Buying a property in Bangkok: What to consider

Bangkok is a beautiful, vibrant and enchanting city. Being the international business hub of Southeast Asia with a huge population, international community and excellent network of mass rapid transit train lines, buying a property here is not a bad idea.

A few years before the COVID-19 pandemic struck, I partnered with a group of people who promoted Bangkok real estate projects in Malaysia. I also spent time in Bangkok visiting projects and speaking to local agents to have a good understanding of the property market. Our weekend launches in Kuala Lumpur had a decent turnout, and my partners had already made their foray into Bangkok.

Buying a property overseas is a different ballgame: you would be dependent on someone there to help you. Usually, that person is a real estate professional, and choosing the right one is crucial.

Note: Due to legal restrictions, foreigners usually buy condos and apartments. Foreigners cannot directly buy landed properties in their own name.

There’s a ton of information on why Bangkok is great for property investment, where to choose and how to go about it. I won’t rehash what has been written except to emphasize certain areas. I have listed a few general guidelines from my perspective as a consultant.

Visit the actual project site

I would not recommend buying any property off-plan without visiting the site unless you already know the area or know someone who does. Spend some time at the location and get to know the area and its surroundings. If the location does not have BTS or MRT stations or shops nearby, don’t consider further unless you really like it for your own stay. Also, look into future developments that would make a positive or adverse impact on the location.

Distance to train stations

The rule of thumb is that properties closest to BTS train stations could command higher rates than those further away. Now, this is odd for me as I do not like to live so close to an elevated rapid rail transit. However, this is the way of life here. Ease of getting around is very important. It’s not about your personal preferences, so don’t forget that Bangkok traffic is horrendous.

Buy a bigger unit

Many projects carry units of about 200 to 300 sq. ft. because they are easier to sell. Given that the rate can be very high when compared to Malaysia, it is very tempting to go for the smallest units. A 500 sq. ft. luxury condo downtown can command up to RM1.5 million. These units are mostly let on a fully furnished basis, and they cater to the single occupant. There are tens of thousands of these units in the market. Tenants are spoilt for choice, and it’s just a matter of packing one’s suitcase to rent another unit after one year simply for a change.

Getting a new tenant means paying the agent another month’s rental fee. If you need the agent to help manage the tenancy, that’s another fee equivalent to one month’s gross rental income. Factoring the void period of, say, one to two months, you would only have eight to nine months’ rental income.

Choose a safe and proven location

If you are buying for investment, I suggest getting a property close to the BTS Skytrain stations on the Sukhumvit Line along the stretch from Asoke to On Nut. You can also consider the stretch from On Nut further on to the Bearing station. There are ten stops from Asoke downtown to the outskirts of Bearing, but it takes less than 30 minutes by skytrain to travel between the two stations. The ride is very comfortable and scenic. There are many impressive projects in beautiful locations but remember the criteria of being close to a train station.

Personally, I like the quiet neighbourhood of Ekkamai. It doesn’t feel as crowded and is only 3 stops from Asoke downtown on the Sukhumvit Line. There’s a shopping centre right by the station. There are many Koreans living here. I also like busy Sathorn, the commercial precinct, because it is close to the riverside. Sathorn has a BTS station on the Silom Line. Ploenchit downtown is very exclusive; choose here if price is not an issue.

If you have risk appetite, you can consider areas on the outskirts of Bangkok which have potential for growth due to new developments and more rapid transit lines coming up in the locality. There should be at least a train station nearby and good road accessibility.

Be prepared to hold

One way of making a quick return is to buy a property off plan at the start of the launch and then sell before the project is completed. This is known as a flip, which can be like a speculative bet on the stock exchange.

Depending on the location and market conditions, you could get a good appreciation if you buy early and get the early-bird discounts. Apart from the agency fee and a small administration charge some developers may impose, the rest of the profit is yours. There is no government involvement at this stage, so be careful. The developer just needs to transfer the name on the sales and purchase agreement to that of the new buyer.

Caution: Tread very carefully and get a lawyer to vet the details of the contract. Ask the developer to show how the calculation works in writing. If your flip does not pan out, you must be prepared to hold the property beyond completion.

If the sale happens after the property is handed over, there would be additional costs such as transfer fees, specific business tax (if you have owned for less than 5 years), stamp duty ( if the business tax is not applicable) and withholding tax. These taxes generally total about 5 to 7% of the sale price of the property. In addition to these costs, the standard agency fee of 3% applies.

Note: Property agents in Thailand are not regulated by any legislation, unlike those in Malaysia, and they don’t need to be licensed. It is important to go with a reputable firm and an agent who will look out for you. This person will play a significant role in your success.

Financing

Don’t bother applying for a loan with Thai banks if you are a foreigner without a Thai permanent residence or work permit. You can look into offshore mortgages from international banks with local offices in Thailand. Or you can pay in cash.

With the current low-interest savings rate in Malaysia and the potential to get good properties at reduced prices in Bangkok due to the pandemic, it is worthwhile to consider buying before the market picks up.

Also, remember that the purchase needs to be done in a foreign currency wired to a Thai Bank. Pay your deposit that way as well to avoid complications.

If you have plans to invest in Bangkok, do your own research before you sign off on the dotted line. Focus on under-construction development projects by reputable developers, but don’t rule out the sub-sale market. Buy for the right reasons and have realistic expectations.