Property Portfolio in Bangkok

[paul2510]

Hi All

I have recently relocated to Bangkok, as part of work and i expect to be here for the foreseeable future. For a long while myself and my wife have been considering purchasing some average price town houses or condominiums to rent out, typically in the 1.2m to 2m price range. As for location i am not sure as yet but we have initially looked at Nonthaburi and Samut Prakan given that there are transport improvements occurring here, namely the Purple Line and BTS Extension.

My question is has any TV member built up a portfolio of property and how have you found the investment, from a financial perspective and also from a tenant perspective. And finally have you had any exposure to the property the main banks are offering, which i assume are predominately repossessions, the reason i ask this is that whilst in the Bangkok Bank we browsed through the a catalogue of offerings and the bank representative indicated the pricing shown are negotiable, which was interesting.

Any information would help, just researching at the moment.

[JeremyBowskill]

Don't know much about BKK but do know that what the banks are offering will be for the most part overpriced. Anything good they get on, the upper management gets first crack at, staff next, staffs friends next, preferred customs after that and then finally you are seeing it. Most of the peanuts have already been pulled out the poo.

[huanga]

I assume you and your wife are both non-Thai? If this is the case, I'd highly caution you of trying to build up a real estate portfolio here. The policies are fickle and offer almost no protection to non-Thais. Condos in Bangkok, at least based on my experience, are easy and fairly tempting to purchase, due to the excessive marketing, but difficult as hell to unload. I'd rather look into other investment that offer more liquidity, here in Thailand or elsewhere. But if you really want to buy into condos here, go along the BTS routes, present and future plan. But with that said, I highly doubt that 1mil-2mil will get you anything worthwhile.

Not to sound like a super paranoid. I believe your goal of investigating this stream of revenue is probably trying to create passive income and personal wealth. As a foreigner, I definitely would like to keep a low profile. Owning many condos/real estates here might just attract you unwanted attention. However unlikely this might sound, but just be careful....

[paul2510]

I assume you and your wife are both non-Thai? If this is the case, I'd highly caution you of trying to build up a real estate portfolio here. The policies are fickle and offer almost no protection to non-Thais. Condos in Bangkok, at least based on my experience, are easy and fairly tempting to purchase, due to the excessive marketing, but difficult as hell to unload. I'd rather look into other investment that offer more liquidity, here in Thailand or elsewhere. But if you really want to buy into condos here, go along the BTS routes, present and future plan. But with that said, I highly doubt that 1mil-2mil will get you anything worthwhile.

Not to sound like a super paranoid. I believe your goal of investigating this stream of revenue is probably trying to create passive income and personal wealth. As a foreigner, I definitely would like to keep a low profile. Owning many condos/real estates here might just attract you unwanted attention. However unlikely this might sound, but just be careful....

Hi huanga, thanks for the reply. My wife is Thai, i should have mentioned that in my original post, we have been married close to 20 years now. Looking at the various websites i tend to agree with you that 1-2m does not get you too much and i expect the rental return on these to be fairly low, typically 8-14,000 per month, maybe less, but you have raised an interesting point about offloading, which at some point i would no doubt do. You are correct in saying that my aim was to create a passive income, my overall goal was to attempt to purchase a new property maybe every 6 months and ultimately have a good portfolio were the rental income would serve us well over time.

Another option i have looked at is one of the many apartment buildings which are on offer, although the initial outlay is higher than i would be comfortable with, but from a positive spin i have always wondered why such properties have never utilized the roof space, which tends to be flat and cover a large area, i suspect in many cases it would be possible to build on top of this as most appear to have the structural beams protruding through which gives me a sense this may be viable.

Anyway i do value your comments, and will keep them in mind, i obviously need to give this a lot more thought.

Edited August 19, 2014 by paul2510

[robertthebruce]

Yes have to agree with that comment, Bangkok or Thailand would not be the best place to have a large property portfolio,

Maybe worth taking a look at where you come from ???

All the best with your ventures...

[paul2510]

Yes have to agree with that comment, Bangkok or Thailand would not be the best place to have a large property portfolio,

Maybe worth taking a look at where you come from ???

All the best with your ventures...

Thanks robertthebruce, i have been looking at Australia where i normally reside or the UK were i am originally from. Lots of options to consider in all locations so will keep giving it some thought

[AyG]

Hi huanga, thanks for the reply. My wife is Thai, i should have mentioned that in my original post, we have been married close to 20 years now. Looking at the various websites i tend to agree with you that 1-2m does not get you too much and i expect the rental return on these to be fairly low, typically 8-14,000 per month, maybe less, but you have raised an interesting point about offloading, which at some point i would no doubt do.

Just a tiny bit of personal experience to put things in perspective.

I rented a small apartment near a BTS station in Bangkok three years ago - somewhere to live during the week whilst I was studying. At that time I paid 6,000/month. An identical apartment was bought for 1.1 million new a few months before. More than half the apartments in the block were unoccupied, and this was a pretty nice, clean, modern development. There were loads of notices on the office noticeboard advertising apartments for rent.

To me this looked like a very poor investment with very little chance of making a capital gain on sale, plus the ongoing problem that apartment blocks become run down pretty quickly - particularly at the lower end of the price range.

[Robert24]

to be fair you can get a decent return on your investment in property in Thailand. Usually around 6-8% depending on the investment. Now obviously some people have a view that real estate in Thailand is overpriced and don't invest but I guess you could say that for many countries in Asia whether it is Singapore, Hkg, Malaysia, Myanmar etc. Maybe Vietnam might be an exception as it has corrected significantly already.

If you are interested, suggest you look at both new developments and also at repossessed properties up for auction. Personally I have bought 2 properties that were repossessed and they were good investments. My experience from the market of repossessed properties is that they are approx 20% below market prices you see otherwise and hence why I proceded this way. But clearly people have different (strong) views about property in Thailand.

[paul2510]

Hi huanga, thanks for the reply. My wife is Thai, i should have mentioned that in my original post, we have been married close to 20 years now. Looking at the various websites i tend to agree with you that 1-2m does not get you too much and i expect the rental return on these to be fairly low, typically 8-14,000 per month, maybe less, but you have raised an interesting point about offloading, which at some point i would no doubt do.

Just a tiny bit of personal experience to put things in perspective.

I rented a small apartment near a BTS station in Bangkok three years ago - somewhere to live during the week whilst I was studying. At that time I paid 6,000/month. An identical apartment was bought for 1.1 million new a few months before. More than half the apartments in the block were unoccupied, and this was a pretty nice, clean, modern development. There were loads of notices on the office noticeboard advertising apartments for rent.

To me this looked like a very poor investment with very little chance of making a capital gain on sale, plus the ongoing problem that apartment blocks become run down pretty quickly - particularly at the lower end of the price range.

Hi AyG

Thanks for passing on your experience, information like that is what i am looking for. From what i am hearing and observing it may not be a good idea to invest in such properties, as previously advised maybe i should look at Australia and the UK, or possible just hold on for the moment. I get a little hasty at times with the whole thrill of the investment but maybe i will step back for the moment, plus i should give it a little more time in Bangkok.

Once again thank you.

[paul2510]

to be fair you can get a decent return on your investment in property in Thailand. Usually around 6-8% depending on the investment. Now obviously some people have a view that real estate in Thailand is overpriced and don't invest but I guess you could say that for many countries in Asia whether it is Singapore, Hkg, Malaysia, Myanmar etc. Maybe Vietnam might be an exception as it has corrected significantly already.

If you are interested, suggest you look at both new developments and also at repossessed properties up for auction. Personally I have bought 2 properties that were repossessed and they were good investments. My experience from the market of repossessed properties is that they are approx 20% below market prices you see otherwise and hence why I proceded this way. But clearly people have different (strong) views about property in Thailand.

Hi Robert24

Great info thanks, especially about the 6-8% on the investment. On the repossessed properties were these through a bank auction ? the Bangkok Bank indicated to me i could make an offer direct based on there book valuation, which i suspect is normal as per western practices prior to going to any auction.

As you say different people have different views, and at this stage it is great listening to them.

[smutcakes]

I would suggest that in the next few years the market for older more sizable accommodation will increase. For upmarket projects in prime location, you are now looking at an asking price of between 140-200k per sqm for rooms you could not swing a cat.I saw a 'special offer'over the weekend of a 3 bedroom condo at 104 sqm.

My suggestion would be buying some of the older building units, apartment buildings where traditionally the unit sizes are much larger, and paying 50% of the price for them, and often they are in prime locations already.

You can spend 5-10K per sq m upgrading them to a modern specification and reap the upside in the future should you sell. The yields on newer condo's are even more derisory than bank interest.

Traditionally in Thailand people have lived in houses, but as the demographic of the city changes and the first generation of Thais to move out to condos have their own families, land for houses is no longer viable for them. They will need larger family condo's but at the selling prices and unit sizes of the new condo's it is unrealistic.

[Robert24]

to be fair you can get a decent return on your investment in property in Thailand. Usually around 6-8% depending on the investment. Now obviously some people have a view that real estate in Thailand is overpriced and don't invest but I guess you could say that for many countries in Asia whether it is Singapore, Hkg, Malaysia, Myanmar etc. Maybe Vietnam might be an exception as it has corrected significantly already.

If you are interested, suggest you look at both new developments and also at repossessed properties up for auction. Personally I have bought 2 properties that were repossessed and they were good investments. My experience from the market of repossessed properties is that they are approx 20% below market prices you see otherwise and hence why I proceded this way. But clearly people have different (strong) views about property in Thailand.

Hi Robert24

Great info thanks, especially about the 6-8% on the investment. On the repossessed properties were these through a bank auction ? the Bangkok Bank indicated to me i could make an offer direct based on there book valuation, which i suspect is normal as per western practices prior to going to any auction.

As you say different people have different views, and at this stage it is great listening to them.

There are 2 types of markets for repossessed properties from my experience:

1) those listed on the government website for repossessed properties that will be coming up for auction. Usually they put them on the website about 6 months before the auction date. My advice would be as Bangkok Bank indicated to you, if you do like a property, to get in touch with the bank and the owner and make a deal outside the auction. Normally the bank as well as the owner prefer to not go to auction and often agree to a 10-15% lower price than indicated on the website.

2) Sometimes banks sell entire NPL portfolios to Asset Managers and those asset managers put then those properties up for sale (i.e. Siam Asset Management etc). Often those prices that asset managers want are at least the level of the market or even a little bit higher than that. Also they tend to have a lot of time and are not in a hurry to sell the property.

My advice would be 1) to understand the area, type of property etc what you are looking for and then look at the government website if there are any properties of that type/area for auction/sale and proceed according to what I listed under 1).

Now 6-8% return is from my experience. One property I have gives me just above 7% return and one a little bit less than 7%. Now some Thais have told me they make at least 14-15% return on similar properties (Apartment buildings) but I have not been able to achieve that. My view is that around 7% is realistic if you include all the cost from maintenance, tax, people you need to hire etc.

Also if you worry about individual investments, you may want to consider investing in a REIT that gives you similar return but with a more diversified portfolio, possibly even with commercial property and less headache for yourself.

hope this helps.

[paul2510]

I would suggest that in the next few years the market for older more sizable accommodation will increase. For upmarket projects in prime location, you are now looking at an asking price of between 140-200k per sqm for rooms you could not swing a cat.I saw a 'special offer'over the weekend of a 3 bedroom condo at 104 sqm.

My suggestion would be buying some of the older building units, apartment buildings where traditionally the unit sizes are much larger, and paying 50% of the price for them, and often they are in prime locations already.

You can spend 5-10K per sq m upgrading them to a modern specification and reap the upside in the future should you sell. The yields on newer condo's are even more derisory than bank interest.

Traditionally in Thailand people have lived in houses, but as the demographic of the city changes and the first generation of Thais to move out to condos have their own families, land for houses is no longer viable for them. They will need larger family condo's but at the selling prices and unit sizes of the new condo's it is unrealistic.

Hi Smutcakes, thanks for the advise, it is appreciated. Agree with your comment about 'swinging a cat' , when we came to Bangkok the relocation agent showed us several properties around Suk 24 and we could not believe how small some of them were, with typical prices around 75-85k per month, i do understand this is prime real estate in this area, but we eventually settled for Sathorn and got a place twice, if not three times larger than these.

I will certainly keep an eye open for some of the older style apartment buildings, which as you mention offer the extra space for less money.

[paul2510]

to be fair you can get a decent return on your investment in property in Thailand. Usually around 6-8% depending on the investment. Now obviously some people have a view that real estate in Thailand is overpriced and don't invest but I guess you could say that for many countries in Asia whether it is Singapore, Hkg, Malaysia, Myanmar etc. Maybe Vietnam might be an exception as it has corrected significantly already.

If you are interested, suggest you look at both new developments and also at repossessed properties up for auction. Personally I have bought 2 properties that were repossessed and they were good investments. My experience from the market of repossessed properties is that they are approx 20% below market prices you see otherwise and hence why I proceded this way. But clearly people have different (strong) views about property in Thailand.

Hi Robert24

Great info thanks, especially about the 6-8% on the investment. On the repossessed properties were these through a bank auction ? the Bangkok Bank indicated to me i could make an offer direct based on there book valuation, which i suspect is normal as per western practices prior to going to any auction.

As you say different people have different views, and at this stage it is great listening to them.

There are 2 types of markets for repossessed properties from my experience:

1) those listed on the government website for repossessed properties that will be coming up for auction. Usually they put them on the website about 6 months before the auction date. My advice would be as Bangkok Bank indicated to you, if you do like a property, to get in touch with the bank and the owner and make a deal outside the auction. Normally the bank as well as the owner prefer to not go to auction and often agree to a 10-15% lower price than indicated on the website.

2) Sometimes banks sell entire NPL portfolios to Asset Managers and those asset managers put then those properties up for sale (i.e. Siam Asset Management etc). Often those prices that asset managers want are at least the level of the market or even a little bit higher than that. Also they tend to have a lot of time and are not in a hurry to sell the property.

My advice would be 1) to understand the area, type of property etc what you are looking for and then look at the government website if there are any properties of that type/area for auction/sale and proceed according to what I listed under 1).

Now 6-8% return is from my experience. One property I have gives me just above 7% return and one a little bit less than 7%. Now some Thais have told me they make at least 14-15% return on similar properties (Apartment buildings) but I have not been able to achieve that. My view is that around 7% is realistic if you include all the cost from maintenance, tax, people you need to hire etc.

Also if you worry about individual investments, you may want to consider investing in a REIT that gives you similar return but with a more diversified portfolio, possibly even with commercial property and less headache for yourself.

hope this helps.

Hi Robert24, once again thanks for the information. You mention Government Websites, do you have a link to these or more so the most useful ones, i have found the Bank Websites and will keep reviewing to see what comes up.

[Robert24]

http://asset.led.go.th/newbid/asset_search_map.asp

This is the link to the government website with properties/land that are in the legal process of being repossessed and auctioned.Apologies for the delay in responding, just realised now that I haven't responded yet.

[mike324]

I have a property portfolio mainly in Bangkok. Here is the low down, average return is 4-4.5%

2 Bedroom in the range of 50,000 baht to 70,000 baht monthly rental is the easiest to rent out. Asian expat are ok with 2 Bed in the 80-100 sqm range. Western most want at least 100 sqm and up for 2 Bed. Average 2 bedroom priced in prime locations are around 10 million and up.

1 Bedroom - the price is all over the place depending on the type of apartment / condo. Rental is usually around 8000 baht to 30,000 baht for locations near bts. Price for 1 bed is usually 8 million baht and up.

With the budget of 1 to 1.2 million, you will not really find anything on the market in downtown Bangkok. You will be able to find old and rundown townhouses in not so desirable locations, rental will most like be 5000 baht and up for average workers seeking accommodation. Rent to run businesses can be up to 30,000 baht again depending on location.

Nonthaburi is a good place to look but will be harder to rent out due to the supply and how spread out the area is. For your budget, I strongly recommend buy units by developer call "Lumphini", the units are usually tiny 25 sqm but in some locations they sell it for 600,000 baht and up for the unit. Those usually appreciate 40-50% within a year or two as it is so cheap and very desirable for low to mid income earners who wish to own an apartment. You can get rental at around 5000-7000 baht depending on location of Lumphini apartments. There are usually over 800 units in each of the Lumpini apartments, one of the downside is you don't get parking space included in the sale. Instead you have to pay monthly to park there if you have a car, its usually couple hundred per month.

There is currently around two apartments by the BangWa BTS station (Green Line), it is worth a look as 2 years ago I check, each condo unit was around 1.5 to 1.8 million. I'm sure its over 2 million now, but worth the investment as that area is very dense with few condos so far and a lot of working folks. Those areas will surely appreciate when the Blue Line completes which also intersects with the Green Line at Bang Wa station.

Most of that info was for condos / apartments. Townhouses can be good investment as well, Thais have a thing with townhouses.

Best is to walk around the area and find for sale signs and ask the locals if there are any for sale and if its suitable for rental and such.

[roberta]

I too have been considering investing in rental condos. Today I have viewed 4 units offered for sale. All were good quality studio apartments ranging from 30 to almost 40 sq m in size. Two of them had tenants already in place on annual contracts. Asking prices ranged from 2.1 to 2.9 MB, and monthly rentals from 10,000 to 14,000 baht. Assuming that I could negotiate a small discount on the prices asked, it appears that the sale price is consistent at about 200 times the monthly rent. Is this a reasonable multiple? A 30 sq m unit renting for 10,000 was priced at 2.1 MB, and a superior 39 sq m unit expected to rent for 14,000 at 2.9 MB. This equates to a gross ROI of a little below 6%. However, common area fees are equal to about one month of rent, the agents fee (I would need to use an agent) is also one month's rent, and I can probably expect about one month of vacancy each year, plus there are transfer fees to be paid on the transaction, so I find the expected net ROI is probably closer to 4%, which is a disappointing figure.

The best bank account yield available to me is 2.8% for 11 months, but there is a 15% tax withheld from this, so the net return is under 2.4%, and this is below the inflation rate so the true return is negative. 4% would give a small return above inflation but not enough to sustain my living expenses indefinitely. And capital gains on resale seem unlikely as condos tend to lose value as the building ages and becomes less attractive. I am not sure that the risk is really worthwhile, but am unable to find any better alternative.

[Robert24]

I think you are spot on with your calculations for high end condos. But my experience has been that you get better returns if you invest in low end properties such as student apartment buildings etc. They tend to also be far more crisis resistant than high end properties. Assume you look at what would happen to your returns in an economic downturn or crisis.

[mike324]

Now 6-8% return is from my experience. One property I have gives me just above 7% return and one a little bit less than 7%. Now some Thais have told me they make at least 14-15% return on similar properties (Apartment buildings) but I have not been able to achieve that. My view is that around 7% is realistic if you include all the cost from maintenance, tax, people you need to hire etc.

Also if you worry about individual investments, you may want to consider investing in a REIT that gives you similar return but with a more diversified portfolio, possibly even with commercial property and less headache for yourself.

hope this helps.

You are correct, lower end apartments you can achieve 6-7%. Thais who are able to achieve 14-15% most likely bought and own the land from long time ago when it was cheap. I do own an entire apartment 8 floors with 78 rooms, near a major university. My apartment is 90-95% full year round and average return is around 7%. I wish it was a lot higher also. But competition is also very fierce as there are a lot of big developers in this market with money to blow on making the apartments look nice. Most student apartments are fully furnished, hence the upkeep will start to kick in after 5 years, expect the return to start dropping slightly.

Depending on the area, there are apartments units that can be bought and rented to students, they usually range from 1.5 million and up. ABAC is a school where you would find a lot of these apartments, but then competition is too stiff for my liking.

Like you said, the student apartment market is pretty stable overall, especially if you in located in prime location right by the school. Two of my 3 Bed units in Bangkok sat empty for half a year due to the economic downturn 2-3 years ago.

[roberta]

I am now convinced that an apartment building is the way I should go. Others I have talked to are of the same opinion. Now I have to find one for sale at a reasonable price. Any suggestions about how to go about this? Not so easy as searching the classifieds and property websites for condos.

[trogers]

I am now convinced that an apartment building is the way I should go. Others I have talked to are of the same opinion. Now I have to find one for sale at a reasonable price. Any suggestions about how to go about this? Not so easy as searching the classifieds and property websites for condos.

First try the website of legal execution dept www.led.go.th and the auction websites of the major banks.