Condo as investment -----> rents or appreciation or both?

[Woke to Sounds of Horking]

Dear all,

For those with experience do entry-level condos -- say 2-3.5 million baht -- actually rise in value in Bkk? Or is it more realistic to expect that the only return you might see is rental revenue?

I've noticed that since 2009 units at this price point on some of the islands/beach areas of Thailand haven't moved either way.

Regards,

[Card]

In my opinion, you are correct. I would only buy either to enjoy/rent as a holiday home or to live in or for rental income. This is not the west where investment for capital increase is great due often to limited alternatives. I would also not buy a new condo in Thailand as they depreciate, like a car, immediately someone moves in.

[AlexRRR]

In my opinion, you are correct. I would only buy either to enjoy/rent as a holiday home or to live in or for rental income. This is not the west where investment for capital increase is great due often to limited alternatives. I would also not buy a new condo in Thailand as they depreciate, like a car, immediately someone moves in.

What are you talking about?

"only buy to either enjoy/rent as a holiday home or to live in of for rental income"......... sounds like you have covered all bases

Don't agree..to many experts in TV who know jack poo, its like anywhere, location location location, in BKK there are a number of areas where you can get a good return, common sense will tell you where they are, also its a bit like anywhere if you don't know the city your buying into you can make mistakes.

It seems true that a place like Pattaya has a glut of condos right now, checking 1 website alone showed up over 800 listings, but prices were always moderate there compared to BKK.

Buying to live in is different than buying to invest in we all have our views.

[ezzra]

Now times is buyers and renters times where you can find good properties for rent and sale in a very affordable

prices, if you the kind that like to be your own boss than buy one, if you the transient kind, here today gone

tomorrow, than renting is your good choice...

[trogers]

Now times is buyers and renters times where you can find good properties for rent and sale in a very affordable

prices, if you the kind that like to be your own boss than buy one, if you the transient kind, here today gone

tomorrow, than renting is your good choice...

I have been living in Bangkok for over 30 years. Should I have remained a renter, I would have bought a condo each for two fortunate souls.

[Minnehaha]

one opinion:

Generalities are just that. Generalities/ generalizations about Bangkok...

As was pointed out, there are some generalizations that have been proven and can be applied quickly to such a question as this one.

Location, location, location. is always the most important consideration. But it is never the only one.

Once you answered this question to your satisfaction, you can do the math. you will find, I believe, that it is difficult to get (in rent) better than the cost of the money to borrow to buy the unit. and if you use your own money, then you have to ask yourself if you could do better investing it in something else. then looking at rent, you can do more math to figure out if you would be better off renting for a period of time (nobody lives forever).

Your question is about small condos (see location location location, and assuming your 2-3MB) and personally I could never live in a space that size. Thus, for me this size unit would only be for investment. Presently, there is substantial oversupply in the Bangkok market. There is also middle class population that has its credit maxed out. That is to say, most of the young professionals who would buy these units are already overburdened with debt.

Presently, there is an oversupply of units available for rent. And prices have stayed the same as they were a few years ago. They have not come down. Why? Because the real estate market in Thailand does not react to supply and demand the same way as other markets. That explanation is complicated, in my opinion. Complicated things are not attractive to me. I agree with Warren Buffet, only make investments in things you can understand and which make financial sense in that they will show a return.

[Minnehaha]

Now times is buyers and renters times where you can find good properties for rent and sale in a very affordable

prices, if you the kind that like to be your own boss than buy one, if you the transient kind, here today gone

tomorrow, than renting is your good choice...

I have been living in Bangkok for over 30 years. Should I have remained a renter, I would have bought a condo each for two fortunate souls.

hope you bought a few in '99

along sukhumvit ... or Ratchadamri or Lumpini or Sirikit.

you should be sitting pretty

[trogers]

Now times is buyers and renters times where you can find good properties for rent and sale in a very affordable

prices, if you the kind that like to be your own boss than buy one, if you the transient kind, here today gone

tomorrow, than renting is your good choice...

I have been living in Bangkok for over 30 years. Should I have remained a renter, I would have bought a condo each for two fortunate souls.

hope you bought a few in '99

along sukhumvit ... or Ratchadamri or Lumpini or Sirikit.

you should be sitting pretty

I bought my first condo as home in 1994.

[chicowoodduck]

I'm pretty sure anyone who even thinks of buying anything in the Land of Smiles must be on a daily dose of stupid pills......? IMHO

[Mr Wonderful]

Location

Quality of build, safety standards

Facilities

Management

Age

Tenant target market

Leads me to believe that high end (100-300k/Sqm) decent size units (65- 150 Sqm) hold the best potential at the moment. Buying at a good price and achieving high rentals by maintaining and managing your unit will result in income and capital gain.

The under 3-5MB market is heavily saturated and tends to appeal to a market which tends to prefer new units. Thai people don't like buying pre owned housing. Meaning, rental income is your goal there.

[MauiSteveBKK]

I own a condo near Ari BTS Station. Currently, rented out to young couple with a child.

It's really difficult for me to think of it as an "Investment" that will appreciate substantially.

It's paid for. To make money, you've got to be ready to wait for the uptick cycle, which may or may not happen.

Does anyone make good money buying and selling (flipping) condos?

I don't believe so -- but I was wrong about something a few years back - maybe wrong now.

[Jacks77]

Also thai people are not into maintaining or renovating anything. Some buildings in bangkok are in excellent locations but they are falling apart because they dont like to spend a dime to fix anything. Make sure u buy a condo that is well kept.

[trogers]

I own a condo near Ari BTS Station. Currently, rented out to young couple with a child.

It's really difficult for me to think of it as an "Investment" that will appreciate substantially.

It's paid for. To make money, you've got to be ready to wait for the uptick cycle, which may or may not happen.

Does anyone make good money buying and selling (flipping) condos?

I don't believe so -- but I was wrong about something a few years back - maybe wrong now.

The amount of 'Resale' units of newly completed projects would indicate the degree of problems of flippers...

[FiveStarVagabond]

I live in Pattaya and don't see much capital appreciation, however condos with a good view always rent well. My building is opposite the beach near the Holiday Inn, and a friend is selling his 45 M2 condo for B3.0 million. It's always rented between B17k & B18K per month so return on investment is very good. There will be no more high-rise like this opposite the beach which makes it good value. As we all know, location is everything.

[Mr Wonderful]

You should know.

I purchased as low as 89k per Sqm in a building which definitely isn't selling below 150k now.

Rental returns have been a steady 7-9 percent gross (5-6.5 percent after CAM fees and expenses). Capital appreciation might end up averaging 5-7 percent. That's a solid 10-12 percent return.

Exchange rate is a risk, though. Or reward, depending on the situation.

[trogers]

I live in Pattaya and don't see much capital appreciation, however condos with a good view always rent well. My building is opposite the beach near the Holiday Inn, and a friend is selling his 45 M2 condo for B3.0 million. It's always rented between B17k & B18K per month so return on investment is very good. There will be no more high-rise like this opposite the beach which makes it good value. As we all know, location is everything.

Bt17-18k a month for how many months a year?

[jadee]

The OP's asking about "entry-level condos -- say 2-3.5 million baht" but you'd have to look at it on a case-by-case basis. I think Prakard.com is one of the best sites to get a sense of what's really going on with a development. It's so popular with Thais, you can see at a glance, how much people are selling or renting for and do your research that way. There are certainly some very popular areas and developments, you can tell by how long adverts stay on the first page for.

[FiveStarVagabond]

It varies, currently it is rented until mid December at B18k pm, long term say six or 12 months it drops down to around B16k. The women he has currently finding renters favours short term but if I owned it I would go for the longer period. It's a very clean apartment on the 12th floor and not a penny to spend.

[Shiver]

I have zero experience of property ownership in Thailand, though quite a lot in my home country. My initial feeling would be to buy only if you want to enjoy the property yourself, and not as an investment unless you're playing a very long term game.

There are a lot of uncertainties in the world at the moment in the financial game, and I can't think of any upside over just renting.

Edited October 28, 2015 by Shiver

[trogers]

I have zero experience of property ownership in Thailand, though quite a lot in my home country. My initial feeling would be to buy only if you want to enjoy the property yourself, and not as an investment unless you're playing a very long term game.

There are a lot of uncertainties in the world at the moment in the financial game, and I can't think of any upside over just renting.

Those who are holding cash at the moment - hold your cash. The final two global bubbles are waiting to burst - Wall St. and the US dollars.

When the dust settles, go shopping for your bargains.

[AlexRRR]

Location

Quality of build, safety standards

Facilities

Management

Age

Tenant target market

Leads me to believe that high end (100-300k/Sqm) decent size units (65- 150 Sqm) hold the best potential at the moment. Buying at a good price and achieving high rentals by maintaining and managing your unit will result in income and capital gain.

The under 3-5MB market is heavily saturated and tends to appeal to a market which tends to prefer new units. Thai people don't like buying pre owned housing. Meaning, rental income is your goal there.

Mr Wonderful parrots whats been written here a hundred times, Thais do buy second hand, if what you say is true half of BKK houses and condos would be deserted.

[KittenKong]

I live in Pattaya and don't see much capital appreciation, however condos with a good view always rent well. ...... There will be no more high-rise like this opposite the beach .......

Beauty is indeed in the eye of the beholder; in your photo you see a good beach view and I see a nasty view of the next-door building that I could never live with.

As for "no more high-rises opposite the beach" they are building one now right next door to VT6 that will ruin the views from most of the south-facing units in that building - the views from the north-facing units were ruined years ago by the Hilton and Central Festival - and there are several more empty plots they could build others on.

As for the question of the topic: Thai property is not the sort of thing I would ever invest in. Buying one place to live in is as far as I would ever go. X decades ago when there were 99 Baht to the Zloty and beach-front penthouses were selling for 1000B/sqm there may have been some bargains to be had, but those days are long gone if indeed they ever really existed.

[trogers]

I live in Pattaya and don't see much capital appreciation, however condos with a good view always rent well. ...... There will be no more high-rise like this opposite the beach .......

Beauty is indeed in the eye of the beholder; in your photo you see a good beach view and I see a nasty view of the next-door building that I could never live with.

As for "no more high-rises opposite the beach" they are building one now right next door to VT6 that will ruin the views from most of the south-facing units in that building - the views from the north-facing units were ruined years ago by the Hilton and Central Festival - and there are several more empty plots they could build others on.

As for the question of the topic: Thai property is not the sort of thing I would ever invest in. Buying one place to live in is as far as I would ever go. X decades ago when there were 99 Baht to the Zloty and beach-front penthouses were selling for 1000B/sqm there may have been some bargains to be had, but those days are long gone if indeed they ever really existed.

There would always be people who would occupy the unit, even long term.

In my evaluation as an investor, I would only pay not more than Bt2m for this studio unit, spend another 300k to refurbish, and rent it out for Bt14-15k long term.

This would give a 6% nett annual returns from rent.

[realenglish1]

Ive been here almost 20 years and I believe the condo market is in for a correction here Credit is maxed out for the Average Thai.

What a little longer it will correct 30 % or more

[Nomyai]

In my opinion, you are correct. I would only buy either to enjoy/rent as a holiday home or to live in or for rental income. This is not the west where investment for capital increase is great due often to limited alternatives. I would also not buy a new condo in Thailand as they depreciate, like a car, immediately someone moves in.

What are you talking about?

"only buy to either enjoy/rent as a holiday home or to live in of for rental income"......... sounds like you have covered all bases

Don't agree..to many experts in TV who know jack poo, its like anywhere, location location location, in BKK there are a number of areas where you can get a good return, common sense will tell you where they are, also its a bit like anywhere if you don't know the city your buying into you can make mistakes.

Dont buy into location, location, location, mantra. Price is probaly more important factor. Tons of condos for sale on bts line yet probably none offer good capitalization rates.

[Woke to Sounds of Horking]

Hey All,

Great replies, just what I was looking for! Thanks everyone for sharing your experiences & opinions.

If I didn't make it clear enough: I'm not looking to live in a unit. It's pure investment, long term, ~25 years.

@trogers -- you forgot about one more 'bubble': The Canadian housing market.

That said, it may not actually be a bubble. Truth is everyone on the planet dreams of living in Canada -- no war, no pollution, no guns, no crime, no corruption, no bad of any sort -- hence the unquenchable demand for real estate, which is in limited supply in the 2 or 3 cities worth living in. The result? Bidding wars for 1.5-million-dollar shit shacks.

The Canadian dollar's a bargain right now!

[alex8912]

Location is extremely important and when a poster like the one above uses the word " probably" it comes with no real life experience. I bought my first condo here for 3.4m in 2005 in a 15 year old very well maintained building a six minute walk to Chong Nonsi BTS, in a neighborhood that has only added luxury condo buildings, high end hotels and upscale restaurants, bars and coffee shops since I purchased my condo. The neighborhood even got a trendy new name recently " Satorn Square". It was a 54 sq meter one bed where I took down the wall between the bedroom and living room and put about 300k into it mainly adding new cabinets a slab of granite and western oven in the kitchen, some nice painting and some teak wood accents and new lighting that really made the place look very updated and modern. It had an amazing city view with floor to ceiling windows. I stayed in it every winter for 9 years. When I was away I usually rented it out for 7 to 9 month leases and always easily got 22 to 25k for rent because of the location. I never paid an agent fee which saves a lot of money and always rented out to westerners who I found on Craigslist. I never had a bad tenant. I do have a long experience renting out apts abroad as part of my work so my gut feelings are good. I always returned the security deposit. I Collected about 1.3m baht in rent over the years. I was lucky that when I purchased it with $$ 10 years ago it was 42 baht to the USD.

What I found interesting when looking at older condos in BKK is how long things stay on the market. After viewing several to set my price for selling I knew I had to spruce it up a bit. I spent 5000 baht and touched up every single area that looked bad and re painted an accent wall. I made sure the place was immaculate. Every piece of clutter gone. Every light was working. NO ONE does this in BKK! The places that are 7 years old look 20 years old with dust, peeling walls etc.. I put it on the market early this summer for 4.9m and sold it n 33 days for 4.7m. Most of the new buildings on my block offer one beds that are 35 to 39 sq meters for 5.5 to 6m. But they sit and sit and sit.

I sold my condo to a person who soooo many expert TVF posters say will never buy my condo. A single female Thai professional who will live in it herself and absolutely loved it. Maybe I as lucky or maybe some common sense is nice to have. No killing was made here but it was a great experience for me.

[KittenKong]

In my evaluation as an investor, I would only pay not more than Bt2m for this studio unit, spend another 300k to refurbish, and rent it out for Bt14-15k long term.

This would give a 6% nett annual returns from rent.

Looks great on paper. The problem is that it's for sale at 3MB, not 2MB.

If prices were sensible then you could indeed buy it for 2MB and rent out for a 6% return. But asking prices aren't sensible.

[mcfish]

Rental returns in bangkok in tourist area near bts are fantastic. I rent mine on air bnb to o/s tourist's for stupidly good money. I feel sorry for renters getting 3% bank interest and throwing a life time of good money into and endless pit.

Sent from my SC-01D using Tapatalk

Edited October 28, 2015 by mcfish

[trogers]

In my evaluation as an investor, I would only pay not more than Bt2m for this studio unit, spend another 300k to refurbish, and rent it out for Bt14-15k long term.

This would give a 6% nett annual returns from rent.

Looks great on paper. The problem is that it's for sale at 3MB, not 2MB.

If prices were sensible then you could indeed buy it for 2MB and rent out for a 6% return. But asking prices aren't sensible.

That's why foreign property buyers need to relook at property valuation based on the investment method.

At the end of the day, the property cycle would revert back to the basics.