NPP Realty and Consultants have been watching the market closely especially during the impact of Covid-19. Even before the pandemic, property demand was weakening in Thailand for the middle or lower segments, despite rental income on luxury condominiums offering attractive yields. With Thailand having currently contained the Covid situation, business has resumed to near normal levels although of course the impacts on certain industries have been phenomenal.
During the biggest lockdown in recent history the industry still saw a rise of 5.1% for single detached houses. That coupled with the bank of Thailand’s interest rate cut to a record low of 0.5% which followed on from 4 other rate cuts in the previous 10 months.
This led to the mortgage market growing to 18.3% of GDP rising from 13.8% a decade ago. Personal housing credits and total property credits rose by 3.9% and 5% respectively in quarter 1 of 2020.
Rental yields in Bangkok are pleasing, ranging from 5.0% to 8.0%, based on a Global Property Guide research. During the past three years, yields on medium-sized apartments (120 sq. m.) have risen significantly. Apartments in Bangkok’s upscale residential areas which include Sukhumvit Road, Silom, Sathorn, Riverside, and Central Lumpini have all shown steady growth leading industry advisers to believe that there is no property bubble. With the real demand not speculative, purchases have continued throughout the pandemic measures despite restrictions on travel for many.
In most major cities, smaller apartments are deemed a stronger investment opportunity, offering higher rental yields. Bangkok differs in this sense. A 60 sqm apartment earns a gross rental yield of 5.6% while 120 sqm and larger apartments earns gross yield of around 8%.
The pandemic situation has weakened the residential construction work. While current projects are still being completed, fewer registrations of new buildings has been recognized by the real estate market. This will increase demand in the long term for the available units.
On the resale side of the market, sellers are reviewing their sales prices and are being realistic with their own expectations. This has led to a buyer’s market with investors keen to take advantage in the small dip in the depressed property prices. With international investors finding it difficult to visit the country with a travel ban being in effect from April 18th, fewer international transactions are taking place while a greater number of local buyers are investing in the properties. When the travel restrictions are lifted, the investors will return and engage with the property market once again.
At NPP we have been supporting our clients with purchases from distance and locally with many finding opportunities that suit their portfolios. We will continue to follow the market trends to ensure that the most up to date information is provided.