Revisiting the Investment Property Market in Thailand

After the bloodless political turmoil that Thailand has encountered of late and which is hopefully resolved now that a democratically elected government has been returned to power, there are those who are coming out strongly in favour of property investment in Thailand.

So, we thought we’d revisit the investment property market in Thailand for our readers because we feel the picture is far more complicated than simply a political one!  After all, the entire globe is on the cusp of a financial squeeze thanks to the adverse credit situation that probably really arose because of ignorant lending behaviour among banks that should’ve known better.  You know we’re right!

So, yes, on the one hand we have a democratically elected government back in power in Thailand and this is of course good news for the nation and its people.  And off the back of this fact, a wealth of confidence has returned to this, the second largest economy in Southeast Asia.  To the point at which CB Richard Ellis has recently spoken out strongly in favour of the investment property market in Thailand…

The company’s standpoint is based on the fact that 15 months of military rule physically restricted the amount of development in the real estate sector so that now there is a shortage of property in Thailand in certain areas – e.g., apartment units in Bangkok for example and residential tourism based resort accommodation as well.

According to the CB Richard Ellis report, since 2003 there have been price increases of up to 12% in the luxury condominium market in Bangkok, and now that there is a physical restriction on the amount of property under construction and coming to completion, these price gains could not only continue, but potentially improve.

They cite likely areas for strong investment activity to include the grade A office sector in Bangkok where there is a massive undersupply and restriction on what actually comes to the market for sale.  Additionally they advise that there will likely be strong investor movement on land for sale in Bangkok’s most attractive areas.

However, however, however, not everything in Thailand is in favour of property investor commitment at this time – which is probably why the brand new government is actually laying out a number of incentives to draw investors back to the market.  For one thing there’s the good old credit crunch – now, this may not be affecting Thailand directly in terms of its citizens being foreclosed upon as, generally speaking, Thai people are cautious investors.  However, it is having a direct impact on the amount of money flowing in to Thailand. 

For example, Singapore and Hong Kong which were both significant investors in Thailand have sub-prime obligations…as does the US, another strong investor in the past. 

Mind you, the credit situation globally is having a lovely sobering effect on the Thai market which bodes well for its long term health – the Bank of Thailand has imposed such restrictions on lending that it’s having a direct impact on property valuations and according to the very sagacious opinion of Scott Bolls from Smith Hodgkinson auctioneers, appraisers and valuers, this has brought realistic valuations to the Thai market which will protect it over the medium to long term.

There are a couple of other issues that would-be investors should be aware about in terms of property in Thailand – there’s the fact that often times, projects are announced but never realised.  Additionally there is the fact that there is a lack of liquidity across the country affecting everything from new project starts to consumer activity – this will have a real effect on the development of the property market and impact on an investor or at least their chosen strategy for profit.  Finally, it’s tricky for an individual to acquire resale real estate in Thailand too…

So, before you believe everything you read in one particular report, ensure you dig a little deeper to find the flaws in a market as well as the potential.  That way at least you’ll be making your decisions with your eyes wide open!

Special Reports: Property News for Thailand

Thailand Property Buying Guide for Foreigners
The amount of restrictions that apply to foreign property investors in Thailand makes the whole property buying process complicated

Thailand Property Investment Potential
Potential for property investors in Thailand is in abundance but dependent on the success of the tourism industry

Thailand: A Guide for Property Investors
The profitability of investment property in Thailand has increased significantly in recent years making Thailand real estate highly desirable.