Real Estate News, Reviews and Investment
Article: despite the strong baht, Thai residential property is highly affordable.
Despite the strength of the currency, the country is still one of the most affordable investments in the Asia Pacific.
When thinking about Thailand most automatically think of Bangkok – and it is no different when it comes to investment in real estate and finance. This perception is changing, however, as other cities begin to show signs of increasing real-estate activity.
Pattaya, a coastal resort city south of the capital on the Gulf of Thailand, has witnessed booming real-estate activity since 2008. In the eyes of local realtors and observers, it is the “second city” after Bangkok, and the growth in tourism in the area is attracting the attention of domestic and foreign investors.
You should keep in mind that Thailand real-estate investment is attractive to many foreign investors because they often serve as second homes and can deliver returns on investment by being rented out when not in use.
You should also bear in mind that this market is not regulated; it is always better to consult a good local lawyer before investing.
Residential real estate
The price index for single detached houses fell by just over 1% (3.59% adjusted for inflation) during the year to end-Q2 2012, according to figures from the Bank of Thailand (BOT).
On a quarterly basis, it declined 1.81% (3.03% adjusted for inflation) in the second quarter, which is the second consecutive decline.
However, during the year to the end of the second quarter of 2012:
The country’s gross domestic product (GDP) growth recovered right a stronger-than-expected 4.2% year on year from the devastating effects of the floods. Despite some uncertainties, the domestic economy is expected to grow by a healthy 5.7%, according to figures from the Bank of Thailand.
The Bank of Thailand changed some rules to allay public fears about a property bubble, especially in the condominium market.
In fact, a bubble is unlikely to develop in the Thai property market because the price rises have been natural, according to the Government Housing Bank (GHB), a state-owned lending agency. Despite the substantial increases recently in low-end property, there is nothing to worry about.
The bottom line
Because of the existence of real demand as opposed to speculative demand, low-rise housing prices below THB 3 million (approximately equivalent to USD $99,000), which is 70% of the market, is likely to see continued growth.
Given the healthy growth in GDP and the continued affordability of property, investment in Thai residential real estate, investment prospects are promising.