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REALTY: Immense Potential for Overseas Investment in Bangkok – M Birjmohun

Overseas investments in infrastructure will help make Thailand a regional transport hub that will boost home buyer demand, especially in Bangkok, which acts as a gateway to other ASEAN markets. In conversation with MARCIANO BIRJMOHUN, Head-Global Sales, Angel Real Estate Consultancy, on Thailand’s real estate market, with special focus on Bangkok:

GRIHA: What is the outlook for the housing market in Bangkok’s Metropolitan area?
MARCIANO BIRJMOHUN: Bangkok is the ever pulsing heart of the country's investments and development. Demand for homes close to mass transit systems will still grow strong. More consumers will express interest in developments near the city's edges, prioritizing locations along the city’s Bus Rapid Transit System (BRTS) and Mass Rapid Transit System (MRTS) for commuting convenience. When the Government starts to invest in infrastructure projects, it automatically opens up new opportunities for property developers to plan residential projects. The new mass transit route from Bangkok to the suburbs will consequently challenge property developers to invest in these emerging locations of the city. Investment in infrastructure and several new mass transit routes will make Thailand a regional transportation hub in the ASEAN Economic Community. This will boost demand for home purchases, as foreign companies will also invest in Thailand as it acts as a gateway to other regional markets.

GRIHA: What is the main challenge facing the country’s real estate market today?
M. BIRJMOHUN: The ratio of household income to property prices remains a big issue for the majority of Thailand’s residents. The income inequality is truly visible, household debts are rising and banks are not willing to provide credit. The fact is that most condominium units are priced beyond their budgets, with the result that the majority of households are shifting, choosing locations that are part of the new mass transit expansion plan and suitable to their budget. Surprisingly, these factors do not affect the great majority of the prime positioned developments. The reason for that has been the positive influx of foreign investors, which has stimulated developers to continue new innovative projects.

GRIHA: What is the “Buy-To-Let” concept in the Bangkok market?
M. BIRJMOHUN: A key factor for property investment returns is "Buy-to-Let". Looking at other prime cities such as Singapore, London and New York, long term buy-to-let programs are self-evident. In 2015, the average gross rental yield (before expenses and taxes) for Bangkok downtown condominiums was approximately 4.8 %, a drop from 5.4 % in the previous year. This decline is in line with the price increase of new condominiums that exceeded the growth in rents. The good news is that the number of expatriates in Bangkok has increased by 10% year-on-year.

GRIHA: How important is the expatriate community for Bangkok’s housing market?
M. BIRJMOHUN: The expatriate market is the key rental market for mid to high-end downtown condominiums. Two- and three-bedroom condominiums are the most popular types of units rented by expatriate families, while demand for one-bedroom units is taken up by singles and young couples. Rentable property is highly dependent on the location and price to size ratio of housing units.

GRIHA: What kind of housing projects do expats typically prefer?
M. BIRJMOHUN: Expatriate tenants are willing to spend their budget on smaller units attracting higher per square meter rent if it is a fresh project at a good location with modern amenities and good construction quality. New buildings with smaller units therefore have a higher chance of being rented out than older buildings. The building facilities are also an important consideration. While Sukhumvit is the most popular area because of easy access to the BTS Skytrain and proximity to good social infrastructure, the area also offers more real estate supply than Central Lumpini and Sathorn/Silom.