Thailand Real Estate Sector Lures Local and Foreign Investments

Thailand is attracting a lot of investors these days. The economic prosperity in the ASEAN (Association of South East Asian Nations) region is drawing a lot of foreign interests. Thailand’s prominent role in the economic integration of ASEAN countries contributes to the positive outlook for the country, attracting more investments into its real estate industry. Bangkok condos enjoyed a profitable year in 2012.  Mr. Frank Khan, the executive director and head of residential unit at Knight Frank Thailand reported that condominium properties in the Sukhumvit area and Bangkok’s central business district have been particularly successful. For one, Bangkok has become a favorite destination for migrating Europeans as Europe continues to face a gloomy economic outlook. Moreover, it is also favored by neighboring countries in Asia like Singapore and China.


Most Popular Areas

Bangkok remains the most popular location for property investment in Thailand. In particular, there is high take up rate in projects within Sathorn, Chidlom, Narathiwas, Ratchadamri, and Ploenchit areas.  The development of high-rise buildings in these locations attests to the scarcity of available land for residential and commercial purposes. Aside from the huge increase in the supply of new units, Khight Frank also reported that the resale market, particularly in Sukhumvit and the central business district areas, is thriving as well. This current market trend is also advantageous to other areas like Ladprao and Ratchadapisek. In 2012, one of the most popular areas for the foreign market was Phuket. In fact, Knight Frank Phuket executive director Nattha Kahapana noted that 100 percent of the investment money in Phuket’s luxury residential properties was obtained from overseas.  The tourism industry of Phuket is booming. Flights to Phuket increased by 1.02 percent year-on-year, while the number of tourists swelled by 13.57 percent. There were over 19 million tourists who visited Phuket in 2012 alone. Together with the influx of tourists, new homes and condominiums launches increased considerably during the year as developers tried to lure more investments to the island.


Investment Objectives 

Knight Frank noted that some investors were more focused on rental yield and capital appreciation rather than in resale. It is reported that rental rates went up during the past 10 months. Also, returns were estimated at around 5 to 6 percent per year. Meanwhile, other investors, locals in particular, opted to retain their asset holdings and are on the lookout for positive developments in the future.


Sources of Foreign Investments

The 2012 statistics show that 21 percent of units in luxury properties were sold by CBRE to foreign buyers. This shows an improvement from only 14 percent in 2011. Mr. Khan noted that foreign investments are likely to come from Japan, China, Hong Kong, Singapore, Taiwan, India, U.S., and Europe. The investors who bought properties in the high end market were mainly expatriates from Singapore and Hong Kong. Some investors also came from South Korea.


Officials at Knight Frank expect an even more vibrant residential market in 2013. With Thailand’s dynamic economic growth trend and the outpouring of government projects, the real estate industry anticipates a more active participation not only from local and foreign investors alike.