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Buying a condo in Bangkok – how to do it/is it a good idea?

Buying a condo in Bangkok – how to do it and is it a good idea? That will be the subject of this article.

As stated in previous articles, my general view is that there are better assets to invest in than overseas property.

Despite that, my staff have also looked at some of the positives associated with investing in property in Thailand in the article below, as well as the negatives.

If you want to invest in more productive assets, don’t hesitate to contact me, email (advice@adamfayed.com) or use the WhatsApp function below.

Introduction

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Buying a condo in Bangkok - how to do it/is it a good idea? 3

Bangkok is one of the most popular destinations in Asia for investors to buy property. Beautiful landscapes, stunning beaches and amazing Thai culture are all obvious attractions.

In fact, Bangkok has so much to offer that the potential of this amazing island is immediately apparent to visitors.

Whether it is a home or investment property, people are very comfortable buying property here. And the most popular type of real estate among foreigners is the condominium.

In this article, we aim to cover why you have to purchase a condo in Bangkok, how this process is being done, is it worth your money and much more information which will definitely help you to make a good decision.

First of all let’s understand what is a condo? Some people are not familiar with the term “condominium” because this particular legal structure is not used in their home country.

Many people think of condominiums as multi-storey buildings with hundreds of apartments, but a condominium is not necessarily a type of building, but rather its legal structure or the form of ownership it offers.

The easiest way to define a condominium is a building in which the owners – in addition to their individual units – jointly own everything in the complex. Then the size of each unit determines the share of each person in the total area.

This means that you own a percentage of the gardens, pools, gym, hallways and reception areas that are part of the shared areas. In fact, your title will indicate the size of your condominium, the total gross area of ​​the resort, and your percentage of ownership of that gross area. (Your fractional ownership will also match the voting rights you have in the owner association.)

It is this favorable legal structure that leads many investors to choose to buy a condominium with any other type of property.

Why buy a condominium in Thailand?

A condominium is the only sure means of foreign ownership in Thailand. Thai law allows foreigners to rent land properties or villas for up to 30 years. Foreigners can also operate (as a minority shareholder) a legally compliant business, which can itself own the property as part of the business.

However, only a condominium in Thailand allows a foreigner to register property in their own name with the Land Department. This registration has a title (Chanote) which gives permanent title to the foreign purchaser.

Thailand’s Condominium Act (1979) not only allows foreigners to own freehold property, but it has also been amended over the years to include fairly stringent guarantees that protect investors buying condominiums in the Kingdom.

Just as the restrictions apply to foreigners buying land properties, there is also a foreign ownership quota for apartments. The law states that 51% of the living space in each residential complex must be owned by Thais, and the remaining 49% can be purchased by foreigners.

It is important to note that laws protecting the rights of Thai apartment owners apply equally to foreign owners.

It is thanks to the Condominium Law that foreign nationals have been successfully investing in Bangkok condominium sector over the past several decades. And the apartment belongs to you until you decide that you no longer need it.

Why do people choose to buy a condominium?

In addition to owning real estate, people love condominiums because they are a relatively easy way to own a home. Compared to the maintenance of a house or villa, there is little that can be done with an apartment.

With the condominium, the chief condominium attorney (CJP) will take care of the overhaul and maintenance of the building. It is the governing body that organizes the staff and manages the resort to keep everything up and running smoothly.

If you are an owner and a resident, you are responsible for everything within your four walls. This means regular cleaning, paying bills, repairing leaking sinks, or repairing broken air conditioners are all up to you. But the responsibility for any problem that arises in the general area lies with the CJP.

If your apartment is a purely investment property and is part of the complex’s rental program, these repairs and maintenance also fall under the purview of CJP.

For people looking for a vacation home, condominiums also offer security when they are not there. They will receive round-the-clock security and / or video surveillance. The complex will likely also have a swimming pool and gym.

All these amenities are taken care of by CJP without any hassle or owner involvement. CJP will take care of the pool, gym and all common areas. This allows you to just sit back and enjoy your tropical home.

Thus, apart from the legal basis for buying an apartment in Bangkok, the condominium offers many other benefits for those looking for a holiday home or investment.

Why choose Bangkok to buy an apartment in Thailand?

Anyone who has visited Bangkok already knows the answer to this question. Simply put, it’s stunningly beautiful.

And as Thailand has developed over the past few decades, so has its real estate market. This was especially noticeable on this magnificent tropical island.

Bangkok is Thailand’s number one tourist destination, attracting nearly a third of all visitors to the Kingdom. In 2018, Thailand welcomed 35 million tourists, almost 15 million of whom came to Bangkok. These numbers are expected to grow in the coming years.

Due to its natural beauty and significantly improved infrastructure, Bangkok attracts more and more tourists every year, who inevitably show interest in buying property on the island. It doesn’t take long for regular visitors to decide that this is a great place to invest in real estate.

As these numbers continue to rise, more and more people are becoming aware of the opportunities that exist in the Bangkok property market.

Many global real estate portals and real estate marketing companies show that Bangkok and Thailand are among the most popular destinations to buy overseas property.

Over the past few years, we have seen buyers from Asia, Europe, Australia and North America. Chinese buyers have been particularly attracted by the buoyancy of the condominium sector on Thailand’s most popular island.

In addition to the natural beauty that Bangkok has to offer, there are many infrastructure improvements that have occurred over the past few decades.

There are also new roads, underpasses and a myriad of new facilities, including new marinas, golf courses, health clubs and gyms, shopping malls and restaurants, as well as duty-free warehouses and all manner of new amenities throughout the island.

So the answer to this heading question is indeed answered, pointing to the amazing culture of Thailand, the stunning scenery of Bangkok and the attraction of tourists.

Buying an apartment in Bangkok gives investors the opportunity to take advantage of the dynamic tourism industry, while at the same time they have free space to relax when they visit each year.

Understanding the Bangkok real estate market

Like the rest of Thailand, Bangkok has seen modest growth in the property market over the past twenty years. But Bangkok is different from most other markets in the country because it relies heavily on tourism. This means that as the tourism industry expands, so does the real estate sector.

As the number of visitors to Bangkok continues to grow and occupancy rates remain high, there appears to be a correspondingly large number of purchases. People often buy an apartment even on their first visit to the island.

As in the rest of the world, there will always be periods of extreme buoyancy in the real estate sector, followed by periods of slower growth. But there was no boom-bust cycle, only steady growth.

Thailand’s broader property market has slowed somewhat over the past 2 or 3 years, but this has not necessarily been the case in Bangkok. The market there is quite resilient, mainly because the tourism sector is a key factor.

The extra income that Bangkok receives from tourism means money that can be spent on infrastructure, which in turn attracts new private investment and new attractions. These improvements subsequently brought even more tourists to the island, and in general the last 20 years have developed in a similar way.

With the rapid increase in tourist numbers, this continuing trend is expected to have a huge positive impact on the development of the Bangkok real estate sector.

Is buying an apartment in Bangkok a good investment?

As mentioned, Bangkok condominium investors are attracted in part by the island’s ever-improving infrastructure and high build quality standards. The styles and amenities offered by Bangkok luxury projects draw new buyers to there every day.

Since this city is visited by so many people every year, most of the investment is based on this holiday market. New resorts are being built specifically for investors looking to capitalize on the thriving tourism sector.

This increased competition has led to the emergence of new innovations. As the industry matures each year, projects become more daring, with more facilities and amenities to serve the ever expanding tourism industry.

Many new resorts offer their own shops and a selection of restaurants, as well as a range of other facilities including saunas and steam rooms, jacuzzis and libraries, all in addition to the usual health and fitness centers and pools.

Bangkok can attract investors for these fantastic projects because buyers know that when they (or their tenants) are in Bangkok, the infrastructure around the island will be of the same high standard.

This is not only about improving roads and accessibility, but also about the quality of health care, leisure, education and even shopping on the island.

Unless there is a dramatic long-term reversal in the travel industry, Bangkok will always be a great place to invest in real estate.

How much should you expect to pay for an apartment in Bangkok these days?

Bangkok condominium prices have steadily increased over the past two decades. However, prices are still much lower than other holiday destinations around the world and are surprisingly cheap compared to some capitals.

Prices can start at 2 Million Baht (US $ 65,000) depending on location. But due to the scale of some of the new developments, even projects on the west coast offer off-plan properties at very low prices.

At the other end of the scale, luxury properties can be worth up to Baht 75 million (US $ 2.5 million). They are generally in great locations with stunning sea views, and while they are licensed to be condominiums and offer non-deed, they may even have a garden and pool.

Of course, there are many choices between economic and luxury apartments. Much depends on location, build and finish quality, and even the developer’s reputation.

Well-known developers will try to maintain high quality standards and also strive to keep prices at attractive levels for buyers. They want to offer a top-notch quality product, but they also have to consider affordability. Their price will also depend on the completion on the island.

General rule: new designs sell for around 100,000 baht per square meter. If you can find a quality condominium in a great location for below that price, then this is probably a good deal. For any new project that will be much more than 100,000 baht per square meter, there must be other factors to justify this higher price.

The units offered for sale will come in a variety of sizes, so you can choose the one that suits your budget. The island offers a variety of studios, one and two bedrooms, as well as three and four bedrooms.

What other expenses are associated with buying an apartment in Bangkok?

As in many countries around the world, local or state taxes will be levied. For a condominium, this is relatively easy, and not too expensive. In fact, property taxes in Thailand are among the cheapest in the world.

While they are fairly straightforward, they are not always the same as the fees will depend on either the developer (for a new build) or the seller’s situation (with resale).

In a new build, when you buy directly from a developer, the developer will indicate what commissions will be in the marketing materials, and these are usually detailed in the price list.

Translation fees are usually 2%, split equally between the developer and you.

If you are buying a foreign freehold unit, then the developer will often need to pay an additional fee on top of the condominium sale price (which is usually listed as Thai freehold / overseas rent).

Upgrading foreign ownership can be a one-time fee of around 100,000 or perhaps even 200,000 baht. But on larger, more luxurious projects, you should be willing to pay any amount up to THB 500,000.

Sometimes the cost of an upgrade is expressed as a percentage of the sales price, which can be as little as 1%, but sometimes it can be as high as 3.15% (which is essentially a 50/50 split of developer cost).

When you resell, you will most likely share 50/50 fees with the seller. These will vary depending on the profit earned from the apartment and the length of time the seller has owned the property. If the seller has owned the property for more than 5 years, these costs should not exceed 1-2% of the purchase price when shared.

All new developments will require you to pay into the depreciation fund, which is a form of emergency fund that is held in reserve for every residential development. If any major renovations or refurbishments are required in the future (such as a pool refurbishment or a repainting of the exterior of the apartment), the CJP may invoke a depreciation fund to cover these costs.

This one-time payment is usually around 500-600 baht per square meter and can be easily calculated by multiplying this amount by the square footage of your unit.

Don’t forget that owning a condominium also comes with running costs. Obviously, you would like your investments to be looked after and well maintained in order to remain attractive to future investors.

For example, gardens need maintenance, a pool needs maintenance, garbage collection needs, and administration and security personnel need to be paid.

Ownership gives you a partial stake in the entire resort, but it also gives you partial responsibility for all maintenance costs.

The common area maintenance fee (or CAM fee) will vary from resort to resort, but averages around THB 50 per square meter. This can be easily calculated by multiplying the fee by the size of your apartment.

CAM fees are usually paid monthly, but can sometimes be calculated quarterly.

Pros of Buying Property in Bangkok

Buying a property is a large financial commitment with its unique set of responsibilities, risks, and rewards. Therefore, below we will talk about some pros and cons of property ownership in Bangkok!

1. Foreigners can own condominiums.

“Condos” are “legal titles” that foreign nationals can acquire directly under freehold terms. Thus, foreigners can own, resell or transfer apartments in Thailand without any restrictions. This simple property law has allowed the condominium market, especially in Bangkok, to grow and grow rapidly!

2. Rental income and the possibility of increasing the cost of capital

Bangkok is an important business center for Thailand and Southeast Asia, resulting in an active rental and resale property market!

Potential investors can, on average, receive 4-6% gross rental returns on apartments in Central Bangkok. On top of that, property prices in Bangkok have risen as a result of the city’s development and economic growth.

3. Quality residential projects.

In recent years, developers have actively launched a series of residential projects, which has led to intense competition between developers. A positive product of this competition is the increasingly high-quality housing estates offering a huge selection of properties. Bangkok developments now often include luxury facilities like pools, gyms, libraries, and even rooftop gardens as standard!

4. Amazing Bangkok lifestyle

Bangkok is a world place to live as it offers an amazing array of things to do, see and experience. The city has a coveted residential appeal like no other; from shopping malls, world-class restaurants, trendy bars, trendy clubs and a rich cultural heritage.

In addition, the city is a regional economic center with many commercial and career opportunities for working professionals. This work-life balance is why Bangkok is a popular investment destination for expats and foreign investors!

Cons of Buying Property in Bangkok

And here are some cons that you have to consider before buying a condo. 

1. Foreign citizens cannot own land

While foreigners can own condominiums (condominiums) free of charge, it is important to note that they cannot own land. Therefore, they cannot own landed property (i.e. villas, townhouses, houses) directly under their own name. This can make acquiring any form of land ownership a daunting task.

2. Cash purchase and limited funding

Most foreign buyers need to buy real estate with cash as local financial institutions do not usually offer financing to foreigners. This means that buying a property in Bangkok can be a pretty big financial commitment.

3. The used property market can be “illiquid”

Although there is an active resale market, especially in Central Bangkok, the capital also has a large number of apartments (completed and under construction). As a result, this reduces demand and resellers compete for buyers’ attention.

Unfortunately, Bangkok’s real estate market is not as liquid as the real estate market in developed markets such as London or New York. Consequently, finding a buyer and negotiating a potential exchange can take months, with no specific completion / transfer timeline.

4. Immigration laws and regulations

The Thai Immigration Office offers several different types of long-term visas, ranging from business / work, retirement, and even investment.

However, it is possible that strict and sometimes exorbitant requirements are imposed on these types of visas. This can make it difficult for some foreign nationals to apply for a long-term visa and as a result, long-term residence in Thailand can be difficult!

Pained by financial indecision? Want to invest with Adam?

Financial Planner - Adam Fayed

Adam is an internationally recognised author on financial matters, with over 233 million answers views on Quora.com and a widely sold book on Amazon

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