The Top 5 Tips on Buying a Condo in Bangkok
Bangkok is constantly reshaping its urban landscape, and the relentless pace of development in the Thai capital often creates opportunities for potential owners or investors.
There are still massive language and cultural barriers to contend with though. And Bangkok’s somewhat unique property standards more often than not cause uncertainty with many interested parties.
In many cases, the multi-levelled and often conflicting information available can cause yet more confusion. So is it that difficult to buy a condo in the city of Bangkok?
Let’s take a look at the possibilities when it comes to buying or investing in a condo in Bangkok, beginning with one of the most obvious questions.
1. There Are Limitations with Property in Thailand for Foreigners
Is it even possible for foreigners to own property in Thailand? This is probably one of the first questions you may be asking. The straightforward answer is…well, yes and no.
Thai Property Law is in some ways straightforward when it comes to foreign property ownership. The main thing to note is that foreigners cannot directly own “Land” in Thailand.
So you can forget building that house for your girlfriend out in the country — at least if you were expecting to have any claim on it, that is.
And the ‘good’ news? Well, foreigners are allowed to own condominiums units, formally referred to as “Condominium Freehold Titles”.
Foreigners can legally purchase a unit in a building where not more than 49% of the Condo Project is owned by non-Thais. The remaining 51% can only be owned by Thai nationals or Thai entities.
2. There Are Costs Involved in Owning a Condo in Bangkok
If you are thinking of buying or investing in a condo, there are a few things to consider beforehand in terms of ownership and maintenance. There are 3 major expenses you will face as property owners in Bangkok.
Property Agency Fees
If you are a rental investor, it is very likely you will instruct real estate agents to market your property. In Bangkok, property agents charge standard marketing and leasing fees.
Common Area Management Fees (CAM Fees)
The condo usually has a building management team to maintain the building. Thus an annual CAM Fee is charged to the owner. It often includes some kind of building insurance in case of any major disasters or structural issues.
General Expenses & Taxes
Property owners are responsible for the utility bills such as water and electricity, unless the property is rented out. In Thailand’s tropical climate, air-conditioners require maintenance, usually done twice a year.
Then there is the much-maligned ‘Property Tax’, whereby landlords are expected to declare any income from renting a property. They are then responsible for filing annual tax returns.
3. You Need to Find the Right Location
Any kind of property search in Bangkok can be somewhat overwhelming, especially with the sheer volume of condo projects being developed and sold.
The main determining factors when it comes to investment value are going to be the attractiveness and possible renting potential of a property in Bangkok.
Traffic congestion is a massive bane to Bangkok residents, so many rely on the Mass Transit Lines (BTS/MRT). Location is everything when it comes to buying a condo and ideally you should consider projects within close proximity to a BTS or MRT Station.
Another important consideration is doing a little research into the local neighbourhood, and getting a handle on local demographics and residents. This will give some idea of possible rental rates, as well as acceptable sales prices.
Bangkok’s rental market has a large expat sector, centred in and around the Central Business District. The primary neighbourhoods that form the CBD are Sukhumvit , Silom/Sathorn, Wireless/Ploenchit, and Rama 9/Ratchada.
These areas are home to major business centres and so attract many of the expat workers in the city. The CBD is also a lively and vibrant living environment, with plenty of leisure and entertainment options like luxury malls, bars, restaurants and nightlife.
Needless to say, real estate in the CBD regions tends to be on the expensive side.
Any other region of Bangkok located outside of these areas is usually categorized as ‘Outer Bangkok’. Some of these areas still offer some great opportunities to investors and buyers, though.
Residences in Outer Bangkok are a little more competitively priced, although some locations often are a little under-developed, without any real established residential neighbourhoods. This could make it more difficult to rent the property, and even harder to eventually resell, depending on how the area moves forward.
4. You Need to Understand Condo Property Specifications and Building Maintenance
The price-to-size ratio (price per square meters) of a specific property makes it possible to evaluate that price compared to other units in the project and area.
You should also consider the general layout, size, floor and orientation of the place, as residences in Bangkok now usually offer a range of high-quality facilities. So you need to evaluate the facilities and areas like the lobby, pool, gym, and available meeting places.
Developer and Building Management
The property market in Bangkok is all about creating brands and themes.
So it is always a good idea to look for projects with well-known developers and established brands behind them as they are usually more popular and hence hold their value more easily.
Established developers usually have more reliable building management operations, and some even have their own facilities management subsidiaries.
Building management and maintenance is actually a huge factor in the condo holding its long-term value. Many of the run-down residential blocks in the city would have started outed out in fairly pristine condition, and are testament to the fact that it tends to lapse rather quickly without the proper management.
5. You Need to Consider Resale Properties v New Projects
New projects are launched almost constantly throughout the city of Bangkok, on top of the vast range of existing, established properties. So potential home buyers and investors are usually faced with two choices — buying resale properties on the secondary market, or investing in off-plan projects direct from the developer.
There are both advantages and disadvantages to either option.
Buying Resale Properties
Buying a second-hand property means buying a condo that was completed sometime back from someone who already owns it. The obvious benefit of this type of deal is that the property is immediately available to move into and live in.
Condos on the secondary market also have quite a bit more transparency when it comes to price. These units are generally advertised publicly through real estate agencies and online property portals, meaning that you can compare sales prices and potential rental rates.
When it comes to price per square metre, resale properties are likely to be much more competitive than the off-plan option.
The downside is likely to be related to the age and condition of the building and the individual unit, meaning you could end up facing higher maintenance and possible renovation expenses.
Buying New Buildings
An off-plan project is basically a condo development that is being launched or is still under construction.
This means you buy directly from the developer who will have a completion timeline of somewhere between 1 and 3 years. As a buyer you would have to wait for it to be finished.
The main advantage of this type of deal is having the ability to pay in installments. Apparently the common way this works is with a 30% down payment, and the other 70% upon completion. This system also allows you to get a fixed price on the condo even though it won’t be completed for a few more years.
The obvious and probably biggest advantage is that you are buying a completely new property. The interior will be under a one-year warranty from the developer, and this is one of the options especially popular with Asian buyers who generally prefer to buy not only new buildings, but new everything.
The ‘brand new’ aspect of modern off-plan residential projects in Bangkok is also the thing that ensures they come at the highest premiums. This means they are quite a bit more expensive on a price per square meter basis than secondary market condos.
The last thing to consider – and although not that common it has nevertheless happened before — there is always the possibility that the project won’t actually be completed. This is when the developer runs into problematic issues related to either construction, finance, or both.
The last thing you might be wondering is whether foreigners qualify for any kind of financing to purchase property in Thailand?
Well, yes – although not as easily as you might think. There are particular banks and financial institutions provide mortgages to foreign nationals (the majority definitely won’t).
Needless to say, the application requirements are incredibly strict, and the mortgage conditions are offered at rates that are hardly competitive – especially in comparison to those offered to Thais.
Loans of any variety to non-Thai buyers are only offered to those strong financial profiles. They require buyers to be employed in the Kingdom with a valid Thai work permit and visa, at the very least, with earnings deemed worthy of said financing.
Another requirement is that the purpose of any property purchase should also be the acquisition of a home rather than a buy-to-let investment.
Three companies known to offer financing options along these lines to foreigners are MBK Finance, UOB, and ICBC.