Sunday, July 3, 2022

Affordable in demand, but foreigners “off the radar” in Bangkok

Research from global real estate advisor DTZ has revealed that demand for affordable condominiums in central Bangkok remains strong, despite the recent political instability. However, the company cautions that foreigners are likely to remain “off the radar”, especially for luxury property projects, until the situation becomes more certain. The report noted that activity in Bangkok’s Central Business District (CBD) residential property sector waned with the disruption from the political riots which took place during the quarter. The majority of real estate activity was concentrated in peripheral fringe and suburban locations near to the mass transit lines. Demand for smaller one- and two-bedroom (40 sqm to 70 sqm) affordable units, which are usually priced below THB80,000 (US$2,470) per sqm, remained upbeat despite the political woes. CBD condominium rents averaged THB452 (US$13.97) per sqm per month in Q2 2010, reflecting no change quarter-on-quarter. The overall average capital value for the CBD condominium market was also stable, registering no change over the quarter to stand at THB82,740 (US$2,548) per sqm. Low Ming Tze, Senior Manager of DTZ Thailand Research, said: “New launches within the CBD will be very selective. With the uncertain political and economic conditions, developers are more cautious in initiating new projects. More time is being taken to conduct due diligence studies prior to launching a new project.” She added: “Buying activity over the next quarter will largely be dominated by domestic purchasers – both end users and speculators. Foreign investors are likely to remain off the radar, particularly for luxury projects, until there is more certainty in the political situation.” Source : property-report.com .

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Affordable in demand, but foreigners “off the radar” in Bangkok

The severity of the global financial crisis also saw the government introduce additional sweeteners for buyers — a 300,000-baht income tax deduction for any buyers of a new home that was transferred within 2009. At the same time, mortgage interest that could be deducted from taxable earnings was increased to 100,000 baht from 50,000 and has now become a permanent tax benefit.

Foreign nationals are not permitted to own freehold titles, the only exception being where the foreign national has invested a significant amount of money (about US$1 million) in stocks, securities, or companies, and has Board of Investment Promotion (BOI) approval, in which case the BOI may recommend that the foreign national be permitted to hold a freehold title not exceeding an area of 1,600sq.m. The only other ways for foreign nationals to own freehold titles are to form a private limited company that then owns the title, a mechanism the Thai authorities are starting to take a dim view of, or to have a Thai national (usually the foreign national’s spouse) hold the title – a very risky option.

At the end of 2002, quality “Grade A” condos in the Central Business Districts ranged from $148 to $170 per square foot. Ongoing projects in the same area now sell for $193 to $273. Both expats and investors mostly seek two- and three-bedroom units. But if you drop down from luxury to “decent” level, you’ll find plenty of resale properties in the $62 to $227 per square foot bracket. As in most cities, the smaller the property, the more expensive the cost of floor space.

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