While rental yields for condos in Bangkok have decreased in the past few years, demand for luxury condos in Bangkok’s prime areas is still strong with both Thai and foreign buyers expecting capital gains from these in the long term, shows new research from JLL.
Rental yields for upscale condos in Bangkok average 3 per cent a year which is a drop of nearly 50 per cent when compared with the yields earned 5 years ago. The reason for this decrease is due to increased selling prices. Prices for high-end condos have risen by 30 per cent while rents have risen by only 10 per cent during this time.
“The 3 per cent yield does not sound attractive, but many people have continued to buy luxury condominiums in Bangkok as an investment, particularly in prime locations. A lot of buyers of luxury condos whom we have recently represented were Thais buying for their own use and as an investment. Those who purchased as an investment focus more on a potential capital appreciation in the long term than rental yields,” says Bunthoon Damrongrak, Head of Residential Property at JLL.
Foreign investors continue to acquire luxury condos in Bangkok. Buyers are attracted to this segment because prices make it an affordable investment opportunity, especially for buyers in Hong Kong and Singapore. Property prices in those markets are very high and a low-end condo in Hong Kong can cost as much or even more than some luxury units in Bangkok.
“Excluding the ultra-luxury segment, luxury condo prices in Bangkok have remained very competitive. Products of similar quality in Bangkok are twice cheaper than in Singapore and five times cheaper than in Hong Kong. In addition, though the rental yields in Bangkok are generally low, they remain competitive, compared to many more mature markets such as Singapore, where yields are less than 2 per cent,” says Bunthoon.
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