The lasting appeal of Bangkok will continue to propel its property market, notwithstanding domestic and international headwinds.
2017 is presenting itself as a year of uncertainty for the local Bangkok property market. Firstly, with the atmosphere of global economic and political turbulence, Thailand’s export-led economy is facing some strong headwinds. At the same time, rising local household debt has caused Thai banks to tighten lending resulting in a slowdown in Q4 of 2016.
Notwithstanding that, Central Bangkok and its prime areas have been relatively insulated from the economic impact of these issues. However, residential properties in Bangkok’s suburbs, especially in the areas that will be welcoming the new mass transit lines have been struggling and going through tough market conditions.
While many doomsayers are “jumping ship” and claiming that Bangkok has reached a plateau, it is important to note that property investment has always been a long-term game. The Thai capital is in a state of constant flux and has yet to reach its peak in terms of economic and urban development!
Here are 3 Reasons why Bangkok still has potential as a property investment destination:
1. BANGKOK BUSINESS ENVIRONMENT
Thailand is in a unique geographical and economic position to benefit from the growth of the Southeast Asian region. It offers generally good infrastructure, a skilled labour force and a relatively open business environment that nurtures both local and international business
If we look specifically at Bangkok, it has developed a brand as a world-class destination; “Mastercard Global Cities Index” even ranked the city as the top travel destination globally (beating London for 1st position). This is because the city offers a cultural and leisure experience unlike any other destination. This demonstrates the unique appeal that Bangkok offers to the international community.
From a business perspective, Bangkok offers two international airports (Don Muang and Suvarnabhumi Airport), established corporate and commerce law, as well as affordable operational costs such as staff. Above all, Bangkok harbours an expatriate and local business community that welcomes both start-ups and established operations.
This unique balance of business and leisure is what has been propelling the property market forward for the past many years. These crucial macroeconomic and social investment factors are unlikely to disappear overnight!
2. URBAN DEVELOPMENT
Bangkok has yet to reach its full potential as a mega city!
Despite being home to approximately 8 million inhabitants, its public transport system remains largely underdeveloped. However, the government has made efforts to remedy this situation, kickstarting the development of extra BTS Skytrain and MRT Underground Links. This mega infrastructure project, once completed, will not only result in better travel/commuting options for Bangkok Metropolitan Area but also for neighbouring residential provinces (e.g. Nonthaburi and Samut Prakan).
On top of this, numerous Bangkok neighbourhoods (suburbs and even the CBD) are experiencing modernization and gentrification. The city as a whole is a bustling construction site, with a plethora of ongoing commercial, residential and retail development activities. This will have inevitable positive effects on the local property market in the medium/long-term.
3. RELATIVE AFFORDABILITY
Bangkok’s popularity as a Southeast Asian lifestyle destination and business hotspot is being reflected in the ever-inflating prices of local real estate. In recent years, some residential developers have even shattered historical price records, registering sales of 300,000 THB Per/Sqm on new project launches. These sensational prices are usually the “talk of the town” and take the front page of news outlets.
However, it is important to note that Bangkok has hundreds of condominiums and neighbourhoods, where more reasonable prices are available. Interestingly, Bangkok is still offering opportunities at affordable rates especially compared to its global counterparts such as Singapore and Hong Kong. Lucrative investment opportunities at “grounded” price ranges are available on both the re-sale and off-plan condo market; allowing a lower entry-point for retail investors.
These factors show that Bangkok is presenting incredibly appealing economic and social fundamentals which cannot be overlooked. While the Thai economy will be facing struggles this year, it is important not to embrace short-termism and fear-mongering.
Bangkok represents approximately 80% of Thailand’s urbanization and it is undoubtedly the economic heart of the country. Therefore, provided Thailand continues to strengthen its economy and grow, Bangkok’s property market will inevitably continue its uptrend in the long-run![/ihc-hide-content]