Hi. I’ve been doing its job a real estate agent in Bangkok since 2006. In that time I have observed some changes, but surprisingly almost no has changed. Let me explain.
Apartment Rental Prices Bangkok 2008 – 2018
Rental prices of many apartment buildings have raised very marginally within the last 10 years. Whereas a spacious 3 bedroom apartment in Sukhumvit area could have cost 70,000 Baht decade ago, it is you 85,000 Baht today. That’s only a 20% increase over decade, actually a great deal less than inflation, plus many ways a condo is cheaper now than a decade ago.
Why? It’s difficult to mention but I would estimate that ongoing political problems, 2 coups, as well as a pretty stagnant economy barely kicking at around 3% increase in GDP each and every year are the reasons. This degree of growth can be acceptable for a global leading developed nation, except for Thailand that (after all) is still equipped with some way to get in terms of development, it isn’t very good.
The apartment rental market in Bangkok is usually governed by expats. Thai folks don’t rent at these prices, either they do not earn enough, or are sensible enough to acquire a property inside the suburbs, or are area of the immensely wealthy elite and already own several blocks in central Bangkok. As the quantity of expats has always been fairly constant, so have housing costs.
Newly built condominium buildings have noticed a rise in the cost of rent, there will always be half the normal commission of people who adequate budget and just want to live somewhere very new, something is specially true of Japanese renters, even so the new buildings can be old as soon as they are already constructed and also a rental price continues to be established, you will see that the price will remain relatively stagnant after that.
This is in fact the same with condominiums available for purchase. Once a building has finished construction, a sales price and rental costs are established, and will also remain stagnant with this level for years.
But prices are actually increasing in Bangkok, everyone understands that!! So am I wrong?
Condominium Sales Prices Bangkok 2008 – 2018
I don’t believe I’m wrong. There are some condominium buildings which have experienced an incredibly good amount of capital appreciation recently, but “on average” they haven’t.
Yes, prices have already been increasing significantly in Bangkok, which is something that developers will happily promote to your account when selling you their new project. They will provide you with graphs through an upward trend in prices, and explain to you that price is increasing no less than 5-10% year on year.
Prices of fresh buildings are actually increasing a 5-10% year on year, although not completed buildings.
This is mainly down to increases in land prices. As land prices increase (also to some extent construction costs) so have the price tag on new buildings. So new buildings get increasingly expensive, but you are completed buildings following suit?
No. And this is the reason why I’m not wrong. A building that cost 150,000 Baht/sq.m. five years ago, may now simply be 160,000 Baht sq.m. In this example around 1.5% compound growth. This building was completely new 5 years ago, plus a brand new building today still under construction might run you 200,000 Baht/sq.m. and that is 33% greater than the new building was 5yrs ago, hence the 5%++ compound growth.
But the fact remains, the dwelling that YOU purchased 5yrs ago may have raised only 1.5% compound a year.
This could be the ongoing trend with Bangkok property. New buildings constantly set new benchmarks in prices, after which remain a similar. With even newer buildings adding a layer ahead, setting new benchmarks, then remaining at the identical level. Even newer buildings still, just keep adding another layer on the top.
This is the reason why you will find such huge price discrepancy between buildings, even though they are located right next door to one another. An example could be Lumpini 24, a different condominium situated on Sukhumvit Soi 24, where prices will fetch around 250,000 Baht/sq.m. So, a 60 sq.m., tiny little 2 bedroom unit costs around 15,000,000 Baht.
Immediately to your neighbors is an older condominium called President Park, where prices have remained stagnant about 60,000 Baht/sq.m. So, an exceptionally spacious 3 bedroom unit of 260 sq.m. will run you around 15,000,000 Baht.
Four times bigger, located immediately to your neighbors, though the same price! So the old adage “Location, location, location” doesn’t apply here. It is ONLY in accordance with the age of the structure.