Mass transit the key for investors


Buying a residential property as an investment is a practice requiring careful consideration of the type of residence, its price and its location, according to property experts, with condos, detached houses offering big annual returns.

Investors are currently being offered guaranteed returns of 6 per cent per year on some properties, but returns can be as high as 10 per cent if the location precisely matches demand from tenants or new buyers.

The CEO of property brokerage Bangkok City Smart, Pumipat Sinacharoen, said if home-buyers expected a return on their investment from rental or resale, they should put their money into a residence close to Bangkok’s mass-transit system.

According to the company’s database, the preconstruction value of condominium units around the mass-transit system can be expected to increase at least 10 per cent and sometimes more than 20 per cent when construction is complete and units are transferred to owners.

Investors who booked condominium units close to both the Skytrain and the subway in 2007, and whose projects have been completed this year, have seen the value of their properties rise more than 20 per cent, depending on the location.

If the projects are only 100 metres from a mass-transit station, investors will find if they wish to resell their properties, the value will be more than 20 per cent above the amount they paid at a preconstruction stage, he said.

If investors are seeking long-term returns on investment by opening their condominium units for rent, the location principle is the same: units within 100 or 200 metres of a mass-transit station will generate returns on investment between 6 and 10 per cent per year.

A one-bedroom condominium unit in such a location would attract a monthly rent of between Bt10,000 and Bt15,000, Pumipat said.

However, if investors are interested in buying a detached house and letting it for rent, the best locations are near expressways or main roads providing easy access from outer suburbs to the city centre. These locations include Ram-Indra, Kaset-Nawamin and Rama V-Ratchapreuk.

Property Perfect CEO Chainid Ngow-sirimanee, whose company has residential projects in both the Rama V-Ratchaphruek and Ram-Indra areas, said a number of foreign tenants were interested in renting detached houses in these locations, offering rents between Bt30,000 and Bt50,000 per month, depending on the location.

“If people are interested in investing in a detached house, they should be very careful about selecting the location and the project environment. It needs to have more space and the design has to offer closeness with nature that will please foreign tenants. They prefer to live in detached houses rather than condominiums,” he said.

However, investors may turn to one of several development projects in Bangkok that are now guaranteeing returns on investment of at least 6 per cent per year.

One such project is Eight Thonglor, by Pacific Star International (Thailand). Construction will be complete this month and the purchase price is Bt150,000 per square metre, up from a preconstruction value of Bt105,000 per square metre in 2007. The developer is not only offering a guaranteed annual return on investment of 6 per cent, but is also offering to manage the properties for rent.

Developers making such offers are at pains to point out the difference between the returns they guarantee and the current interest rate for bank deposits, which is lower than 1 per cent.

Villa Sikhara by Sikhara Kotobuki Property, a joint venture between Japanese-owned Siam Kotobuki and Thai investors, is offering to guarantee an annual investment yield of 6 per cent over five years for buyers of its condominium units in Soi Thonglor 25. The project will be completed within the first half of next year.

About the author

Somluck Srimalee Somluck Srimalee
Somluck Srimalee is a journalist with The Nation, Bangkok's independent English language newspaper and specialises in the property and real estate sectors.
Other posts by Somluck Srimalee ( 57 )

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