Bangkok Villa
Big returns available in what is at least for now a blue-ocean business
While economic difficulties are affecting many aspects of the property industry, Bangkok’s rental-house business is growing rapidly, because among other things, it generates high returns on investment.
Unlike rental condominium units – a business in which there is high competition – the rental-house business is increasing in popularity among landowners on Sukhumvit Road and other main Bangkok streets, because lower investment costs are involved, and there is less competition.
The residential division of real-estate firm Jones Lang LaSalle says the business not only adds value to assets, but also generates high profits.
“Many investors and owners of land plots are choosing to build a few rental houses on their land for foreigners. This kind of investment helps increase income for land owners rather than keeping undeveloped land, which may loose value every day,” a spokesperson said.
In the luxury and high-end segments, rental clients seeking a “community lifestyle” have particular demands, including high security, a privatised zone and integrated services. Tenants who are executives of large organisations or multinational companies are willing to pay rents of Bt150,000 to Bt300,000 a month for a two- or three-year rental contract for a dwelling with 400-450 square metres of floor space.
As well as Bangkok’s business areas, other locations are becoming known for their high-quality rental houses, including the area around the Ekamai-Ram-Indra Expressway, often these days referred to as the “Beverly Hills of Bangkok”. This area is located not far from the city, transportation systems are nearby, and it provides easy access to Sukhumvit Road. Jones Lang LaSalle says this area is replacing Sukhumvit as a location for upper-class residences.
Many residential projects still owned by developers are now being offered for rent, at monthly rentals ranging from Bt60,000 to Bt120,000, depending on size.
Bangkok Villa, operated by City Realty, is located on 13 rai of land in the Ekamai-Ram-Indra area (Lat Phrao Soi 84). It has 30-40 units for rent at Bt80,000 to Bt90,000 per unit per month. Each unit has two or three bedrooms with full facilities such as a sauna, cable TV, swimming pool, cleaning service and security guards.
Property Perfect’s Perfect Masterpiece at Ekamai-Ram-Indra offers 17 units for rent at Bt65,000 to Bt100,000 a month, depending on size of land and contractual arrangements. Jones Lang LaSalle – the sole agent – says the project targets foreign executives looking for a single detached house with convenient transport to Sukhumvit Road.
This project, which covers 97 rai, has 167 single-detached houses. They may either be bought as finished homes or built to order, with floor space of up to 220 square metres. The purchase price ranges from Bt11 million to Bt57 million.
The Bt3.49-billion project focuses on quality living, offering homes with full facilities and surrounded be a natural environment.
Although the project itself offers only 17 units for rent, home-owners in the project have also opened their houses for rent. Monthly rentals may be as low as Bt60,000 if a tenancy contract runs for more than two years.
Demand for rental houses has made investment in this type of property a new alternative for investors who are looking for high returns.
Unsurprisingly, some of Bangkok’s larger property developers are turning to the rental-house business, and Jones Lang LaSalle suggests landowners consider building rental houses as a means of adding value to their assets, because it is – for the present – a blue-ocean business.