1. Inherent risk

   I have always spoken about investment risk. This earthquake brings to mind the risk of a property facing natural disasters. I am Singaporean and in Singapore, we are not faced with the prospect of frequent earthquakes. In fact, the cause of the tremors was an earthquake in Myanmar. The particular fault line was the Sagaing Fault which stretches from Mandalay to Yangon. This is relatively far from Thailand and definitely far from Bangkok. Yet due to the low frequency tremors, it affected taller buildings. Bangkok being an extremely built up area in Thailand with so many tall buildings, the people in these tall buildings experienced the full force of the tremors.

   However, no building other than that skyscraper under construction fell. There were similarly many other buildings under construction. There were also similarly many other buildings taller than that skyscraper. The Mahanakhon, has 79 floors and is 320 meters tall to tip. The Baiyoke Sky Tower has 88 floors and is 328 meters tall to tip. Both these buildings are the tallest in Bangkok and both are unscathed from the tremors. It is arguable that if that skyscraper under construction did not topple, the tremors would be closer to a non-event then the current state of emergency.

   There are many risks. There is also the risk of war. In Singapore, we are worried about rising sea levels. In the event that sea levels rise past a certain point, it is arguable that large parts of Singapore will be underwater despite its best efforts to mitigate this risk. All investments come with risk. Properties are relatively illiquid as compared to equities. If you cannot stomach such risk, you should not be investing because once you are in and want to sell the property when something happens, the illiquid nature of properties will become extremely apparent to you.

2. Comfort level

   It should not be up to me to tell you whether you can still buy Bangkok properties. This is a very subjective decision. You should be comfortable with your investment and understand the various risk. You should not listen to someone without forming a constructive and structured reasoning as to why you decide to do things in a certain manner. If you listen to me when I tell you to invest just because I tell you to then you did not form a constructive and structured reason. Similarly, if you think that all buildings in Bangkok are damaged and you are worried that this will be an issue in the future, then you should not buy a property in Bangkok. This especially when most reputable developers have conducted checks on their buildings are found them to be safe. If you are still not reassured and believe that the developer may he hiding something or that the developer will be faced with future issues that are not manifesting currently, then you should not be buying Bangkok properties.

   In everything we do, we have to undertake some degree of risk. If there is no risk, then there is no to little reward. This risk premium is something that you should determine on your own.

3. Reputation of developer

   I have been reiterating the point that we should always buy from the large, reputable developers that are listed on the Stock Exchange of Thailand. Such developers are always keen in maintaining their business in Thailand. While investigations are still ongoing, the truth of the matter is that if the skyscraper did not collapse, there will be no state of emergency in Bangkok. Bangkok will not be a disaster zone. I am sure that the earthquake would have affected other parts of Thailand. However, there was no collapse of any building elsewhere and hence there is no state of emergency outside of Bangkok.

   If you want to know what most, if not all large Thai developers are doing, here it is.

   MQDC is one of Thailand’s largest developer. It is the developer in charge of Icon Siam. Here is what they put out on their social media platforms and in their communications with clients who purchased their properties. Buildings come with warranty on their structure. It is a norm to have such warranty. However, the warranty is only valid if the party warrantying the building is around in the event something happens. This is why I have always reiterated that the profile of the developer is extremely important. I had spoken extensively about a certain Chinese developer that was in debt building in Bangkok. I highlighted this fact to the general public on many occasions. You can see this short post I did from back in 2023.

   I am confident that there is a high probability that MQDC will be around to deal with any matters should there be a need to make a claim on the warranty.

   

   

   Noble Development, like MQDC, is listed on the Stock Exchange of Thailand. It is one of the largest developers in Thailand. Its major shareholders include the BTS group which runs a large proportion of the metro lines in Bangkok.

   

   Developers like Noble will undergo the process of checking the structural integrity of all its developments. This includes buildings that were built long ago. This is the list of buildings that were checked.

   

   Similarly, here are other large Thai developers that have done similar work.

   
   

So can you still buy Bangkok properties? I cannot answer that question for you. Nor can I guarantee that everything will be safe. No one can do so for any property in any part of the world. Even in Singapore, from where I come from. Bangkok has not experienced anything like this for as long as recordings have started. For Burma, the earthquake toppled structures that had been around for more than a century. Which meant that the earthquake to just about everyone in the country was unprecedented.

If you are a client of a large Thai developer. You most likely should have received a message from your developer or your juristic (management) office. You should follow the steps provided as to what to do in the event you find damage to your property. People who do not live in Bangkok but have properties in Bangkok should engage a property management company to assist them with the checks and rectification process with the developer.

Yours sincerely,

Daryl

The post Can we still buy Bangkok properties? appeared first on Daryl Lum's Blog.

When a buyer is looking at a new launch, it is first important to identify whether this development is located in a good location. Next, the buyer should consider whether all units in the development are open for sale. This is because the key to property investment is selecting the right development and the right unit within the development.

I had previously written an article titled “How to select a good unit at a new project launch“.

If a buyer is focused on these two requirements, he should not be focused on whether the developer issues a discount or not. The next consideration is whether the development is priced competitively. The comparison should be whether the pricing, i.e., the per square meter or square foot pricing of the development is in line with either the units in the resale market or other new launches in and around this area. New launches should have a premium over older developments in the same area. The older the development, the larger the premium. As for comparable new launches in the same area, the pricing should be similar and in line with these developments.

In summary, this should go through a property investor’s mind when looking to purchase a new launch. I write with reference to properties in Singapore and Bangkok as I only have experience in these property markets. However, I would think that this train of thought should apply to all property markets.

Step 1: Consider the location of the new launch.

Step 2: Consider which units are ideal within the development.

Remember that you are buying a development with many units of similar layouts. Identifying units with unique investment attributes will help your unit stand out if you decide to rent or sell the unit in future.
An example of this would be a unit on the facilities level. I had sold such a unit at a higher price as compared to the asking prices of similar units in the same stack on a higher level. Trust me, there will be people who will tell you that it may be very noisy and there will be no privacy, etc… Let them be. This is just prospective purchasers’ methods in trying to press down the selling price.

Step 3: Compare prices of resale units in the same area.

Step 4: Compare prices of other new launches in the same area.

Consider also whether the units come fully fitted and fully furnished by the developer. This is more prevalent in Bangkok than in Singapore.

Look at all the factors which I have stated. If a purchaser is focused on the attributes that make up a good property investment, nowhere in the matrix that I just mentioned is there consideration of the discount that the developer is offering.

So why then do purchasers consider the discounts on offer when deciding to purchase a new launch?

Because some purchasers are enticed by discounts rather than the more important factors which I just stated. Selling is playing on emotions. For many, the idea that they are getting a discount is enough psychologically to entice them into making a purchase.

Hence, is a discount always an indication of a play on emotion?

Now always. The developer will usually place discounts on less desirable units. In Bangkok, the 13th level of every condominium is labelled as #12x and not #13. However, units on that particular level will still be less desirable. Hence, the developer may offer a significant enough discount for buyers to consider those units. Also, in every development, there will be less desirable units. They may be facing a noisy road or are blocked by a neighbouring development. Imagine a development with unblocked views on all three sides but on the fourth, the view is obstructed. Buyers will naturally not consider such a unit. The developers will usually throw in discounts to try and move these units. Also, at the tail end of the sale, when most units have been snapped up and only a few units are left,  the developers would typically throw in discounts to clear these unsold units.

So then consider why the developer is giving a discount. Especially if it is at later stages of the new launch.

What I need to reiterate to property purchasers is this: Focus on the factors that matter.

Yours sincerely,

Daryl

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So why then do local Thai banks not extend mortgages to foreigners?

Just as a point of reference, the loan to value for Thai nationals purchasing their first property with values less than THB 10 million is 90%. The local Thai home loan market is competitive and local demand for properties is constantly healthy.

For foreigners purchasing Thai properties, they will need to purchase the Thai property with foreign currency. For example, if a Malaysian purchases a Thai property of THB 5 million, he or she will need to make payment on that THB 5 million using a currency other than THB. Conveniently, that Malaysian purchaser would pay in Malaysian Ringgit. However, he can chose to pay in any currency except THB. If he has USD he can make the payments in USD as well.

This then lies an issue. The Thai banks, if they want to extend a mortgage to a foreigner to purchase a Thai property, will have to lend in any other currency other than THB. The most likely would be for the Thai banks to extend a mortgage in USD. However, this is not as straightforward and as cost effective as it sounds. Also, the Thai banks will have to generate a certain volume of foreigner mortgages to substantiate the cost of maintaining a business unit to handle these loans. The local Thai demand for mortgages is constantly healthy. Yes, the local Thai demand for Thai properties is healthy. Foreign purchases typically make up about 30% of the sales in most condominiums. The locals make up the bulk of the purchasers.

Therefore, there is no incentive for Thai banks to extend mortgages to foreigners. Therefore, most foreigners who purchase Thai properties would pay for the property in full. Usually the purchase is a one-bedroom unit and such a unit would be in the region of USD$200,000 thereabouts. Foreigners would usually remortgage their properties in their home country and use the monies obtained from that mortgage to pay for the Thai property.

For example, if a Singaporean has a property in Singapore with a value of USD$2 million with an outstanding loan of USD$1 million, he can remortgage the property. This means that he would go to his bank and tell the bank that he would like to “extract” the value of his property. If he wants to obtain USD$200,000 from his property, then he would tell the bank that he wants to remortgage his property such that the outstanding loan is USD$1.2 million. Up from USD$1 million. With that USD$200,000, he then pays for the Thai property in full. He will continue servicing the USD$1.2 million loan thereafter.

Another example is if a Malaysian has a house in Malaysia that is fully paid. He then goes to a Malaysian bank and tells the bank that he would like to remortgage the property. He extracts the USD$200,000 from the Malaysian property. He then pays for the Thai property in full. He services the mortgage on his Malaysian property.

In conclusion, if you are a foreigner looking to purchase a Thai property, you effectively only have one bank that will grant you a loan. UOB Singapore. If you are from Malaysia, Taiwan, Hong Kong, Japan or any other country, the bank that will grant you a mortgage to purchase a Thai property is UOB Singapore. UOB Singapore is distinctly different from UOB Thailand. When I use the word effectively, it is because the only bank that follows up with foreigners to grant them the mortgage. We have tried with other banks like Bank of China but the approval process is tedious and the success rate is low.

Please note that this is accurate as of the time of this article.

Yours sincerely,

Daryl

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The FET would bear the following information:

1. The amount of foreign currency that the Thai bank received
2. The amount of baht that the foreign currency is converted into
3. The name of the sender of that foreign currency
4. The name of the recipient of that foreign currency
5. The purpose of the money transfer

The FET is a way to prove that foreign currency was brought into Thailand. Foreign purchasers of Thai properties require this FET to register their properties with the land department. If a foreign buyer of a Thai property does not have an FET, he or she cannot transfer the title of the Thai property to his or her name. An FET can only be issued if the monies are transferred from a foreign bank to a Thai bank. If a foreigner uses remittance services and the monies are not transferred through the international money system, then no FET can be issued. Therefore, it is imperative that the transfer of money has to be done through a foreign bank.

While many sources are stating that the sole reason for such an implementation is that Thailand wants to prevent money laundering, I find it difficult to accept this. To force the money to remain within the international money system, i.e. within banks, means that the money is traceable. However, when the money is received in Thailand, the Thai bank does not question the source of funds. So while the money received still has a trace, it does not make sense that a Malaysian cannot transfer Thai baht into Thailand and must instead transfer any currency other than Thai baht. I believe an additional, but less talked about reason for this rule, is that the Thai government wants to see foreign currency flowing into Thailand.

It is a little-known fact but Thailand has the second highest foreign exchange reserve in South East Asia. Singapore has the highest.

It has more foreign exchange reserves than countries like the UK, UAE, Indonesia, the Philippines, Malaysia, Vietnam, Qatar and Australia. A high foreign exchange reserve helps a country withstand external shocks to its financial system during financial crises.

This data should also be a good conclusive reason for investors of Thai property or Thai assets. It means that the Thai government has a strong arsenal to come to the Thai baht’s aid if there were a major financial crisis. It can use the foreign exchange reserve that it is sitting on to support the value of the Thai baht.

For foreign purchasers of Thai property, it is essential that they are aware of what information should be provided when making international money transfers towards the purchase of their Thai property. The purpose of the money transfer has to be clearly stated. The purpose should state the development that is being purchased as well as the unit number. For example, if a foreign purchaser from Malaysia were to purchase a unit at Shush Ratchathewi, the purchaser would state “For the purchase of Shush Ratchathewi, unit number 0801”. Of course, it would be essential to follow the description that is provided by the developer if the purchaser is purchasing from a developer. This is the reason why I usually encourage first-time purchasers of Thai properties to purchase from a reputable Thai developer with a good track record of selling to international clients. The information provided would be in English and a few other languages that the usual foreign purchasers would understand. The transfer would be made to the developer’s Thai bank account.

Some purchasers may have an existing Thai bank account. They may have previously purchased a Thai property or worked and resided in Thailand and thus they were allowed to open a Thai bank account. They may choose to transfer foreign currency into their own Thai bank account ahead of the developer calling for the funds. This is probably to take advantage of times when the Thai bath is low to lock in a favourable exchange rate. Such purchasers must speak directly to their Thai bank to ensure that they will be issued with the FET. Also, they need to ensure that the purpose of the money transfer is clearly stated. Therefore they will need to speak with the developer who they are purchasing from. The developer will usually be the one who is in charge of registering the purchaser’s name with the land department. For the record, I do not recommend that purchasers do this.

In conclusion, the FET is something that all foreign purchasers of Thai property will require. Therefore, it is important when foreigners purchase Thai properties, they engage professionals who can advise them appropriately. There is no requirement to hire a Thai lawyer to transfer the title of the property. The developer or your property agent can do the transfer for you. A Thai lawyer may still be engaged to do due diligence on the property. In my personal opinion, this is more applicable when purchasing from a small, lesser-known developer or when purchasing resale properties from individual owners.

Yours sincerely,

Daryl

The post What is the Foreign Exchange Transaction Form (FET)? appeared first on Daryl Lum's Blog.

SIBOR is administered by the Association of Banks in Singapore (ABS). The ABS publishes the SIBOR rates and trends on its website. There are four SIBOR rates. 1-, 3-, 6- and 12-month. Typically 1-month SIBOR rates are lowest and 12-month rates are highest.

SOR stands for Swap Offer Rate. It is the synthetic rate for deposits in Singapore Dollars. It is the effective cost if we were to borrow US Dollars for a certain maturity and swapping the US Dollars for Singapore Dollars.

SOR rates and trends can also be found on the ABS website.

SOR is used less frequently in home loan packages. Last I checked, most banks were using SIBOR to set their home loan rates. 1- and 3-month SIBOR is the more frequently used metric for setting home loan rates.

SIBOR is typically referred to as the cost of funds by the bank. This is the rate at which banks can borrow money from the open market. If a lender were to offer them a higher rate than SIBOR, they would just borrow in the interbank market at SIBOR. They can obtain funds at rates lower than SIBOR but in the event that they have a borrower who would like to borrow to perhaps buy a property and they need to make a loan, they could borrow at SIBOR if they did not have the required funds. Home loan rates are typically SIBOR plus a spread. This spread is to compensate the bank for making the loan, taking up the risk, administrative costs and other related costs. If SIBOR rises, all else constant, the home loan interest rate will correspondingly rise. At the point of writing, UOB is offering a package with the following details:

2-year lock-in

Year 1: 3-month SIBOR + 0.63% (Effective rate: 1.38%)
Year 2: 3-month SIBOR + 0.63% (Effective rate: 1.38%)
Year 3 and thereafter: 3-month SIBOR + 0.63% (Effective rate: 1.38%)

Current 3-month SIBOR: 0.75% (as at 5th May 2020)

Partial payment penalty: Nil, so long as loan outstanding within the lock-in period. Loan does not fall below SGD$200,000

Full repayment penalty: 1.5% on outstanding loan amount if loan is redeemed within 2 years from first disbursement. For redemption due to sale: 50% reduction in penalty upfront + 50% reimbursement upon new loan taken up within 6 months from date of redemption. New loan amount must be more or equal to the redeemed loan amount.

Additional feature: 1-time free conversion after 2-year lock-in from date of first disbursement.

This package uses the 3-month SIBOR and the spread if 0.63%. Other banks may also have similar packages but their spread may be different. There are many packages to suit different customers. It would be wise to factor in other loan packages if homeowners are looking to dispose of their property within the lock-in period. This is especially true for homeowners looking for a home loan package when refinancing their home loan. There are instances when homeowners had to bear the full repayment penalty when they sold their property.

SIBOR is mainly affected by global trends especially the US Federal Funds Rate. If SIBOR is significantly higher than rates across the globe, banks could just borrow from other institutions at a lower rate. Thus if global interest rates are low, SIBOR will follow suit. As for those looking to take up a home loan, if you think that the global economy will be weak for the next two to three years, then perhaps consider a home loan package that is pegged to SIBOR as SIBOR will remain depressed.

Yours Sincerely,

Daryl Lum

p.s. When in doubt, do look for mortgage advice. I am working with some mortgage specialists on a comparison site. You can visit https://easilyloan.sg/ for loan rate comparisons and affordability calculators.

Other related articles:

How to pick the best home loan

Can a foreigner take a property loan in Thailand?

The post What is SIBOR and SOR and how do they affect home loan rates? appeared first on Daryl Lum's Blog.

The 1-year USD to Thai Baht Chart (Source: XE Currency)

When it comes to comparing a currency’s strength, we peg it to the US Dollar as the US Dollar is the world’s reserve currency. The US Dollar itself has been rather strong itself and this makes the Thai Baht’s growth against the US Dollar even more spectacular. If you were to compare the Thai Baht to other major currencies like the Euro or the British Pound, the Thai Baht’s strength is even more pronounced.

The one year chart for the Euro against the Thai Baht shows that the Euro has weakened by almost 12 per cent against the Baht.

The 1-year Euro to Thai Baht Chart (Source: XE Currency)

The 1-year Stirling Pound against the Thai Baht chart paints an even bleaker picture for the Pound which has weakened more than 14 per cent against the Baht.

The 1-year GBP to Thai Baht Chart (Source: XE Currency)

As many of you know, I do deal with Bangkok Properties since 2012 and the purpose of me writing this article is because of some questions posed to me by some clients and Bangkok property seekers. For the purpose of comparison, here is the 1-year chart of the Thai Baht to the Hong Kong Dollar, Chinese Renminbi, Singapore Dollar and Malaysian Dollar.

The 1-year HK Dollar to Thai Baht Chart (Source: XE Currency)

The 1-year Chinese Renminbi to Thai Baht Chart (Source: XE Currency)

The 1-year Singapore Dollar to Thai Baht Chart (Source: XE Currency)

The 1-year Malaysian Ringgit to Thai Baht Chart (Source: XE Currency)

So what happens when the Thai Baht is so strong?

1) Exports are more expensive and imports are cheaper

When trading, the buyers of Thai goods will need to pay in Thai Baht. For example, if someone or a company in Singapore were to import a car that is manufactured in Thailand, the car will have to be paid in Baht. This would mean that the buyers of the car would have to change their Singapore dollars to Thai Baht to pay for that car. As the Thai Baht has increased by about 7.65 per cent against the Singapore Dollar over the past year, if the price of the car were to remain constant, the amount that the Singapore buyer would have to pay would have gone up by 7.65 per cent. This would make Thai exports less attractive and thus buyers of Thai goods may consider looking elsewhere for suitable substitutes. The top exports of Thailand are office machine parts, integrated circuits, delivery trucks, cars and broadcasting equipment. The top export destinations of Thailand are China, the US, Japan, Malaysia and Hong Kong. The Thai Baht has strengthened against all of the currencies of these five countries. There is a fear that export volumes will fall as these countries find it expensive to purchase Thai exports, thus hurting the Thai economy.

2) Imports are cheaper

Imports into Thailand would be cheaper as well. Due to the strength of the Thai Baht, Thai companies and consumers may find foreign goods cheaper. They will spend less importing these foreign goods. The top imports are crude petroleum, integrated circuits, vehicle parts, gold and petroleum gas. The top import origins are China, Japan, Singapore, Hong Kong and Malaysia. The Thai Baht has also strengthened against the currencies of all of these countries. The Thais will also find it cheaper to travel to countries which the Baht has strengthened against.

3) Repayment of foreign debt is cheaper

If Thai companies or individuals have borrowed from foreign sources, repaying the debt will become cheaper as well. This is especially true for Thailand which has borrowed from the Chinese and Japanese among others. However, Thai households are among the biggest borrowers in Asia and this is something which we have to keep an eye on. The Thai government had stepped in earlier this year to increase the amount do downpayment for locals when buying a property to try to reduce the amount of debt that local property buyers undertake.

4) Thailand loses its attractiveness as a retirement destination

For a retiree, a rising Baht can severely derail retirement budgets especially if they are living off their pension from their home country. As the Baht continues to rise, some may look to other countries for retirement. In the region, Malaysia stands out as a very viable substitute due to its relatively low cost of living and excellent health care. Inflation remains weak in Thailand, slipping below 1 per cent for June year-on-year. This may mitigate the erosion of the spending power for the retirees from foreign countries.

5) Investment becomes more expensive

Thailand controls foreign investment, especially in the property sector. Property purchases have to be made using foreign currency and if the Thai Baht is strong, property purchases become more expensive. Let us use an example of the Hong Kong Dollar versus the Thai Baht. Back in October 2018, 1 Hong Kong Dollar could but 4.20 Thai Baht. Today it is hovering around 1 Hong Kong Dollar to 3.80 Thai Baht. Let us assume a typical 1-bedroom apartment in a prime location in central Bangkok which costs about THB7,000,000.

In October 2018, THB7,000,000 would convert to HKD1,666,666

In October 2019, THB7,000,000 would convert to HKD1,842,105

That translates to a difference of HKD175,439

So then where do we go from here? Is the Thai Baht truly overvalued or is this a new normal whereby the Baht will stay or even strengthen further? What is the case for a particular currency to increase in value over time? I live in Singapore and I’ve seen the Singapore dollar appreciate against the Malaysian Ringgit, the UK Pound and the Australian Dollar among a host of other currencies. The point now is whether the Thai Baht has the same fundamentals as the Singapore Dollar to continue its upward trajectory. Let us see what has the Thai Central Bank done to try to mitigate, slow down or even halt the Thai Baht’s rise.

1) The Thai government can regulate the supply of Thai Baht in the open market

Open Market Operations are when a central bank buys up or sells assets in the open market. This act increases or decreases the supply of its currency in the market. In the case of the Thai central bank, it can and perhaps has on a number of occasions, tried to increase the amount of Thai Baht in circulation. Imagine this simple analogy, to increase the Thai Baht, the Thai Central Bank would have to buy up foreign assets or foreign exchange in exchange for Thai Baht. This, in turn, increases the amount of Baht in circulation. However, it in turn also means that the Thai Central Bank has more foreign currency and foreign assets on its balance sheet. To many, this is seen as a sign of stability and increases the perception that the Thai Baht is a safe haven currency, thus increasing the demand for it and this inadvertently pushes up its value. This is counter-intuitive as the initial intent was to weaken the Thai Baht, not to strengthen it. However, this is what has happened and will happen moving forward.

2) The Thai government can set a lower interest rate target

By lowering its target interest rate, it should encourage an outflow of funds. Simply put, higher interest rates incentivise those with money to place funds in Thailand. By lowering the target interest rate, those looking for higher returns may look elsewhere. This, however, does not seem to be working as funds continue to flow into Thailand. The US and China trade war is not helping the situation and many companies are relocating to South East Asia from China to circumvent the tariffs that are targeting Chinese made goods. Thailand’s draw is that it has a rather educated workforce as compared to the rest of South-East Asia barring Singapore. Yet labour and other related business costs are cheap.

If we were to look at the 10-year charts, we can see that the current strength of the Thai Baht is not unprecedented. The Thai Baht has actually been stronger against the US Dollar and the Hong Kong Dollar and its strongest point was actually in April 2013. The USD actually hit a low of USD$1 to THB28.6436. This means that the 1-year high of USD$1 to THB30.2852 is still about 5.7 per cent off its 10-year high.

The 10-year USD to Thai Baht Chart (Source: XE Currency)

The 10-year HK Dollar to Thai Baht Chart (Source: XE Currency)

I do think that the Thai Baht is exceptionally strong and it may pose as deterrence for some when it comes to investing in Thailand. However, I do think that there may be some more legs to this rally and here are some reasons why I think so.

1) Thailand is no longer seen as a cheap destination

In fact, Bangkok, for the first time in 2018, was listed in the top 100 most expensive cities in the world. Gone are the days when we could remark that Bangkok or Thailand was exceptionally cheap. Thailand now has a growing reputation for being a place which offers good value. In place of cheap food are high-end, even Michelin starred restaurants providing good bang for your buck. The hospitality sector is growing and improving rapidly as tourism remains a major driver of the Thai economy.

2) Thailand does not depend solely on tourism

Agriculture and manufacturing contribute a great deal to Thailand’s gross domestic product (GDP). In fact, the industrial sector of the economy accounted for 39.2 per cent of Thailand’s 2018 GDP. With the US-China trade war, companies looking to relocate out of China may consider Thailand and this may see further growth in this sector. Thailand has great infrastructure as compared to all its neighbouring countries. In fact, its capital Bangkok has perhaps the second most extensive rail network in South East Asia after Singapore, has two fully functioning international airports and adequate grade A office space. It is strategically located right in the middle of South East Asia and China has made Bangkok an integral component of its One Belt One Road Initiative. A rail network connecting the whole of South East Asia will fan out from Bangsue in Bangkok, Thailand and this will connect Kunming, China to the rest of South-East Asia.

3) The Thai economy has been doing well

The Thai economy is expected to post a growth of 3.8 per cent in 2019 and in 2018 it posted a surplus of 7.5 per cent of its GDP. Major cities like Bangkok and Chiangmai are flourishing. The income disparity is widening though and this is something the Thai government must try to mitigate. I will usually urge would-be investors of Thailand to take a trip to Bangkok and visit the high-end shopping malls and restaurants and realise that the locals are the ones who are spending. Local demand for property has been rather off the charts in recent years as well. Properties in prime locations do see very strong local demand. The Thai government is aware of this bullish sentiment and are wary of household debt levels. This is why they introduced the minimum down payments for locals buying properties earlier this year.

Of course, no one can be sure when it comes to investing. There are many other factors which can cause the Thai Baht to go either way. As always, invest with caution and gauge your own comfort level when investing, especially in a foreign country.

Yours Sincerely,

Daryl Lum

p.s. Disclaimer: I have been dealing with Bangkok properties since 2013 and I have shares in a real estate company in Thailand that deals with new and resale properties in Bangkok. You can visit my website at InvestBangkokProperty.com.

My other articles about Thailand:

Thailand Property Market Outlook for 2019

My views on the Singapore and Bangkok property markets

Where are the up and coming property investment locations in Bangkok?

The good locations for property investment in Bangkok

A compelling case to invest in Bangkok

Guide to buying a property in Thailand

Thailand Property: Legal and Tax Issues

Recognising the different property title deeds in Thailand

Can a foreigner take a property loan in Thailand?

Buying property in Bangkok: Payment procedures

A guide to the top property developers in Thailand

Thailand Property Market Outlook for 2018

How to get an Investment Visa in Thailand

Thailand as a retirement destination

How to get a Retirement Visa in Thailand

My personal experience purchasing a property in Bangkok

Things to take note when investing in an overseas property

Factors that determine the property price in Bangkok

Looking to buy a Bangkok condo? Things to take note of.

Thailand property inheritance laws: taxes, succession and wills

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