Thailand has been crawling with multiple property investments, with first-time buyers rushing head first without first knowing about the property market.
In knowing the value of a Thailand property, investors and foreign buyers usually look at the rental yields. The typical rental yield in Thailand equals 4 to 6%. This percentage is commonly seen in different publications, but it is only a rough estimate. A property’s yield ultimately rely on:
Target demographic (high-end, mid-end, or low-end)
Given that, each property has its special set of rental yield. But first, let us explain how to compute rental yields.
How to Calculate Rental Yield (Gross)
Yields are the rental money that you gain through tenants. Usually expressed in percentage, rental yields reflect the rent a property could provide over a year.
Computing the gross rental yield will give you an overview of your property’s return on investment. It is often calculated by dividing the annual rental income (monthly or weekly rent multiplied by 12) by overall property purchase price.
For a detailed guide in computing your property’s return on investment, you can check out Siam Real Estate’s online ROI calculator.
Bangkok Real Estate: Understanding Bangkok Rental Yield
Generally, you can differentiate rental properties into two: New rental properties (completed after 2012) and old rental properties (completed before 2012).
Old Rental Properties
Currently, older rental properties are enjoying a higher occupancy rate due to lower rental prices as compared with new launches. These types of setting also can have a take-up rate of almost 80-100%.
A Bangkok property at the city fringe and other peripheral areas can get as much as 5% rental yield. Aside from having relatively lower rental rates, the growing population in the area is also a factor, as stated in a report from Thailand Property News.
New Rental Properties
Newer rental properties are normally expected to have lower gross rental yields. However, new rental supply can be absorbed faster if rental rates are attractive for middle-class buyers.
According to Fresh Bangkok, rental yields for newly launched properties in prime locations such as Phrom Phong, Asoke, or Ploenchit equal to 4-4.5%. Although generally lower, new developments along CBD usually benefit from a higher capital appreciation return.
Resale Apartments and Houses
Global Property Guide reported that bigger and centrally located resale apartments and houses in Bangkok a fairly good rental yield. For a 60-square metre apartment in Bangkok, you could expect a gross rental yield of around 5.6 %. Meanwhile, a 120-square metre can earn a gross rental yield of around 8%. These apartments included in the Global Property Guide 2015 survey are located in Bangkok’s upscale residential areas such as Sukhumvit Road, Silom, Sathorn, Riverside, Rama III, and Central Lumpini.
Where Can You Find the Best Rental Yields?
Exactly pinpointing areas with the best rental yield is a bit challenging, since you have to consider all three factors mentioned above. Each area has its own rental market with an ideal tenant demographic. However, foreign investors usually consider areas around the central business district:
Locations to look out for are the suburbs and the areas near current and future MRT and BTS stations. This year’s outlook for the Bangkok condominium market expects multiple properties to be constructed in these areas, especially now that more and more people are looking for more convenient places to live in. These areas are inevitably going to be property hotspots.
Now that you have an idea, here are some related articles to help you out if you plan to become a rental property landlord:
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