As Thailand continues to grow and expand, Bangkok is becoming a hotbed for global investors seeking to enter the booming Southeast Asian real estate market. Other properties in other Thai cities such as Hua Hin, Phuket, Chiang Mai, and Pattaya have also attracted investors’ interest. However, in terms of Thai real estate, Bangkok is still the most popular place. So, which areas of Bangkok have the highest rental yields for real estate investment? In this article, we will take a look at the comparison between northern and central Bangkok’s rental yields.
If you have considered investing in a property, you will often encounter the term “rental yield.” A rental yield is the “annual rent income as a percentage of the property’s value,” according to Sansiri PLC. It functions as one of the key indicators of property value and investment potential. Rental yields further help you determine how much you can earn from a rental property and if the rental price of the property is reasonable.
To understand the winds of the Bangkok real estate market, you must first understand the specific areas of the city. Central Bangkok is Thailand’s most iconic area that features a lot of prestigious malls and office buildings. According to CBRE Thailand, the updated Thai CBD includes Silom, Sathon, Rama IV Road, Ploenchit, Wireless Road, Asoke, as well as the early-Sukhumvit (Sukhumvit Road up to Soi 24).
What makes central Bangkok attractive for property rental is the high rent demand and high property appreciation. As the busiest area in Bangkok, finding tenants is easier than in other areas. As a result, the region’s continued high demand for real estate translates into positive capital appreciation.
The estimated rental yield in central Bangkok is between 4% to 5%. Some may think that this is quite low for Thailand’s overall real estate market. However, even if you ask any credible Thai real estate agent, they will tell you that Central Bangkok is the safest place for rental properties.
While Central Bangkok provides an ideal place for real estate investment, this does not mean that other areas are less attractive for investment.
Although the boundary separating central and northern Bangkok is not clearly defined, areas such as Phahonyothin, Bang Sue, Chatuchak, Don Mueang and Saphan Mai are generally considered to be part of Northern Bangkok.
Based on apartment sales and rental income over the past few years, rental yields in these regions can be as high as 6% to 8%. This is not surprising, as house prices in these areas are generally lower than those in the central. This is mainly due to the perceived lack of rental demand and low capital appreciation in the area.
While this view may have been true a few years ago, multiple infrastructure projects may significantly reverse these trends. Ongoing projects to look out for include the renovation of Don Mueang International Airport, the expansion of the new train operation line to the north, and the Bang Sue mega station project. These projects are expected to increase rental demand and capital appreciation for properties in northern Bangkok in the next few years.
The rental yield can be used to determine the location of your next real estate investment, but you must also pay attention to rent demand, capital appreciation, and the potential of the region. Central Bangkok offers investors stable rental demand and attractive real estate prices, while northern Bangkok is full of investment potential.
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