Offices, Condos and Apartments – How have things changed in the last 10 years in Bangkok?

Hello. I have been working as a real estate agent in Bangkok since 2006. In that time I have seen some changes, but surprisingly little has changed. Let me explain.

Bangkok apartment rental prices 2008 – 2018

Rental prices for most apartment buildings have risen very marginally in the last 10 years. Whereas a spacious 3-bedroom apartment in the Sukhumvit area would have cost 70,000 baht 10 years ago, today it can cost you 85,000 baht. That’s just a 20% increase over 10 years, actually much less than inflation, and in many ways an apartment is cheaper now than it was 10 years ago.

Because? It’s hard to say, but I’m guessing the ongoing political troubles, 2 coups and a pretty stagnant economy barely getting around 3% GDP growth each year are the reasons. This level of growth may be acceptable for a world-leading developed nation, but for Thailand, which (let’s face it) still has a ways to go in terms of development, it’s not very good.

The apartment rental market in Bangkok is mostly driven by expats. Thais either don’t rent at these prices, or don’t earn enough, or are sensible enough to buy property in the suburbs, or are part of the immensely wealthy elite and already own several blocks in central Bangkok. As the number of expats has remained fairly constant, so have rental prices.

Newly built condominium buildings have seen rental prices rise, and there will always be a small percentage of people who have enough budget and just want to live somewhere very new, something that is particularly true for Japanese renters, but new buildings will become old. and once they’ve been built and a rental price has been set, you’ll notice that the price will stay relatively flat from then on.

This is really the same with condos for sale. Once a building has completed its construction, a sale price and a rental price are set, and it will remain stuck at this level for years to come.

But the prices have been increasing in Bangkok, everyone knows it! So am I wrong?

Bangkok condominium sales prices 2008 – 2018

I don’t think I’m wrong. There are some condominium buildings that have experienced a very good level of capital appreciation in recent years, but “on average” they haven’t.

Yes, prices have increased significantly in Bangkok, and this is something that all developers will be happy to promote to you when they sell you their new project. They will show you charts with an upward trend in prices and show you that prices are increasing by at least 5-10% year on year.

Prices for new buildings have risen 5-10% year over year, but not for completed buildings.

This is mainly due to increases in land prices. As land prices (and, to some extent, construction costs) rise, so do the costs of new buildings. So new buildings are getting more and more expensive, but are finished buildings following suit?

No. And that’s why I’m not wrong. A building that costs 150,000 baht/m2. 5 years ago, now it may only be 160,000 baht per square meter In this example, around 1.5% compound growth. This building was new 5 years ago, and a new building that is still under construction could cost you 200,000 baht/m2. which is 33% more than the new building was 5 years ago, hence the compound growth of 5%++.

But the fact is, the building YOU bought 5 years ago may have increased only 1.5% compounded per year.

This is the current trend with Bangkok property. New buildings constantly set new price benchmarks and then stay the same. With even newer buildings adding a layer on top, setting new benchmarks, and then staying at the same level. Even newer buildings still, just keep adding another layer on top.

This is why you will find such a large price discrepancy between buildings, even if they are located next to each other. An example would be Lumpini 24, a new condominium located on Sukhumvit Soi 24, where prices will be around 250,000 baht/m2. So a small 60sqm 2 bedroom unit will cost around 15,000,000 baht.
Immediately next door is an older condominium called President Park, where prices have stuck at around 60,000 baht/m2. So a very spacious 260sqm 3-bedroom unit will cost you around 15,000,000 baht.

Four times bigger, located immediately next door, but at the same price! So the old adage “Location, location, location” doesn’t apply here. It is ONLY based on the age of the building.

Here is an example of a newer building for sale, 275 m2. asking 80,000,000 baht: http://www.property-bangkok.com/viewproperty.asp?id=587

This is an example of an old building for sale in a similar location, 366 m2. asking 21,000,000 Baht: http://www.bangkokcondo.org/viewproperty.asp?id=614

Yes, the new condo is much nicer, better designed with a newer lobby and shiny amenities. But is the price variation fully justified? I mean, 4 times the price!
Keeping in mind that the interior of the new condo will get old and need to be replaced, and if you bought in the older building, you can renovate the interior to have it brand new.

In any case, whether you are buying in the newer condo or the older building, the main issue raised in this article is that the prices of the new projects may have increased considerably, but once you have invested in your unit of condominium, you may not achieve the same level of growth that the developer directed you to.

The only ones who really see a lot of capital growth are the land owners. And these are mostly already very rich Thais, since non-Thais cannot own land. It does not help the majority of Thais who are not wealthy and who still have financial problems.

Office rental prices have also remained fairly static. In the last 10 years, office rental prices have risen marginally, similar to apartment buildings. However, as most investors (both Thai and foreign) seem obsessed with condominium buildings, the price of office space for sale has also remained fairly static, and office units for sale arguably provide the best option for rental profitability, since office leases are typically at least 3 years, and you don’t need to renovate office space like you would with a condo, as the former requires a coat of white paint, the latter new furniture, new bathrooms, new kitchen, etc.

This is not to say that it is a bad idea to invest in real estate in Bangkok. But you need to consider office space and commercial properties as well as residential, and you need to consider the building very carefully, as I mentioned earlier, some condo buildings have seen good growth in the last 10 years while most have not. .

You have to have a good eye. Best of luck!