This is somewhat different than investing in developed countries (Such as the U.K & U.S) as with these countries you want to go where the boom and the financial hub of the country is. When investing in the U.S, you want to mostly stay away from the city’s such as New York and London unless you have a lot of money. While the frontier or developing regions are quite the opposite although you do trade off some of the stability that you would get in a developed market, with currency swings political unsuitability, and corruption.
These can be lucrative and much more affordable option if you do it right, however, it does come with more risk.
As we have mentioned before, by investing in these areas you are primarily looking for growth and not rental yields as such. Rental yields will be far more stable in places like New York and London where growth has stagnated slightly.
Where to buy South East Asian Property?
It fully depends on your situation and knowledge and price range. There are a few key areas. I would stick to two areas and these are my personal favourite although I acknowledge that other places like Cambodia can be a good place to invest with it being cheaper and a few years behind Bangkok and K) and is just entering its boom but will stick with these two cities as I believe they have less risk but good growth.
Bangkok
Bangkok has hit a boom recently with the Condos going up all over the place and developments all over the central areas of Asoke, Silom, Sathon, and now Rama 9/ Petchburi with the new super tower.
I counted the number of developments that have gone up down one road in Rama 9 with 4 major condo projects within the last 18 months. So the developers have definitely got wind that there is a market in this place, this has also been reflected in the prices with the price going up to $4000 per square meter and more in some of the more desirable locations.
Although I personally think there will be growth in the area as a mega powerhouse in the region like Hong Kong are $27,000 per square meter so if you believe it to be the next powerhouse it still has a lot to grow.
Why?
Well, it has the potential to be a major hub in the region it has a population of 13 million the economy is growing fast and GDP is increasing and is the most visited city on the planet that brings with it soft power that gives it an edge over its rival KL with the population to be a megacity and more migration every year (as KL only has 5 million).
Couple this with it being a transport hub, a flight that is easily available and cheap and more developed than other places like Phenom Penn, Ho Chi Mihn, and Manila. Make it a potential place for investment. As a foreigner it is possible to buy a condo, the land is not possible if you hold a foreign passport.
Note- A higher rate of tax in Thailand will be done if you sell the property within five years of ownership.
The bad
As of 2019, the Thai Baht was one of the best-performing currencies in the world, this means that you will get less Baht for your dollars making it more expensive to buy. The demand has been high, and it has been noticed by developers that have increased supply and this has left many condos empty and causing an increase in a surplus of condos which has brought down the prices of some areas.
This is mainly by the Chinese, they are wanting to own property and see Bangkok as an admirable place, so they have started buying in a big way. For example, in my time in China, I have met countless agents in China who are real estate brokers specializing in Bangkok and have seen it advertised in a local Beijing Gym. Even the other day I was sat next to a Chinese person on the plane and got talking and was specifically flying to Bangkok to look at the property with her friends.
I would hardly say it was a secret and would say with this has meant that the supply has caught on and may lead to an increase in supply with now unwanted and condo prices dropping in some places.
The political situation, although I would say it is somewhat more stable than other countries in the region, it is still not without its trouble with regular coups and the political vote in 2019. With a lot still not being decided, it could lead to more unrest in the country (although this could be a blessing as it may lead to the weakening of the Thai Baht) and curation like most developing places is big within the country.
Kuala Lumpur
Kuala Lumpur (KL) is in many ways similar to Bangkok. I was driving through KL and all you see are Cranes in the centre going out to the outskirts and into the mountains. It is a major hub with flights being accessible and easy making it a prime location for businesses and individuals to live like Bangkok.
The economy is booming and is becoming a hub for offices outside Singapore. What I would say that KL does have over Bangkok is that it is cheaper although the central areas like KLCC are getting expensiveness (in relative terms) it is still somewhat less than the condos that you would get in Bangkok, combined with this the condos in Bangkok are getting smaller and smaller which it seems to be 25m for a condo is now the norm, KL seems to have bigger places.
The MR has somewhat more room to grow unlike the Thai Baht that is punching above its weight, the MR is cheap at the moment and looks like with the stability of the country to grow and get stronger this could make a purchase in the currency alone increase 10-15% in the next 5-10 years.
As well as this, buying in Malaysia can be part of the MH2 visa program that can help obtain a visa to buy real estate investment in the country.
The downs of this are that the rental yield in KL is still low. So you would be buying mostly on the assumptions that you would hold for capital growth.
Conclusion
I personally prefer KL as I think the currency has room to grow the economy seems to be more stable and being a cheaper place to buy overall than Bangkok and is somewhat overlooked as a city while hoping to become a fully developed place within the next few years it still has frontier market housing prices.
Tips
In either of these places look for experienced developers that have experience doing some projects within the region or the city before and have a credible reputation.
With both these places look at where the transport hubs, their plan is to build an MRT or BTS in the near future here (this can be seen on the internet current transport plans for 2030). This will have a likely increase in value.
- Is the price in correlation with similar places in the area?
- What have the price trends done?
Look at alternative places in the area look at what they have done year to date and ask yourself why has it been like this?
Finally, do your research look at the economy of the places you are going to buy is there a new business centre being built, how many condos are going up in that area, are places selling or sitting empty?
Further Reading
If you have any questions on property in Asia or UK please email me and I can answer your questions. Please email me at info@investmentsforexpats.com.
