Buying Real Estate during the Low Season in Thailand: Why Is It Profitable?
Real estate in Thailand can be a lucrative asset, appealing to both investors and end users. Whether you're buying a property for personal use or to generate rental income, the key to a successful purchase lies in timing. Let’s explore the benefits of purchasing Thai real estate during the low season.
CONTENT:
- Why renting/buying property during the low season is a smart move
- Current state of the Thai market
- Profit strategies for investors: passive, moderate, and aggressive
- Passive strategy
- Moderate strategy
- Aggressive strategy
- Benefits of buying property during the off-season
- Let us help you buy real estate in Thailand!
WHY IS RENTING/BUYING PROPERTY DURING THE LOW SEASON A SMART MOVE?
Property prices in Thailand fluctuate significantly depending on the season, sometimes dropping to half their peak values. The low season, when tourist traffic declines and demand for housing decreases, presents an ideal opportunity to buy. In Thailand, this period typically lasts from mid-summer to early autumn. Experts agree that this is the best time to secure a property.
If you're planning a quiet, cost-effective holiday, the low season is also perfect for finding affordable rental options.
CURRENT STATE OF THE THAI MARKET
As of May 1, 2023, private investment in the real estate sector remains robust. Experts note that investment typically increases in autumn, following the rainy season from June to August, making summer an optimal time for purchases. Over the past few years, the average annual growth in property prices in Thailand has been 1.5–2%. In high-demand tourist areas such as Bangkok, Phuket, and Pattaya, prices have risen by 4–5% annually, while non-tourist areas see more moderate growth.
PROFIT STRATEGIES FOR INVESTORS: PASSIVE, MODERATE, AND AGGRESSIVE
Passive Strategy
For investors seeking passive income, rental properties can generate a return of 7–8%, factoring in EBITDA (earnings before interest, taxes, depreciation, and amortization). Thailand’s income tax ranges from 3 to 15%, and when combined with property value appreciation, the payback period for such investments is typically 9–10 years. This strategy is ideal for those seeking steady, long-term returns.
Moderate Strategy
Land is one of the most attractive investment options in Thailand. While foreigners are limited to long-term leases by law, purchasing land through a legal entity allows for direct ownership, reducing risks. Despite the complexities of such transactions, land plots are ideal for moderate investment strategies. In 2022, land prices in Bangkok rose by 13%, in Phuket by 16.5%, and in Pattaya by 15.7%.
Aggressive Strategy
For those adopting a more aggressive investment approach, developments in major cities and tourist destinations offer the highest returns. Properties in the «finished carcass» stage of development are particularly profitable, yielding up to 15–20% annually.
Advantages of Buying Property During the Off-Season
Buyers and investors who make property deals during the low season benefit not only from reduced prices but also from several other advantages:
A Peaceful Experience: During the low season, you can enjoy the beauty of Thailand with fewer tourists and less chaos. This provides the opportunity to comfortably view potential properties, explore the neighborhood and infrastructure, visit tourist attractions, and breathe in the fresh sea air without the typical crowds.
Thorough Market Research: Real estate transactions, whether for rent or purchase, require serious capital investments and careful research. The low season offers an ideal time to explore all available market options, review property documents, and prepare the necessary paperwork without feeling rushed.
More Options in the Secondary Market: If you are looking at secondary market properties, you may find more availability during the low season as tenants often vacate rentals. It’s also easier to arrange property viewings without disturbing current tenants.
Assessing Weather Resistance: The off-season is an excellent time to test a property’s resilience to climate changes and varying weather conditions. You can assess the housing quality and comfort level year-round, including protection from heat, humidity, and drafts, and check the efficiency of the climate control systems.
More Personalized Attention: When purchasing property in Thailand during the low season, owners and real estate agents generally have more time to dedicate to you, making them more attentive and flexible in meeting your requests.
It’s important to note that market seasonality in Thailand differs across provinces. Understanding how seasonal trends impact the real estate market in specific regions is key to making an informed decision.