THURSDAY, March 28, 2024
nationthailand

Leasehold condos become attractive options

Leasehold condos become attractive options

MOST leasehold condominium buildings are in the city centre and in high-potential locations where developers cannot buy land or where the land belongs to the state agencies and the Crown Property Bureau. Such locations cover the Rajdamri area, Langsuan and Rama IV Road, according to a survey by property agency Nexus Property Marketing Co Ltd. 

The company’s managing director, Nalinrat Chareonsuphong, said a total of 4,500 leasehold condominium units from 22 projects was available in the centre of Bangkok. Of the total, more than 67 per cent are located in Langsuan and Rajdamri. 
Analysis of only new supply launched over the past 2-3 years reveals that the projects at these special locations – for example, I am China Town in Chinatown, Sinthorn Residence in Langsuan and Four Seasons Private Residences on riverside – have high potential and have a clear target customer group.
The price of leasehold condominium varies depending on many factors like locations, building completion and quality of the project. Many super luxury leasehold condominium projects often hire five-star hotel chains to manage the property while some are mixed with five-star hotels or Grade A serviced apartments to add value and attract more foreigners. Generally, leasehold condominiums can be leased for up to 30 years.
The selling price of resale leasehold condominiums are supposed to decline in cases where the lease period is shorter. But in reality, the prices of many leasehold projects have not declined. Instead, they have gone up because of the quality of the units, good maintenance by the projects’ owners and high demand for particular locations. Besides, the prices of leasehold condominiums have increased despite a shorter leasing period and they sometimes generate annual yield of 7-10 per cent, which is higher than freehold condominiums at the same location.
She added that leasehold condominiums will become more attractive in the future because of many factors, such as the rising price of land in the heart of the city that would make landlords prefer to lease rather than sell their land. The prices of leasehold condominiums are at least 30-40 per cent cheaper. It makes it easier for the buyers to make the decision. Besides, super luxury condominiums with a leasehold contract are mostly in premium locations like Langsuan or Rajdamri. 
When analysing the living platform of Bangkokians in the millennial era, they need convenience in life including commuting and other amenities, and the option of shifting to a single house when they are older. Therefore, buying leasehold condominium is an interesting option for them. 
From the capital market perspective, leasehold condominiums usually require a higher deposit and contract payment than freehold condominiums. 
Leasehold condominium requires a 30 per cent deposit while the bank provides a loan for the remaining 70 per cent. However, the Bank of Thailand’s new policy will revise the regulation for the purchase of second or third homes, which will require a deposit of 20 per cent. 
This will enable leasehold condominiums to compete with freehold condominium in terms of investment capital. 
In terms of return on investment, leasehold will offer a higher yield as the price is lower and most are in areas that have high demand for rent. Besides, the money that is saved from buying at a lower price can go towards other investments. Proper size and design that respond to the demand in each location are core factors to make rentals successful. 
Lastly, the international market offers a bright future to leasehold condominiums because of several factors such as the familiarity of foreigners, particularly from Singapore and Hong Kong, as they can own leasehold condominiums more easily than freehold ones. Also, there will be no problem of transfer of money from overseas.
 

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