Rental Market for Condos Under 10,000 Baht Surges Amid Loan Rejections
Primo Reports Continuous Growth in Rental Condos Priced Below 10,000-15,000 Baht per Month Due to Strict Bank Lending Policies Resulting in Increased Loan Rejections, Leading Consumers to Rent Instead of Buy
Mr. Watayut Thongphrom, Managing Director of Primo Service Solutions Co., Ltd., part of Origin Property, stated that there are still opportunities in the rental market. Although the luxury condominium rental market, with prices ranging from 25,000 to 150,000 Baht per month, has been severely impacted due to the primary tenants being expatriates from multinational companies who cannot travel because of closed borders, resulting in a 50% drop in this tenant group. This has led to significant price reductions of 20-30% in luxury condo rentals to attract customers.
In contrast, the rental market for condos priced below 10,000-15,000 Baht per month continues to thrive. This is because the clientele in this segment is unable to secure loans to purchase homes or condos, as banks have tightened lending policies, making it difficult for people to buy and transfer property ownership. Consequently, many still need to rent condos due to loan rejections.
“At the same time, those with purchasing power can buy condos at lower prices to rent them out affordably, creating a good opportunity in the rental market for condos priced below 10,000 Baht and not exceeding 15,000 Baht per month. We have seen a significant increase in rental percentages recently, especially for the Primo group, which has risen by 20%. The main locations remain near the BTS lines,” he added.
Mr. Watayut noted that Primo currently provides comprehensive real estate services, managing 40 condominium projects, with 36 under the Origin umbrella and 4 external projects. The trend in the rental market for properties priced below 10,000 and not exceeding 15,000 Baht per month is considered an attractive investment segment. From this year to next, this segment remains viable for rental, yielding returns of 4-5% in urban areas along the BTS lines, while the segment for rentals priced from 25,000-150,000 Baht per month has seen returns drop from 5% to 3%.
“Previously, there were many luxury projects developed, and since 2019, the market has been affected by the trade war between China and the U.S., LTV measures, and the COVID-19 pandemic, leading to the disappearance of high-paying tenants until the COVID situation improves. It will take some time for foreign investors and executives to return to Thailand, likely by the second quarter of 2021,” Mr. Watayut concluded.
