Amid the economic recession and fuel price crisis, the inflation rate reached the highest level in 13 years in March 2022, touching 5.7 per cent, pushing the prices of product and services through the roof, and affecting everyone from business owners and investors to consumers.
Siripong Srisawangweong, head of Hampton Investment Property Programme under the Origin Property Group, said that the property business has been hit hard by customers’ declining purchasing power due to the pandemic outbreak, while inflation has further driven up the cost of construction materials.
“The luxury condominium market has been stagnating since January and is likely to remain so throughout the year. Only houses and townhouses are seeing real demand from customers who are seeking their own places,” he said. “From the investors’ perspective, prospecting in the real estate market amid soaring inflation is a tricky move. In the past, investors’ earnings were mainly from renting a condo that they had bought. However, during Covid-19 the supply of new condos has been dropping while fewer people are looking to rent due to lower purchasing power caused by high inflation and the declining popularity of luxury condos.”
Siripong pointed out that because of Covid-19, people are adapting to the “new normal” way of living and working, with their focus on working from home, where a house or a townhouse could meet their needs better than a condo, which has the advantage of locating near the city centre. This phenomenon has caused many investors to stop buying luxury condos out of fear that they might be unable to find renters, or the earnings could be too small to overcome the inflation rate.
To restore investors’ confidence in the property market, Origin Group has designed the “Hampton Investment Property Programme”, aiming to generate sustainable income from condominium rental by using the least investment capital and to gain renters in the shortest timeframe.
Under the programme, investors will enjoy “No Risk – No Loss” benefits while Hampton will be responsible for room decoration, utility bills and repair of condo units and bundle these costs into rental fees while renting the units as serviced apartments.
The team of professionals at Origin Property will also help find customers with focus on expats in Thailand, as this target group is starting to grow after the government has eased restrictions for foreign arrivals.
“Investors will receive regular revenue in the form of yield every month for 20 years, averaging from all the units under the programmes, while in a normal rental scheme, owners will only get rents from units that have tenants,” said Siripong.
“The pilot phase of the project has started at the Hampton Suite Sriracha, a five-star serviced apartment project in Chonburi province. The programme was so popular that all 300 units have been rented out within a month, mostly by Japanese customers, while 100 per cent of investors in this project are Thais.
“Hampton Investment Property Programme will find customers using business-to-business deals with large foreign corporations, such as Toyota who are looking for exclusive lodging for their executives, engineers and technicians,” he added.
“This is a blue ocean market that has no price war problem, while the rents will also be adjusted periodically following the exchange and inflation rates. Meanwhile, the normal rental condo market usually seeks customers via agencies, which often results in getting salaried people as renters.”
Hampton Investment Property Programme estimates 5-9 per cent yield under the 10+10 years contract with payout every month. In the first three years, the yield is capped at 5 per cent after which it will be free to rise or fall, depending on the market.
Origin Property estimates that as the economy is recovering, the long-term earnings from the programme could reach 8-9 per cent. Most importantly, condo units in the programme can also be sold at high prices as they are located in high-potential locations. Starting price of a unit is THB7.99 million, while the most expensive units are THB17 million.
“According to data from the Bank of Thailand, the price index of condominium has increased 188.67 per cent from 2008 to 2020, up 8 per cent per year on average, well above the inflation rate that has increased 115.02 per cent during the same period. This proves that the condo market is an excellent investment opportunity that will help investors beat the inflation rate by generating sustainable income over several years,” Siripong concluded.
Seminar ''INVESTMENT PROPERTY'' The Future Investment Trend in 2022
Organised by HAMPTON RESIDENCE & Krungthep Turakij
Saturday May 21, 10pm at Sindhorn Kempinski Hotel Bangkok
• Dr Vichai Viratkapan, acting director of Government Housing Bank's Real-Estate Information Centre
• Peerapong Jaroon-ek, president of Thai Condominium Association and Group CEO of ORIGIN Pcl.
• Naowarat Charoenpraphin, investor & CEO of MONEY CHAT
Join us to reserve investment property (IP) in three locations and win a chance to own serviced apartments on Sukhumvit Soi 24, Phya Thai and Thong Lo.
This seminar is for confirmed registrants via https://lin.ee/5FSgmC6 only. No walk-in participants will be accepted to safeguard against Covid-19.
Published : Aug 10, 2022
Published : April 28, 2022
By : THE NATION