Are you a business owner? An investor? Whether you are an individual or a business owner, there are serious arguments to take into consideration before buying an office space in Bangkok. Below are 10 reasons to buy an office space in Bangkok:
1. Scarcity: investment in office space in Bangkok has limited supply
Opportunities to purchase office space in Bangkok are limited by the supply. In comparison to residential condominiums – which have dramatically increased in Bangkok – office space is much more rare. Office space condominiums in Bangkok are scarce especially in new area such as Ratchada, Rama IX, Thonglor and Ekamai. The majority of these office buildings are in Silom, Sathorn and Sukhumvit which is good news for potential investors as these locations are Central Business District (CBD) and perfect locations for business.
Development projects for office condominiums have been very low for the last decades, especially since the 1997 financial crisis. Because of the price of land, developers are more focused on residential and multi-usage projects. Because a Thai middle class has emerged, they can now target a larger audience and make higher profits in residential real estate. New office developments are focus on leasehold project backed by big groups who can afford to launch such projects.
Consequently, scarcity means opportunity. Limited supply of office space for sale means it will have a better resale value.
In a commercial real estate market with low supply and high demand, investment in such a property can be seen as a real opportunity by a foreign entrepreneur living in Thailand.
2. Buying an office space in Thailand is a secure investment for foreigner
Thailand has a favorable legal environment to purchase office space. Buying an office space in Thailand is a secure investment for foreigners as it is part of the condominium act (No. 4), B. E. 2551 (2008). If you buy under your own name, foreign quota of 49% must be respected. If you buy under your company name, foreign quota will not be applied if your have Thai partners.
Moreover, the fact that most of the opportunities to buy office space in Bangkok concerns older buildings is a good point. As a matter of fact, you will be able to inspect the building and see how it is maintained. A 30 year old building in good condition is synonymous with a safe investment.
Access to financing in Thailand has always been difficult for foreigners. Few local and foreign banks can provide finance, but their conditions are restrictive and most of foreigners can not meet their requirements.
Alternatively, to invest in the office market, foreigners can finance locally the purchase of an office space in Thailand. The main condition is that it must be purchased under your Thai company. Most of the Thai banks will accept financing such an operation up for up to 70% of the purchase price.
Therefore, access to local financing is a great opportunity for foreigners and foreign companies.
4. Improve your business equity:
Purchasing an office space will improve your company’s financial structure. Your assets will increase and, if you do not finance with local banks, it is an opportunity to strengthen your equity.
As a result, you will be able to use your investment in office property to develop your business with local banks. Thai banks consider owning an office a strong asset which can be used as collateral. It will allow you to finance other projects with local banks like your growth, cash flow, machinery etc…
5. Freedom: escape Landlord dependency:
The commercial estate lease market in Thailand is not secure for a lease of less than 3 years. Most property owners do not want to make lease terms longer than 3 years. This is because the taxes to pay for a long term lease registration are high and the owners want to keep their hands on their property. This is a big risk for your business in Thailand. There are plenty of examples of entrepreneurs being evicted from their commercial lease after investing heavily in their office space. The consequences can be cost ineffective for your business.
An other side effect of renting is that the rent prices increase. At every renewal you are exposed to a 2 digit percentage increase. Once you have invested and renovated your office, it is very difficult to move to a new location and you have no choice but to accept such an increase.
Investing in your own office space is more secure and will cancel the risk of dependency from your landlord.
6. Investing in human resources:
As we just mentioned above, renting is not secure in Thailand. This often means the need to frequently relocate your office. Business relocation may be considered by Thai law as a breach of contract and your employees will have the choice to follow you or not. If not, you will have to indemnify them and unsuspected cost may arise.
In addition, building employee loyalty takes time and is a big effort for a company, breaking it because of unsecured leases is not desirable for any business.
Investment in office space in Bangkok will help build your company with stability.
7. Save cost: office rental price in Bangkok will continue to increase:
All the studies and projections are clear, currently Bangkok has lower on average prices for commercial space rent in comparison to other big cities. But prices are increasing, there are more and more companies setting up in Bangkok. CBD and New CBD areas are seeing office rental prices increase.
As a result, investment in commercial property in Bangkok will make you save a lot of money in mid to long term perspectives. You can expect a good return on investment and increase your business profitability.
8. Price opportunity to buy an office space in Bangkok:
Price of office spaces in Bangkok is situated between 30 000 THB / SQM up to 150 000 THB / SQM. This is far less than condominium projects in the same areas.
As a result, entrance tickets to real estate in Thailand are cheaper for commercial real estate than residential real estate. This is a great investment opportunity for entrepreneurs.
9. Tax planning:
Investing in a business office space under your company is fully deductible at a rate of 5% per year equivalent to 20 years amortization. Moreover, you can amortize renovation costs from 5 to 20 years, it will depend on the value. Loan interests are fully deductible, too. As a result, your company will save on corporate tax at the end of the year.
10. Yield: purchasing an office space in Thailand is profitable
Finally, office space in Bangkok is a profitable investment. It is easier to manage a professional tenant than an individual. Corporate tenants are much more stable than individual tenants. Average leases for an individual in Bangkok is 1 year while it is sometimes over 10 years for professionals. It is much easier to manage and it will boost your yield.
In addition, corporate tenants pays on time, they do not want to have issues with their landlords in return for the stability of their business.
In conclusion, opportunities to buy an office space in Bangkok have to be considered by any business owner and entrepreneur. There are many advantages and this market is under valued by major players in Thailand.
Strata Bangkok Co., ltd is here to help you to find your dream office and to buy an office space in Bangkok, do not hesitate to contact us.