We’ve provided an overview of buying South Korean property, a market overview and a look at the Gangnam district (check out the articles here, here and here) this week. To conclude our series on the South Korean capital, will do a brief comparison of the Seoul and Bangkok property market.
For starters, it’s important to note that the Seoul and Bangkok property markets are in different stages. Seoul is a developed market that comes with far less risks. Bangkok on the other hand is still an emerging market, offering both greater upside and more risk exposure.
This is far from a complete overview, but here is a brief, side-by-side look at the Seoul and Bangkok property markets.
Understanding the Seoul and Bangkok property markets
South Korea has very open laws when it comes to foreign property ownership. Foreign nationals buying Seoul property can acquire apartments, landed houses, entire buildings and land. The only thing they can’t buy is land in military installation reservations, cultural property protection zones or ecosystem reservation districts.
Foreign nationals can own freehold condominium units in Thailand but this group may take up no more than 49 percent of a single building. They may not acquire land or landed properties on a freehold basis, but can purchase them via leasehold agreements that can be extended up to 90 years.
Property price growth
According to the Korea Appraisal Board, Seoul apartment prices rose by 8.22 percent from the previous year. This was the highest price increase in 12 years. Seoul’s Gangnam district recorded some of the most significant home price jumps. The average apartment price in Gangnam increased by nearly KRW 200 million (USD 178,000) between May 2016 and May 2018.
Bangkok home prices have risen steadily over the past few years although this growth has been limited to a few specific areas. For example, prime Bangkok locations, including the CBD and Sukhumvit areas, recorded double-digit residential price growth in both 2017 and 2018, according to research from Nexus Property Marketing. Since the year 2000, a few of these locations have seen a 100 percent increase in home prices. However, residential prices have grown at a far slower rate in non-prime, suburban locations.
Research from the National Assembly Research Service showed that the median price for a Seoul home was KRW 716 million (USD 637,000/THB 20 million) in 2018. The median home prices in Asoke, one of Bangkok’s most expensive areas, was roughly THB 10.5 million last year, according to data from Thailand Property.
To put this in perspective even further, for the median price of a Seoul home, it would be possible to purchase three, one-bedroom units in VENIO Sukhumvit 10. This luxury condominium from Ananda Development has a full-range of upscale amenities in addition to being centrally located near Asoke.
The skyrocketing property prices in Seoul have seen the government intervene on several occasions. Cooling measures put into place since 2017 include more home loan restrictions and the creation of anti-speculation zones in Seoul that have stringent regulations in place. If prices keep climbing in 2019, more regulations will likely be enacted.
New policy from the Bank of Thailand will take effect in April. New regulations include greater down payment requirements for property purchases of more than THB 10 million or for anyone taking out more than one mortgage. Interest rates are also expected to climb higher this year making it difficult for first time homebuyers.
The Seoul and Bangkok property markets both face challenges in 2019 and beyond, especially locally. The South Korean economy is in the midst of a slump with the Seoul real estate situation not helping matters. Meanwhile, domestic demand continues to concern property developers in Bangkok.
The one positive for Bangkok is strong overseas demand and property prices that are still relatively affordable. However, a competitive rental market may see a lot of those units sold in the Thai capital sit empty during the coming years. This is less of an issue in Seoul where an estimated 90 percent of people in their 20s and 30s are renters.