With the strength of the US dollar causing depreciation in many Asian currencies, investing in overseas property has become increasingly attractive for Hong Kong investors. In recent years, the number of Hong Kong residents in Thailand has risen, boosting interest in property investments in the country. Chiang Mai’s real estate market has quickly recovered post-pandemic, with positive outlooks on its commercial development, transportation infrastructure, and tourism. The Chiang Mai government is actively planning extensive infrastructure projects, including high-speed rail from Bangkok, airport expansions, and new expressways to Chiang Rai, aimed at supporting logistics and new industrial zones. Chiang Mai is likely to emerge as a significant business city in ASEAN, especially with growing interactions with China, Myanmar, and Laos. Additionally, property entry costs in Chiang Mai are lower than in Bangkok, with apartments being particularly popular among buyers.

Why Invest in Chiang Mai?

Stable Market and Government Influence: Chiang Mai’s property market is less affected by government regulations and is generally more stable compared to other markets. The property prices remain stable and less prone to significant fluctuations. According to a report by Thailand’s Thoresen Thai Agencies, the city’s property prices have been steadily increasing, making it an attractive option for investors. Chiang Mai’s units are easy to rent, with annual rental yields between 5% and 8%, offering stable rental returns. The anticipated high-speed rail to Bangkok is expected to further stimulate local property prices, with significant room for growth compared to other locations.

Rental and Property Investment Insights

Easy-to-Rent Properties and Stable Returns: Chiang Mai, as Thailand’s second-largest city, is the economic center of northern Thailand and offers a peaceful environment, making it a preferred location for retirees. The city’s low industrial development results in minimal environmental pollution, and the government’s commitment to environmental sustainability makes Chiang Mai an excellent choice for cost-effective vacation living. The property market is divided into key areas:

• Old City: Historic and central, attracting tourists with its ancient temples, city walls, and famous night markets. There are few new apartments or residential properties within the Old City, with new developments concentrated outside the eastern gate in the Thapae area.
• Nimmanhaemin: Chiang Mai’s financial district, known for its world-renowned brands, shopping opportunities, and bustling atmosphere. The area’s proximity to the university provides a stable rental market with a range of restaurants and emerging shops. Property prices in Nimmanhaemin vary, with average prices around 10,000 THB per square meter, reaching up to 20,000 THB per square meter for well-located properties.
• Thapae Area: Known as a golden business district with high property price and rental growth. New residential and apartment developments are prominent here.

Ownership and Legal Considerations

Freehold vs. Leasehold: Properties in Thailand can be owned under different legal structures. Typically, buying a house offers freehold ownership, while purchasing an apartment usually involves leasehold ownership with a lease term of 99 years. New leasehold apartments do not require land rent payments following a 2022 update benefiting 4.5 million UK property owners.

Taxation and Ownership Rules: Rental income exceeding 150,000 THB annually is subject to personal income tax, with a basic rate of 5% and a progressive rate for higher income brackets. Thailand also imposes a building and land tax at a uniform rate of 12.5%. Foreigners can own up to 49% of the units in a condominium project, with the remaining 51% owned by Thai nationals. Funds for purchasing property must be in foreign currency and transferred from abroad.

Investment Opportunities and Trends

Affordable Entry Costs and Growth Potential: In Chiang Mai, a property priced at 7.5 million THB can be purchased with a 40% down payment. Buyers should seek real estate agents for assistance due to potential cultural, legal, and language barriers. Real estate agents’ fees are typically covered by sellers or developers. For those interested in purchasing leasehold properties, landlord approval is required, and foreign buyers can only purchase condominium units.

Market Demand: Data from DDproperty shows that the demand for Chiang Mai apartments is highest among potential buyers, with over 55% interested in apartments, followed by detached houses (28%) and townhouses (17%). Most potential apartment buyers seek properties priced between 1 million and 3 million THB, while buyers are willing to pay up to 10 million THB for detached houses.

Economic and Market Trends: Sena Development’s managing director notes that due to inflation, rising interest rates, and more challenging loan applications, customers are shifting from larger to smaller units to manage costs. Rising material prices, including transportation and raw materials, are influencing the market. As the economy recovers, new property prices are expected to rise, making smaller units more attractive to buyers.