To Buy or to Rent a Condo? Which Is the Sound Choice Amid the Opportunities Presented by the COVID
14 Jun 2021
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The market for vertical properties such as condominiums is undeniably experiencing reduced growth during this current period (May 2021) compared to the previous year, due to economic and investment uncertainties that were products of the unresolved COVID-19 situation in Thailand.
But for the average buyer who was looking for a residential property, the present time represents the most opportune moment which should be seized by someone who was looking to rent or purchase a condo. This is so because real estate developers’ adjustment of their tactics has resulted in price reduction campaigns at each development project.
A plethora of special offers has been made available, helping to greatly reduce expenses for the customer. This enables the average homeseeker to reach a purchase decision that brings about optimal value.
Behavioural changes of buyers and renters of condos in the Next Normal era
Analyses by many financial institutes which have relevance to property-related investment uniformly agree that 2021 is a year where economic insecurity within the country is having pronounced effects on condominium projects. This is especially true on the buyer’s side.
With the public feeling financially insecure and with tendencies for reduced work retention, decreased income and lessened confidence in the national situation, decisions to purchase large assets such as houses or condos will be postponed. People will generally avoid committing to long-term debt.
Furthermore, the change in the behaviour of buyers in the Next Normal era has significant effects on decision-making for property purchases. We may roughly differentiate the factors influencing buyers’ behaviour in this era as follows:
- Price and location factors. These two details remain crucial when making a consideration to purchase or rent a condo. Owing to increased expansion of the BTS and MRT rapid transit routes outwards from the city, purchasing or renting condos in the suburbs have become more attractive than in the previous year.
- Environmental factor. This has increasingly become an important aspect to consider when deciding to buy or rent a condo. For instance, how are the neighbours? Is the common area suitable for one’s requirements? How much green space is accessible? Is there a swimming pool, a fitness room and a co-working space that can accommodate uses by the occupants of the entire project?
Importantly, is the internet connection stable?
- The factor of the residential unit’s area and design is drawing increased focus in the condo selection process compared to previously. The Work from Home trend and the greater time we spend at home occasion condominiums whose unit plans are designed to allow for work comfort, with space to sit and converse, and with enough kitchen area for cooking self-sustaining meals.
It is acceptable to exchange some bedroom space for these features.
Deciding to purchase or rent a condominium or any other residential property is a big life decision which entails consideration of numerous factors. In addition to the aforementioned changes in customer needs, the following advantages and disadvantages should be pondered in reaching a purchase or rent decision:
Mortgaging or renting a condo: which choice would best serve our needs and give greater value in the Next Normal era?
An age-old question for people deciding over a condominium is whether to rent or go for a mortgage, and which option would yield greater value.
Choosing to get mortgage for or to rent a condo entail different advantages and disadvantages, depending on each person’s needs. A purchase decision for a large asset inevitably comes with debt, as the buyer would have to apply for a long-term loan with the bank (depending on how much down payment is produced).
When unforeseen developments occur, leading to the occupant no longer wanting to be in possession of the condo for whatever reason, one who made the choice to rent would be able to easily terminate the lease and has versatility when moving to another place of residence – there are no obligations.
But one who opted for a mortgage to purchase the condo would, regardless of circumstances, have to keep paying instalments for the condo until the repayment completes. PLUS has put together the advantages and disadvantages of renting versus purchasing a condo for you to consider, as follow:
The advantages of choosing to rent a condo in the Next Normal era
- Rent has decreased from normal times.
Visits to condo letting websites will yield the observation that more people are posting to rent out their condos than usual. This is partly because there are now more unoccupied rooms, consequent of the COVID-19 situation. Many lessors have slashed the rent for their properties, to attract tenants instead of leaving the rooms unoccupied.
This has presented individuals looking to rent a condo with an opportunity to secure a tenancy at a more economical price than during normal times.
- Tenants have greater choices because of the decline in numbers of expat workers and foreign tourists.
The economic downturn has diminished the purchasing power of the general public. Many have chosen to return to their hometowns in the provinces. Meanwhile, the target customers of upscale condominiums situated downtown – expats working in Thailand and foreign tourists – have been affected by the Covid situation.
People looking to rent a condo thus have greater choices than before at the moment.
- Flexibility to adjust to whatever transpires.
An advantage of choosing to rent a condo over purchasing one is flexibility, which is among the prominent factors taken into account when deliberating the method of occupancy. This is especially true for someone who wants to reduce liabilities in life.
Not being obligated to a loan for property purchase allows a person to relocate freely, in contrast with someone who has a long-term obligation to repay a mortgage.
The advantages of choosing to purchase a condo in the Next Normal era
- A good opportunity for those looking to buy a condo, for either residency or long-term investment.
With regard to investment, being able to scoop up a valuable asset at a bargain price is considered to be an appropriate investment. This is even more so for someone looking for a long-term investment who does not need cash flow for daily spending. Investing in a condominium purchase yields an asset that can be expected to, more or less, generate gains.
On the part of people looking to buy a condo to use as a place of residence, the circumstances at hand present a good opportunity to form an opinion of the development projects that offer the highest benefits to the customer.
For instance, condo mortgage interest reductions and a slew of promotions now enable a person to own the condominium of his/her dream at a more optimal price than previously.
- Tendencies associated with COVID-19 vaccines, which are expected to improve within 2021.
Recently (as of May 5, 2021), the government proceeded with the “Mor Prom” program for the vaccination of elderly people and members of vulnerable groups without charge. More than 200,000 people have registered to receive vaccines under this initiative.
If the government is able to proceed with the inoculation drive as expected, Thailand will achieve herd immunity by having 50 million inoculated people within this year. Such a development is expected to positively influence the confidence of investors and foreign tourists, who can be expected to re-channel their interests toward purchasing or renting condos in Thailand.
However, whether this scenario takes shape depends on the capability of the government.
Takeaway points for renting and buying condos in the Next Normal era
The return of COVID-19 outbreaks in Thailand, which has been causing distress since earlier this year, and the domestic distribution of vaccines that fall short of the needed ratio, have negatively impacted the market for condo leasing and buying on the part of the real estate developer.
However, this presents an opportunity for customers and investors who still retained a positive view about the situation, especially with regard to the tendency for lower rent that is not expected to recover to pre-Covid levels soon.
Furthermore, there is an inclination this year for condo leasing and buying activity to dissipate towards development projects in the suburbs. This may be attributed to progress in the mass rapid transit network, which now has better coverage of city centres in Bangkok‘s periphery provinces, in addition to the behaviour of people who have come to want less congestion and crowding in their lives.
Social Distancing and Work from Home have become principal concerns influencing decision-making on whether buying or renting a condo would better suit a person’s mode of living in the present time.
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