Investing in Thailand Office Space & Buildings: A Complete Guide

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Bangkok is the most visited city in the world and attracts everything from leisure travelers to investors. Most of Thailand’s office space is allocated to the capital where multinational banks like J.P. Morgan and startups alike have offices.

While prime office space is found in the central and extended business district, we also see upcoming areas in suburban and fringe areas.

That said, when looking at buying regulations and bureaucracy, investing in office space in Thailand can indeed be challenging for some foreign investors.

In this article, I explain the basics you need to know when buying office space and buildings in Thailand.

Topics covered:

• Can foreigners buy office space in Thailand?
• Thailand’s Office Market
• Areas to Invest in Office Space
• Taxes
• How can I find office space for sale in Thailand?

Can foreigners buy office space in Thailand?

Foreigners are allowed to own so-called strata-titled units in Thailand, which typically include condominium units and strata-titled office units.

According to Thai laws, 49% of the units in a project can be owned by foreigners while the remaining 51% have to be allocated to Thai citizens.

In these projects, you pay a monthly management fee and share facilities and utilities such as swimming pools and pantries. The land which these projects are built on cannot be owned by foreigners though.

Buying real estate in Thailand is not the best option in Asia in terms of foreign ownership regulations, even if it’s comparably better to countries like Indonesia and Myanmar.

Commercial real estate is beyond the reach of foreign investors unless you partner up with a local company and set up a local entity. International property developers, for example, often collaborate with real estate developers in Thailand and set up joint-ventures (JVs).

Opening a Private Limited Company

Local private limited companies with Thai shareholders are allowed to own land and commercial property in Thailand.

Foreigners, with the exception of Americans, can own 49% of the shares in a local Thai company without the need of applying for a Foreign Business License (FBL).

Americans have the privilege to own Thai companies outright thanks to the Treaty of Amity and Economic Relations between Thailand and the US, signed in 1966.

From time to time, the Board of Investment (BOI) exempts foreign investors from applying for the FBL, if the project is considered special and in a specified area.

The BOI doesn’t exempt foreigners from applying for FBL that often, but you should consult with a local partner to understand your options.

Thailand’s Office Market

Thailand’s office market is primarily centered around Bangkok, a reason why I focus on the city in my analysis.

The real estate market was hit hard during the COVID-19 pandemic. Even if analysts believed that the office market would remain healthy, the lockdowns persisted longer than expected.

Expected rental increases are now diminished and many believe in flat rental growths in the coming year. A diminishing demand along with a great supply of 1.8 million square meters of office space is mostly to blame.

CBRE also predicts that more tenants will choose agile workplaces such as co-working spaces. Thus, they will demand less space but pay more rent per square meter to get access to good quality buildings with sufficient amenities.

The co-working space market is growing practically anywhere in Asia at the moment and it’s said that 30% of all office space will be dedicated to co-working operators by 2030.

Bangkok’s Office Market Remains Affordable

Looking at the market in the coming years, Thailand’s economy has been weak and with lower investment incentives. This will most likely result in tenants having stronger bargaining power.

This can also result in investment opportunities in distressed units if you’re persistent and careful in your research.

Bangkok remains one of the most affordable office markets according to JLL with occupancy costs averaging at USD 44 per square foot per year (around USD 473 per square meter).

The markets considered most affordable globally according to JLL are:

• 1. Nairobi (17 USD / sq.ft.)
• 2. Johannesburg (USD 19 / sq.ft.)
• 3. Santiago (USD 28 / sq.ft.)
• 4. Kuala Lumpur (USD 30 / sq.ft.)
• 5. Bogota (USD 32 / sq.ft.)
• 6. St. Petersburg (USD 33 / sq.ft.)
• 7. Minneapolis (USD 34 / sq.ft.)
• 8. Chengdu (USD 37 / sq.ft.)

Bangkok snapped the 15th place on the list.

Areas to Invest in Office Space in Bangkok

Office space is mainly allocated to the central and extended central business districts and most foreign corporations look for office space here.

Below I have listed the main areas that should be of interest when investing in Bangkok office space and buildings.

Silom-Sathorn

Silom-Sathorn is the financial district of Bangkok and home to many banks, luxury condos, and consultancy firms.

The same as it goes with most other business districts in metropolises, Silom-Sathorn is a rather small district but filled with shiny skyscrapers.

Here, you can also find plenty of shopping, nightlife, and dining opportunities. It’s a vibrant area that caters to wealthy Thais, expats, and visitors alike.

King Power Mahanakon, one of the most visually appealing buildings in the world from my point of view, is located in Silom.

Other well-known buildings in Silom and Sathorn include Sathorn Square, Empire Tower, United Center Building, and Sinn Sathorn Tower. Not surprisingly, you’ll find some of the most expensive prices in these areas.

Ploenchit

Ploenchit area is considered to be part of the central business district in Bangkok and some of the most prominent areas. It’s located within the Lumphini Subdistrict of Pathum Wan District, stretching 1.2 kilometers.

Wireless Road, Chidlom Road, and Ploenchit Road are all part of the area and you can find the BTS Ploenchit and BTS Chidlom stations here. Some of the most famous buildings available here include Gaysorn Place, Gaysorn Tower, Park Ventures Complex, and 208 Wireless.

Rentals are in the higher segment, be prepared to pay THB 800 – 1,500 (USD 27 – 50) per square meter and month if leasing office space in Ploenchit.

Sukhumvit

Sukhumvit Road stretches from Bangkok to Cambodia and the main street in the capital. It’s known for being the home to residents as well as offices, restaurants, and bars.

Asoke and Thong Lor get much attention where the latter one is a comparably developed but still upcoming area. It’s a booming up-market residential and commercial strip that primarily caters to wealthy Thais and foreign corporations.

Asoke is one of the junctions in Bangkok with hotels and facilities for foreign tourists and business people.

Examples of buildings located in Asoke include Fico Place, K-Tower, Sermmitr Tower, and 253 Asoke.

Taxes

Before you commit to a large-sized investment that can fetch tens or hundreds of millions of US dollars, you must understand your tax burden not only when buying, but also selling.

Below I have included general information regarding taxes that you have to pay when purchasing office space and buildings in Thailand.

Keep in mind that rates change frequently and you should consult with a local partner before engaging in the market.

Stamp Duty

Stamp duties are charged for the transfer of ownership to individual buyers and can be found in practically all countries. When buying office space in Thailand, a stamp duty of 0.5% is charged and multiplied by the assessed value.

Companies don’t pay any stamp duties but are subject to a business tax instead.

Business Tax

The business tax is currently set to 3.3% and multiplied by the assessed value or sales value. Companies that acquire commercial units have to pay the business tax, but not stamp duty.

Withholding Tax

A withholding tax is charged by the tax authorities that increases progressively from 5% up to 37%. The same as it goes with the other above-mentioned taxes, it’s calculated by the assessed value or the sales value, whatever is higher.

Besides, the taxable amount is calculated by using a deduction factor. This factor ranges from 0.08% to 0.5%. It’s beneficial to hold the property as long as possible as the deduction rate increases and your tax burden decreases.

Municipal Tax

A municipal tax of 10% is multiplied by the business tax amount and charged to owners of commercial real estate. For more information about the tax, I recommend you talk with your partner.

Transfer Fee

A transfer fee of 2% is multiplied by the sales value or the assessed value.

Capital Gains Tax

If you sell commercial property through a company, you have to pay capital gains tax that is the same as ordinary business income tax. The rate is currently set to 30%.

How can I find office space for sale in Thailand?

There are plenty of residential real estate agents in Bangkok, not rarely foreign-owned. French and British nationals are well-known for setting up real estate companies in Thailand to cater to fellow countrymen and other foreigners.

With that said, these agencies often focus on the sales and rentals of residential units. If you plan to acquire commercial properties, multinationals can come to help, including brands like CBRE, Savills, JLL, and Knight Frank.

You can either approach the companies directly or look for listings online, even if the latter option can be time-consuming. Besides, foreign investors sometimes face the issue that listings are outdated or limited in number.

Asia Property HQ works with leading partners in Thailand that have years of experience catering to foreigners, both in the residential and commercial real estate markets.

If you believe that investing in office space is too complex or you don’t have the funds needed to make such large transactions, buying REIT units in Thailand can be a substitute.

Closing notes:

I hope that you found this article useful and interesting. Keep in mind that investing in commercial property in developing countries requires due diligence and patience.

Thailand’s industrial real estate sector is also predicted to perform well in the coming years. If you want to know more, I recommend you to read my separate article.