emerging property markets BANGKOK – HO CHI MINH CITY – JAKARTA
If you focus on the more relevant inflation adjusted property yields, Bangkok has higher yields than Jakarta but get topped by Ho Chi Minh City.
The property markets of Bangkok, Ho Chi Minh City, and Jakarta are in different stages and their quality, character, and performance is best seen with a comparison to each other.
The benchmarks and figures comparison for Q4 2013 in generated by propertydata.asia based on thousands of public property listings/ asking prices of apartments and condos from the corresponding market.
Property markets overview
The property prices of Ho Chi Minh City seems to be for all the districts very homogeneous and similar compared with the very wide price range of properties in Jakarta and Bangkok.
The offered apartment sizes in Ho Chi Minh City for rent or buy are with 71 sqm and 93 sqm higher than in Jakarta (70 sqm /75 sqm) and much higher compared to Bangkok (52 sqm/ 60 sqm).
The average apartment prices (median) in Jakarta and Bangkok are around 130’000 us$ and twice as high as the 58’000 us$ offered in Ho Chi Minh City.
Surprisingly the median rents are in Bangkok (924 us$/mt) and Ho Chi Minh City (900 us$/mt) almost the same and 30% lower than in Jakarta (1’254 us$/mt).
Sqm prices comparison
The sqm prices for freehold condos are in Jakarta (1’991 US$/sqm) and Bangkok (2’387 US$/sqm) similar. although they both show a wide bandwidth between their cheapest and most expensive districts. In contrast the sqm-price is in Ho Chi Minh City (806 US$/sqm) by factor 2-3 lower than in Bangkok and Jakarta.
Surprisingly the comparison of the the monthly sqm- rents show a different image with 16.0 US$/ sqm in Jakarta, 13.9 US$/ sqm in Bangkok, and 9.5 US$/ sqm in Ho Chi Minh City. Jakarta offers higher rents and Bangkok higher property values, one explanation is the high inflation rate in Jakarta (read more about this in the “Inflation adjusted yield” paragraph)
Taxation, building regulations and characteristics of the landlord- tenant relationship were already taken into account for the local property valuation, therefore these prices represent their property market and can be used for a market comparison.
Gross yield
The gross yield of a property is calculated by dividing the property annual rent by the property value and it’s a benchmark for the annual cash-flow generated by the property investment.
Gross yields are also an indicator for the property investment risk and it is made up of base interest rate (risk free asset in the particular market like 10-year goverment bond), real estate specific risks (liquidity,…), object specific risks (location, function,…), and development risks.
The average gross yield is in Ho Chi Minh City 12.6%, and Jakarta 9.9% are significantly higher than in Bangkok (6.9%).
Inflation adjusted property yield
To compare the gross yields of different property markets in different countries, they have to be monetary adjusted by subtracting the inflation of the last 12 months (simplified calculation).
The rents follow the inflation only with a delay and stepwise. Often the adjustments of the rents are only done during a tenant or contract change.
The average inflation adjusted property yield is in Bangkok 4.7%, higher than in Jakarta (3.0%) but lower than the property yield in Ho Chi Minh City (6.0%).
The highest average property yield is found in HCM’s Binh Tan District (7.2%), the lowest, even negative one in JKT Grogol Petamburan (- 1.1%).
Beside the yields, the annual property valuation gain is a substantial part of the property earnings, although only realizable by selling the property.
relevant property market reports:
BANGKOK Q4 2013 property market report
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