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Everything you need to know is included in our Laos Property Pack
Are you considering buying real estate in the land of a Million Elephants? Are you contemplating whether you should make a purchase now or in the coming year?
Everyone has their own viewpoint when it comes to market timing. Your Laotian colleague may suggest that it's currently a good time to buy property, but your friend residing in Vientiane might suggest waiting for a couple more months.
At BambooRoutes, when we create articles or update our pack of documents related to the real estate market in Laos, we use factual data and statistics to analyze information, minimizing biases and uncertainties caused by opinions.
We have carefully studied official reports and statistics from government websites, and we now have a trustworthy database with important information. Here's what we discovered, which can help you decide if it's a good idea to purchase real estate in Laos.
We hope you'll find practical value in this article.
How is the property market in Laos these days?
Laos is, today, a relatively stable country
Neutral
If you want to invest in properties, prioritize stability as it ensures a supportive economic and social framework. It is an information you need as a foreigner who might buy a property in Laos.
These days, Laos is experiencing a notable degree of stability. The last Fragile State Index reported for this country is 73.8, which is an acceptable number.
Laos is relatively stable today due to the centralized control of the Lao People's Revolutionary Party, which has maintained political continuity and social order since taking power in 1975. Additionally, the country's strategic economic partnerships, particularly with China through initiatives like the Belt and Road Initiative, have bolstered its economic development and infrastructure, contributing to internal stability.
Let's examine other data now to see if it's the right moment to purchase property in this country.
Laos will keep growing in the next 5 years
Positive
Before buying real estate, evaluate the economic performance of the country.
In line with IMF predictions, Laos will end 2024 with a growth rate of 4%, which shows the country is on the right path. Regarding 2025, the consensus estimate is 4%.
Besides that, the economy will keep growing since Laos's economy is expected to increase by 18.3% during the next 5 years, resulting in an average GDP growth rate of 3.7%.
The expected sustainable growth rate in Laos indicates a stable and expanding economy, which can lead to increased demand for real estate as more businesses and people move into the area. This growth can drive up property values and rental income, making it a potentially profitable investment for real estate investors.
On top of that, there are other indicators to pay attention to.
Laos' population is growing and getting richer
Positive
Considering population growth and GDP per capita is essential for making informed real estate purchases because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Laos, the average GDP per capita has changed by 5.3% over the last 5 years. It's a satisfactory number. Furthermore, the Laotian population is growing (+9% in 5 years).
This means that, if you purchase a traditional house in Luang Prabang and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is expected to increase in Laotian cities such as Vientiane, Luang Prabang, or Pakse in 2025.
No high rental yields in Laos
Neutral
Now, we have to look at the rental yield.
It's the annual rental income of a property divided by its price. For example, if a property in Laos is purchased for 500,000,000 LAK and generates 20,000,000 LAK in annual rental income, the rental yield would be 4%.
Based on the data provided by Numbeo, rental properties in Laos promise gross rental yields from 1.9% and 4.6%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Laos.
It indicates a moderate level of income generation.
Everything you need to know is included in our Laos Property Pack
In Laos, expect minimal inflationary effect
Neutral
In two words, inflation is when purchasing power diminishes.
It's when your go-to bowl of khao soi costs 40,000 Lao kip instead of 35,000 Lao kip a couple of years ago.
If you're contemplating investing in a property, high inflation can bring you several benefits:
- Property values tend to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby boosting cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, preserving the value of the investment.
- Diversifying into real estate provides stability during inflationary periods.
- Tax advantages, such as depreciation deductions, can help offset the impact of inflation.
In line with IMF predictions, over the next 5 years, Laos will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data means that Laos is anticipated to experience negligible inflation. Unfortunately, in the absence of inflation, purchasing a property now may not result in substantial price increases or substantial profits in the future.
Foreign investors should pay attention to this, as it could be of interest.
over the past five years.
Is it a good time to buy real estate in Laos then?
Now it's time to draw our conclusions.
Laos is currently a relatively stable country, which is a great foundation for any long-term investment, including real estate. Stability in a nation often translates to a more predictable and secure environment for property investments. This means that if you're considering buying property in Laos, you can expect fewer unexpected political or economic disruptions that might otherwise affect your investment. Stability is a key factor that can help ensure your property maintains or increases its value over time.
Moreover, the economy in Laos is on a promising trajectory, with an expected increase of 18.3% over the next five years, resulting in an average GDP growth rate of 3.7%. This kind of sustainable growth indicates a stable and expanding economy, which is likely to lead to increased demand for real estate. As more businesses and people move into the area, property values and rental income could rise, making it a potentially profitable investment for real estate investors. This economic growth can create a vibrant market for both residential and commercial properties.
In addition to economic growth, Laos' population is growing and becoming wealthier. This demographic trend suggests a rising demand for housing and commercial spaces, as more people will be looking for places to live and work. As the population grows and incomes rise, the real estate market is likely to see increased activity, which can drive up property values. This makes 2025 an opportune time to invest in property, as you can capitalize on these trends before the market becomes more saturated.
Finally, according to data from Numbeo, rental properties in Laos offer gross rental yields ranging from 1.9% to 4.6%. These yields, combined with the minimal inflationary effects expected in Laos, suggest that investing in property could provide a steady income stream. With inflation kept in check, the purchasing power of rental income is less likely to erode, making it a more attractive option for investors looking for reliable returns. All these factors combined make 2025 a potentially excellent time to buy property in Laos.
We sincerely hope this article has been helpful!. If you need to know more, you can check our our pack of documents related to the real estate market in Laos.
-Will real estate prices go up in Laos?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.