Buying real estate in Laos?

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Is it a good time to buy a property in Laos in 2024?

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property market Laos

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 75.5, which is an acceptable number.

Laos has experienced a period of relative political stability since the 1990s due to a shift towards a more market-oriented economy and a focus on developing infrastructure and foreign investment. Additionally, Laos has benefited from strong diplomatic relations with its neighbors and the international community, which has helped to foster a more secure environment.

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 2023 with a growth rate of 4%, which shows the country is on the right path. As for 2024, the consensus estimate is 4%.

Besides that, the economy will keep growing since Laos's economy is expected to increase by 18.4% during the next 5 years, resulting in an average GDP growth rate of 3.7%.

The expected sustainable growth rate in Laos is a positive sign for potential real estate investors, as it indicates that the country's economy is growing steadily and is likely to continue doing so in the future. This provides a strong foundation for investment opportunities in the real estate market, as it suggests an increase in property values over time.

On top of that, there are other indicators to pay attention to.Laos gdp growth

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 (+2% 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 2024.

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.

Laos rental yields

Everything you need to know is included in our Laos Property Pack

In Laos, expect moderate 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 13.6%, which gives us an average yearly increase of 2.7%.

This data means that Laos could face inflation in the near future, which would lead to an increase in prices. Consequently, purchasing a property could become more expensive. However, if you buy now, there is a chance that your investment will appreciate, allowing you to sell it at a higher value in the future.

Laos's currency is currently very low

Positive

Foreign investors should pay attention to this, as it could be of interest.

The Lao Kip (LAK) is greatly devalued: the currency is currently 26-30% over the past five years.

As a foreign investor, buying a property in Laos could be a smart investment. The low currency means that a foreign investor would be able to purchase a property for a fraction of the cost compared to other countries. Additionally, the appreciation of the currency could provide a substantial return on the investment in the long run.

Is it a good time to buy real estate in Laos then?

Now it's time to draw our conclusions.

There's no doubt that 2024 presents an exceptionally favorable opportunity for property investment in Laos, underpinned by a range of compelling signals that underscore the country's attractiveness for potential investors. With Laos's continued growth projected over the next five years, the nation presents a promising environment for property buyers seeking potential returns.

The combination of Laos's growing population and increasing wealth enhances the appeal of property investment. As personal incomes rise and the population expands, the demand for housing can surge, potentially leading to appreciating property values and sustained rental income opportunities.

The very low value of Laos's currency further contributes to the investment appeal. A weak currency can positively impact international buyers, making property purchases more affordable and offering potential benefits when converting investments back to stronger currencies.

Even with neutral signals such as relative stability, moderate inflation, and not notably high rental yields, the overall investment climate in Laos remains compelling. The country's growth prospects, growing population and wealth, favorable currency exchange conditions, and the relatively stable environment collectively make 2024 an ideal time to consider property investments in Laos, offering a balanced opportunity for both short-term returns and long-term growth.

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.

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.

Buying real estate in Laos can be risky

An increasing number of foreign investors are showing interest in Laos. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.

buying property foreigner Laos