Bad Press Thailand, Property Sales

[khall64au]

While researching an article I am writing for an international property magazine, most property agents interviewed say that many potential buyers are becoming very wary of investing in Thailand due to concerns highlighted in recent bad press ie. coup, unstable govt/ company laws, troubles in the south etc.

Just today, a Phuket property development marketing director said many potential buyers are worried about the troubles in southern Thailand which is constantly in the news. Australian media covers the southern troubles quite diligently and todays Australian news featured, as a major headline, the Times Magazine freelance photographer Phillip Bleckinsop - an Australian - injured in a bomb blast at Yala.

Since we have many members involved in real estate sales in Thailand - is it fair to say that discerning buyers are afraid of investment due to the current political factors?

[lannarebirth]

I would say that most of the insecurity many are feeling regarding the property sector can be put down to ownership structure concerns. The Thai government, in many peoples minds, has acted in bad faith concerning it's rule changes on what comprises a "Thai" company and what comprises a "foreign" company. The more cynical foreigners see it as a Thai government move to seize their legally (per prior laws) aquired homes and ratchet up xenophobia.

Any interests in Thai politics go only so far as when will this current gang of stooges be gone. Will there then be a return to the former arrangement? Who knows? is the answer. So many are just waiting to see IMO. As far as the troubles in the south, I don't think that has any bearing on the real estate market at all.

[solo siam]

I agree that all concerns are down to ownership, many people just didn't realise previously that the company route was actually illegal so many think its a new law, and are wary for that reason.

Although it is a slow time, its still pretty busy here and probably the strongest market in Thailand, I'm buying a home here and my wife will soon own a nice plot of land to build another larger house a little later.

After coming back from a trip to Samui, Pattaya, Bangkok and Chiang-Mai - for some of us there is just no place like Phuket.

[jumnien]

Hua Hin seems to be growing nicely!

[jas007]

I'm retired, on a retirement visa, and a potential property buyer. I have two primary concerns: 1) Will I continue to have the right to stay in Thailand on a retirement visa? Owning a condo is of no use to me if I can't stay here to live in it. What's to keep them from radically altering the requirements for a retirement visa? 2) Will my ownership rights be protected?

I'd like to say I have a good feeling about it all, but I don't. I get the feeling foreigners aren't really welcome here at all, and that the status quo can be changed at someone's whim. Consequently, any purchase I may make will be small.

J

[khall64au]

Would it be fair to say that the current investors are based in this region and looking to eventually retire in a property purchased - in this current climate of positive financial growth? Or is Thailand also attracting myriad speculators who are merely here for profit and will take their profits elsewhere? Could this be a factor in the current Thai government's decision -making policies?

[think_too_mut]

Would it be fair to say that the current investors are based in this region and looking to eventually retire in a property purchased - in this current climate of positive financial growth? Or is Thailand also attracting myriad speculators who are merely here for profit and will take their profits elsewhere? Could this be a factor in the current Thai government's decision -making policies?

The current (uniformed) Thai government has never been elected, they carry guns and make decisions.

Set your position from there, if you care.

[Briggsy]

Would it be fair to say that the current investors are based in this region and looking to eventually retire in a property purchased - in this current climate of positive financial growth? Or is Thailand also attracting myriad speculators who are merely here for profit and will take their profits elsewhere? Could this be a factor in the current Thai government's decision -making policies?

I feel the costs and legal obstacles make it a very unfavourable market for foreign speculators. (Hasn't that become a dirty word?)

Are we writing this article for you?

[solo siam]

Would it be fair to say that the current investors are based in this region and looking to eventually retire in a property purchased - in this current climate of positive financial growth? Or is Thailand also attracting myriad speculators who are merely here for profit and will take their profits elsewhere? Could this be a factor in the current Thai government's decision -making policies?

I don't think there are huge amounts of property speculators in the context you are talking about, most owners I know use their homes for holiday or rental. Besides if there are people willing to buy retirement homes here in abundance, won't the investors simply move their money into financing the building and development of said properties.

Most people I know who have bought properties are not from Asia, with the exception of HK/Singapore expats.

As far as I see it people in general are becoming wealthier, the world is easier to travel and money is good anywhere.

[khall64au]

Thanks for input all ... my purpose of thread is to create discussion. I have heard from agents/ developers overs past month that trend is swapping from villas to condos ... and now leasing of land - in an attempt to keep up with govt policy. Seems like a real board game - just like Monopoly!

[lannarebirth]

Thanks for input all ... my purpose of thread is to create discussion. I have heard from agents/ developers overs past month that trend is swapping from villas to condos ... and now leasing of land - in an attempt to keep up with govt policy. Seems like a real board game - just like Monopoly!

People, I don't believe, are willing to keep up with whatever the current government policy is. It would behoove an agent/developer to say so however. What a prospective buyer would be willing to pay for leased land/house is far less than what could be expected from a scheme that leads to a semblence of ownership. I think instead they will spend more time researching and visiting, and perhaps moving to, those countries that are more investor/retiree friendly.

Edited May 22, 2007 by lannarebirth

[TheScribe]

The property-ownership laws are irksome to us foreigners, but what would the alternatives be?

Anybody can buy property in Spain or Portugal or the UK, and what happened? Price inflation that put so many local and young people out the market that its resulted in a nasty 2-tier society: owners and have-nots.

Spanish property has boomed and boomed, the whole of the coast is now horribly (over)developed, and Florida is a similar story. Would we want Thailand to follow that path? Don't think so.

It is hard that the rich Thais can buy in Switzerland, USA etc. but we can't (securely) buy in Thailand, but that's the price we pay to be here. Many falang residents are (semi)retired males with a Thai partner, and these property laws give her the power. So all you can really do is choose that woman wisely.

If that doesn't suit, you should be making plans to move to Malaga or Ft. Lauderdale.

Steve.

[khall64au]

Interesting, though, that Thaksin Shinawatra is shopping all over the world for property purchases ... meanwhile foreign property investors are having a terribly difficult time investing in Thailand property!

[donx]

I agree that the primary reason for concerns by foreigners in the Thai real estate market is the lack of ownership protection of any property purchased. Because of this, I believe there are two types of foreign buyers - 1) those with a trusted Thai partner and 2) those without a trusted Thai partner. I fall into the first category. How someone determines that they have a trusted Thai partner is a subjective and potentially mistaken determination. Nonetheless, I believe that everyone considering buying property in Thailand probably first attempts to determine what route of "ownership" they will choose. Having a trusted Thai partner makes the purchase of property in their name much more straightforward and a usufruct and will can help the foriegner retain some reasonable level of control of the property. Without a trusted partner, one has to decide whether to limit their purchase to a condo, sign up for a 30 year lease, or attempt to have a Thai company own the property. There are other methods as well but these are the primary ones that I have seen discussed in this forum.

For those of us in the first category, I don't think anything that is going on politically or economically will dissuade us from our desire to have our paradise in the sun. Those in category 2 may be more skiddish because of these issues but I think it comes down more to how strongly someone is connected to Thailand and how confortable they feel they will have control of any purchase they make. Right now I think most potential buyers in this category aren't feeling comfortable at all - with the exception of those interested in buying a condo.

[rott]

One point I've only just realised is that condo's in Florida can be cheaper than Thailand.

Difficult to compare like with like by just looking at the internet, but there looks to be plenty of choice under £50,000/$100,000.

No doubt some of our American contributors can say whether I'm talking sense or not.

[backflip]

Just because there are $100K condos in FL, it doesn't mean that you want to live there. But, let's assume that you do want to move into a $100K FL condo...you'll have a pay real estate taxes annually, and FL has a relatively high rate. Too, condos in the US have high, and quickly escalating, monthly maintenance fees. The first home I bought in the US was a condo and, within a couple years, the monthly condo association fee was higher than my mortgage.

[rott]

Just to add to my earlier piece, I am keen to buy a condo in Thailand, but am hanging back mainly because I see an illiquid market where I feel properties can take years rather than months to sell.

A secondary reason is a lack of confidence in the future attitude (of whoever is in government) towards farang residence visas and property rights.

Troubles in the South, while being a very real and serious problem,

currently would rate somewhere behind the perennial question of the

possible price crash and is it or isn't it an overpriced/oversupplied

market.

Whilst pondering the above and wandering the internet I became aware

of the surprisingly low prices of property (oh alright, 'real estate') in

the USA compared to the UK, and to an extent Thailand.

In the meantime rental and casuai accommodation prices are low,

so who's rushing.

[jas007]

For those interested in Florida condos: What you see on the Internet can be deceiving. I don't think you can buy much of anything in Florida, in a safe neighborhood, for under $100K. And as another poster has said, the property taxes in Florida are outrageous. And with all the hurricanes lately, I think property insurance has also gone through the roof. In short, Florida is probably not cheaper than Thailand once you add it all up.

Still, if you want to retire in the USA, there's plenty of reasonably priced real estate in certain areas of the country, mainy in the Midwest. North Carolina is also good. Just stay away from Florida and California. And be sure to check the local property tax rates before you buy. Take Texas for example. Texas has no state income tax, so they have to get their money in other ways. You guessed it. Outrageous property taxes. Figure 3% of the property's value, per year, in some areas. So, even though the real estate may appear to be cheap, in the end, you pay dearly.

Panama seems to have some reasonably priced real estate. I'm going to take a trip there this fall. They give some sort of property tax break for newly constructed properties.

J

[Swelters]

The property-ownership laws are irksome to us foreigners, but what would the alternatives be?

Anybody can buy property in Spain or Portugal or the UK, and what happened? Price inflation that put so many local and young people out the market that its resulted in a nasty 2-tier society: owners and have-nots.

Spanish property has boomed and boomed, the whole of the coast is now horribly (over)developed, and Florida is a similar story. Would we want Thailand to follow that path? Don't think so.

It is hard that the rich Thais can buy in Switzerland, USA etc. but we can't (securely) buy in Thailand, but that's the price we pay to be here. Many falang residents are (semi)retired males with a Thai partner, and these property laws give her the power. So all you can really do is choose that woman wisely.

If that doesn't suit, you should be making plans to move to Malaga or Ft. Lauderdale.

Steve.

A sound comment. I own property in Los Angeles and here, and I am just as worried about the LA place at a possible bubble 250,000 baht/square meter as Bangkok's 60,000 baht per square meter for condos and a lot less for little shophouse places that can be easily improved. The "Thai only" rule has kept Bangkok prices very low, a small fraction of Hong Kong or Singapore. The market is very slow now, same as US, but the value is still good, with rental returns in the 6-10% range, vs 3% or less elsewhere, and the restated ownership controls are conducive to greater price stability. I for one didn't like the previous situation where questionable foreign developers with questionable local partners were using questionable methods to create a speculative situation in the high-profile resorts -- a creeping disease that was bound to spread and taint the whole property sector.

Edited May 23, 2007 by Swelters

[Prakanong]

" The "Thai only" rule has kept Bangkok prices very low, a small fraction of Hong Kong or Singapore."

You can not buy landed property in Singapore or above a certain amount of units in a property which would make you de facto a freeholder unless you are a Singaporean citizen or PR.

This is how it was explained to me last week by a Singaporean colleague when we were discussing Thailand and Singapore property options.

He has landed property here and has been looking at Thailand but thinks its a no no.

I do not think the prices are higher here for condo's due to the Thai Only rule - its supply and demand and the demand is much bigger here - many more expats looking for places.

[chownah]

One downside factor that no one has addressed is the fact that from the US to Thailand the jet lag is terrible and I assume from Europe its no picnic either.....while Central America and the Caribbean offer the same tropical beauty as Thailand and no jet lag for US citizens. My friend bought some waterfront land in Panama and likes the fact that he can come and go as he pleases and doesn't have to suffer the jet lag thing....this allows him alot of flexibility time wise and makes it easier to maintain residences and social presence at both locations.

[Fred Sanford]

One point I've only just realised is that condo's in Florida can be cheaper than Thailand.

Difficult to compare like with like by just looking at the internet, but there looks to be plenty of choice under £50,000/$100,000.

No doubt some of our American contributors can say whether I'm talking sense or not.

I can unequivockly say that Bangkok condo prices are through the roof and Florida offers a much better value dollar for dollar. I have a home in a Beverly Hills type Florida community and the house next door sold for a mere $315K. This is 1 block from the finest beach on the Gulf Coast of Florida. Property taxes are low and hurricane hype is just that; in addition you have the homestead exemption in FL which freezes your tax rate and provides protection from creditors. What does 315K buy you in Bangkok? Nothing compared to a top shelf FL community. For me, I'm in Bangkok for the chicks but no way in hel_l I'd buy anything here. Take the chicks out of the equation and I'd be outta here in a flash.

Edited May 23, 2007 by Fred Sanford

[Phil Conners]

The property-ownership laws are irksome to us foreigners, but what would the alternatives be?

Anybody can buy property in Spain or Portugal or the UK, and what happened? Price inflation that put so many local and young people out the market that its resulted in a nasty 2-tier society: owners and have-nots.

Spanish property has boomed and boomed, the whole of the coast is now horribly (over)developed, and Florida is a similar story. Would we want Thailand to follow that path? Don't think so.

It is hard that the rich Thais can buy in Switzerland, USA etc. but we can't (securely) buy in Thailand, but that's the price we pay to be here. Many falang residents are (semi)retired males with a Thai partner, and these property laws give her the power. So all you can really do is choose that woman wisely.

If that doesn't suit, you should be making plans to move to Malaga or Ft. Lauderdale.

Steve.

Essentially this is one of the results of capitalism. There's a very simple way to balance the situation: property taxation, particularly on secondary property, i.e. all property except for the owners own primary residence. This would limit the speculation in something that should be a human right, a privately owned place to live in for everyone. Otherwise, like in Monopoly, one person will eventually own all the production facilities and all the property. What's left for the rest? Resign?

Edited May 23, 2007 by Phil Conners

[Naam]

I agree that all concerns are down to ownership, many people just didn't realise previously that the company route was actually illegal so many think its a new law, and are wary for that reason.

bingo! i am also wondering why the blaming of the present military government goes on. the so-called "crack down" on foreign landownership was initiated under Thaksin when nobody even thought of a military coup. the same goes for the change of the visa laws. it's "legislation" was prepared under the Thaksin regime and only implemented after the present government came into power.

[admiraldy]

While researching an article I am writing for an international property magazine, most property agents interviewed say that many potential buyers are becoming very wary of investing in Thailand due to concerns highlighted in recent bad press ie. coup, unstable govt/ company laws, troubles in the south etc.

Just today, a Phuket property development marketing director said many potential buyers are worried about the troubles in southern Thailand which is constantly in the news. Australian media covers the southern troubles quite diligently and todays Australian news featured, as a major headline, the Times Magazine freelance photographer Phillip Bleckinsop - an Australian - injured in a bomb blast at Yala.

Since we have many members involved in real estate sales in Thailand - is it fair to say that discerning buyers are afraid of investment due to the current political factors?

I can say that Thailand was till today considered lucky , because its neighbours ( burma , cambodia , vietnam) arent yet developed , and dont have the infrastructure that thailand have ,however once this countries open up for the free market style economy , Thailand will be in big problem , not only in property market , but also in tourism and export.

However the most important factor that is affecting investment in thailand is the military coup , Many people dont like to invest in a country ruled by a group of generals . property ownership rules comes second to political stability .

What is the benefit of property ownership rules , if there was popular unrest , demonstrations , civil war , will you still live in that country?? or can you sell your property ?

Edited May 23, 2007 by admiraldy

[quiksilva]

Property ownership laws have not changed. Rather they have just got around to enforcing existing laws.

Foreigners have not been allowed to own land here for quite considerable length of time (30-40 years ? I cant recall). The fact that these laws were not enforced for such a long time meant that many mistakenly believed that the company route aka Nominee route was all legal and above board, when in fact it was not.

I have had discussions with Thais who advise the government on real estate related matters, and they confirmed that foreign ownership laws will not change, yes that includes increasing / decreasing foreign quotas for condos, in fact you are more likely to see increased protection of leasehold interests before quotas or farang ghettos, as has been widely suggested.

As you can see from this thread the single biggest threat to Thailand right now is not the Southern troubles, alone but rather its a lack of confidence stemming primarily from poor leadership, and whilst lowering interests rates is all well and good, confidence will not truly return until elections are held.

It will take time and commitment to repair the damage that has sadly been done to this country's reputation in the international community, and interest rate cuts whilst welcomed will not 'cut' it alone.

I believe many people will still wait to see what the new leaders stance will be towards foreign business interests in Thailand before committing further to this country.

However, all that being said, there are also those in the market who realise that property should not be a short term play, and can look beyond 12 months and see that Thailand on the whole has a lot going for it, and that these difficult times will eventually pass.

This period must be put into perspective, it's slow, but its not 1997.

[Swelters]

" The "Thai only" rule has kept Bangkok prices very low, a small fraction of Hong Kong or Singapore."

You can not buy landed property in Singapore or above a certain amount of units in a property which would make you de facto a freeholder unless you are a Singaporean citizen or PR.

This is how it was explained to me last week by a Singaporean colleague when we were discussing Thailand and Singapore property options.

He has landed property here and has been looking at Thailand but thinks its a no no.

I do not think the prices are higher here for condo's due to the Thai Only rule - its supply and demand and the demand is much bigger here - many more expats looking for places.

I didn't do my homework on the Singapore ownership rules. But I've heard that prices are maybe 5 times higher for condos there and Hong Kong, campared to Bangkok's typical 60,000-90,000 thb/sm for typical fahlang units. Am I right on this

[pkrv]

I agree that the primary reason for concerns by foreigners in the Thai real estate market is the lack of ownership protection of any property purchased. Because of this, I believe there are two types of foreign buyers - 1) those with a trusted Thai partner and 2) those without a trusted Thai partner. I fall into the first category. How someone determines that they have a trusted Thai partner is a subjective and potentially mistaken determination. Nonetheless, I believe that everyone considering buying property in Thailand probably first attempts to determine what route of "ownership" they will choose. Having a trusted Thai partner makes the purchase of property in their name much more straightforward and a usufruct and will can help the foriegner retain some reasonable level of control of the property. Without a trusted partner, one has to decide whether to limit their purchase to a condo, sign up for a 30 year lease, or attempt to have a Thai company own the property. There are other methods as well but these are the primary ones that I have seen discussed in this forum.

For those of us in the first category, I don't think anything that is going on politically or economically will dissuade us from our desire to have our paradise in the sun. Those in category 2 may be more skiddish because of these issues but I think it comes down more to how strongly someone is connected to Thailand and how confortable they feel they will have control of any purchase they make. Right now I think most potential buyers in this category aren't feeling comfortable at all - with the exception of those interested in buying a condo.

Not true! There are also Ferangs with Ferangs. Bloody hel_l this is a complex thread!!!!!!!!!!!!!!!

[thedude]

" The "Thai only" rule has kept Bangkok prices very low, a small fraction of Hong Kong or Singapore."

You can not buy landed property in Singapore or above a certain amount of units in a property which would make you de facto a freeholder unless you are a Singaporean citizen or PR.

This is how it was explained to me last week by a Singaporean colleague when we were discussing Thailand and Singapore property options.

He has landed property here and has been looking at Thailand but thinks its a no no.

I do not think the prices are higher here for condo's due to the Thai Only rule - its supply and demand and the demand is much bigger here - many more expats looking for places.

I didn't do my homework on the Singapore ownership rules. But I've heard that prices are maybe 5 times higher for condos there and Hong Kong, campared to Bangkok's typical 60,000-90,000 thb/sm for typical fahlang units. Am I right on this

grade A condo space in singapore has skyrocketed this year to the range of S$2,500 to S$3,500 per sq ft. certain properties like the St Regis are looking at S$4,000 psf. this translates to about 580,000 baht psm to well over 900,000 baht psm. even here in Saigon, grade A prices are reaching US$3,500 psm, this converts to circa Baht 120,000 psm.

highest grade A prices in bangkok right now are around Baht 130,000 to Baht 140,000 psm, so yes, bangkok is still a ways off. optimistically, if all goes well over the next 12 to 24 months, there may be an argument for bangkok grade A to make substantial gains.

Edited May 23, 2007 by thedude

[steveromagnino]

I would say that most of the insecurity many are feeling regarding the property sector can be put down to ownership structure concerns. The Thai government, in many peoples minds, has acted in bad faith concerning it's rule changes on what comprises a "Thai" company and what comprises a "foreign" company. The more cynical foreigners see it as a Thai government move to seize their legally (per prior laws) aquired homes and ratchet up xenophobia.

Any interests in Thai politics go only so far as when will this current gang of stooges be gone. Will there then be a return to the former arrangement? Who knows? is the answer. So many are just waiting to see IMO. As far as the troubles in the south, I don't think that has any bearing on the real estate market at all.

Hmmmm, not quite how i would see it.

1. Since there has been no change in law, I struggle to understand how it was legal before for a foreigner to own land which they were expressly not allowed to own individually, and that a foreign company could not have nominees in order to circumvent the existing laws...but ah well; enforcement would be perhaps a better word (for this law, and also abuse of titles in Phuket Samui etc)

2. Condo laws haven't changed at least not since 1998 AFAIK; enforced slightly more perhaps - thus 49% of a condo development can be sold off to foreigners no issue exactly the same as before; Raimon Land seem to be doing ok with this model. Singapore's prices are much higher because of land scarcity and average disposible income; it isn't that easy to buy a Singaporean development with land as a foreigner AFAIK BTW; you cannot compare them directly in the same way it doesn't make sense to say 'I could earn XX,XXX a month working in New York so pay me the same amount here'; I had heard things are going gangbusters down there with rents rising to match

3. This enforcement, combined with the coup and southern issues has definitely had some impact on some sectors of the property market, but not all; check out some of the developments aimed at the Thai market selling out over the weekend with 100+ units.