Bad Press Thailand, Property Sales

[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.

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

The one I am in is just over 1000 Sing Dollars a sq Foot - 23000THB

They want to sell it now and (and even with me with a lease till Sept 2008) will make between 200,000 and 300,000 SGD profit on it in less than a year according to my relocation consultant who is also a real estate agent who I bumped into in our reception today - she is saying they are asking 5000 SGD a month for a 3 bedroom in my place now - up from 3500 just over 6 months ago.

She is having a he11 of a time getting properties for the new expats coming in.

They can and do go a lot higher and there is a boom going on right now - so much they are auctioning off new developements to the highest biddr to invitees only. Some sell out the day they are on the market and I mean they are sold - not the false market you see elsewhere.

En Bloc sales are the big thing right now with record prices being paid (they buy the older properties as a whole, knock them down and re-build.- my agent is going to have her's sold from under her and even at record prices she will not afford somewhere in the same location. Many owners get upwards of 2 million so how much will these places cost that are built in their place?

Edited May 23, 2007 by Prakanong

[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.

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.

It's not simply an enforcement issue. The issue is, many people sought legal advice of Thai legal counsel, authorized to conduct matters of law by the Thai Bar association. Upon receiving counsel that there are corporate structures, that if the correct provisions and bylaws are addressed, it would allow for defacto ownership/control of Thai real property by the client. Once the client is assured of this, puchases the property, and then has the lawyers scheme APPROVED by the land office, there is every reason to believe it was a legal process.

Now, from my perspective, I wouldn't touch the company route with a 10 foot pole, but I certainly feel for those who have gone that route.

As for who's buying, I get weekly calls from Thais for land I own. I much prefer doing business with Thais. They have more money, they buy something if they like it, and usually they will become your friend afterwards.

[pkrv]

Singapore you may own a property leasehold - Unfortunately the country has its own difficulties that are now thoroughly entrenched in a veneer of democracy - I hope Thailand does not follow such a path.

Bangkok (look I don't know about all of Thailand) - You may legally own a freehold in a Condominium up to a 49% share of the available saleable space - There is absolutely no threat to this, it is not in Thailand’s interests to do such a stupid thing. The house ownership issue is a dead duck! If you had to use esoteric laws/issues to purchase that should have been warning enough.

Let me see 1m THB = the cost of a reasonable new car in the UK even the very best that can be offered will only set you back 80+m, are you really saying that a 5m Condo is expensive????????????

The political situation in Thailand is admittedly in transition but I do hope that when democracy is re-established, which it will be, it in no way mirrors the Singapore 'version'.

Edited May 23, 2007 by pkrv

[jetjock]

In answer to the OP's question, I would consider myself a discerning buyer as I have a lot of real estate experience and own quite a few properties in the US. I have a Thai wife who owns a property in Thailand and we had been looking at property in our favorite areas in Hua Hin or Phukett for possible purchase before the recent political instability increased due to the coup and the situation in South. This current situation has definitely changed our minds about investing in Thailand property.

I love Thailand and plan on spending a lot more time there but think at the current time that it is wiser for us to rent in areas that we are interested in rather than buying. I realized that investment wise, rents are so cheap in Thailand, why take the investment risk of buying albeit even slight . Renting also allows us to move if we decide we do not like an area or have noisy neighbors ( which from reading all the stories in TV forum I realize is a problem for many farangs living in LOS). As I now have had time to give this issue greater thought, I realize that since I have the itch to buy another property, it is smarter for me to buy an investment property in a more stable country and then use the rental income from it to more than offset what it will cost me to rent in the areas that I want to locate to in LOS.

Edited May 23, 2007 by jetjock

[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.

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

I think you misread my statement. "Ferangs with Ferangs" most likely fall into the category of "those without a trusted Thai partner". I specifically used the term "partner" because I don't want to imply being married to this person. I expect that for some the "trusted Thai partner" may be a business partner or a family friend, etc. For this reason you could be a farang married to another farang but be willing to purchase property that is titled in a Thai friend's name. I wouldn't do this but I'm sure this has been done.

[pkrv]

Donx - deeply appreciate the clarification - this thread is difficult - but I will say Bangkok (Thailand) will wipe the floor with Singapore - no one with any taste would buy there, and mono cultures are of course doomed.

Edited May 23, 2007 by pkrv

[quiksilva]

Let me see 1m THB = the cost of a reasonable new car in the UK even the very best that can be offered will only set you back 80+m, are you really saying that a 5m Condo is expensive???????????? [well said]

The political situation in Thailand is admittedly in transition but I do hope that when democracy is re-established, which it will be, it in no way mirrors the Singapore 'version'.

Well there's certainly aspects of Singapore's system that I'd like to see in Thailand namely, a stable clear direction with policies that create a level playing field for foreign business, and a quality education system.

Democracy is probably the only choice open to Thailand to restore confidence, but it takes a hundreds of years to create a system that works smoothly, I think sometimes we forget that. (I'm pretty sure Bush did)

What this country needs more than anything else is strong leadership with a clear political direction. Up until Thaksin politics and power bases here have always been fragmented, which meant that progress was very slow. Say what you like about Square Face he was certainly no angel but he got stuff done.

If a clear direction comes from a single dominant party, or even a dictator, so be it, just so long as we know where we stand. Look at communist Vietnam, and SG, the truth is investors aren't too fussy about how its governed but they absolutely detest uncertainty.

One can only hope that no matter which direction Thailand moves in, the powers that be will recognise that globalisation has become a fact of life that they must face up to or they will be left behind.

I believe that the leaders of most parties recognise this, (in fact they have already mentioned that they do) but the problem with implementing policies along these lines, lies with the powerful 'old guard' who are still living in the 1970's.

It will take time but once confidence is restored, the economy and the property market will recover, but in the meantime the last thing we need is for these self-inflicted wounds to be reopened with another coup...

Edit: unfortunately the 'old guard' probably need to feel some pain before they will see sense.

Edited May 24, 2007 by quiksilva

[Swelters]

Based on all said here, one wonders whether the current thai property market is just another example of the maxim that everything is priced at exactly what it should be, and that all opinions (including my own) are worthless.

Swelters

[pkrv]

Perhaps the answer is that Thailand is not in the same position as Singapore 10 years ago, it has moved on.

[thedude]

Based on all said here, one wonders whether the current thai property market is just another example of the maxim that everything is priced at exactly what it should be, and that all opinions (including my own) are worthless.

Swelters

there certainly is a lot of merit in that belief. the market is what people are willing to pay for it. all those wealthy arabs and chinese and indians and russians are not pouring their millions buying up thai penthouses, but they are doing that in singapore now, that's whats driving up the prices.

prkv, governments from singapore to shanghai to vietnam may all be autocratic and not conforming to western notions of democracy, but the majority of the citizens in these places are arguably less aggrieved than your average bangkok citizen. what good is all the freedom of speech and expression if your government cannot even solve basic problems like traffic, crime, drugs and education. what happens if you are poor motorcyclist being run over by a rich man's son in thailand? democracy does not equate to justice for all in asia. thais can still protest on the streets, but there is not even a constitution to fall back on, how did it all come this way? an over-exhuberent and liberal application of their "democratic" rights? perhaps thailand should worry more about becoming like another philippines or even myanmar, instead of worrying over being like another singapore.

Edited May 24, 2007 by thedude

[quiksilva]

My sentiments exactly, well said.

[pkrv]

All three ultra heavy weights who contribute to this forum, all in agreement, hmmmm interesting. I do not run a business from Thailand so feel very ill at ease on this subject, but I am investing and will probably rub shoulders in the near future, which I need to prepare for.

In attempting to digest all that has been said I have suddenly realised that a well ordered transition is paramount, I do not recall an international début from the heir apparent, has this taken place?

Edited May 24, 2007 by pkrv

[Prakanong]

"In attempting to digest all that has been said I have suddenly realised that a well ordered transition is paramount, I do not recall an international début from the heir apparent, has this taken place?"

We can not really talk about this on here.

Some interesting stuff in a certain book bought widely by Thai's at Singapore airport on the way home.

[taxin]

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.

Go for it Rott ! Buy in a popular tourist area such as Phuket (not Pattaya) and live off the rental. 30 year leasehold, freehold condo... doesnt really matter, in 5 or 6 years at 60% occupancy its paid itself !

Visas ? It will never be impossible to live in Thailand, a little harder and maybe more expensive but never impossible !

[Livinginexile]

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.

Why do you need to buy land?

Buy a condo is perfectly legal.

Oh wait....the wife wants you to build a big house on her family's land right?

[pkrv]

Bad press, well Ok things are not too hot on the home front so to speak. I have seen articles etc on the return to democracy, but I find it a bit odd that Thaiviasa is not running a 'countdown clock/thread' to such an important event. OK things can get a bit out of hand in such threads, but other sites manage this type of stuff OK, believe it or not this kind of open dialogue can actually help! (PS still investing in the country it is still pretty fab)

[Kf6vci]

Unless we can get a mortgage in THB, following the Baht's recent increase, prices are too high for my liking. Even getting a mortgage in Yen at very low interest rates won't resolve the currency issue. ** IMHO, business and immigration law changes outweigh the troubles in the South. But the real killer is the exchange rate of the Baht.

[thaigene2]

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

I think this post above pretty much sums it up for me. And I think the overwhelming reaction from the other posts that it is the uncertainty of ownership structures that is the real burning issue for foreigners.

That really puts to bed this silly rhetoric we keep reading in the Thai newspapers and Property rags (sorry no offence to yours!) tha the 'political situation and problems in the south' are main conerns. Rubbish - always was.

So would someone finally write a REAL report on why we won't/can't buy?

*No right to live here, *no access to credit, *unsure ownership rights that could change tomorow in any event.

[quiksilva]

I agree I think the main reasons is primarily down to the fact that we have no access to local financing. Visas are also an issue too. I also don't subscribe to the Southern Troubles theory either, but will caveat that by saying that events there are covered more extensively in the Australian press than it is in say, Europe, which does influence the Southern markets (e.g. Phuket) to a degree.

Foreigners have only ever been able to own condo's anyway and that hasn't changed. So what has really happened that might indicate a potential change in foreign ownership laws?

The comments I have read here about ownership concerns sounds a lot more like a failure of confidence to me. Visa requirements can be changed at whim by any government in the world, but changing organic laws happens with a lot less frequency.

Think about it, if they were to say that foreigners can now only own 25% of units in a condo project, they would have to expropriate literally 1000's of units and there would be an international backlash of huge proportions. I just don't see it happening. They don't have the resources to enforce it for one thing, and it just doesn't make good political or business sense to do so.

This failure in confidence has been brought about by recent changes in politics. The single biggest one of which was the proposed amendment of the FBA, that hasn't gone through yet and only really closes an illegal loophole that many people used. FYI both the Democrats and TRT have said in behind closed doors meetings to Chambers of Commerce here that they would reverse this amendment should they become elected.

This is one of the major reasons why you see the election mentioned so often, Abhisit and the TRT in separate meetings have both acknowledged that Thailand needs to open up more to foreign business.

Just don't expect land ownership laws to change for the better, or for the worse for that matter.

Edited June 4, 2007 by quiksilva

[khall64au]

Thanks for all comments. Most Phuket agents/ developers I have spoken with mention that sales are abysmal at present but cite European and some Asian buyers are still comfortable with the leasehold purchase option on landed properties (as a historic option). Is this the case in other regions of Thailand?

[lannarebirth]

Thanks for all comments. Most Phuket agents/ developers I have spoken with mention that sales are abysmal at present but cite European and some Asian buyers are still comfortable with the leasehold purchase option on landed properties (as a historic option). Is this the case in other regions of Thailand?

I'm surpeised to hear that, as a leasehold is a diminishing asset. I imagine they are payimg markedly reduced prices from freeholders.

[Gorguruga]

What if I could get a 99-year lease on a property (or as long as legally permissable), would that guarantee security?

Are there any laws concerning properties been given as "gifts" to a foreigner which might get around the ownership issue?