New High End Condos

[dotcom]

Only 1/3 the price?

[JeremyBKK]

Hi guys. Need your advice. I am planning to buy a condo near Lumpini area. I was in Bangkok last month and am interested in a property called "Baan Rajprasong", Rajadamri Road. I know it is a leasehold property but the property seems great in terms of the location and outlook. The project will be finished within few months. I know there are 2 blocks. Block A is overlooking the Royal Sports Club. Block B has the city view. Any guys know the price psm? Appreciated your help.

[ray08]

Hi guys. Need your advice. I am planning to buy a condo near Lumpini area. I was in Bangkok last month and am interested in a property called "Baan Rajprasong", Rajadamri Road. I know it is a leasehold property but the property seems great in terms of the location and outlook. The project will be finished within few months. I know there are 2 blocks. Block A is overlooking the Royal Sports Club. Block B has the city view. Any guys know the price psm? Appreciated your help.

Dont know your current status eg Age , but buying a 30 year leasehold would have to be one of the worst investments you could make as all it is is a depreciating Asset , A freehold has at least a chance of going up in value ,,but say in 15 years time you are looking to sell your property , who would buy something with a 15 year life on it , as no gurantee of Renewal or on what terms , I don,t know the price per meter , but whatever it is , it will be the most the property is ever worth , Anyway if you really like it and dont care about the investment aspect i am sure someone here will know price

good luck on your decision

[samtam]

Quick math lesson. The difference between 80,000 psm & 240,000 psm is 300% - NOT 200 % as you mentioned. Or triple for those mathematically challenged.

I think you'll find my 200% difference, or 1/3 of the price was the correct percentage difference, as suggested by backflip.

However, if you think a 17 year old (former Grade A) building should be worth 1/3 less than the new one, do you then also think that The Sukhothai Residences will have the same discount when it is 17 years old?

Bangkok is indeed a strange market if buildings become worthless the older they get; if this is the premise, then surely no one should ever buy. I still maintain there is a huge disconnect in a 200% difference in price, (1/3 the price) of a Grade A building, and a "super deluxe" complex such as Suk Res. What aspect justifies it? It's a square box in the sky; it's location is almost similar; it's footprint approximately the same. The branding cannot justify that, but I suppose people will always pay a premium for a fashion item, and so is this one such item? According to The Nation's property section today one of the (4?) penthouses was sold at USD4.45m (THB313k psm). This is heady stuff indeed, especially in a market partially reliant on foreign buying, in a world economy that is uncertain, into a property market that is going to have some jitters from the political impact that will ensue after the election on Sunday.

[trajan]

you forgot to mention that 88 units (at an average price of B250K psm) have already been sold....

that's during pre-launch in Bangkok...so 108 units left.....

pre-launch in HK is going on now and formal launch in Bangkok will be in early 2008...

the Sukhothai Hotel management company will also manage the condos....(although not part of a big chain, I personally like the management style and standards of the Sukhothai, in fact its my favorite in Bangkok of the top hotels)....

(btw, there are NINE penthouses, the largest two being about 1200 sq. meters each)...the penthouse mentioned is one of the smallest ones at 435 sq. meters...

Edited December 21, 2007 by trajan

[trajan]

one indication of the quality of management.......The Sukhothai Hotel just voted best hotel in Thailand by "Institutional Investor" (and top 8th in the world)...

1 Ritz-Carlton, Battery Park (New York) 95.9

2 Four Seasons (San Francisco) 95.4

3 Adlon Kempinski (Berlin) 93.8

4 Four Seasons (Hong Kong) 93.5

5 Four Seasons (New York) 93.2

6 Çırağan Palace Kempinski (Istanbul) 93

7 Baur au Lac (Zurich) 92.9

8 Sukhothai (Bangkok) 92.8

9 Arts (Barcelona) 92.4

10 Bristol (Paris) 92.3

11 Ritz-Carlton (Four Seasons) Chicago 92.2

12 Bel-Air Los Angeles 92.1

13 Four Seasons Bangkok 91.5

13 Landmark Mandarin Oriental Hong Kong 91.5

15 Four Seasons Washington, D.C. 91.3

16 Peninsula Bangkok 91.1

17 Alvear Palace Buenos Aires 91

17 Phoenician Phoenix 91

19* Peninsula Chicago 90.9

20* Claridge's London 90.9

21 Four Seasons George V Paris 90.2

22 Taj Boston** Boston 90

23* Four Seasons Boston 89.8

24* Kämp Helsinki 89.8

25 Four Seasons Los Angeles 89.6

26 Mandarin Oriental Hong Kong 89.2

27 Mandarin Oriental New York 89

28 Four Seasons Istanbul 88.8

29* Park Hyatt Chicago 88.6

30* Ritz-Carlton Hong Kong 88.6

31* Mandarin Oriental San Francisco 88.5

32* Park Hyatt Paris-Vendôme Paris 88.5

33 Four Seasons Dublin 88.3

34* Shangri-La Singapore 88.2

35 Beverly Hills Los Angeles 88.2

35 Island Shangri-La Hong Kong 88.2

37 Raffles Singapore 88.1

38 Four Seasons Atlanta 87.9

39 Oriental Singapore 87.8

40 Oriental Bangkok 87.7

41* Bellagio Las Vegas 87.6

42* Grand Hyatt Hong Kong 87.6

43 Ararat Park Hyatt Moscow 87.5

43 Four Seasons Chicago 87.5

45 Millenium Hilton New York 87.4

46* Grand Hyatt Tokyo 87.3

47* Four Seasons Miami 87.3

48* Four Seasons Chinzan-So Tokyo 87.2

49* Hay-Adams Washington, D.C. 87.2

50* Oberoi Mumbai Mumbai 87.1

The Sukhothai Bangkok Recognised By Senior International

Business Executives As Thailand’s Best Hotel

14 NOVEMBER 2007

BANGKOK – The Sukhothai Bangkok hotel has been voted as the best hotel in Thailand and among the top ten hotels in the world by the respected Institutional Investor magazine in its annual poll of readers rating the World’s Best Hotels.

The results of the reader’s poll, published in the November international edition of the famous magazine, acknowledges the prestigious Bangkok hotel as Thailand’s best and the eighth overall in the global poll.

The recognition is seen as a major achievement in a highly competitive hospitality market with luxury properties being unveiled on an almost weekly basis.

The Sukhothai Bangkok General Manager, George Benney, said: “This is a great accolade from the astute and highly discerning readers of one of the world’s most respected international business magazines.”

“We at The Sukhothai do not have the advantage of being a major global brand, but I think our position on this exclusive list clearly illustrates that we are one of the premier independent luxury hotels in the world.”

Business facilities at The Sukhothai have recently been further improved with the recent launch of the Garden Villa Meeting Rooms set in 7,000 square metres of lush tropical gardens and a complete renovation of its Bussabong Business Centre.

The Sukhothai Bangkok was also selected as Thailand’s exclusive representative of the globally renowned brand Spa Botanica, which opened this month to provide executive guests with new levels of spa opulence and comfort.

The hotel also recently revealed a new fleet of Mercedes Benz S320 CDI class limousines and opened an upscale boutique-shopping precinct, featuring chocolates, silks, art and antiques.

The Sukhothai Bangkok

The 210-room The Sukhothai Bangkok hotel is a multi-award winning member of the exclusive Leading Hotels of the World network. As one of Thailand’s most luxurious accommodation experiences, its ancillary facilities from the Spa Botanica, limousine fleet, gym and swimming pool, modern meeting space

and superb culinary encounters combine to produce one of the finest hospitality brands in the Kingdom.

[backflip]

"Dont know your current status eg Age , but buying a 30 year leasehold would have to be one of the worst investments you could make as all it is is a depreciating Asset..."

A good assumption is that the Royal Treasury will renew your lease for another 30 years. The bigger question is, what will a 30 year lease extension cost, in 30 years. I tried to get that info from a sales person ar another leasehold condo. Her response was "one milion baht per condo". I don't believe that, and neither should you.

[samtam]

According to The Nation's property section today one of the (4?) penthouses was sold at USD4.45m (THB313k psm).

As an interesting comparison, a prime condo in Tokyo, in the centre of Tokyo, built by Sumitomo is being sold at THB360k psm equivalent.

[ray08]

"Dont know your current status eg Age , but buying a 30 year leasehold would have to be one of the worst investments you could make as all it is is a depreciating Asset..."

A good assumption is that the Royal Treasury will renew your lease for another 30 years. The bigger question is, what will a 30 year lease extension cost, in 30 years. I tried to get that info from a sales person ar another leasehold condo. Her response was "one milion baht per condo". I don't believe that, and neither should you.

On the Assumption that lease will be renewed , i agree 1 million baht is a just a straight out lie , What the normal scenario would be is that when any lease expires the next one is at market Value , so if for example that unit could be sold on to another buyer for the market value say for fun Thb 20-30 million , why would they renew for 1 million , i am sure that would not make good business sense at all and there would be no reason to be so genereous as this is a pure business transaction

[trajan]

According to The Nation's property section today one of the (4?) penthouses was sold at USD4.45m (THB313k psm).

As an interesting comparison, a prime condo in Tokyo, in the centre of Tokyo, built by Sumitomo is being sold at THB360k psm equivalent.

interesting only if the comparison is equivalent....what prime area of Tokyo? is the condo part of a luxury hotel residence (a hotel residence or a condo hotel)? what is the building like and is the unit a penthouse? Ive seen some very plain (cramped, no view and extremely bare-shell) condos in suburban fringes in Tokyo at super premium prices...

[JeremyBKK]

Hi guys. Need your advice. I am planning to buy a condo near Lumpini area. I was in Bangkok last month and am interested in a property called "Baan Rajprasong", Rajadamri Road. I know it is a leasehold property but the property seems great in terms of the location and outlook. The project will be finished within few months. I know there are 2 blocks. Block A is overlooking the Royal Sports Club. Block B has the city view. Any guys know the price psm? Appreciated your help.

Dont know your current status eg Age , but buying a 30 year leasehold would have to be one of the worst investments you could make as all it is is a depreciating Asset , A freehold has at least a chance of going up in value ,,but say in 15 years time you are looking to sell your property , who would buy something with a 15 year life on it , as no gurantee of Renewal or on what terms , I don,t know the price per meter , but whatever it is , it will be the most the property is ever worth , Anyway if you really like it and dont care about the investment aspect i am sure someone here will know price

good luck on your decision

Hi, ray08. Appreciated your input. I am 40 years old. As I was told, the leasehold property is based on 30-year lease, and can be renewed for another 30 years at cost (based on the estimation at time of renewal). I am thinking 30 years from now, I either become an old man or will be dead. Should I enjoy myself to live in a premium location? This is only my thought. Anyone member there has an opinion, I wonder. Thanks in advance.

[jumnien]

Leasehold properties are hardly depreciating assets. I've bought and sold at a profit and so have many others. The yield is also much higher with a leasehold if used as an income property. I'm not arguing for or against leaseholds, just pointing out the facts.

[ray08]

Leasehold properties are hardly depreciating assets. I've bought and sold at a profit and so have many others. The yield is also much higher with a leasehold if used as an income property. I'm not arguing for or against leaseholds, just pointing out the facts.

Very supprised to hear that , don,t know if yours is more an exception than the rule , Surely as the lease term reduces as to say 15 years and at this stage no one is guranteeing a Renewal or what the terms are , technically you would be left with nothing when lease expires , i find it hard for someone to on sell at a profit and even harder to find buyers for such properties ,would be very interested to hear from others who say that there is profits to be made in leaseholds

[ray08]

Hi guys. Need your advice. I am planning to buy a condo near Lumpini area. I was in Bangkok last month and am interested in a property called "Baan Rajprasong", Rajadamri Road. I know it is a leasehold property but the property seems great in terms of the location and outlook. The project will be finished within few months. I know there are 2 blocks. Block A is overlooking the Royal Sports Club. Block B has the city view. Any guys know the price psm? Appreciated your help.

Dont know your current status eg Age , but buying a 30 year leasehold would have to be one of the worst investments you could make as all it is is a depreciating Asset , A freehold has at least a chance of going up in value ,,but say in 15 years time you are looking to sell your property , who would buy something with a 15 year life on it , as no gurantee of Renewal or on what terms , I don,t know the price per meter , but whatever it is , it will be the most the property is ever worth , Anyway if you really like it and dont care about the investment aspect i am sure someone here will know price

good luck on your decision

Hi, ray08. Appreciated your input. I am 40 years old. As I was told, the leasehold property is based on 30-year lease, and can be renewed for another 30 years at cost (based on the estimation at time of renewal). I am thinking 30 years from now, I either become an old man or will be dead. Should I enjoy myself to live in a premium location? This is only my thought. Anyone member there has an opinion, I wonder. Thanks in advance.

same age as me , question is can you really see yourself living in same unit for 30 years ????

[JeremyBKK]

Hi guys. Need your advice. I am planning to buy a condo near Lumpini area. I was in Bangkok last month and am interested in a property called "Baan Rajprasong", Rajadamri Road. I know it is a leasehold property but the property seems great in terms of the location and outlook. The project will be finished within few months. I know there are 2 blocks. Block A is overlooking the Royal Sports Club. Block B has the city view. Any guys know the price psm? Appreciated your help.

Dont know your current status eg Age , but buying a 30 year leasehold would have to be one of the worst investments you could make as all it is is a depreciating Asset , A freehold has at least a chance of going up in value ,,but say in 15 years time you are looking to sell your property , who would buy something with a 15 year life on it , as no gurantee of Renewal or on what terms , I don,t know the price per meter , but whatever it is , it will be the most the property is ever worth , Anyway if you really like it and dont care about the investment aspect i am sure someone here will know price

good luck on your decision

Hi, ray08. Appreciated your input. I am 40 years old. As I was told, the leasehold property is based on 30-year lease, and can be renewed for another 30 years at cost (based on the estimation at time of renewal). I am thinking 30 years from now, I either become an old man or will be dead. Should I enjoy myself to live in a premium location? This is only my thought. Anyone member there has an opinion, I wonder. Thanks in advance.

same age as me , question is can you really see yourself living in same unit for 30 years ????

Hi rayo8. Have read what another member has written. Glad to know that you are in my age group. No one can predict what will be happening even tomorrow. I doubt it to live in the same unit for 30 years. As another member said............ I may consider to sell it if I can make a good profit. The leasehold property has its value. Need some more comments on this and research more, I think...........Thanks ray and other members. Really good to have your feedback.

[pkrv]

Leasehold properties are hardly depreciating assets. I've bought and sold at a profit and so have many others. The yield is also much higher with a leasehold if used as an income property. I'm not arguing for or against leaseholds, just pointing out the facts.

Hi sunrise - I think it would be fair to say you look at this from an investment stance? Am I correct in that you saw increases in leasehold values over relativly short time frames e.g. 2-5 years, before the lease was significantly impacted?

If so this may advise not be applicable to someone seeking to live in a property for a protacted period.

In general terms:

Leases become worthless / a liability (you may sometimes have to pay to extend them in order to sell) over protracted periods.

When you retire your income dimishes and costs (rents etc) go up.

The only (personal) assests that (generally) increases in value will be freehold property.

Yes leashold is a good instrument for investment - if you know what you are doing in the property market. Quite frankly it's generally the cheaper option and someone who is renting could not care less if the property is freehold or leasehould. This becomes a short term numbers game, and is probably not applicable to this guys situation.

Edited December 23, 2007 by pkrv

[samtam]

An interesting update on the pricing of The Sukhothai Residences: despite being on their top list of clients invited to view and buy a condo, my price was was offered at THB240k psm. A Thai friend on a similar list was offered his at THB180k psm Dual pricing indeed. He too is a speculator, so a nice tidy profit when he resells.

[Lazy Sod]

An interesting update on the pricing of The Sukhothai Residences: despite being on their top list of clients invited to view and buy a condo, my price was was offered at THB240k psm. A Thai friend on a similar list was offered his at THB180k psm Dual pricing indeed. He too is a speculator, so a nice tidy profit when he resells.

Perhaps they are selling the 49% foreign quota at a premium, same as nearby places with high foreigner demand such as The Legend on Saladaeng.

[ray08]

An interesting update on the pricing of The Sukhothai Residences: despite being on their top list of clients invited to view and buy a condo, my price was was offered at THB240k psm. A Thai friend on a similar list was offered his at THB180k psm Dual pricing indeed. He too is a speculator, so a nice tidy profit when he resells.

Perhaps they are selling the 49% foreign quota at a premium, same as nearby places with high foreigner demand such as The Legend on Saladaeng.

Or perhaps selling at thb 180 due to low local demand ,

Out of curiosity , can a local buy a unit under the Thai 51% quota and them on sell to a foreigner under the 49% foreign quota ,especially if building is not sold out can they play around with quota?

[BEENTHEREDONETHAT]

Why not writ6e into the lease that it can be renewed for a new 30 year period any time it is sold?

[pkrv]

Why not writ6e into the lease that it can be renewed for a new 30 year period any time it is sold?

The reason is rather brutally simple. Take for example large tracts of London's East End and indeed Dubai. The link is that in London's East End there are vested interest groups who own many, many, freeholds which are then leased out. Their income stream is the renewal of leases. Think of this in terms of paying rent 20-30 years up front. In Dubai much of the property is owned by the crown. Not being daft they know the oil money will run out again this is a future investment for them.

I'm afraid some people think very long term when it comes to money - and in a nutshell this is how they pass it on from generation to generation at your expense.

There's (tones of) money to be made in them there leases, just not for you… That's why…

Edited January 2, 2008 by pkrv

[quiksilva]

Leasehold properties are hardly depreciating assets. I've bought and sold at a profit and so have many others. The yield is also much higher with a leasehold if used as an income property. I'm not arguing for or against leaseholds, just pointing out the facts.

Very supprised to hear that , don,t know if yours is more an exception than the rule , Surely as the lease term reduces as to say 15 years and at this stage no one is guranteeing a Renewal or what the terms are , technically you would be left with nothing when lease expires , i find it hard for someone to on sell at a profit and even harder to find buyers for such properties ,would be very interested to hear from others who say that there is profits to be made in leaseholds

It is possible for leaseholds to appreciate, just so long as you are in a market which supports rental growth. To understand how that can be one of the first things we need to know is to see what happens to the value of money over time.

It's lunchtime and I have a spare minute so lets look at an example:

Unit A is 200 sqm and is able to fetch 100,000 Baht a month in the open market for a 1 year lease. So gross rental = 1,200,000 per annum

Less

Allowance for vacancies over the lease term, say 1 month per year (being generous)

CAM fees say 50 Baht per square per month = 120,000 per annum

Contingencies say 5% per annum = 60,000 per annum

There are others but add them as you see fit, this will do for now

So Net annual income = 920,000

Using the Parry's valuation tables and assuming that an investor would look for 8% ROI for a leasehold property, we can determine that the value of a 30 year lease would be THB 10,350,000 and for a 15 year term that value will drop to just THB 7,874,720 (not 50% due to the nature of the value of money over time - a whole other subject).

However, this is a very basic calculation and does not allow for future fluctuations in occupancies, rents or expenses. To do this we would have to forecast each future year's income and discount each of those capitalised net income streams to the present value and add them together.

So you see it is possible to see some appreciation in leasehold value but it will be dependent upon many different factors: for example one would have to see rental growth outperform the pace of inflation.

Just for the sake of contrast, if we use these same assumptions to determine the freehold value at a lower yield to reflect the greater security of tenure (lets say 6%) the same unit would be worth in the region of THB 15,333,272 million or THB 76,666 psm.

Obviously investment yields (or what you should pay for these assets) are a very personal reflection on ones own perception towards risk so the actual amounts will differ, from person to person but I suggest that the spread of 2-3% on yields to reflect the greater risk of leasehold tenures should remain about the same.

[ray08]

Leasehold properties are hardly depreciating assets. I've bought and sold at a profit and so have many others. The yield is also much higher with a leasehold if used as an income property. I'm not arguing for or against leaseholds, just pointing out the facts.

Very supprised to hear that , don,t know if yours is more an exception than the rule , Surely as the lease term reduces as to say 15 years and at this stage no one is guranteeing a Renewal or what the terms are , technically you would be left with nothing when lease expires , i find it hard for someone to on sell at a profit and even harder to find buyers for such properties ,would be very interested to hear from others who say that there is profits to be made in leaseholds

It is possible for leaseholds to appreciate, just so long as you are in a market which supports rental growth. To understand how that can be one of the first things we need to know is to see what happens to the value of money over time.

It's lunchtime and I have a spare minute so lets look at an example:

Unit A is 200 sqm and is able to fetch 100,000 Baht a month in the open market for a 1 year lease. So gross rental = 1,200,000 per annum

Less

Allowance for vacancies over the lease term, say 1 month per year (being generous)

CAM fees say 50 Baht per square per month = 120,000 per annum

Contingencies say 5% per annum = 60,000 per annum

There are others but add them as you see fit, this will do for now

So Net annual income = 920,000

Using the Parry's valuation tables and assuming that an investor would look for 8% ROI for a leasehold property, we can determine that the value of a 30 year lease would be THB 10,350,000 and for a 15 year term that value will drop to just THB 7,874,720 (not 50% due to the nature of the value of money over time - a whole other subject).

However, this is a very basic calculation and does not allow for future fluctuations in occupancies, rents or expenses. To do this we would have to forecast each future year's income and discount each of those capitalised net income streams to the present value and add them together.

So you see it is possible to see some appreciation in leasehold value but it will be dependent upon many different factors: for example one would have to see rental growth outperform the pace of inflation.

Just for the sake of contrast, if we use these same assumptions to determine the freehold value at a lower yield to reflect the greater security of tenure (lets say 6%) the same unit would be worth in the region of THB 15,333,272 million or THB 76,666 psm.

Obviously investment yields (or what you should pay for these assets) are a very personal reflection on ones own perception towards risk so the actual amounts will differ, from person to person but I suggest that the spread of 2-3% on yields to reflect the greater risk of leasehold tenures should remain about the same.

When we look at ROI we must take into account the Capital gain which is where the money is made in property , i can see where you are coming from in your example above , but all things being equal it does make sense ,But Things here are not equal , in a situation where the property will not be yours after a certain time ,back to what i said above , why would some purchase a property that in 15 years they have the real possibility of being evicted ( no option on lease available ) Surely such a property would be worth very little in the market and hard to almost impossible to sell , remember very easy to get 6-7% per cent on your money these days just on term Deposits , eg( Australian dollar term deposit in HSBC ) so why go and pay someone key money

My main point is that as the lease term decreases each year the capital value of the property must surely follow , granted the first few years possibility of no movement , but lets go to extreme of 15, 20 , 25 years down the line and see what you can sell property for , and compare to a similar freehold unit ,so a as a longterm investment leasehold is not the way to go , unless we can get UK style 99 year leases

[pkrv]

Yes leashold is a good instrument for investment - if you know what you are doing in the property market. Quite frankly it's generally the cheaper option and someone who is renting could not care less if the property is freehold or leasehold. This becomes a short term numbers game, and is probably not applicable to this guys situation.

I agree a short term numbers game on leasehold. The flip side is in the long term freehold game. Freehold property is not then leased out for charitable purposes is it But I have never seen the principles of the financial mechanism by which this works.

For me it is more a philosophical decision, it is important to me to pass on tangible assets upon my inevitable demise and simultaneously gain some measure of security during old age.

IMO Leasehold = Investor and indeed non property businesses (e.g. HP only have short leaseholds on all their global properties) and Freehold = home owner or very, very, long term investor (multi generational, crown, property companies, church (e.g the Church of England owns some of the freehold in Soho, Londons red light district which has some of the most profitable oportunities) etc). There are however always exceptions.

Edited January 2, 2008 by pkrv

[quiksilva]

When we look at ROI we must take into account the Capital gain which is where the money is made in property , i can see where you are coming from in your example above , but all things being equal it does make sense ,But Things here are not equal , in a situation where the property will not be yours after a certain time ,back to what i said above , why would some purchase a property that in 15 years they have the real possibility of being evicted ( no option on lease available ) Surely such a property would be worth very little in the market and hard to almost impossible to sell , remember very easy to get 6-7% per cent on your money these days just on term Deposits , eg( Australian dollar term deposit in HSBC ) so why go and pay someone key money

My main point is that as the lease term decreases each year the capital value of the property must surely follow , granted the first few years possibility of no movement , but lets go to extreme of 15, 20 , 25 years down the line and see what you can sell property for , and compare to a similar freehold unit ,so a as a longterm investment leasehold is not the way to go , unless we can get UK style 99 year leases

Sure, Im only showing the internationally accepted method of leasehold valuation to show that yes in theory it is possible under certain circumstances to see some short term 'capital gains' on a leasehold, However, the moon has to be in the right alignment and the wind must be blowing in a certain direction etc etc etc etc etc etc.

So yes, generally speaking leaseholds are depreciating assets, all Im saying is that they do not depreciate as fast as one might think.

Eg The multiplier for an 8% yield in perpetuity is 12.5 , on 99 years its 12.494 , on 30 years its 11.258 , on 15 years its 8.559 on 10 years its 6.710 (these are used to capitalise net annual income to determine value)

Does that make a good investment? Well thats up to you to decide, some say banks deposits are safe, but I wonder what customers of Northern Rock would think? I doubt that they will put their money under a mattress but some may look to property instead and perhaps be tempted by the prospect of those returns. Are they harder to sell, sure thats one of the reasons they are cheaper (i.e. offer higher returns for higher risk).

As for security of tenure. No lease anywhere in the world has a guaranteed right to renew, even under UK law* there are several provisions for the landlord to choose to not to renew a lease and in fact many parties even opt out of the landlord and tenant act 1954 altogether.

I don't think anyone has any reason to doubt that the fact that contractual benefits in a registered lease are enforceable throughout the duration of the lease term. What happens after its expiry is down to negotiation as it is everywhere.

So yes I agree that it is highly unlikely to make capital appreciation over the long term but a better annual return based on pure rental income should be possible, just so as long as you back the right horse!!

[Lazy Sod]

An interesting update on the pricing of The Sukhothai Residences: despite being on their top list of clients invited to view and buy a condo, my price was was offered at THB240k psm. A Thai friend on a similar list was offered his at THB180k psm Dual pricing indeed. He too is a speculator, so a nice tidy profit when he resells.

Perhaps they are selling the 49% foreign quota at a premium, same as nearby places with high foreigner demand such as The Legend on Saladaeng.

Or perhaps selling at thb 180 due to low local demand ,

Out of curiosity , can a local buy a unit under the Thai 51% quota and them on sell to a foreigner under the 49% foreign quota ,especially if building is not sold out can they play around with quota?

Interesting point. I believe they can sell from Thai quota to Foreign quota providing that at the time of transfer there is foreign quota available. Could be a way to make a quick buck if you have a Thai partner, but the problem with doing this at places like The Sukhothai is that you are not actually buying yet, you are only booking. So I guess the developer will not guarantee there will be foreign quota available if you book under Thai quota.

[samtam]

No, you're buying now. Not just booking.

[trajan]

An interesting update on the pricing of The Sukhothai Residences: despite being on their top list of clients invited to view and buy a condo, my price was was offered at THB240k psm. A Thai friend on a similar list was offered his at THB180k psm Dual pricing indeed. He too is a speculator, so a nice tidy profit when he resells.

the B240K psm is the sale price (after the pre-sales period)...the lower prices (variable by floor and particular unit) were applicable during the pre-sales reserved period....I was offered those..... not dual pricing as you define...

Edited January 4, 2008 by trajan

[trajan]

It appears that hi-end luxury is on the ascendant climb in Phuket:

From today's Bangkok Post (Jan 9th 08)

PHUKET PULLS IN THE WORLD'S SUPER-RICH

More high-end projects attracting notice

Story by ALASDAIR FORBES

Ten years ago in Phuket, the most expensive home you could buy would have been a villa in the Baan Kata development. Prices for these luxury homes started at around 10 million baht _ at that time about US$250,000.

Today the most expensive home on the market in ''Greater Phuket'' _ Phuket and the coastline just north of the island, in Phangnga province _ is Villa Natai. This 6,000-square-metre home with a private golf course and bowling alley goes for $25 million _ equivalent to 100 of those homes in Baan Kata.

Villa Natai was built for Eric Levine, the founder of California Fitness (California WOW! in Thailand). The villa has a 350-square-metre fitness centre.

Nick Anthony of Phuket's Indigo Real Estate, which has the task of selling this aircraft-hangar-sized house, said, ''Over the past four years the second home market has suddenly expanded.''

Bill Barnett, co-founder of C9 Hotelworks, a property and hotel consultancy, agrees. ''We've seen quite a dramatic shift in Phuket from people buying as primary investors,'' he says. ''Now people are looking for investment properties. They're buying investment yields. This is not unique to Phuket. It's global.''

Why Phuket? ''Wealth attracts wealth,'' Mr Barnett says. ''Look at the number of private aircraft landing [in Phuket] these days. It's around 500 a year.'' Three years ago such flights could have been counted on the fingers of one hand.

''These people already have homes in Tuscany, Bordeaux, Queenstown or Whistler. They have expendable income _ for them the amounts are relatively insignificant. And Phuket is growing in sophistication.''

This increasing sophistication allows the very rich, especially those already based in Asia, to see Phuket as a place where business mixes with pleasure.

One example is Canadian Alan Zeman, a highly visible figure in Hong Kong. Chandara, his home on Phuket's west coast, reportedly built at a cost of $12 million, incorporates full offices that allow it to serve also as his business base in Phuket. On the island he has completed an upscale shopping centre, and is now building a high-end property project.

A more recent arrival is Richard Li, son of Li Ka-shing, Hong Kong's wealthiest person. Richard Li _ himself ranked by Forbes as 754th-richest person in the world _ bought a villa at Samsara, on a headland just north of Patong. He is now in the process of taking over Thai Muang Golf Course in Phangnga, which will, naturally, have expensive villas for sale around the fairways and along the nearby beach.

New Zealand brothers Richard and Christopher Chandler, who together rank as the 488th-richest people in the world, have bought eight homes at the Trisara resort on Phuket's west coast. Villa prices there start at $4 million.

Rising with the boom in high-end homes _ and helping to fuel it _ is a boom in branded resorts with villas for sale attached, such as the JW Marriott near the airport and the Movenpick in Karon. More recent arrivals in this market are Hyatt, Shangri-La and Raffles.

Adrian Zecha is credited with inventing the whole resort-and-villas concept 20 years ago at Phuket's Amanpuri. He's now involved in an ultra-luxury hotel under construction on the east coast of the island. The Yamu, as it's called, will be run by GHM, Mr Zecha's hotel management company.

The Yamu, next to the Cape Yamu development, where 26 villas have already sold for prices ranging from $3 million to $6 million, will be surrounded by two types of privately owned villas.

For those looking for a complete escape there are the Club Villas, priced at around $2 million, which will form an exclusive hotel within the hotel. The much more spacious Villa Estates, each consisting of a main pavilion and three guest pavilions _ and four swimming pools _ will sell for $8 million and up.

The first booking for a Villa Estate at The Yamu was made before marketing had even begun. Word got out and someone with cash to spare wanted to get in early.

Part of the allure of such high-end property is not just the hotel brands, but the other famous brands attached to them. Campbell Kane, owners of The Yamu, have packed in a trio of heavy-hitting names.

Apart from the Zecha/Aman connection, the design is by Frenchman Philippe Starck, one of the most famous designers in the world. The architect is Belgium's Jean Michel Gathy, renowned for his resort designs worldwide, especially for Aman.

Mr Gathy has already done work on the island. On the west coast, he was architect and designer of the art dealer Eric Smulders van Heer Janspolder's large cliff-edge home. The Gathy name is clearly one that adds lustre.

Mr Starck sets the tone for this kind of ''beyond mere homes'' development. He comments, ''Some people think that architecture is about aluminium, steel and glass. I don't think so. I think it's about love and poetry.'' His designs, he says, are for ''intelligent people; the smart tribe''.

Intelligent, smart and very wealthy, more and more members of the tribe are heading for Phuket.

Alasdair Forbes was managing editor of the Phuket Gazette newspaper for eight years. He now runs the Phuket-based editorial consultancy Forbes Communications.

//

[thaigene2]

Trajan

Come on pal..I mean, I know you're not responsible for the BKK Post publishing a shameless advertizing/opinion piece like that in the 'news' space of their paper, but it is quite shameless on the Post's part I think (it was on the back page of the Biz section today). As far as Phuket goes, "wealth attracts wealth" said the salesman..The sky's the limit! Everyone with money is buying here - hurry, hurry, before there is no island left, he screamed! - and they published. Shame..

By the way, isn't Li Ka Shing's son named "Victor" Li - not Richard? Or is there another son? Perhaps - not sure. The important one is Victor though, pretty sure of that.

Edited January 9, 2008 by thaigene2