Property Overseas: Is It Safe To Buy Thai?

[Mobi]

Property overseas: Is it safe to buy Thai?

Graham Norwood

Last year's coup sent property prices tumbling. Graham Norwood investigates the drive to attract British buyers back to the market

As foreign holiday home destinations go, Thailand ticks all the boxes: tropical sunshine, tranquillity, low property prices and bullish estate agents. But on September 19 last year, a coup and declaration of martial law sent the country and its economy into flux. Holiday homes dropped in price due to the volatility of the baht, Thailand's currency, and confidence levels followed suit.

Yet the property industry is not easily deflated and a year later a post-coup charm offensive is being launched to resuscitate British interest in Thailand. One estate agent selling in the region has thrown champagne receptions in cities across the UK, offering invitations to Thailand to look at new schemes in Phuket and Koh Samui. So what is the current state of the market?

"Demand for property definitely cooled off as a result of the coup, almost up to 50 per cent," admits Robert Green of Cluttons Resorts, which has started selling properties on the Banyan Tree Resort in Phuket. "But sales are moving relatively slowly again and although prices have remained static in the past year, they are picking up.

"Ninety per cent of our enquiries are for two- to three-bedroom villas in managed top-end resorts, which offer rental returns," says Robert. "Buyers are still looking for properties as an investment as well as for their own use." Robert Collins, head of Savills's Thailand office, describes sales as "subdued" and warns that "the strengthening of the baht is having a negative impact on the economy". Foreign buyers, he says, are taking a "wait and see attitude".

His colleague, Charles Weston Baker, Savills's head of international sales, however is confident that buyers will return. "Thailand is an incredibly beautiful area, few places in the world compare to it, and the coup has not unduly affected interest," he says. "It is a two-tier market, both regional - from Singapore and Hong Kong - and European, so there is good demand. People still see Thailand as a top holiday area and rightly so." Others have commented that the military government's promise of a general election before the end of the year could bring an end to the political uncertainty. "As coups go, this has not been the worst," says Robert Collins. "The market will hopefully stabilise and if a democratic government comes to power, controls on foreign ownership will be relaxed," he predicts. "The biggest problem is the complicated ownership laws."

Foreigners can buy a freehold or leasehold property in Thailand, but are not allowed to buy a freehold plot of land. If you plan to buy a house or villa, then you must set up a Thai limited liability company jointly with Thai nationals who have to prove they can take over your payments should you default. Start-up costs are £1,000, with ongoing fees of about £50 a month.

Claire Brown, whose company Claire Brown Realty specialises in Thai middle- to top-end property, believes there is a better way than this "back-door" method of buying.

"You don't need a separate company to buy a house if you buy leasehold," she says. You can usually only buy for a total of 90 years, via three "rolling" 30-year leases. "It's a more legally robust system which doesn't try to circumvent the law," she says. "It is straightforward to sell on, as the developer will renew the 30-year lease and it is cheaper with stamp duty at 1 per cent as opposed to 6·6 per cent for freehold."

But other agents warn of the potential pitfalls associated with leasehold purchases. "The 90-year lease idea simply loses value year by year," warns Julian Cunningham of Knight Frank. "A buyer must be very careful who he buys from, and what and where he buys."

Stephen Owen, of Dhevatara Properties, who sells top-end villas in a gated beachfront community on Phuket, warns against buying a leasehold property. "A foreigner can legitimately set up a company to buy a property. If freehold, there is no problem selling on; if leasehold, the developer can always turn around and not renew the lease. This happened at a top residential resort here which was given notice after only 14 years. There was a legal battle to extend to 30 and nothing longer has been promised."

All of which begs the question, for a country which is so keen on foreign investment, shouldn't the laws be made easier? "The government is under increasing pressure to open up the market and make it less complicated," says Robert Green, "but it will be a good few years before the regulations ease up."

Certainly the political and economic turmoil of the past year and complicated buying procedure hasn't deterred longer-term owners such as Londoner Neil Redcliffe. Shortly before the coup, he bought a villa on Coconut Island at Maphrao, an island just east of Phuket, after visiting Thailand frequently over the past 25 years.

"It's a beautiful country where the quality of everything - furniture, building, service - is five star, just as those qualities are going down in areas like the Caribbean," says Neil, head of a foreign exchange firm.

"Through my job I'm aware of what's been happening. The effects of the coup won't last long. The former government was on a track unpopular with Thai people, so I see the military involvement as a sign of strength," he says. "Thailand is superbly positioned. The culture and the food are fantastic, and I love it."

The target for Thailand, now, is to persuade the rest of us to love it too.

[londonthai]

"It's a beautiful country where the quality of everything - furniture, building, service - is five star, just as those qualities are going down in areas like the Caribbean," says Neil, head of a foreign exchange firm.

"The former government was on a track unpopular with Thai people, so I see the military involvement as a sign of strength,"

if the market slow - drop the price, which is heavily inflated for the rich farangs.

as to 5* quality of everything than Neil is telling porkies to lure buyers.

the former government was, more or less, elected and was perceived as stable - the military coup did strengthened the power of the ruling class in thailand, but has corrupted the democratic processes and showed, that thailand is a volatile country where is not the best to invest long term

[ThaiAdventure]

So thats a NO then. But we all know that anyway and still buy

[the gent]

Articles such as this do serve a purpose in that they remind one just how despicable the average estate agent can be in his insatiable desire for filthy luchre without actually doing anything for it beyond peddling deceit.

Shooting 1 in 10 could be a reasonable start.

[solo siam]

"It's a beautiful country where the quality of everything - furniture, building, service - is five star, just as those qualities are going down in areas like the Caribbean," says Neil, head of a foreign exchange firm.

"The former government was on a track unpopular with Thai people, so I see the military involvement as a sign of strength,"

if the market slow - drop the price, which is heavily inflated for the rich farangs.

as to 5* quality of everything than Neil is telling porkies to lure buyers.

the former government was, more or less, elected and was perceived as stable - the military coup did strengthened the power of the ruling class in thailand, but has corrupted the democratic processes and showed, that thailand is a volatile country where is not the best to invest long term

Why would he need to lure buyers? read the short article, he's just bought a house here, thats all.

[taxexile]

Articles such as this do serve a purpose in that they remind one just how despicable the average estate agent can be in his insatiable desire for filthy luchre without actually doing anything for it beyond peddling deceit.

short , sharp , and spot on .

[think_too_mut]

Articles such as this do serve a purpose in that they remind one just how despicable the average estate agent can be in his insatiable desire for filthy luchre without actually doing anything for it beyond peddling deceit.

short , sharp , and spot on .

The article is plain rubbish. What would one expect from a small format papers?

[londonthai]

to be more precise - torygraph

so the british rulling class supporting thai rulling class

[Captain Chaos]

to be more precise - torygraph

so the british rulling class supporting thai rulling class

To be even more precise - 'Torygrope'!

Disappointing to see such a shallowly researched article in what is a respected broadsheet publication though, irrespective of its political views

[Mobi]

Articles such as this do serve a purpose in that they remind one just how despicable the average estate agent can be in his insatiable desire for filthy luchre without actually doing anything for it beyond peddling deceit.

Shooting 1 in 10 could be a reasonable start.

Not often I agree with you Gent, but on this occasion you are spot on, and I have nothing further to add.

[backflip]

"Last year's coup sent property prices tumbling"

Where? The first sentence is wrong, and it goes pear-shaped quickly after that.

[lazeeboy]

"Last year's coup sent property prices tumbling"

Where? The first sentence is wrong, and it goes pear-shaped quickly after that.

people arn't stupid ,they read the news ,even a very stupid person knows that there are problems here ,you cant pull the wool over it anymore ..

[Irene]

Property overseas: Is it safe to buy Thai?

Graham Norwood

"Through my job I'm aware of what's been happening. The effects of the coup won't last long. The former government was on a track unpopular with Thai people, so I see the military involvement as a sign of strength," he says. "Thailand is superbly positioned. The culture and the food are fantastic, and I love it."

The target for Thailand, now, is to persuade the rest of us to love it too.

No, correction, Thais never persuade foreigners to love and buy Thai property. On the contrary, they have made it more difficult for foreigners to buy landed property!!!

[stevejones123]

This article is not quite so stomach-churning as the ones British papers publish suggesting people buy in Goa, where estate agents sell, at freenhold prices, a five-year lease and blatantly lie claiming you have the right to register the freehold any time you want under a tourist visa, and that there is no problem in rolling over the lease (until they decide not to renew of course) but it is still criminally negligent.

There is no reason the Telegraph shouldn't publish the truth, which is that foreigners can own condominiums freehold but that anything else is asking for trouble, but as has been said, real estate scum, with the aid of clueless or junketed journos, are out to rip people off.

Edited September 23, 2007 by stevejones123

[nognoi55]

I bought a room at Baan Sathorn Chao Phaya. It's a nightmare. The same owner is also selling a new project at Baan Rachprasong. Buyer beware.

[londonthai]

I smell a rat - are you, by any chance, his direct competitor rather than buyer?

[GuestHouse]

Demand for property definitely cooled off as a result of the coup,

No mention of the enforcement of long existant laws prohibiting foreign ownership of land.

Crooks - and the Telegraph is not much better for publishing that <deleted>.

[Ollie]

Two weeks ago in the "Home" section of the Sunday Times, a "lawyer" expert in foriegn property answered a question from a guy seeking to buy a couple of properties as an investment in LOS. He basically got the green light. Nothing about land/lease/company law etc. The guy making the enquiry never mentioned if his wife was a Thai.

I was tempted to pen a reply, but I couldn't be a**ed!

I wondered about what UK Thai developer the "lawyer" was tied into?

[SNGLIFE]

I really want to own land, but I hope, for Thais' sake, the market NEVER opens up to allow foreign ownership of land. If it ever does, the same thing that happened to Hawaii and native Hawaiians will happen to Thais...

PERIOD.

[dee123]

.....I don't want to dig too deep about misleading journalism but ,I caught a short piece about the coup from BBC's Bangkok correspondent and although what she said was true she did not complete a rounded picture........if you know what I mean

[typist]

I bought a room at Baan Sathorn Chao Phaya. It's a nightmare. The same owner is also selling a new project at Baan Rachprasong. Buyer beware.

I'd appreciate if you could tell us your experience?

I heard that some who bought off plan were unhappy (gym location, common rooms not as specified in plan), and I've also heard that some co-owners are suing the developer as they allegedly spent sinking fund money on day-to-day operations of the building, until co-owners got control of the juristic person.