Housing Prices

[DanBlack]

What do you think the future prices of housing in Phuket might be? Would you even take the chance of throwing you're money away here.

[LivinginKata]

Dan, as long as you buy at a sensible price then you should not 'loose' any money. The 'cheapest' way to purchase a property is either to buy off-plan from builder/developer, and wait typically 6 - 9 months for the house to be built. You make staged payments, thus financing the builder. Once house finished then you could sell for at least 20% more than you paid. Or you could buy the land yourself and get a reputable builder to build you dream home on a fixed price. Given that you have no dramas during building (and that often happens) then you could expect your home to be valued at least 30% more than your cost price. A well sited plot of land can appreciate at least 10% per annum, much more for land with sea view.

If you buy a 'second hand' home, an already established house & land, then you won't make much profit if you decided to sell on, and you might not even get what you paid if you buy for too high a price. You should only calculate a modest price appreciation of somthing less than 5% per annum. But you are living rent free, and that's worth at least another 5% per annum. Another major benifit of buying an established home is that you can see what has already been built in the neighbourhood, and the general ambiance of your new street.

Any questions, then PM me.

[Wellington]

Dan, as long as you buy at a sensible price then you should not 'loose' any money. The 'cheapest' way to purchase a property is either to buy off-plan from builder/developer, and wait typically 6 - 9 months for the house to be built. You make staged payments, thus financing the builder. Once house finished then you could sell for at least 20% more than you paid. Or you could buy the land yourself and get a reputable builder to build you dream home on a fixed price. Given that you have no dramas during building (and that often happens) then you could expect your home to be valued at least 30% more than your cost price. A well sited plot of land can appreciate at least 10% per annum, much more for land with sea view.

If you buy a 'second hand' home, an already established house & land, then you won't make much profit if you decided to sell on, and you might not even get what you paid if you buy for too high a price. You should only calculate a modest price appreciation of somthing less than 5% per annum. But you are living rent free, and that's worth at least another 5% per annum. Another major benifit of buying an established home is that you can see what has already been built in the neighbourhood, and the general ambiance of your new street.

Any questions, then PM me.

What you also have to bear in mind is the old Estate Agents mantra; 'Location,location,location" if you want to consider the future and gain a decent mark up on your purchase........sea view, golf view, lake view will always sell.

Property in a street of the same or a behind the walls pool villa will always be stickers.

[LivinginKata]

I agree completely about the location thinking, however a home with a great location most likely has a high price tag. My reply to Dan was a generalisation. Clearly, those thinking about buying a home would have to consider market & price conditions for lower, mid, and high end properties. Dan did not indicate his price range. From my conversations with various estate agents & sellers it seems to me that high end propertiesin the 20 + million baht have stalled these past 12 months. There seems to much more interested buyers in the 3 - 5 million baht range. That sort of price range would not likely have the best location, and are most likely in a large housing estate, but prices tend to be more stable, and on a modest % increase increase.

[ade100]

In other parts of Asia Pac property prices have been booming. In Singapore they have almost doubled over the last two years. However this is mostly fuelled by foreign speculators which, of course, is not something Thailand is very open to.

My anecdotal evidence of Phuket suggests steady growth. When I first came to Phuket two years ago I was thinking about buying an apartment of-plan at the Ocean Breeze condominium. Asking price was 4 Million THB. I have just seen the last ones selling for 8 Million.

Currently I am buying a place at Permsap Villas. Every quarter they raise the prices by 5% and appear to be selling. So 20% per year growth.

The trend seems to be steady growth but a lot will depend on the economic and political stability following the elections. And that is an unknowable factor.

[SiamRealEstate]

Hi DanBlack,

Please feel free to contact us if you want to talk to an agent or have more questions or need advice although of course Thai Visa is good way to start!

We have Thailand's largest selections of listing on our website, which is quite easy to use and to narrow down a search.

For example should you want to take investigate LivinginKata's advice you can just search developments.

[LivinginKata]

Hi DanBlack,

Please feel free to contact us if you want to talk to an agent or have more questions or need advice although of course Thai Visa is good way to start!

We have Thailand's largest selections of listing on our website, which is quite easy to use and to narrow down a search.

For example should you want to take investigate LivinginKata's advice you can just search developments.

Oh Dan, another thing. Try not to buy through an estate agent or middle man as one way or another you will be paying the agents 10% commision. Yes, the seller pays the commision, but usually inflates the sell price to cover that 10%. Beware....

[Wellington]

Hi DanBlack,

Please feel free to contact us if you want to talk to an agent or have more questions or need advice although of course Thai Visa is good way to start!

We have Thailand's largest selections of listing on our website, which is quite easy to use and to narrow down a search.

For example should you want to take investigate LivinginKata's advice you can just search developments.

Oh Dan, another thing. Try not to buy through an estate agent or middle man as one way or another you will be paying the agents 10% commision. Yes, the seller pays the commision, but usually inflates the sell price to cover that 10%. Beware....

[SiamRealEstate]

Didn't mean to offend anyone,

we have rules and we have privileges as sponsors and I don't believe the post was

a violation of the sponsor guidelines.

I simply wanted to mention our services and our presence.

PS of course the agents make a commission but it is far from 10%

[LeungKen]

IMHO all the best bargains are to be found by researching local communities, they will not be found advertised in English or through real estate agents, but they are to be found in Phuket if you take your time and do your homework.

[LivinginKata]

Didn't mean to offend anyone,

we have rules and we have privileges as sponsors and I don't believe the post was

a violation of the sponsor guidelines.

I simply wanted to mention our services and our presence.

PS of course the agents make a commission but it is far from 10%

You did not offend me.

I'm sure the post was not in violation of sponsor guidelines.

I know everyone in business needs to make money.

I know of plenty agents making 10% on sales and rental contracts. From my ersonal experiences and talking to sellers. Does not bother me, just want to make buyers BEWARE of inflated prices.

I always advise newbies in town to look about for the FOR SALE or FOR RENT signs direct by owners. That's where the best (= cheapest) deals can be found. IMHO....

[WOOHOO]

I think it's only fair to say, that companies like Siam Real Estate, do offer a pretty good service if you have plenty of money to spend and not a lot of time to do your own research, but as for any service you will always pay a price. LeungKen hit the nail on the head. The houses being sold at their truest value will be houses owned by Thais, being sold to other Thais. Therefor the advert won't even be in English. The best thing possible is to have the assistance of a Thai friend that you trust and will help you search for and buy your house without wanting any financial reward.

[DrDave]

The future trend of housing prices is a bit difficult to predict, but I'd agree that new construction will appreciate faster than something older.

You didn't mention whether you're interested in a single detached house, or a condominium.

When considering new construction in an apartment or condo project, there are considerable risks when buying "off-plan". Many times, the developer will be selling units without having gotten the proper approvals and building permits. In some cases, the project that actually gets approved by the authorities and subsequently built is significantly different from what was advertised during the "off-plan" sales phase. In addition, there may be long delays until the construction starts (if it ever starts!). While you can expect to get a much better price when buying off-plan, this also puts your money at risk, possibly for a long period of time.

To minimize your capital risk, try to arrange a "backloaded" payment schedule - one that provides for the majority of the sales price to be paid closer to the completion/handover date. Some of the more reputable builders will offer contracts with payment schedules that call for 50-70% of the purchase price to be paid at completion/transfer. Avoid projects that front-load the payment schedule, requiring you to pay a significant amount of the purchase price before a substantial amount of construction has been completed (or even started).

Lastly - regarding real estate agents... the decision to use one should be based upon the value that they bring to the transaction. Do they support you through the entire process of selecting, negotiating, buying and transferring the property, or do they just connect you with the seller? How up-to-date are their listings? From my experience, several prominent agencies have carried listings on their websites that are several months (and in some cases, well over a year) "stale". That is, the properties had been previously sold. An agent, working on a full commission basis that is really nothing more than a listing and introduction service should be avoided. There is, however, a lot of value in working with an agent who will provide support to you throughout the entire process as part of their normal service.

[DanBlack]

Actually, I have found an interesting piece of property, and was thinkin of building

[LivinginKata]

Would you even take the chance of throwing you're money away here.

My answer is YES. I would take the chance, and don't think 'I would be throwing my money away'

[LivinginKata]

Hey Mods, why did you completely remove all the comments about a SPONSOR agressively using this forum to promote their business ?? Is this not subject up for member debate ??

[LeungKen]

Hey Mods, why did you completely remove all the comments about a SPONSOR agressively using this forum to promote their business ?? Is this not subject up for member debate ??

The Op should take note.

[taxin]

Hey Mods, why did you completely remove all the comments about a SPONSOR agressively using this forum to promote their business ?? Is this not subject up for member debate ??

Did this really happen ? Sorry as im a bit of a late arrival to the thread.

I suppose in defense of the mods it is a little off topic to be discussing if a sponsor should be allowed to actively pitch other posters, but still its a very interesting point made by livinginkata.

I think siamrealestate didnt help by by being so obvious, might have been better to go with the less obvious "in-direct" route by simply answering the OP's original question, or by sending a PM.

But then again, PM messages dont help when the main purpose is for optimization and getting your name on the forums

[LivinginKata]

Yes it did really happen. Wellington made quite a mild remark about a SPONSOR making a reply, and it was depeted... 'Reason for edit: inflammatory post removed. Siam Real Estate is one of our sponsors. Please respect that.'

I made a mild repsonse in agreement to Wellington, and my post has completely vanished...

Never post was inflammatory, think we just wanted clarification about how far a SPONSOR is allowed to go on this forum to promote their services. No doubt this post will soon be removed....

[fiddlehead]

Yeah, i've learned that in other forums: The more mods, the faster the forum goes downhill.

People start to be afraid to post what they really think or mean. And sooner or later it's : What's the point in even posting anymore?

At least that's what i've seen happen all too often.

[Iolare]

Getting back to the original topic, I think the future of housing prices in Phuket is up, but there’s a lot of uncertainty in the marketplace right now. Assuming the election goes well, and there is an elected government in place again, and assuming that government clears up the confusion with the foreign business act, and provided the government doesn’t tighten up the visa rules even more, and if they drop the 30% capital control, and.......and....., then it will go up. You get the idea.

I don’t think you’d be throwing your money away if you proceed carefully, and take advantage of these uncertain times by making a purchase now. I’ve talked to a few local brokers who say that business is very slow especially in detached homes built for the expat market. Condos are a different category.

Then there’s the whole separate issue of the many different titles for property, and what you can safely buy and rely on. Since you’re looking at land to build on, I assume you’ve got a Thai wife who will actually take title. That’s my situation, and we’ve bought three parcels of land this year, and are looking for more. We’re building on one now.

Good luck to you.

[LivinLOS]

The elephant in the living room for me is the health and future of the king and what that means for the governance of the country and stability.

25 odd coups in the history of modern Thailand doesnt bode well.. Thailan has had a pretty unusual period of prosperity and stability for the last 15 years and peoples memories of problems have faded, it was only back in early 90's the army was popping off machine guns at demonstrators. People expect things to remain as they are and improve not become less stable. I would say Thailand has had a lucky streak and is more Burma like or Combo like in its governance than Malaysia like or Singapore like. That fact stops me from making a real seaview villa on some high end land.

As to property I feel on phuket the low end is still going along nicely, cheap expats and thais locating to the area, the 4 mil and under range, tho thats hardly 'investment level' spending.. And the very very upper end 40 - 80m end still seems to be building and selling (to who baffles me but from what I see).. But the 10 - 20 mil range is not selling well and second hand homes that are not on developments, your normal nice one home plot jobs are proving very hard to shift. Land sales itself have simply crashed to a tiny fraction of previous sales with (almost) only Thais in the market nd hence prices not at what previous farang guesses would indicate. Theres also a tonne of bullshit surrounding every sale price etc.

[Abrak]

I think property prices in Phuket will continue to rise but I would caution people that it can still be difficult to make money in this market even though new build prices are rising steadily.

There are a number of reasons for this.

(1) The second hand market is very tricky. Typically second hand units for either a house or a condo are priced at a 30% discount to newly built. Secondly, the second hand market is extremely illiquid - with very few transactions.

(2) The cost of maintenance of a house - especially a beach villa is pretty high. I have a 4/5 bedroom beach villa in Phuket that I dont live in most of the time. It still costs me an estimated Bt120k/month to maintain.

I bought my land in late 1997 (after the crisis), built between 1997-99 (relatively low building costs) and reckon my villa is worth twice what I put into it. A good if unspectacular investment.

I doubt people can go too far wrong building good villas in the best locations on the island.

[lordofdelusion]

The elephant in the living room for me is the health and future of the king and what that means for the governance of the country and stability.

25 odd coups in the history of modern Thailand doesnt bode well.. Thailan has had a pretty unusual period of prosperity and stability for the last 15 years and peoples memories of problems have faded, it was only back in early 90's the army was popping off machine guns at demonstrators. People expect things to remain as they are and improve not become less stable. I would say Thailand has had a lucky streak and is more Burma like or Combo like in its governance than Malaysia like or Singapore like. That fact stops me from making a real seaview villa on some high end land.

As to property I feel on phuket the low end is still going along nicely, cheap expats and thais locating to the area, the 4 mil and under range, tho thats hardly 'investment level' spending.. And the very very upper end 40 - 80m end still seems to be building and selling (to who baffles me but from what I see).. But the 10 - 20 mil range is not selling well and second hand homes that are not on developments, your normal nice one home plot jobs are proving very hard to shift. Land sales itself have simply crashed to a tiny fraction of previous sales with (almost) only Thais in the market nd hence prices not at what previous farang guesses would indicate. Theres also a tonne of bullshit surrounding every sale price etc.

Yep, yep and yep. You said a mouthful there LL. I have been on the island almost 2 years and have been shopping property off and on since I arrived. Many of the resales I saw when I arrived are still available. Most are for rent too. I have seen a drop in prices among those who really need to leave. The construction of too many just leaves me shaking my head so I have remained a happy renter. The rental I've been in is not cheap but has a lot of issues that as an owner, I would be very concerned about.

As for the government, I really wonder what the last coup would have been like if not for the high regard this country has for it's king. His influence will be greatly missed in Thailand someday. Long live the King!

[Iolare]

I think property prices in Phuket will continue to rise but I would caution people that it can still be difficult to make money in this market even though new build prices are rising steadily.

There are a number of reasons for this.

(1) The second hand market is very tricky. Typically second hand units for either a house or a condo are priced at a 30% discount to newly built. Secondly, the second hand market is extremely illiquid - with very few transactions.

(2) The cost of maintenance of a house - especially a beach villa is pretty high. I have a 4/5 bedroom beach villa in Phuket that I dont live in most of the time. It still costs me an estimated Bt120k/month to maintain.

I bought my land in late 1997 (after the crisis), built between 1997-99 (relatively low building costs) and reckon my villa is worth twice what I put into it. A good if unspectacular investment.

I doubt people can go too far wrong building good villas in the best locations on the island.

I agree that location is very important in real estate generally, and especially in Phuket. My background is in real estate related businesses in the USA, and I wouldn’t want to be trying to sell tract housing in inland CA or FL locations right now. But the Beverly Hills and Palm Beach markets are holding up pretty well. Our purchases here are ocean frontage, and I’m pretty sure we could sell to Thai investors if we chose to.

i echo LivinLOS and lordofdelusions' sentiment “Long Live the King.”

[LivinLOS]

Secondly, the second hand market is extremely illiquid - with very few transactions.

Very few people seem to take this into account.. And people pull numbers from new build and compare to resale and look at 'claimed' sale numbers and price accordingly.

The old adage of a house is worth what you can sell it for is so true, I know many nice enough homes that have sat for 2+ years for sale. Is it fair to say they are of X value if you cant liquidate it at close to that value.

Now imagine some kind of turmoil or rushing for the exits ??

(2) The cost of maintenance of a house - especially a beach villa is pretty high. I have a 4/5 bedroom beach villa in Phuket that I dont live in most of the time. It still costs me an estimated Bt120k/month to maintain.

And I thought my last place was a lot of maintenance !! Do you keep full time staff ??

I bought my land in late 1997 (after the crisis), built between 1997-99 (relatively low building costs) and reckon my villa is worth twice what I put into it. A good if unspectacular investment.

On simply cracking the numbers I do far far better with my assets working offshore.. I paid about 3% rental based on the valuation of my last villa and made 35 or so % on my investments.

However the fact is living in rental accommodation has many drawbacks if your really trying to 'settle'.. Or you wish to improve the place or one of many things.

Also I am now back in the market for finding a nice pool villa for long term rent or few years leasehold, finding just the right one proves hard and would love to think that things were truly stable enough to design and build the dream home exactly as I wanted it.

I doubt people can go too far wrong building good villas in the best locations on the island.

Here I agree totally with the exception I have listed out already.. Only at some point in the coming few years theres going to be a very tense issue and then all bets are off.

[Abrak]

And I thought my last place was a lot of maintenance !! Do you keep full time staff ??

I have three full time staff - two maids and an odd job man. That might seem excessive (I have a similar size house in BKK and I simply have a maid.) But a house within 20 meters of the beach requires a lot of upkeep with constant repainting/revarnishing etc..

The staff easily pay for themselves.

Incidentally I would agree that buying a villa is unlikely to be the best possible use of your cash.

I have just bought a 3 rai plot on the beach in Phuket and will be building a large villa. I am under no illusion that I will do well to cover my costs plus interest. There is a lot to be said for owning your own place, building what you want etc though. That is worth a lot to me.

I believe that beach villas are as much a lifestyle choice as an investment decision.

As a side note - these villas rent extremely well - but only for short term rentals. (I can get up to US$1500/night for my place.) Long term rentals dont make sense either economically or as an ownership proposition.

It is nigh impossible to go to Phuket and pick up a really top end villa on a long term rental.

[LivinginKata]

Actually, I have found an interesting piece of property, and was thinkin of building

The OP is thinking about buying a simple plot of land and (I guess) building a modest home. Not sure why some members are discussing exotic properties, with exotic costs. All step back and take a reality check...

Edited December 2, 2007 by LivinginKata

[Wellington]

Hi DanBlack,

Please feel free to contact us if you want to talk to an agent or have more questions or need advice although of course Thai Visa is good way to start!

We have Thailand's largest selections of listing on our website, which is quite easy to use and to narrow down a search.

For example should you want to take investigate LivinginKata's advice you can just search developments.

Oh Dan, another thing. Try not to buy through an estate agent or middle man as one way or another you will be paying the agents 10% commision. Yes, the seller pays the commision, but usually inflates the sell price to cover that 10%. Beware....

I still think,sponsor or not, that Property agents here are in a cartel and commissions are too high.

That is NOT inflammatory.

That is fact and needs debate.

[Ping]

VERY interesting thread. I'll be sure to visit it regularly to look for further developments. Oh, and the on-topic stuff is mildly interesting as well.