Phuket / Patong

[ShugNorris]

Hi,

As you may have noticed in my previous thread, I'm purchasing a condo in Phuket.

There were two I was interested, one in Karon and one in Patong itself (on the North side of Patong, nearby the Unity)

Both have 'sea views' or as I'd say 'partial sea views'

Anyway, I have read a lot on here about how Patong is a bad investment.

I know I shouldn't trust an estate agent too much but they seemed to think that there is excellent rental in Patong and studios especially were a great investment.

Both of the condos were 'OFF PLAN' and the real estate people were highly confident they could resale the units before they were even complete.

The condos all sold very quickly.

Would I be better to 're-sale' my off plan condo or would I stand to make money once it is complete by an increase in value or even rent it out?

I actually bought it purely for investment purposes.

To be honest, I was fairly confident that I'd keep it but I unfortunately came to Thaivisa and read a lot of bad press about condos in Phuket which has kinda got me worrying slightly!

Thanks in advance, all advice will be greatly received!

EDIT: I purchased LEASEHOLD. Does it really matter? I was too late for the freehold quota.

Shug

Edited September 6, 2012 by ShugNorris

[falkan]

who will buy 30 years leasehold? anyone with some iq will buy freehold so you can "own it"...

and btw there is so many condos now for sale in Kata,Karon,Patong that been empty for years..

to buy condo there is like open a bar in patong good luck!

[donx]

I've never heard of a leasehold quota before. I have heard of a foriegner owned quote (up to 49% of livable space). I always assumed that all properties within a given development would be freehold or not. Can you clarify this situation?

[johnnyk]

I would never "buy" a condo on a leasehold arrangement.

1) It's a diminishing asset

2) Upfront payment means that money is gone forever

[ShugNorris]

Hi,

49% is freehold but the other 51% is leasehold, so therefore Thai owned. Although 3 x 30 year lease is 90 years. You can re-sell leasehold also.

Anyway, it can be owned freehold in my Thai wifes name for example... but not foreigner freehold.

The condos are still selling fast though, I looked at a condo, still off plan and during construction and someone had bought it off plan and were re-selling it at over 500 000 higher (as construction had begun)

Anyway, it's just interesting to hear any experiences.

Shug

[sportsman69]

Hi,

49% is freehold but the other 51% is leasehold, so therefore Thai owned. Although 3 x 30 year lease is 90 years. You can re-sell leasehold also.

Anyway, it can be owned freehold in my Thai wifes name for example... but not foreigner freehold.

The condos are still selling fast though, I looked at a condo, still off plan and during construction and someone had bought it off plan and were re-selling it at over 500 000 higher (as construction had begun)

Anyway, it's just interesting to hear any experiences.

Shug

Shame I won't be around to see it in 30 yrs. time but would be interested to see how the next 30 + 30 lease pans out. To my knowledge and talking to my lawyer, not worth the paper it's written on.

" You can re-sell leasehold also." This I think Johnnyk was referring to, the law of diminishing returns. The less the lease has to run, the less it's worth.

" and were re-selling it at over 500 000 higher (as construction had begun)"

Selling or have sold ? there is a big difference between trying and getting especially in today's market.

As falkan says +1, Good Luck

[johnnyk]

Hi,

49% is freehold but the other 51% is leasehold, so therefore Thai owned. Although 3 x 30 year lease is 90 years. You can re-sell leasehold also.

Anyway, it can be owned freehold in my Thai wifes name for example... but not foreigner freehold.

The condos are still selling fast though, I looked at a condo, still off plan and during construction and someone had bought it off plan and were re-selling it at over 500 000 higher (as construction had begun)

Anyway, it's just interesting to hear any experiences.

Shug

Shame I won't be around to see it in 30 yrs. time but would be interested to see how the next 30 + 30 lease pans out. To my knowledge and talking to my lawyer, not worth the paper it's written on.

" You can re-sell leasehold also." This I think Johnnyk was referring to, the law of diminishing returns. The less the lease has to run, the less it's worth.

" and were re-selling it at over 500 000 higher (as construction had begun)"

Selling or have sold ? there is a big difference between trying and getting especially in today's market.

As falkan says +1, Good Luck

Yes, it's worth less with each passing year. Not only that, it's paper not bricks and mortar. No such thing as 30+30+30. Land Offices recognize only ONE 30 year lease at a time. That is what goes on the back of the chanote. Never mind what the agent/seller says, the L.O. is what matters.

How does OP know the other 51% is leasehold? Thais don't need that rigamarole, they just buy in their own name.

I wonder if OP is confused about the 49/51% condo regulation? Maximum 49% falang ownershp in the building. The other 51% must be Thai-owned and why would they bother with leasehold nonsense?

[ShugNorris]

Hi,

Thanks for the replies guys, yes of course it makes sense not to purchase leasehold.

Anyway, what I mean regarding the 51% leasehold, I suppose it's not necessarily leasehold, I assume that 51% remains owned by the developer (Thai company or Thai owner) which then means they can lease them out and it's not foreign owned.

Therefore they can sell 100% to overseas buyers because not many Thais buy up the condos.

To avoid leasehold I could just follow the start a company and purchase property in company name route.

The leasehold condos are selling at the same price, it's not in the developers interest to screw people over and yes, it may not be worth the paper it's written on the 30+30+30 thing but there would be an agreement in place and I'm not buying from an individual, it's from a 'respected developer.'

Anyway, I'm not arguing the case for leasehold here because obviously freehold is the logical and smart choice.

Another option could be purchase freehold in Thai wifes name (yes, may have issues from some on here) - only advantage to leasehold is less tax at land office.... short term advantage!

The issue was more the property market in Phuket itself and not the advantages and disadvantages of leasehold and freehold.

With the expansion of Phuket airport and predicted increase of up to 4 million tourists per year isn't this a positive thing for property prices in Phuket?

With regard the re-sale condo I spoke of ... selling.. it's SOLD. A lot are being re-sold, the price of the condo is worth more as the construction goes on, so in theory, you get good return on your investment buying off plan and selling when it's built.. but not without risk of course.

Shug.

[xylophone]

Firstly, as per another poster, the 30+30+30 lease really doesn't exist in Thai law. Secondly forming a company to buy the condo really makes no difference as you can't own it if it is leasehold, no matter what you put in place.

For the record, many Thais buy off the plan, because they can do so with a very small deposit and then they hope to sell prior to completion for a profit. Unfortunately many of them also get burnt because it really doesn't work this way. Patong is way over developed and even now the infrastructure cannot cope, i e. It's now the rainy season and there is a shortage of water in Patong; when it does rain all of the drains flood and many of the roads also; outages of Internet and cable TV are common and many roads need constant repair because they were not built for the type of traffic they are now experiencing.

Add to that the fact that there are many unsold condominiums and apartments in Patong, some up to 4 years old and of course the fact that you can rent a room in the low season for 400 baht a night and in the high season for 1000 baht a night and you get to see that the rental market struggles.

You may be one of the lucky ones, but why take the risk. If you have a chance to sell it now for a profit, then take it because there are plans for many more condominiums and apartments in the offing and second-hand ones a couple of years down the track will not be fetching anything like what you will pay for yours.

For the record, at the North end of Nanai Road there are 400+ apartments/condominiums being built and available now off the plan. Go to the southern end of Nanai Road and there are two very large apartment blocks which have been uninhabited for many years now. And that does not include many more hundreds of apartments and hotel rooms being built in Nanai 8 as speculative investments by developers, some of which have been completed and which have been empty now for many months.

I really do fear for the future of property owners in Patong. I say this having owned two properties and one small business here and fortunately having sold them for a little profit some while ago. Not now I'm afraid.

[falkan]

and please dont forget to give us a update in 6 months how everything went.. becuse you dont listen to us anyway...