Farang Owned Condos

[Thaiquila]

If, as it seems many people believe, it becomes impossible to buy a condo in Thailand through a company, what happens to the values of existing and new condos that are available for full farang ownership (the 49 percent)?

Would there be two totally separate markets within the same buildings? Double price markets, or would it be the same market, with declining prices for everyone?

Edited June 6, 2006 by Thaiquila

[Gary A]

I view this as a serious threat as far as buying a condo that is not yet finished. I remember years ago that those high priced high rise projects were not able to sell enough units to pay for the utilities and the maintenance. No water or electric and not enough money to finish things. Some STILL sit empty. This will cause the resale units that are already farang owned to be worth considerably more baht. Those pre-construction prices of 100,000 baht per square meter will be in BIG trouble.

[paperwerks]

There will definately be pressure on prices in buildings where falangs have used corpoations to circumvent the 49% restriction law. I am thinking of View Talay in Jomtien but lots of other projects apply. Some, but certainly not all, falangs will have to or desire to sell. Also, money is beginning to get tight and a global economic slowdown may be in progress. The first thing that gets sold when things slow down is the foreign beach condo. And it will be sold for whatever the market will bear because the owner is in trouble and trying to save his primary residence. There wil be some bargains in 12 months time.

[Tufty]

I voted UP as the fella down the hall from me who has his up for sale raised the price by 1m cos he thinks people who need two bedrooms will pay the extra, one bedroom or studios will or should stay the same

[backflip]

No change. The number of farangs that form a company to buy a condo is very small.

[pepi1]

Be careful everybody! Soon, we will see many developers going to wall. Projets unfinished. Nobody in their right mind should be buying now! Malaysia is crying out for foreigners to invest in property. And its all legal. So many other places in the World to buy and sleep easy at nights.

[Thaiquila]

No change. The number of farangs that form a company to buy a condo is very small.

I question this especially in the resort areas. Of course, it varies alot based on the specific condo.

Say a developer like a Northshore which I think is charging over 100K baht a sq/meter want to build a new higher end building. They can easily sell the 49 percent share rather quickly, but then the question is, will the Thai market support the 51 percent share at the SAME prices as the foreign owned share? If not, can these projects even get finished?

[thaigene2]

If, as it seems many people believe, it becomes impossible to buy a condo in Thailand through a company, what happens to the values of existing and new condos that are available for full farang ownership (the 49 percent)?

Would there be two totally separate markets within the same buildings? Double price markets, or would it be the same market, with declining prices for everyone?

This is an excellent question Thaiguila. And of course there is no real answer except the law of the jungle. If you were a farang buyer - the ultimate person with the cash in hand - would you want to buy a used condo from a guy whose property is in a farnang-controlled company? Or better still, would you even THINK about forming your own company to buy a condo in these circumstances? We all know the answers..the whole market is going to drop - if not for the better reason that Bangkok condos (at least if not all condos) are grossly overpriced anyway.

Good night sweetheart..we'll keep renting...kiss kiss..no really, I'm not buying a house in your name tilac - I told you before....come on..don't get all mad at me..kiss kiss..really..

[Thaiquila]

Yeah, but the question is about sale and resale values for farang owned condos in the 49 percent segment. These are fully legal for foreign ownership and easily transferrable to a new foreign buyer in their name.

So given the "law of the jungle" and good old capitalist laws of supply and demand, doesn't it make sense that these condos in the 49 percent will be worth more than those in the 51 percent, simply because there is now a strictly limited supply of housing available to buy this way? Before, lots of people bought the line that company ownership was legit, that has been blown away, so the landscape has changed. I have even noticed before these recent events that the condos in the 49 percent carry a premium, isn't it logical that this premium is going to become even more pronounced?

[thaigene2]

Yeah, but the question is about sale and resale values for farang owned condos in the 49 percent segment. These are fully legal for foreign ownership and easily transferrable to a new foreign buyer in their name.

So given the "law of the jungle" and good old capitalist laws of supply and demand, doesn't it make sense that these condos in the 49 percent will be worth more than those in the 51 percent, simply because there is now a strictly limited supply of housing available to buy this way? Before, lots of people bought the line that company ownership was legit, that has been blown away, so the landscape has changed. I have even noticed before these recent events that the condos in the 49 percent carry a premium, isn't it logical that this premium is going to become even more pronounced?

As someone else said, I doubt it will have much impact, becuase as you point out you can buy a condo in your own name. The main reason (though not the only reason) that farang bought houses in a company name is becuase it was the only way to buy a house. if they wanted a condo they just buy one... Don't think too hard about this 49 % thing.. there is a huge glut of available condos already - and growing - many will never be finished as the 'owners' who bought off plan are thai-chinese speculators who told daddy they could flip them and make a profit before completion. Ging-Ging na krup..

[Thaiquila]

Many people wanted to get into a specific building, either because of quality or location, and formed companies to buy condos, when the 49 percent share is sold out. In my opinion, they were foolish to do so, but many did. Developers of such condos have been counting on this. Now they can't. So the situation has changed for such buildings and such developers. The market will decide what happens next, I only was wondering about people's opinions.

[BKK90210]

This is what I think will happen

The supply side - condo inventory will go up, along with the price in only short term. But ofcourse this is Thailand where people will just keep raising the price no matter what.

The demand side – the number will increase only slightly but not much. Here are some reasons.

People who want a house will continue to do so (thru the wife this time around) because they don’t like the condo living in the first place. Most expats who’re staying in Thailand have a wife and children, all are demanding their own diff. spaces (quiet, relaxing, sleep, entertainment, yard / play area for kids, yard of cats/dogs, parking etc.), in addition many of them just absolutely love gardening and home improvement (western mentaliy?). These expats with children will focus most on the development and well being of their children. Their demand for diversity of spaces, is the foremost reason why they would continue living in a home not a condo, because for them the place has to be large enough to accommodate their growing family and needs. So condo is out for them.

[The Skipper]

At the moment, I'd guess that there is practically nobody looking at forming a company to buy a place and quite a few that have these companies wanting to sell.

The prices will drop, the laws will get clarified and the market will then roar ahead.

This is the opportunity some have been waiting for.

[Thaiquila]

At the moment, I'd guess that there is practically nobody looking at forming a company to buy a place and quite a few that have these companies wanting to sell.

The prices will drop, the laws will get clarified and the market will then roar ahead.

This is the opportunity some have been waiting for.

I really don't get your point.

If a farang owner holds a condo by a company, chances are he is in a condo fully sold out for 49 percent farang, so he could not sell to farangs. Since most of our members here are farang, in what way is this any kind of opportunity for people to buy cheaper condos, EXCEPTING Thai people?

So, back to my question, given this, wouldn't the farang owned condos (not by company) be worth more because they would be the only class of condo a farang can buy now?

Are you saying some farangs would take the chance to take over a company owned condo cheaply on spec hoping they don't get screwed later down the pike?

Edited June 8, 2006 by Thaiquila

[thaigene2]

Yes I get your point.

But I think it comes down to how many buildings are at the 49% ratio. I for one believe that the condos are already way, way over priced..so unless you think farang demand for condos is going to increase then I'd agree with Skipper and BKK90210 and say short-term rise on your theory for those already in the market, then a drop-off as the recession starts to bite. The problem in Thailand as someone else noted is that the prices don't drop like in other places when the market cools. They just stay static - and empty.

[Thaiquila]

I am not convinced they are overpriced. I am not that smart to know that, and I don't think anyone else is either. I was shopping in South Florida a while back and thought the condos there were overpriced, and then looked a year later, up another 25 percent.

[icecubes]

Look boys, I think only good will come from all this in the long term

The more land/condo laws that are brought in or existing ones that are enforced

Will only help to get the prices in line with what they should be and not over priced

as they are now by greedy Thais and falangs building new places and selling for a

big fat profit. under a company name.

This is probably only the start of things to come for the companies.

So be ware .

You should have given the house to the wife in the fist place.

Instead of dodging the law. Or buy the condo in your name

No sympathy for the lot of you. You all new the law in the first place.

Stop crying.

To all the people out there that have done things the correct way

you have nothing to fear for the future.

Enjoy your homes and life with you family?s

Have a nice day.

BTW, think the pole tells you all, what people have done with there money in the past.

Stop trying to justify dodging the law.

Sorry boys, yes they will come down in price

[thaigene2]

I am not convinced they are overpriced. I am not that smart to know that, and I don't think anyone else is either. I was shopping in South Florida a while back and thought the condos there were overpriced, and then looked a year later, up another 25 percent.

Thaiquila

You're right, none of us is that smart to know for sure. That's why I said "I think" they are way, way overpriced. But let's look at some proxy indicators of why they may be overpriced.

1. Speculation drives any market. To use you own argument, farangs were forming companies to buy condos (when more than 49% of units were already farang owned), and that fueled the rise from around 40,000 Baht per Sq M. to stupid levels now of 100,000 +++ for Grade A.

2. How many Thais out there can afford (or want) to own a condo at these kind of prices?

3. The world, including Asia and Thailand as just announced the other day, is facing slowing growth and some say recession in the US. That will throw a real kink into the number of foreigners who will look abroad for a retirement nest - or redirect them to cheaper places like Mexico or Costa Rica etc (and other places where they won't have to worry about dodgy laws regarding ownership). There is plenty of anecotal evidence in other places in past recessions. And here too..look at 97.

4. South Florida has a lot of Canadians who come down and buy places. The slide in the US dollar has made those places cheaper for them. I don't know for sure that's the reason but it could be "a" reason.

Thaigene

[mbkudu]

So, as a foreign owner of a condo now (I hold the deed in my name as part of the 49% ownership in the building) will this make my unit more valuable to a prospective foreign buyer because he would be buying straight away into the 49% ? This all seems so crazy. I thought there was a flood, oversupply of condos in Thailand.

Edited June 11, 2006 by mbkudu

[LOS NICK]

I think that it is pretty obvious...49% of the condo building is in ok shape..meaning set for some gains and some leveling off where as the other 51% is in deep <deleted>...

Any and all condo sales should go in favor of farang owned units.

Thats Because uneducated farang can only be fooled so much now.

they must now show proof down at the land office of funds and thai shareholders of these phony thai companies.Not an easy task..

The game has changed my friends.

[libya 115]

Look boys, I think only good will come from all this in the long term

The more land/condo laws that are brought in or existing ones that are enforced

Will only help to get the prices in line with what they should be and not over priced

as they are now by greedy Thais and falangs building new places and selling for a

big fat profit. under a company name.

This is probably only the start of things to come for the companies.

So be ware .

You should have given the house to the wife in the fist place.

Instead of dodging the law. Or buy the condo in your name

No sympathy for the lot of you. You all new the law in the first place.

Stop crying.

To all the people out there that have done things the correct way

you have nothing to fear for the future.

Enjoy your homes and life with you family?s

Have a nice day.

BTW, think the pole tells you all, what people have done with there money in the past.

Stop trying to justify dodging the law.

Sorry boys, yes they will come down in price

Oh Yes?

Your post: 14 June 2005

"Stating more tourists are coming to Pattaya or Jomtien just

Can?t be true, less and less people come to this palace every year.

Just go out and have a look, are the bars and restaurants full of people

No is the answer, there are more people coming to Thailand but not here.

and remember tourists don?t invest in property they stay in nice hotels.

also making comparisons to other countries is not a good thing to do

Its not relevant , keep this to the country your in.

Not much land to build on, well again go out and have a look

I can see hundreds and hundreds of Rai of land not yet developed.

In and around Jomtien.

The planning regs you take about are for high rise buildings not

small developments.

I suspect the planning department is just as good as all the other departments

in Pattaya, (so developers will build where they like).

If you look along Jomtien beach there are two

large projects that never got off the ground. Why was that?

Building reg?s or people getting cold feet with the so called property

boom in Jomtien.

I suspect you are one of these people who talk about Thailand

from afar like many others on this forum.

Keep your money in your pocket or it might be lost in the next

few years.

But if anyone wants my condo its 10m baht to the first one who comes

up with the money, im sure its worth that now judging by the over

pricing going on , only paid 600 thousand a few years back.

Please don?t be a fended, just don?t agree with all you say.

Have a nice day "

Did you get your ten million?

[icecubes]

Did you get your ten million?

[/quote

Its all still relevant.

I never got the 10m, but again I just live in it.

its my home with my family.

No greedy profiteering from me.

[thaigene2]

So, as a foreign owner of a condo now (I hold the deed in my name as part of the 49% ownership in the building) will this make my unit more valuable to a prospective foreign buyer because he would be buying straight away into the 49% ? This all seems so crazy. I thought there was a flood, oversupply of condos in Thailand.

You're right it is crazy. And yes there is an oversupply (IMHO). Most Thais can't afford to live in condos and only the small middle-class younger Thais tend to be the ones who will find it appealing. So that means the market is aimed largely at foreigners (why so many developments market and advertise heavily in English -- only a few of the cheaper ones like Condo One and some others advertise totally in Thai).

So that means if your a developer and you want to make a profit on your 250,000,000 Baht condo building you've got to inflate the price to take into account you may only 'really' sell half or just slightly more than half the units primarily to farangs. Khao Jai, Mai? THE OTHER HALF SITS EMPTY..so the farang buyers are paying over the odds to subsidise the units that the developer KNEW would never sell (because of the 49% limit).

Thaiguila is right - the guys who bought through companies are screwed if they need to sell now. If not don't worry..

But what we're all really waiting for now is to see if the whole condo thing collapses. All those 100% Sold Out signs you see refer to the DEPOSITS made by 'investors'. Flipping condos bought off-plan (before completion) is a time-honored but risky thing that happens here. So - what will those speculators do now that no more farang can buy more than 49%?? They won't make their next payment - that's what! They'll need to bail out, becuase they never planned on paying the whole thing anyway..they were hoping to sell as the price rose and make a profit. It's like leverging (people bought stocks this way with just a deposit - and lost their shirts in 1929 crash).

[thaigene2]

..Oh and one more point about the speculators waiting to flip condos to farangs via the LTD route..I'll bet most of them are well off Thais. If that's the case they'll be screaming bloody murder at Thai Rak Thai..that may be the catalyst that loosens the 49% rule. The party's "real" grass-roots. TRT won't want to mess with them..

[Artisan]

Just a thought. Section 19, Paragraph 2 of the Condominium Act of Thailand reads, and I quote:

Each condominium may have aliens and / or juristic persons as stated under Section 19 take ownership of its units in total of not more than forty-nine per cent of the whole area of all units in that condominium as shown at the time the condominium was registered. In any condominium where aliens or juristic persons as stipulated in Section 19 take ownership of units in excess of the rate as prescribed by the preceding paragraph, that condominium shall be located in Bangkok, municipal or other local government areas as prescribed by Ministerial Regulations, and the area of the land on which the condominium is situated including the land available for use or for common interests of its co-owners shall not exceed five rai.

Pattaya, along with Phuket and other towns with a high foreign population, comes under the category of "a municipal or other local government area as prescribed by Ministerial Regulations". So, as I understand it, the 49% rule doesn't apply in these areas as long the building and common areas conform to the 5 rai maximum clause.

Several years ago, this maximum foreign ownership was set at 40% and then it was lifted to 49% and, a little later, this 100% ownership in prescribed areas was introduced. Also, the restriction on foreign ownership of ground floor condominium units was lifted.

Edited June 12, 2006 by Artisan

[ThaiPauly]

I beleive tthat prices of Condominium Units will rise.. and I have litterally put my shirt on it.

If one wants to own property in ones own name then a Condo is the only answer now.

So I concur with the majority of voters who cast their vote for a rise in prices (although I cannot recall anyone actually posting their reasons for doing so)

I have bought a Condo in BK off plan that is not due for completion until April 07. Building work is coming along nicely and about 80% of units have been reserved, mainly only the lower floor units and Penthouses remain available

My plan is to sell it at a higher price about 2 months prior to completion. thus avoiding any tax implications.

If I have got it wrong I will take it on the chin and will report back what happened, but I am quite confident I will be OK considering its location, size and what I paid for it

TP

[hughden]

There seems to be an assumption that condos are mainly bought by farangs; and I am not sure this is the case in some areas. There are a substantial number of condos owned by Thais in Pattaya/Jomtien; mainly BKK based Thais who keep the place for weekends and holidays. Last time I saw a full list of owners in my condo, only about 10% was non-Thai. I have a friend living in a large condo complex in Jomtien and he finds the place virtually empty except on long weekends when Thais descend from BKK.

So there may well be opportunities in existing condos for farangs looking to own; and those wanting to sell should not assume that only farangs will be interested in buying.

[Nuff Said]

Just a thought. Section 19, Paragraph 2 of the Condominium Act of Thailand reads, and I quote:

Each condominium may have aliens and / or juristic persons as stated under Section 19 take ownership of its units in total of not more than forty-nine per cent of the whole area of all units in that condominium as shown at the time the condominium was registered. In any condominium where aliens or juristic persons as stipulated in Section 19 take ownership of units in excess of the rate as prescribed by the preceding paragraph, that condominium shall be located in Bangkok, municipal or other local government areas as prescribed by Ministerial Regulations, and the area of the land on which the condominium is situated including the land available for use or for common interests of its co-owners shall not exceed five rai.

Pattaya, along with Phuket and other towns with a high foreign population, comes under the category of "a municipal or other local government area as prescribed by Ministerial Regulations". So, as I understand it, the 49% rule doesn't apply in these areas as long the building and common areas conform to the 5 rai maximum clause.

Several years ago, this maximum foreign ownership was set at 40% and then it was lifted to 49% and, a little later, this 100% ownership in prescribed areas was introduced. Also, the restriction on foreign ownership of ground floor condominium units was lifted.

The unlimited foreign ownership scheme referred to under section 19 was a 'special offer' by the Thai government to help boost condo sales in certain areas. It ended in April 2004 or thereabouts. The developers of View Talay 2A in Jomtien sold rooms based on this promotion, but overlooked the need to register for this scheme with the Land Office at least a year before the building was expected to be complete and ready for registration. So they continued to sell rooms to foreigners in the expectation of unlimited foreign ownership. All went well until the 49% was reached in View Talay 2A, then the Land Office said 'no more'. Caught somewhat off the hop, a somewhat embarrassed View Talay offered those who had purchased in the expectation of foreign ownership but were yet to register ownership either a full refund or company ownership with the company formation and balance sheets etc costs covered for 3 years. View Talay wasn't the only one caught out by the requirement to register for the scheme 12 months before completeion, I understand that the neaby Thai Bali development also found itself in the same boat.

[Artisan]

The unlimited foreign ownership scheme referred to under section 19 was a 'special offer' by the Thai government to help boost condo sales in certain areas. It ended in April 2004 or thereabouts.

I hadn't appreciated that the law had reverted to 49% total foreign ownership. Thank you for the up-date.

All of the Thai Law Company websites that I have looked at are still referring to Bangkok (Metropolitan and Municipal) and Pattaya as special areas! If they won't update their websites, or are ignorant about the change back to 49%, that says a lot about them!

Thanks again.

[Nuff Said]

The unlimited foreign ownership scheme referred to under section 19 was a 'special offer' by the Thai government to help boost condo sales in certain areas. It ended in April 2004 or thereabouts.

I hadn't appreciated that the law had reverted to 49% total foreign ownership. Thank you for the up-date.

All of the Thai Law Company websites that I have looked at are still referring to Bangkok (Metropolitan and Municipal) and Pattaya as special areas! If they won't update their websites, or are ignorant about the change back to 49%, that says a lot about them!

Thanks again.

View Talay should have registered their intention to participate in the 'unlimited foreign ownership' scheme by about November 2002, but did not do so. View Talay 2A building was completed on 15 November 2003, that was about the date when the title deeds were available from and transfers to purchasers names could commence. From what I recall it was the 49% foreign ownership quota was reached in mid February 2004. Notices were immediately posted in both View Talay 2A and 2B buildings advising those who had purchased rooms in View Talay 2A but were yet to register to go to the sales office. One offspin from this was View Talay's decision to offer the numerous unsold rooms in View Talay 2B (which was completed in October 2001) with 'free companies for 3 years' to boost the sales rate. They were snapped up very quickly, amost all by foreigners. Most agents now seem keen to promote the phrase 'available for foreign ownership' as a good selling point.

A few days ago I found myself in the office of Pattaya Properties. I'd just popped in to enquire if they offered document translations services, but while waiting a cardboard cutout of the proposed 92 floor Majestic Tower caught my eye. I asked one of the foreign sales staff who they were expecting to sell the 51% Thai only ownership quota to. He said words to the effect of 'no problem, we can still sell condo's to foreigners using the company route'. He claimed that the current clampdown only applies to foreigners purchasing land using nominee companies. Well, he would say that, wouldn't he. It remains to be seen.

Edited June 19, 2006 by Nuff Said