Phuket Property forecast view for rest of 2014? 2015?

[steelepulse]

I just wonder with all the comments previously especially around the land issue, lease renewal (@ 30 years), etc and combining with what I see on several of the property "for sale" websites, who are the buyers and sellers at the 100mn to 300mn Baht Villas is see? Why would someone buy and/or sale at that level assuming the worst would happen? This doesnt make sense and wealthy people/investors are not dumb. Is it only Thai's who buy? are there structures which are use at the higher level assets are also relatively high but when spread out on expensive asset, the % is reasonable or low.

All of these properties are bought through the Thai company route, and the gov't knows full well about these. There was one in particular in Phang nga that the owner of California Fitness sold for either 12 million USD or 20 million USD and it was to a Russian guy. This was headline news in all the local rags and property mags/websites. A purchase doesn't get any more high profile than this.

I haven't seen the property, but if the California Wow Group was involved, I'd say the Russian guys got ripped off by them, like so many others.

The below link is only one of their many dodgy dealings.

http://www.thaivisa.com/forum/topic/644965-california-wow-allegedly-siphoned-bt16-billion-overseas/

Sorry chief, it was California fitness, but keep banging on. http://andamantimes.com/6000-sqm-villa-for-sale/

[NamKangMan]

I just wonder with all the comments previously especially around the land issue, lease renewal (@ 30 years), etc and combining with what I see on several of the property "for sale" websites, who are the buyers and sellers at the 100mn to 300mn Baht Villas is see? Why would someone buy and/or sale at that level assuming the worst would happen? This doesnt make sense and wealthy people/investors are not dumb. Is it only Thai's who buy? are there structures which are use at the higher level assets are also relatively high but when spread out on expensive asset, the % is reasonable or low.

All of these properties are bought through the Thai company route, and the gov't knows full well about these. There was one in particular in Phang nga that the owner of California Fitness sold for either 12 million USD or 20 million USD and it was to a Russian guy. This was headline news in all the local rags and property mags/websites. A purchase doesn't get any more high profile than this.

I haven't seen the property, but if the California Wow Group was involved, I'd say the Russian guys got ripped off by them, like so many others.

The below link is only one of their many dodgy dealings.

http://www.thaivisa.com/forum/topic/644965-california-wow-allegedly-siphoned-bt16-billion-overseas/

Sorry chief, it was California fitness, but keep banging on. http://andamantimes.com/6000-sqm-villa-for-sale/

One post Is "banging on?"

Can you confirm "California Fitness" was NOT "California Wow" (also a fitness group) that had operations in Thailand?

[usasia8888]

from California Fitness (Wikipedia)

California WOW Xperience (SET: CAWOW), a totally separate company, with the California Fitness founder Eric Levine as the CEO, was established when Thailand and Korea locations were spun off from California Fitness in early 2000s.

In August 2008, cross-membership agreements between California WOW Xperience and California Fitness and 24 Hour Fitness were terminated.

Despite company changes, California WOW Xperience is still frequently confused with California Fitness.

In 2012, California WOW Xperience found itself entangled in a financial dispute and was sued in Thailand's Bankruptcy Court by Bangkok Bank Plc. which sought the repayment of a 72 million baht loan including 4 million baht in interest.^[5] As a result, California WOW Xperience shut down seven of its eight Thailand branches. The company faced much criticism for continuing to sign up customers at the various branches until their date of closing. In August 2012, more than 200 members, many of whom found themselves unable to travel to California WOW Xperience's single remaining Thailand branch to make use of longterm or lifetime memberships, filed complaints against the company in hopes of being refunded. The Foundation for Consumers along with 100 former customers have filed a lawsuit against California WOW Xperience which is now awaiting a court order.^[6]

[nedkellylives]

I just wonder with all the comments previously especially around the land issue, lease renewal (@ 30 years), etc and combining with what I see on several of the property "for sale" websites, who are the buyers and sellers at the 100mn to 300mn Baht Villas is see? Why would someone buy and/or sale at that level assuming the worst would happen? This doesnt make sense and wealthy people/investors are not dumb. Is it only Thai's who buy? are there structures which are use at the higher level assets are also relatively high but when spread out on expensive asset, the % is reasonable or low.

Villa's in that price range i have not seen one, most properties called villa's here are called

houses in other countries, and that's all they are

I think the new Aman properties in Surin which I believe started at 35m USD would be in the villa class. They sold out pretty fa

Would you pay 35M USD for a house/villa in Phuket, i certainly would not, you need to see what you can buy

in Australia or USA for that type of money

Most people pay between 5 and 10M baht and get a nice house/villa for that money if they shop around even now

Talked to a bloke who built a large house with a good sized pool plus 4 holiday units on a rai of land

in Chalong around 1999/2000 for 5M baht so prices have gone up a lot especially between 1999 and 2007

Looked at a house yesterday 12.9M negoatable, exactly the same design house close by was put on the

market last year for 9M in the same area and did not sell, taken of the market and rented, no shortage of

dreamers around as far as their property value is concerned

[NamKangMan]

from California Fitness (Wikipedia)

California WOW Xperience (SET: CAWOW), a totally separate company, with the California Fitness founder Eric Levine as the CEO, was established when Thailand and Korea locations were spun off from California Fitness in early 2000s.

In August 2008, cross-membership agreements between California WOW Xperience and California Fitness and 24 Hour Fitness were terminated.

Despite company changes, California WOW Xperience is still frequently confused with California Fitness.

In 2012, California WOW Xperience found itself entangled in a financial dispute and was sued in Thailand's Bankruptcy Court by Bangkok Bank Plc. which sought the repayment of a 72 million baht loan including 4 million baht in interest.^[5] As a result, California WOW Xperience shut down seven of its eight Thailand branches. The company faced much criticism for continuing to sign up customers at the various branches until their date of closing. In August 2012, more than 200 members, many of whom found themselves unable to travel to California WOW Xperience's single remaining Thailand branch to make use of longterm or lifetime memberships, filed complaints against the company in hopes of being refunded. The Foundation for Consumers along with 100 former customers have filed a lawsuit against California WOW Xperience which is now awaiting a court order.^[6]

Well there you go. It just goes to show how easily you can get ripped off in fitness, and property, in Thailand.

[Peterocket]

I just wonder with all the comments previously especially around the land issue, lease renewal (@ 30 years), etc and combining with what I see on several of the property "for sale" websites, who are the buyers and sellers at the 100mn to 300mn Baht Villas is see? Why would someone buy and/or sale at that level assuming the worst would happen? This doesnt make sense and wealthy people/investors are not dumb. Is it only Thai's who buy? are there structures which are use at the higher level assets are also relatively high but when spread out on expensive asset, the % is reasonable or low.

Villa's in that price range i have not seen one, most properties called villa's here are called

houses in other countries, and that's all they are

I think the new Aman properties in Surin which I believe started at 35m USD would be in the villa class. They sold out pretty fa

Would you pay 35M USD for a house/villa in Phuket, i certainly would not, you need to see what you can buy

in Australia or USA for that type of money

Most people pay between 5 and 10M baht and get a nice house/villa for that money if they shop around even now

Talked to a bloke who built a large house with a good sized pool plus 4 holiday units on a rai of land

in Chalong around 1999/2000 for 5M baht so prices have gone up a lot especially between 1999 and 2007

Looked at a house yesterday 12.9M negoatable, exactly the same design house close by was put on the

market last year for 9M in the same area and did not sell, taken of the market and rented, no shortage of

dreamers around as far as their property value is concerned

I'm sure Madonna or Sultan of Bahrain or whatever has properties in both OZ, America and Phuket.

I doubt they care much about the price to be honest.

In general compared to the UK houses are much cheaper here. Bearing in mind you can get a house/condo from 1.5m THB (30,000 GBP) that wouldn't even buy you a garage in the UK. Even if you only get it for 30 years it's still a good deal.

[usasia8888]

--------

I live in HK. Phuket, UK, Sydney and US all look cheap for what we get here in HK on per sq ft basis. However, we have very very cheap money rates (oversupply of cash in HK banks), low taxes and tightly controlled property to build on.

[nedkellylives]

Villa's in that price range i have not seen one, most properties called villa's here are called

houses in other countries, and that's all they are

I think the new Aman properties in Surin which I believe started at 35m USD would be in the villa class. They sold out pretty fa

Would you pay 35M USD for a house/villa in Phuket, i certainly would not, you need to see what you can buy

in Australia or USA for that type of money

Most people pay between 5 and 10M baht and get a nice house/villa for that money if they shop around even now

Talked to a bloke who built a large house with a good sized pool plus 4 holiday units on a rai of land

in Chalong around 1999/2000 for 5M baht so prices have gone up a lot especially between 1999 and 2007

Looked at a house yesterday 12.9M negoatable, exactly the same design house close by was put on the

market last year for 9M in the same area and did not sell, taken of the market and rented, no shortage of

dreamers around as far as their property value is concerned

I'm sure Madonna or Sultan of Bahrain or whatever has properties in both OZ, America and Phuket.

I doubt they care much about the price to be honest.

In general compared to the UK houses are much cheaper here. Bearing in mind you can get a house/condo from 1.5m THB (30,000 GBP) that wouldn't even buy you a garage in the UK. Even if you only get it for 30 years it's still a good deal.

I do not have 35M USD and if i did and wanted to invest it here, which i would not

I would invest in a resort hotel for that type of money not a villa

The only reason i am looking for another investment property here is for my wifes future as i am

only getting a small return from money in bank accounts both here and Aust that does not keep up

with inflation, property always keeps up with inflation over a period of time and you make capitol gains on it

if you do not pay over its true current value

You cannot compare the quality of buildings built here to Aust, In Aust only qualified tradepeople are used to build

and builders have to be qualified and registered

Here everyone thinks they can build houses/villa's

Edited May 21, 2014 by nedkellylives

[NamKangMan]

@ nedkellylives

Why does the "investment" for your wife have to be a property on Phuket, which carries significant long term risks, and expenses?

There are other options, other than "cash at bank" in Thailand that can give good returns with less hassles, and work, than property. Eg. a diversified blue chip share portfolio.

Or, what about opening an Australian bank account for your wife where some term deposits are paying about 4.50% interest.

If you bought her a property on phuket for, say, 5 million baht (around $165,000AUD) and that property rented at say, 25,000 baht a month, it would make approximately $10,000AUD a year for you, but you have ongoing maintenance, fees, taxes, insurances, repairs etc to pay, and you have to advertise and market the property for tenants, over and over again. Also, there will be times when the property will be vacant, thus making no money at all.

$165,000AUD in an Australian bank, in a joint account, at 4.50% earns about $7400AUD a year in interest - well under the tax free threshold for her, so no tax to pay. Your own circumstances maybe different, but you can earn up to $18,000AUD tax free in Australia.

If you keep rolling over that term deposit, in a few years it will make more than the rent on her Phuket property and the cash is at call, as you can still close the term deposit by foregoing the interest owed.

When the time comes for her to sell any property here, it will probably sit on the market for years, with everyone elses, waiting to sell, or be sold at a firesale price, as it will be an older property, most likely in need of repair. There may actually be no capital gain. Also, why even take a chance on the Phuket property market when there is no need to?

The cash will make more money than the rent, with no expenses at all.

You probably had the idea the land will be in her name and you have a 30 year lease on that land, thus giving yourself some security.

With the term deposit, you could have a joint account, giving you similar security.

Upon your demise, or hers, either one of you has control, through a will, of that account, and can transfer it to a regular account and it's either hers, or yours, to do as they please.

This is pretty much why I rent here. I found my cash at bank was making more money in offshore bank accounts that covered the rent here, and some. So, my money is still making money, and I am still living here, but without all the costs and risks of property ownership, let alone a foreigner can't own the land the property sits on.

Basically, my money is working harder for me in various bank accounts, than it would be being tied up in a Phuket property, and with no risk at all.

I still own properties, just not in Thailand, but those properties are in cities and countries that do not have the high level of risk as the Phuket property market does.

Just something for you to consider.

[LivinginKata]

@NKM

Let Ned do what he wants. He already stated that he only gets a small return in Australia on interest. So he well knows the bank/investment scene in Australia.

You underestimate the comfort factor to a Thai national in owning land/property, plus the status factor. Much easier renting rather than dealing with foreign investment portfolios.

[Peterocket]

If you bought her a property on phuket for, say, 5 million baht (around $165,000AUD) and that property rented at say, 25,000 baht a month, it would make approximately $10,000AUD a year for you, but you have ongoing maintenance, fees, taxes, insurances, repairs etc to pay, and you have to advertise and market the property for tenants, over and over again. Also, there will be times when the property will be vacant, thus making no money at all.

A colleague of mine just bought a small new condo for 2.5 million and is renting it for 22,000 per month

That's 10.5% ROI per year before costs

[NamKangMan]

@NKM

Let Ned do what he wants. He already stated that he only gets a small return in Australia on interest. So he well knows the bank/investment scene in Australia.

You underestimate the comfort factor to a Thai national in owning land/property, plus the status factor. Much easier renting rather than dealing with foreign investment portfolios.

Like I said, just something to consider.

Perhaps you underestimate the comfort factor a Thai national has for "CASH" above all.

One term deposit is hardly a "foreign investment portfolio."

[NamKangMan]

If you bought her a property on phuket for, say, 5 million baht (around $165,000AUD) and that property rented at say, 25,000 baht a month, it would make approximately $10,000AUD a year for you, but you have ongoing maintenance, fees, taxes, insurances, repairs etc to pay, and you have to advertise and market the property for tenants, over and over again. Also, there will be times when the property will be vacant, thus making no money at all.

A colleague of mine just bought a small new condo for 2.5 million and is renting it for 22,000 per month

That's 10.5% ROI per year before costs

Is that a holiday monthy rental price, or a 1 year lease price, per month?

[Peterocket]

If you bought her a property on phuket for, say, 5 million baht (around $165,000AUD) and that property rented at say, 25,000 baht a month, it would make approximately $10,000AUD a year for you, but you have ongoing maintenance, fees, taxes, insurances, repairs etc to pay, and you have to advertise and market the property for tenants, over and over again. Also, there will be times when the property will be vacant, thus making no money at all.

A colleague of mine just bought a small new condo for 2.5 million and is renting it for 22,000 per month

That's 10.5% ROI per year before costs

Is that a holiday monthy rental price, or a 1 year lease price, per month?

1 year lease...could probably get similar from holiday letting and also get use of the unit but it's the hassle involved in marketing and housekeeping etc.

[NamKangMan]

If you bought her a property on phuket for, say, 5 million baht (around $165,000AUD) and that property rented at say, 25,000 baht a month, it would make approximately $10,000AUD a year for you, but you have ongoing maintenance, fees, taxes, insurances, repairs etc to pay, and you have to advertise and market the property for tenants, over and over again. Also, there will be times when the property will be vacant, thus making no money at all.

A colleague of mine just bought a small new condo for 2.5 million and is renting it for 22,000 per month

That's 10.5% ROI per year before costs

Is that a holiday monthy rental price, or a 1 year lease price, per month?

1 year lease...could probably get similar from holiday letting and also get use of the unit but it's the hassle involved in marketing and housekeeping etc.

That's a good return, and good luck to your friend, however, I would hardly call it the market norm for rental here.

It's possible the tenant will soon wise up and move on at the end of their lease.

Edited May 22, 2014 by NamKangMan

[Peterocket]

That's a good return, and good luck to your friend, however, I would hardly call it the market norm for rental here.

It's possible the tenant will soon wise up and move on at the end of their lease.

Anything is possible, but personaly I would prefer to have a property portfolio than anything else.