Why invest in real estate in Thailand ?

[spicytani]

We are foreigners and we are currently looking to buy a condo or house in Thailand. The first objective of this purchase is investment, but maybe also for retirement later in Thailand (who knows ?)

However, after reading many reviews here and other sites, which we understood that there are many differences between Thai laws and European countries, we particularly thought that it's not that easy to own a property in Thailand and not always to the benefit of the foreign owner.

Beside, we can also read that there are many real estate programs en route in many places in Bangkok, Pattaya, Koh Samui, Phuket, etc...

Before we make our final decision to buy or not, we would have a few questions :

- if there are so many negative points for foreigners to own properties, why has the part of foreign investment in Thai real estate increased by 20% for the last few years ?

- who are the investors in owning properties in Thailand ? Shall we buy for retirement ?

- if there are so many programs en route, won't there be a surplus of properties which will conduct to a price drop of real estate in Thailand ?

Thank you for your answers

[KittenKong]

- if there are so many negative points for foreigners to own properties, why has the part of foreign investment in Thai real estate increased by 20% for the last few years ?

Has it?

- who are the investors in owning properties in Thailand ?

I suspect mostly "flippers" (ie people who buy off-plan hoping to sell on at a higher price before completion), and people with tainted money that they cant use elsewhere.

- if there are so many programs en route, won't there be a surplus of properties which will conduct to a price drop of real estate in Thailand ?

Seems likely to me.

[trogers]

Location, location and location!

Where do you want to retire? Who will rent or buy your property later?

Locations suitable for retirement usually are not suited for renting out, and future purchasers are limited to future retirees.

[Cabrinha]

Hi Spicytani,

I sent you a message. Check your inbox.

[umbanda]

With some exeptions, like townhouses in a condominium project type, foreigners cannot own detached homes, only condos. Between the Asean Market countries, Thailand is one of the lowest in real estate values, and many investors from the other Asean countries will invest here. Already, many properties are beign sold to Chinese, Malaysian and Singaporean citizens. Condos and mix use units are popular deals for investors. Chiang Rai and Chiang Mai are the favorites investors spots from China and Burma because the new trade agreements with those countries in near borders. Already is a port close to Chiang Rai opened to attend tourist ships coming from China, and the construction of a road into China was just approved by the new Government. It is just matter of time for Thailand real estate prices to get similar values that the ones in China, Korea, Malaysia and Indonesia, and still good buys in the market. Anyway, Chiang Rai developers still building a lot of condo and mix use buildings, with prices around 4.000.000thb, the same kind selling for 8.000.000 in Chiang Mai

[Robert24]

Property prices are certainly very high in Thailand, similar to many other Asian countries, be it Singapore, Hkg, China, Malaysia etc. So from a pure investment point of view, if you buy now, you are not buying low, you are buying at a high price. Now obviously it could go up more and I'm confident it will in the long run. Say if you have a view of 10-20 years, then I'm sure property prices will be up compared to now.

Reasons for the high prices is the same as everywhere else, plenty of liquidity in the Global financial markets seeking for good returns. So both institutional and private investors that traditionally did not invest in property have started to invest in real estate in a big way. Some in a leveraged way, some have shifted out of low yielding other asset classes like government bonds and money market into real estate.

Who are the investors: both foreign and domestic. As mentioned before, plenty of Chinese, Singaporeans etc buying property in Thailand as well as your middle/upper class in Thailand. Household debt in Thailand has gone up significantly, so people take out big loans to purchase property. In terms of institutional investors, you have big corporates that started investing in property in a big way, i.e. Singha, ThaiBev etc companies that traditionally only focussed on their core business. Also a lot of insurance companies have moved some money out of bonds into real estate.

Should you buy for your retirement? Depends on your situation. If you want to buy a condo now and rent out in the short term, you may get a good return of about 6-7% depending on your property and if you plan to live in it later it may well make sense. But bear in mind, the condo may not appreciate that much given the high supply in market and also people like to buy new condos rather than a 20-30 year old condo.

[AnotherOneAmerican]

You want to buy property in a country where a military Junta has seized power, despite them being clearly anti-foreigner?

Why?

Buy in your home country, a place where you have the right to live and own property.

[beachproperty]

buying and selling property in Thailand.

One Caveat.

Its easy to buy real estate in Thailand ....Not so easy to sell!

[PattayaPhom]

buying and selling property in Thailand.

One Caveat.

Its easy to buy real estate in Thailand ....Not so easy to sell!

Only if you buy the wrong or overpriced property to begin with. Many properties in good locations sell without hassle and at a profit for the owner. Maybe you and people you know are stuck with villas out in the boonies that cost 2-3 Mil to build but with asking prices of 15 Mil etc but there are many people making good returns and also some capitol gain.

[JesseFrank]

buying and selling property in Thailand.

One Caveat.

Its easy to buy real estate in Thailand ....Not so easy to sell!

Only if you buy the wrong or overpriced property to begin with. Many properties in good locations sell without hassle and at a profit for the owner. Maybe you and people you know are stuck with villas out in the boonies that cost 2-3 Mil to build but with asking prices of 15 Mil etc but there are many people making good returns and also some capitol gain.

Are overpriced properties announced ?

[beachproperty]

buying and selling property in Thailand.

One Caveat.

Its easy to buy real estate in Thailand ....Not so easy to sell!

Only if you buy the wrong or overpriced property to begin with. Many properties in good locations sell without hassle and at a profit for the owner. Maybe you and people you know are stuck with villas out in the boonies that cost 2-3 Mil to build but with asking prices of 15 Mil etc but there are many people making good returns and also some capitol gain.

You sound like a Real Estate Agent (????). Thailand is one of those places where, yes, property is cheaper than in the west. But here in Thailand with Thai's as the majority of Buyers....They want "new" not Second hand ....something to do with "Ghosts" ....

As for Condo's....Again here in Thailand ....Crappy building management with little or no maintenance....(Just look at all the condo's that are 20 years or older ...pieces of crap! with management taking the maintenance fees and just putting it in their pockets!)

Yes ...Many of the properties in Thailand are "wrong and overpriced"....As for your "Many properties in Good locations selling without hassle and at a profit"....what dream world are you living in! Hope its NOT that overbuilt cesspool they call Pattaya!...Personally years ago I bought a beach front property ....took only 3 years to sell (and yes at a profit)....

AND THAT IS MY POINT!!!!!!.....Easy to buy ....BUT not so easy to sell!

Ever hear the saying "there's a sucker born every minute!"....Well that's what many of the Thai's think about Farangs unfortunately

Edited August 24, 2014 by beachproperty

[Pinot]

I'm sorry but I'm going to repeat some sage advice for all farangs

Never buy property in Thailand.

IInvesting in property is a bad idea. Save your money to invest somewhere else and RENT. Lots of rentals because the property market is terrible. A thousand properties on the market in Phuket? Who knows? Trying to sell anything is a nightmare. Everything goes down in value. Poor quality construction. And the worst thing is IMHO is you have to deal with the Thais. Google Stickman's post about never buying a condo. He sums it up well.

[Robert24]

Hmmm...Thais like to buy new condos or developments hence your caution about selling an old condo is right. However I don't think it's much different from other parts in Asia be it Malaysia, Singapore, Indonesia etc. At the end it's all about location. If your condo has a great location, even if it's aging the price will go up and it will be easy to sell. But to be honest this not unique to Thailand. Kind of similar principle everywhere.

[beachproperty]

Hmmm...Thais like to buy new condos or developments hence your caution about selling an old condo is right. However I don't think it's much different from other parts in Asia be it Malaysia, Singapore, Indonesia etc. At the end it's all about location. If your condo has a great location, even if it's aging the price will go up and it will be easy to sell. But to be honest this not unique to Thailand. Kind of similar principle everywhere.

Real estate is obviously about ...."location, location, location" That's the easy part. Unfortunately in Thailand the Thai's have this dream mentality that even though their property is in a great location they "overprice it" no matter what! The key is to find a seller who "needs" to sell it so you can get a good price. Again unfortunately an extremely large percentage of property is owned by rich Thais' who are not in that distressed situation of needing to sell...hence ...property on the market for years with no maintenance.

Have a friend of mine who bought a condo in Hua Hin (against my advice) for rental purposes. Has had it for 6 years with rent coming in for only 6 months. Paid 750,000 baht for a studio and is still trying to rent it out at 5000 baht month/ or sell it for 750,000 baht. Hasn't been able to do much with it.....ie either rent it or sell it.

He asked me to see what I could do so I went to the condo, its a 3 hour drive for me but figured what the heck got a place to stay so I'll check it out. Well the realtor didn't have the key so went to building management (they were supposed to have a key also!). Was told by management that someone was living there and has been for the last few months. Apparently the realtor (big local real estate company) was renting it out and keeping the money! Well friend obviously got rid of the realtor ...renter left....and is still trying to sell it for 750,000 baht (cheapest condo in Hua Hin....Sports Villa)

So repeat....Easy to buy ...Not so easy to sell

[Robert24]

@beachproperty: agree with your points but what is unique about this? You buy a studio in non-desired area, cannot rent it out, cannot sell it. Not a surprise to me. Not unique to Thailand.

There is ample of supply in the market so if you buy with the intent to rent it out, you need to understand the market, pricing, location etc. But again no different to anywhere else in the world.

[beachproperty]

@beachproperty: agree with your points but what is unique about this? You buy a studio in non-desired area, cannot rent it out, cannot sell it. Not a surprise to me. Not unique to Thailand.

There is ample of supply in the market so if you buy with the intent to rent it out, you need to understand the market, pricing, location etc. But again no different to anywhere else in the world.

Not disagreeing with you....But the studio IS in a desired area....Hua Hin. Definetely not the best location in Hua Hin.... but the price reflects that.

My point ....as always...".Easy to buy ...Not so easy to sell"

[Paul944]

Buying a condo as an investment or for retirement over 6 years does not seem a good idea to me.

First, the costs, about 2% broker commission, 2% tax, yearly service and maintenance fees.

Second, nobody guarantees the price will go up. Maybe the area is not a good location after all, maybe the junta will scare future buyers away, maybe you got ripped off paying too much.

Thirth, over 6 years you do not want to move in a 6 year old condo with dated furniture.

There is money to be made in real estate, by the professionals as real estate agencies, mortgage loaners and the lucky ones that bought on a good location at the time it was not considered good.

[KittenKong]

You sound like a Real Estate Agent (????).

That's probably because he is one.

[KittenKong]

Well the realtor didn't have the key so went to building management (they were supposed to have a key also!). Was told by management that someone was living there and has been for the last few months. Apparently the realtor (big local real estate company) was renting it out and keeping the money!

A very common scam here.

[KittenKong]

Buying a condo as an investment or for retirement over 6 years does not seem a good idea to me.

First, the costs, about 2% broker commission, 2% tax, yearly service and maintenance fees.

That's more likely to be 5% and 6% (though these are totals for both parties).

Costs for buying/selling property here are extremely high when compared to most countries in the West.

[PattayaPhom]

You sound like a Real Estate Agent (????).

That's probably because he is one.

A good one though

[beachproperty]

You sound like a Real Estate Agent (????).

That's probably because he is one.

A good one though

And the difference is??????????????

[Asiantravel]

OP you asked the question-

" if there are so many programs en route, won't there be a surplus of properties which will conduct to a price drop of real estate in Thailand ? "

You should read this Reuters article “Lights off on Singapore's billionaire row as luxury house prices plunge “. I would be asking myself if this is happening in Singapore, what factors would prevent this kind of thing from happening in Bangkok sooner or later?

United Overseas Bank, Singapore's third-biggest lender, last month reported a doubling in its bad debt charges for the second quarter, saying a group of investors was struggling to service high-end property loans. [nL4N0Q66IH]

The number of residential properties being put up for sale at auction by banks after buyers defaulted on mortgages, known as mortgagee sales, quadrupled to 64 in the first half of this year from 16 in the second half of 2013, according to real estate agency Colliers.

"This is different from previous years, when owners' sales dominated auctions," said Joy Tan, head of auctions at DTZ.

"The tables have turned and we expect more mortgagee sales on the way."

http://mobile.reuters.com/article/idUSKBN0GS2M120140828?irpc=932

Edited September 2, 2014 by Asiantravel

[cheeryble]

Property prices are certainly very high in Thailand, similar to many other Asian countries, be it Singapore, Hkg, China, Malaysia etc. So from a pure investment point of view, if you buy now, you are not buying low, you are buying at a high price. Now obviously it could go up more and I'm confident it will in the long run. Say if you have a view of 10-20 years, then I'm sure property prices will be up compared to now.

Reasons for the high prices is the same as everywhere else, plenty of liquidity in the Global financial markets seeking for good returns. So both institutional and private investors that traditionally did not invest in property have started to invest in real estate in a big way. Some in a leveraged way, some have shifted out of low yielding other asset classes like government bonds and money market into real estate.

Who are the investors: both foreign and domestic. As mentioned before, plenty of Chinese, Singaporeans etc buying property in Thailand as well as your middle/upper class in Thailand. Household debt in Thailand has gone up significantly, so people take out big loans to purchase property. In terms of institutional investors, you have big corporates that started investing in property in a big way, i.e. Singha, ThaiBev etc companies that traditionally only focussed on their core business. Also a lot of insurance companies have moved some money out of bonds into real estate.

Should you buy for your retirement? Depends on your situation. If you want to buy a condo now and rent out in the short term, you may get a good return of about 6-7% depending on your property and if you plan to live in it later it may well make sense. But bear in mind, the condo may not appreciate that much given the high supply in market and also people like to buy new condos rather than a 20-30 year old condo.

I'm surprised to hear that prices in LOS are similar to HK Singapore etc.

I would have thought they have a lot of catchup to do......certainly on a global scale.

Next thing is Thais like to buy new properties but the best locations may likely be the old buildings.

Then, one should be buying into the buildings whcih have proved themselves popular with farang so the farang percentage is full.

In this case there may be a two tier pricing system and it doesn't matter about what Thais like as you will not be buying from them and they won't be buying from you.

Sent from my iPad using ThaiVisa app

[Robert24]

@Asiantravel: Thanks for sharing the Reuters report. Didn't think it was that bad in Singapore given the data published shows house prices only down 5-10% over the last 2 years. But clearly the government cooling measures have worked and they were able to take some heat out of the property market.

[trogers]

@Asiantravel: Thanks for sharing the Reuters report. Didn't think it was that bad in Singapore given the data published shows house prices only down 5-10% over the last 2 years. But clearly the government cooling measures have worked and they were able to take some heat out of the property market.

That report covered mainly on sales, but lacking details on rentals. So selling prices are 20% down and have not bottom out yet. If rents bottom out at less than 15%, rental yield is moving upwards.

[Upset]

EAsy to buy but hard to sell and even rent these days. be careful!