Under The Current Climate Would You Buy A Condo?

[trajan]

if the "spirit" of the law was enough, then it would not be necessary to propose amending the current Alien Business Law (to insert all of the technical wording and definitions).....they could just enforce the current wording of the law (extended by its silent but intended "spirit")...

however, it sounds like this military-installed Minister is hinting at a future proposed amendment of the Land Law in addition to the current proposed amendments to the Alien Business Law (as I noted above as a possibility)....IF that is the case AND he has the wonderful idea not to grandfather-in existing structures....then there will be widespread scrambling in respect of existing set-ups... this would be nothing short of expropriation...

I currently own a few condos...I hope these "investment friendly" ministers stay away from the Condo Law...

[Arkady]

It is confusing and for a while I thought I could see your argument trajan, but it still doesnt sit well with me.

Your lawyer might be technically correct regarding the letter of the law but in practice the FBA will almost certainly supercede the land code in this highly politicised rule change. Consider that the spirit of the Land law is that no Alien can own land, with only few specific exceptions (namley 40 M Baht for 1 Rai or as an IEAT/BOI privellege).

Officers at the Tessabaan are already looking into the financial muscle of the Thai shareholders in a firm to determine whether they are nominees or not.

The new terms of the FBA looks at all companies to see whether they are owned by Thais or foreigners, and they then also make sure that if its a Thai entity, that Thai's control it. If they do not, said firm must restructure or else.

So its not really looking good for these people so I stick by my original advice and tell all involved to get to a lawyer ASAP.

quiksilva, it may not sit well but that is what the current laws (and current proposed amendments) state....

Land Law

Definition of "alien" under the Land Law refers only to majority capital (not voting rights)...

yes, officers at the Land Office (in connection with title deed transfers) do inquire into the financial background of Thai shareholders (OR the presence of a loan agreement to the company) to finance the underlying land transfer transaction (this goes to the question of nominee shareholders---i.e., whether Thai shareholders are simply holding shares on behalf of foreigners as "front stick men") but they do not inquire about voting rights of shares held by Thai shareholders... because this is not relevant under the Land Law

Alien Business Law (and proposed amendments)

Contrary to what you state, the Alien Business Law does not supercede the Land Law. Therefore, if they adopt the new proposed amendments to the Alien Business Law, then the definition of "alien" FOR PURPOSES OF restricted business activities under the ABL, will take into account voting rights. If that comes true, both "nominee" Thai shareholders (which has always been illegal) and "shares with diluted voting rights" will not be permtited to engage in List 1,2,3 business activities (except for circumstances where you obtain an ABL license ,get BOI privileges etc.).

Future Worst Case Scenario

HOWEVER, as I've stated repeatedly before, there is no guarantee in the future that the current military-installed ministers will not also propose a change to the Land Law (and re-define "alien" under that law)...if that happens (and there is no grandfathering clause to allow existing structures to continue) then people which currently hold such entities to hold land, will be scrambling......also, if you want to speculate about the future (in worst case scenarios), the government could rescind existing condo laws which allow foreigners to own condos (with no grand-fathering provisions) ...IF that happened there will also be panic.......BUT Im not speaking of future possible scenarios...Im speaking about the PRESENT laws and proposed amendments.....

I think you can assume that the new definition of alien from the FBA will be made to apply to the Land Code without further amendments. Companies with skewed foreign voting rights can be assumed to be foreign by the Land Dept. By buying land and/or renting it to a director a comany can be accused off engaging in an Annex 1 business under the FBA.

[bingobongo]

Bangkok market outlook softens

http://thailand-property-guide.com/?p=news/article&NewsID=288

[david96]

There is a parallel here. The farang in Thailand should know how the Jews had to live in Europe. Learn from them,they understand the power and value of money.

[Casanundra]

There is a parallel here. The farang in Thailand should know how the Jews had to live in Europe. Learn from them,they understand the power and value of money.

Well listening to some of the conversations in my office by the Thai legal community about how us Farangs should be allowed to live in special farang Ghettos then I guess I think I understand your meaning here about how the Jews 'had' to live in Europe.

[trajan]

I think you can assume that the new definition of alien from the FBA will be made to apply to the Land Code without further amendments. Companies with skewed foreign voting rights can be assumed to be foreign by the Land Dept.

sorry, but I dont think this is correct....if it is, why did the government (in 2006) take the trouble to formally propose, vote on and gazette an amendment to the definition of "Alien" under the Telecom Act (by express formal cross-reference to the Alien Business Act definition) if they could have just applied the Alien Business Act definition by a magical implied cross-reference to the Telecom Act?

By buying land and/or renting it to a director a comany can be accused off engaging in an Annex 1 business under the FBA.

If you are refering to "trading in land" business activity under Annex 1 of the FBA, every lawyer Ive spoken to states that this refers to the business activities of development companies which engage in the business of buying and selling land etc. If it applies to what you are suggesting, then by extension, a foreign company which "owns" a long term land leasehold which then sub-leases it to a director, should be considered engaging in Annex 1 activities?

[quiksilva]

Im sorry I have nothing to add to that but you have certainly raised an interesting point.

[danone]

i'd certainly buy a condo - just did - if you like the place and its people and you see your future here.

and just did a major money transfer. no questions asked by the bank.

just submit the buying contract and so on and nobody will ever mention the 30 percent tax.

but: only condos with a good convenience factor do not lose value.

pay a premium, dont go for the cheapest/most affordable, as there are tons of cheap condos on the market.

[Arkady]

I think you can assume that the new definition of alien from the FBA will be made to apply to the Land Code without further amendments. Companies with skewed foreign voting rights can be assumed to be foreign by the Land Dept.

sorry, but I dont think this is correct....if it is, why did the government (in 2006) take the trouble to formally propose, vote on and gazette an amendment to the definition of "Alien" under the Telecom Act (by express formal cross-reference to the Alien Business Act definition) if they could have just applied the Alien Business Act definition by a magical implied cross-reference to the Telecom Act?

By buying land and/or renting it to a director a comany can be accused off engaging in an Annex 1 business under the FBA.

If you are refering to "trading in land" business activity under Annex 1 of the FBA, every lawyer Ive spoken to states that this refers to the business activities of development companies which engage in the business of buying and selling land etc. If it applies to what you are suggesting, then by extension, a foreign company which "owns" a long term land leasehold which then sub-leases it to a director, should be considered engaging in Annex 1 activities?

On second thoughts you are probably right. Thus Annex 2 and 3 can theoretically get grandfathered and retain their preference share structure and their right to own land. This may well be a workable solution for listed companies and other large firms that have substantial or public Thai shareholders. It seems more of a stretch for small farang firms who are more likely to have obviously used nominee shareholders to buy land, for which no amnesty or grandfathering is offered, unlike the FBA. It is not impossible that amendments will introduced in the Land Code and other laws to bring the definition of alien into line with the FBA.

I also agree that regarding buying land and leasing it out as an Annex 1 activity would be incredibly strict but we are not talking about a rational approach to foreign investment here. A low probabililty but not absolutely impossible. Actual property companies are definitely up the creek. Even if they can get still own land with majority foreign voting rights, they can't trade in it.

[trajan]

It is not impossible that amendments will introduced in the Land Code and other laws to bring the definition of alien into line with the FBA.

I agree. If the current ministers are consistent (at least within in their own warped logic), they would also inevitably move to amend the definition of "alien" under the Land Code into alignment with the definition of 'alien" under the FBA amendment. BUT such move would cause massive scramblings to restructure current legal structures.

I also agree that regarding buying land and leasing it out as an Annex 1 activity would be incredibly strict but we are not talking about a rational approach to foreign investment here. A low probabililty but not absolutely impossible. Actual property companies are definitely up the creek. Even if they can get still own land with majority foreign voting rights, they can't trade in it.

Yes, I also agree that such interpretation under Annex 1 would be incredibly strict (if they meant that, the legistlature could have easily stated that in the wording of Annex 1)...

and yes (if the new proposed FBA amendments pass "as is" through the Council of State and the appointed Legistative Assembly), property companies which own and trade in land (like listed Golden Land and Grande Asset (which I understand are owned by "Thai" holding companies, which are in turn, controlled by foreigners by voting and management rights)) will definitely be regarded as engaging in Annex 1 business activities (and will thus need to sell chunks of shares to Thai shareholders at fire sale)....oddly enough though, technically, they might still be allowed to hold land unless the definition of "alien" is also amended under the Land Code...

Edited January 31, 2007 by trajan

[pkrv]

Going back to the original post on the 27/Oct/2006 - Can you actually buy a grade A condo (in Bangkok let alone a good location) for 4.5 Million (say 65k GBP) anymore? Please IMO shoeboxes don't count as grade A.

Penthouse properties are now going for 60 -90 Million (almost all of which have sold when last I enquired) in the core areas. I some how think Bangkok and indeed Thailand is perhaps going up market? And is most definitely succeeding!

[Casanundra]

Can you actually buy a grade A condo (in Bangkok let alone a good location) for 4.5 Million (say 65k GBP) anymore? Please IMO shoeboxes don't count as grade A.

There are still some but not too many and the one down in Sathorn that I originally considered is still selling some at that price but they are making noises that the prices will go up across the board once the building is completed in April. You should know though that Grade A is not denoted by the size of the Condo you actually buy but more on the quality of the overall build itself. Ask yourself this, would you rather be in a 20 million Penthouse in a Grade B or C building and sit on top of what is in effect a pile of crap beneath you in terms of the other apartments or be in a 4.5 million 77 sqr.mtr apartment in a grade A building surrounded by good quality people and materials?

From what I have seen, most of the Grade A properties are now being peddled for 5.5 million and upwards and that's starting at around the 75 Sqr Mtrs size but I am excluding Penthouses in this as they can be anything from 15 million to 60 million.

Putting all that aside, who would in their right mind want to sink anything from 15 million to 60 million into a country that gives you at best a visa for 1 year along with the usual 90 day reporting just so you can say 'yup i'm still here in my big expensive pad, can I go now...'

Let's be clear, Thailand is not Singapore, nor is it Hong Kong, Shanghai or London and regardless of the over inflated prices being asked for some property in the current market here, Thailand will never ever aspire to being anything other than a 'developing' country because it suits them to keep it this way.

Edited February 2, 2007 by Casanundra

[pkrv]

Hi Casanundra - I think in a way you have answered your own question - 4.5M is either now, or shortly will be, a pipe dream for a grade A property in Bangkok.

I understand your points on what makes a grade A building, and indeed there have been some very complex and well informed answers on this forum, though as a very basic rule of thumb maintenance always seems to crop up within the definitions given.

A CBD is being forged in central Bangkok, mere entry level pricing for The Park was 14.5M two years ago, The Athenee entry level I believe was around 10M, I believe that the penthouses at The Park are the most expensive properties in Thailand (excluding estates etc).

When completed many hundreds of (relatively) wealthy will be concentrated within the area that is currently the terminus point for the airport rail link (with all the infrastructure implications that have already been implemented)

I'm afraid I fundamentally disagree that Bangkok (not necessarily Thailand) is over inflated - Its just getting going! (Teething troubles is the expression that comes to mind, short term)

[bingobongo]

The average selling price last year also dipped to 2.59 million baht a unit, compared to 3.08 and 3.73 million baht in 2005 and 2004 respectively.

http://thailand-property-guide.com/?p=news...&NewsID=300

[pkrv]

bingobongo - On two fronts? There are of course lies, dammed lies, and statistics. I prefer the opinions of those who put their spherical objects on the line and/or male chicken who commentates on the block (not mean median or mode) Care to join??

[obsession]

Thank you for suggesting that I rent which is what I think we will do. After a few years in Thailand who knows maybe Malaysia next- somewhere like Langkawi? At least they have a well thought thru package and clearer rules for foreigners on property ownership and visas etc.

The place we saw was very nice indeed as are many places in phuket but while we were walking around the place we noticed a lot of bad design features and the spec was very low. The finishing was shoddy and fixtures were cheap and badly fitted. The water in the bathroom drained away rather than towards the drainage etc etc. We've come across this time and time again. We could see that we would have to put in more money and time to fix things before we could move in. I would never buy anything so substandard with such little protection anywhere else in the world for two hundred thousand pounds and can't understand why I like so many others would be inclined to do so here.

Is there something here in the air?

We bumped into a Western couple who were living in Singapore last week when we went to look at some villas here. They had come over for the day with their 3 small children to buy something in Phuket. The agent had lined up some places for them to see. They had arrived at 10am and it was 1pm and they had already been to 4 different places. They were going to leave to go back to Singapore that very evening. The poor woman looked absolutely harried and was running around keeping her kids who weren't the slightest bit interested under control and wasn't even looking at the placeproperly. They said they had to buy by the end of the day. His boss it seems had just bought something for US$ 2 million and said the time was ripe etc etc so they didn't want to lose out. We have met people who don't think twice about buying something off plan for 30 40 million baht. There are places we have been to see that are selling for 200 million baht and people have bought.

What is going on.

I just don't get it.

palmtree

I agree with you. People are paying crazy prices for poor condos/villas in poor locations with poor infrastructure. In the case of villas ,they arent even in their own name.

And you can never be sure that they will renew your visa. Its madness.

[thaigene2]

I agree with you. People are paying crazy prices for poor condos/villas in poor locations with poor infrastructure. In the case of villas ,they arent even in their own name.

And you can never be sure that they will renew your visa. Its madness.

So what, exactly, has les us to this conclusion that foreigners actually ARE buying anything? I'll bet the numbers that the pundits (with special interests) keep pumping at us are total bullsh+t. Who in their right mind would buy - or even lease -anything now? If one thinks that someone with 300,000 USD "cash" in the bank had to be at least semi-intelligent to have acquired that sum in the first place - would they be that smart to part with it in Thailand - for a plalce they don't own - and may not be able to EVEN VISIT for more than a few months a year. THINK ABOUT IT!! NOOOOOOOOOOOOOOOOOO........is the answer. Of course there are rich and stupid people out there - there is no god nor logic when it comes to money I guess.

[bingobongo]

Property business likely to slow down this year: BoT

"He said the property market slowdown had now gained momentum as the liquidity in the business had reduced in parallel with a decline in total sales."

http://etna.mcot.net/query.php?nid=27684

[Arkady]

Who is going to buy all of those unsold $1 million plus villas with infinity pools in Phuket, Koh Samui etc and the ones that illegal owners will have to sell in a hurry? The bulk of the Thai market for second homes is for places under B10 million in Pattaya, Hua Hin, Khao Yai etc. They prefer somewhere they can drive to from Bangkok and find condos more convenient because security and maintenance are taken care of. Thais don't want to retire in resort areas because friends and family are in Bangkok.

I imagine stories will soon come out about distressed sales and developers disappearing with customers deposits and unpaid contractors bills.

[thaihome]

Hi Casanundra - I think in a way you have answered your own question - 4.5M is either now, or shortly will be, a pipe dream for a grade A property in Bangkok.

I understand your points on what makes a grade A building, and indeed there have been some very complex and well informed answers on this forum, though as a very basic rule of thumb maintenance always seems to crop up within the definitions given.

A CBD is being forged in central Bangkok, mere entry level pricing for The Park was 14.5M two years ago, The Athenee entry level I believe was around 10M, I believe that the penthouses at The Park are the most expensive properties in Thailand (excluding estates etc).

When completed many hundreds of (relatively) wealthy will be concentrated within the area that is currently the terminus point for the airport rail link (with all the infrastructure implications that have already been implemented)

I'm afraid I fundamentally disagree that Bangkok (not necessarily Thailand) is over inflated - Its just getting going! (Teething troubles is the expression that comes to mind, short term)

Though I agree with your with point of view, I would like to point out that someone that has the money to buy a 10-20 million baht condo is unlikely to give a s*it about the airport link terminus. When they need to use the airport, they will undoubtedly have their driver drop them off and pick them up.

TH

[solo siam]

Who is going to buy all of those unsold $1 million plus villas with infinity pools in Phuket, Koh Samui etc and the ones that illegal owners will have to sell in a hurry? The bulk of the Thai market for second homes is for places under B10 million in Pattaya, Hua Hin, Khao Yai etc. They prefer somewhere they can drive to from Bangkok and find condos more convenient because security and maintenance are taken care of. Thais don't want to retire in resort areas because friends and family are in Bangkok.

I imagine stories will soon come out about distressed sales and developers disappearing with customers deposits and unpaid contractors bills.

Why coudn't they simply restructure the land owning company, structure a lease deal or even sell it to Thais - I'm not in the real estate business but its pretty much business as usual here on Phuket, I don't see many villas sitting unsold to be honest.

It feels like there's lots of people who aren't homeowners here who are waiting in the wings to say "I told you so" to people who want a home here or those who have made some money by investing over the years in real estate. I have yet to hear of the authorities stepping in and taking away a single home, has that happened to anyone yet?

[pkrv]

Though I agree with your with point of view, I would like to point out that someone that has the money to buy a 10-20 million baht condo is unlikely to give a s*it about the airport link terminus. When they need to use the airport, they will undoubtedly have their driver drop them off and pick them up.

TH

Perhaps - Perhaps not -have you seen the seats on Tokyo train (tell me about them), count down time on the Hong Kong train, boring Heathrow and Gatwick. I love these; there have been boats and aircrafts in all locations, I am collecting. Gave up the car some time ago.

[xbusman]

Ben@H3, no one on this forum has ever said or even rumored that the authorities just step in and confiscate property as has been done in many third world countries from Mexico to Nigeria.

What has been said over and over and over and over, listen carefully here, we are guests in a third world country without priveleges or rights of any kind. Our invitation can be revoked in a moments notice for arbitrary reasons that we may or may not know. We can still own our beautiful house from the safety of Coventry or Los Angeles but for all extents and purposes, its out of our reach. There are countless stories of farangs (and Thais) getting crushed and evicted by the military/police/mafia who walk away from it all.

There is a huge differance between losing your property by confiscation and being forced to leave. So lets all drop the "never heard of it happening" I think we all agree that it does not happen in Thailand. Instead, keep to the first rule of Thailand, NEVER INVEST MORE THAN YOU CAN WALK AWAY FROM, and understand its because we dont have a SINGLE right here, particularly when we flaunt the law by purchasing property against the wishes or regulations of the authorities.

If you can walk away, have at it. Buy all of Phuket island if you are so inclined. I am sure smart investors have made and will make a lot of money off speculative land in Thailand but always, always always be prepared to pack a single bag and make for the border.

[FoundationEngineer]

Going back to the original post on the 27/Oct/2006 - Can you actually buy a grade A condo (in Bangkok let alone a good location) for 4.5 Million (say 65k GBP) anymore? Please IMO shoeboxes don't count as grade A.

Penthouse properties are now going for 60 -90 Million (almost all of which have sold when last I enquired) in the core areas. I some how think Bangkok and indeed Thailand is perhaps going up market? And is most definitely succeeding!

Agreed. BTW I dont have any property in BBK

[Arkady]

Going back to the original post on the 27/Oct/2006 - Can you actually buy a grade A condo (in Bangkok let alone a good location) for 4.5 Million (say 65k GBP) anymore? Please IMO shoeboxes don't count as grade A.

Penthouse properties are now going for 60 -90 Million (almost all of which have sold when last I enquired) in the core areas. I some how think Bangkok and indeed Thailand is perhaps going up market? And is most definitely succeeding!

Agreed. BTW I dont have any property in BBK

Some one with 60-90 million to buy a condo for cash should consider applying to buy a rai of land by putting 40 million in approved investments.

[pkrv]

Going back to the original post on the 27/Oct/2006 - Can you actually buy a grade A condo (in Bangkok let alone a good location) for 4.5 Million (say 65k GBP) anymore? Please IMO shoeboxes don't count as grade A.

Penthouse properties are now going for 60 -90 Million (almost all of which have sold when last I enquired) in the core areas. I some how think Bangkok and indeed Thailand is perhaps going up market? And is most definitely succeeding!

Agreed. BTW I dont have any property in BBK

Some one with 60-90 million to buy a condo for cash should consider applying to buy a rai of land by putting 40 million in approved investments.

You never know - Someone with that money may perhaps have made their own mind up? (BTW that is not me)

[Mahalika]

<br />

<br />I go along with those that think buying is an unecessary risk.<br /><br />Way too many legal obstacles and very little rights or protections for the farang buyer.<br /><br />The other issue is that it is difficult to sell if you need to get out in a hurry.<br /><br />Much easier to rent in Thailand and if troubles come by way of neighbours, disgruntled work colleagues, grudges, tone of area etc pack your bags and move on.<br /><br />Invest money in your home country and spend the proceeds in Thailand.<br />

<br /><br />If you rent a condo in Thailand, you cannot:<br /><br /> - knock down all the walls and install real wood floors<br /> - install your own doors and fixtures and fittings<br /> - install a huge Jacuzzi in your bedroom that looks out over Bangkok at night<br /> - build a dream kitchen<br /> - paint your walls any colour you like<br /> - decorate your 'home' to the exact style you like<br /> - benefit from any appreciation in the value of your property<br /><br />I am lucky enough to have 4 properties around the world, plus a lot of land, and I've never understood why someone would prefer to 'rent' somewhere, over being able to own their own place and make it into a real home. If you deal with a reputable construction company and have a decent lawyer, and do all prudent checks, investing in a condo here is no different to most other major countries.<br /><br />Plus, I've never come across ANYONE who has lost ownership of their condo because of Thai Government policy etc, nor have my friends and nor have the law firms I know here. It's all a load of bar-talk b****cks.<br /><br />Property in Bangkok is still DIRT CHEAP compared to major Western cities, and even with a tourist Visa you can easily come and go all year long. I have twice the floorspace here in Bangkok as my apartment in Central London which is valued at 3 times as much.<br /><br /> <img src="style_emoticons/default/ph34r.gif" style="vertical-align:middle" emoid="" border="0" alt="ph34r.gif" /> <br /><br />

<br /><br /><br />

I have been reading and following this thread and would like to ask a rather silly question. I am planning to retire in Chiang Mai

before the end of this year and wonder whether dogs are allowed in condos, and whether renting or buying would make any difference.

Thank You.

[backflip]

Every condo has governing rules and regulations, commonly referred to as "CC+R" (codes, covenents, and restrictions). Some condos allow pets, others do not, and the rules do not change whether the unit is owned or rented.

[trajan]

yup, one of my condo "rules and regulations" state:

"Pets

No animal is permitted to be kept at the building, however, some small one such as fish etc. are allowed but prior approval should be obtained from the Management."

I would imagine that the condo co-owners could vote to change the rule if the requisite majority were in favor of that?...

[backflip]

"Why coudn't they simply restructure the land owning company, structure a lease deal or even sell it to Thais "

Exactly.

"Adaptation" is a terrific movie. Ostensibly about orchids, and their ability to adapt to almost any environment, the movie is about adaptation at many levels - how people adapt, how institutions adapt. China and Russia adapted to new economies, even the Roman Catholic church has adapted to new perspectives. Unfortunately, many TVers lack the intellectual energy to do the same. There seems to be a widely-held belief that, if a developer can't sell 100% of the condos, the developer, and anyone who has put a down payment on a condo, lose everything. After posting this nonsense, they start giggling like schoolgirls and repeat "I told you so...I told you so."

As condos, the Amarka development didn't sell...and now it's serviced apartments. The "Urbana Sathorn" condos didn't sell as expected, and now it's "Fraser Suites". Similar to the situation at Amarka, no buyer lost anything.