Condo in Bangkok - To buy or not to buy?

[Familyonthemove]

Advice, thoughts, opinions, abuse needed - as I'm getting dizzy with the condo hunting scene .....

 

My office is in central Bangkok, Chidlom area, and for the past 8 years I've rented various apartments from Phrom Phong to Chidlom - always close to the BTS as very long working hours would make a 2 hour commute painful.  Rent is high in the central business district, and I realize that if I'd bought 8 years ago I could have paid for a condo by now, but I was never sure how long I'd be in Bangkok as our business is global.

 

But I'm still here, with, I guess, 5+ years more years of working and renting ahead of me. 

 

So my plan was to buy a condo on a bank loan for monthly payments of around what I now pay in rent - so in effect I get a 'free condo' after 5-6 years.  Then I started the condo search and I've ground to a halt.  First issue was that anything in my '5 year pay-off' budget was smaller than a Tokyo hotel room - I travel, I own a coat, I can't live in 30 sq m.  So I had to double the budget; do-able, but defeats the original plan.

 

And condo hunting is agony for a range of reasons, including:

 

1. There's millions of them! 

2. Agents use photos taken when the condo was new - but when you visit you realize how unkind the last 5 years have been on the building and fittings

3. Agents place ads for condos that they don't have on their books just to try and snag customers (I've realized that exterior photos only is a the give-away)

4. All common parts smell of drains, and the golf driving simulator/spa/shop/bowling alley/gym/sauna has fallen into disrepair years ago

5. Private sellers expect you to pay the transfer fee and all their tax and anything else they can think of

6. The concept of a square meter seems to be highly flexible

7. Condos that look like a bargain turn out to have 10 years left on a lease and/or an expressway in the bedroom

8. "Close to BTS" means 'not in Chiang Rai'

9. Some condos seem to be a depreciating asset, like a new car

 

Current options: 

 

• A private sale of a nice condo in need a bit of work (I know a good, trusted builder) in Phrom Phong - seems to be below the guide price on Hipflat - but I don't know if that means much
• A new condo in Asoke - nearing completion so offering extra fittings, small discount and the transfer fee

 

But would I be better sticking with renting if it's basically unsaleable in 5 years?

Is new better than second hand?

What else should I be thinking about?

 

Help!

[Peterw42]

I can see the sense in paying off a mortgage instead of rent. 5 years later you own something. 5 years paying rent you own nothing. Its a buyers market, put in really stupid offers. Nothing to loose. 

[Ronuk]

Be selective in what you want. Don't just buy for the sake of buying. A nice condo in a good area in a good block will always sell further down the line. Prices are on the up in Bangkok. The older blocks pre 2000 are far better built than the newer builds. Don't take the outside of the block at face value. If you see the condo you like, take a look inside. You maybe surprised once you enter the foyer. Go for a block with no pets allowed. 

Always go for a high floor with as bigger balcony as possible with a decent view. Don't fall for the ground floor with pool access trick. Nobody wants them with the noise and people walking past there door.

Lastly, not all condos are Lease hold. Lots are Freehold.

Good luck in your search.

[KittenKong]

2 hours ago, Familyonthemove said:

seems to be below the guide price on Hipflat - but I don't know if that means much

 

As far as I know Hipflat just shows an average of asking prices, and I'm not sure that there is even any guarantee that they are current asking prices. Sale prices are never mentioned. As such the prices seem pretty meaningless to me, except in as much as they allow you to compare different buildings.

 

 

2 hours ago, Familyonthemove said:

But would I be better sticking with renting if it's basically unsaleable in 5 years?

 

That is what I would be thinking about mostly. Buying a condo in Thailand may be a good idea if you intend to live it in until you die, and dont care what value is left for your inheritors. I dont think it's a very good idea if you think you might want to sell after a few years.

 

 

2 hours ago, Familyonthemove said:

And condo hunting is agony for a range of reasons, including:

 

As for your long list of dubious business practices and potential pitfalls, welcome to unregulated, badly-managed and badly-maintained Thailand. If you assume that everyone you talk to about real estate here is a thief who is lying to you and trying to rip you off you wont have many bad surprises. It works for me anyway.

[Familyonthemove]

Thanks All!   This is very helpful.  I'll look at some older buildings, and also try some low offers.  I also understand Hipflat figures now - so actual selling price probably lower.

 

The tax issue is confusing me. 

 

I thought that as a buyer I was responsible for part of the Transfer Fee (2% of Gov estimate of value?), and that the % of this that I pay is negotiable from 0% to 2%.  But two sellers have said I need to pay tax on top of this based on the increase in value of the condo?  Surely this is the sellers responsibility?

[Peterw42]

Usually the transfer tax etc is negotiated as part of the sale process buyer pays, seller pays, most of the time 50/50 is agreed upon. Some real estate websites will even state who pays, foreign title etc.

As you have noticed, Hipflat is asking price, often the sale price is way lower. Condos in my block are listed, on hipflat, anything up to 30-40% higher than I know they sell for.

 

 

[Cinderella Man]

I totally don't understand your "pay it off in 5 years for the same cash as renting"

 

I'm sort of a real estate junkie - checking out condos, apartments, houses is what I often do to just to relax. I've worked as a real estate agent in Europe for couple of years and lived in several different countries where I know the market just from my "relax" research.

 

I don't see in any way how buying in Bangkok is a good investment. Unless it's a sh*t hole needing full reconstruction in a very old building with decent location and renting out via AirBnB to tourists.

 

My condo for example is one of the more/most luxurious at Asoke area... Still ton of units not sold and mine 1 bed is 6.5M ... I rent it for 25k = would take me almost 22 years to pay if off in a dream world where I wouldn't have to pay interest + number of fees.

 

Not far away another condo is building up - just literately couple of meters from an older condo. Guess what - people in the older condo with now decent view will look to a concrete soon.

 

Imo it is really really stupid to buy in Bangkok - sure, often you can still make nice profit, but the odds are against you and the upside is limited.

Edited September 23, 2016 by Cinderella Man

[Familyonthemove]

1 hour ago, Cinderella Man said:

I totally don't understand your "pay it off in 5 years for the same cash as renting"

 

I'm sort of a real estate junkie - checking out condos, apartments, houses is what I often do to just to relax. I've worked as a real estate agent in Europe for couple of years and lived in several different countries where I know the market just from my "relax" research.

 

I don't see in any way how buying in Bangkok is a good investment. Unless it's a sh*t hole needing full reconstruction in a very old building with decent location and renting out via AirBnB to tourists.

 

My condo for example is one of the more/most luxurious at Asoke area... Still ton of units not sold and mine 1 bed is 6.5M ... I rent it for 25k = would take me almost 22 years to pay if off in a dream world where I wouldn't have to pay interest + number of fees.

 

Not far away another condo is building up - just literately couple of meters from an older condo. Guess what - people in the older condo with now decent view will look to a concrete soon.

 

Imo it is really really stupid to buy in Bangkok - sure, often you can still make nice profit, but the odds are against you and the upside is limited.

 

That's the dilemma I've been struggling with - as I know the market is saturated and there's always something new being built.

 

But here's the 'theory' .....

 

Over the next 6 or so years that I plan to be working and living in central Bangkok I will probably spend around 4 million THB in rent, (because of the high cost of wanting to live close to my office in Chidlom).  So my original plan was to buy a condo for around 4 million baht and live in that.  So after 6 years I'd have spent the same in deposit, loan repayments and interest as I would have spent in rent .... but I'd now have a paid for condo to either sell or rent out.

 

My theory started to show some holes when I found that the cost of a condo anywhere near the office is over 7 million THB.  But I reasoned that as the end game was a paid-for condo in central Bangkok, it may still make sense if I buy wisely. 

 

The maths are a bit suspect, as a 4 million THB condo would need to be out as far as Bearing - and that far out the rental is much less around Chidlom.  But perhaps there's an optimum model where I travel a but further, pay a bit less and still get a decent property rather than blowing a load of money on rent?  That's why I'm now looking at Asoke, Phrom Phong, Ekamai, On Nut - short motorsai ride distance from BTS, or centrally located condos in 'secondary' locations like Ruamrudee Soi 2/3,, Soi Nai Lert, Ploenchitt/Pratunam.

 

And that also explains how I've ground to a halt.  Case of falang thinking too much.

[ExpatOilWorker]

You can get a condo with a view  close to Chitlom for less than 4 million, but it is of course leasehold.

[Familyonthemove]

2 minutes ago, ExpatOilWorker said:

You can get a condo with a view  close to Chitlom for less than 4 million, but it is of course leasehold.

 

Yes - I've looked at several of those, great locations - but with only 10 years left on a lease I may as well stay with the renting option.  Freehold is double the price and my sums go to pot.  My home country has good protection for leaseholders, but the law is very different here.

[Ronuk]

Be careful on buying a condo on foreign quota with a view to renting it out again. There are laws in place that deems it illegal. Take a look at what is happening in Phuket. Im hearing that some condo management are also under investigation in other provinces too.They have started to look at it. Not only it being illegal to rent on foreign quota but you actually require a wp as it's classed as working. As a previous poster said, buying a condo that you like and want to live in, is a good idea but the days of buying to rent are over.

[dotpoom]

16 hours ago, Peterw42 said:

I can see the sense in paying off a mortgage instead of rent. 5 years later you own something. 5 years paying rent you own nothing. Its a buyers market, put in really stupid offers. Nothing to loose. 

 

Except your self-respect..

[trogers]

4 hours ago, Ronuk said:

Be careful on buying a condo on foreign quota with a view to renting it out again. There are laws in place that deems it illegal. Take a look at what is happening in Phuket. Im hearing that some condo management are also under investigation in other provinces too.They have started to look at it. Not only it being illegal to rent on foreign quota but you actually require a wp as it's classed as working. As a previous poster said, buying a condo that you like and want to live in, is a good idea but the days of buying to rent are over.

 

Seems you do selective reading, and of course, you selected the wrong articles to read and formed the wrong conclusion.

[Ronuk]

11 minutes ago, trogers said:

 

Seems you do selective reading, and of course, you selected the wrong articles to read and formed the wrong conclusion.

Did I really? Maybe you need to educate yourself as to what is legal and what isn't legal here. Other than that, I really couldn't care  less what you think. Like a lot on TE, your a mouthy keyboard warrior that most probably in real life has very little to say. Now maybe you be so kind as to not try and hijack a thread that has absolutely nothing to do with you? Have a nice day.

Edited September 24, 2016 by Ronuk

[Peterw42]

4 hours ago, Ronuk said:

Be careful on buying a condo on foreign quota with a view to renting it out again. There are laws in place that deems it illegal. Take a look at what is happening in Phuket. Im hearing that some condo management are also under investigation in other provinces too.They have started to look at it. Not only it being illegal to rent on foreign quota but you actually require a wp as it's classed as working. As a previous poster said, buying a condo that you like and want to live in, is a good idea but the days of buying to rent are over.

 

It is illegal to rent out a condo short term, ie: under a month, nothing to do with foreign title. it is against the hotel act.

 

It is "legal" to rent out a condo long term, ie: over a month, And you do not need a work permit. Nothing to do with foreign title.

 

 

I am sure your intentions are good, but you are posting incorrect information, which others may act on.

 

[trogers]

To the OP,

 

Your time frame of buying to reside for 5 years and then hope to sell it thereafter would make it a risky investment, because of drastic oversupply.

 

And a budget of Bt4 million would get you a true 1-bedroom (over 40 sqm) from Prakhanong to Onnut. Forget anything nearer to Chidlom.

 

A true 1-bedroom means the bedroom and the living room has their own window or balcony sliding door, and not a hotel room with a partition between the sofa and the bed.

 

[Ronuk]

Just now, Peterw42 said:

 

It is illegal to rent out a condo short term, ie: under a month, nothing to do with foreign title. it is against the hotel act.

 

It is "legal" to rent out a condo long term, ie: over a month, And you do not need a work permit. Nothing to do with foreign title.

 

 

I am sure your intentions are good, but you are posting incorrect information, which others may act on.

 

I suggest you check with the ministry of Labour. I also suggest you check the legalities of foreign quota regarding condo and apartment purchase. Indeed though, your part regarding the Hotel act is correct.

[Peterw42]

7 minutes ago, Ronuk said:

I suggest you check with the ministry of Labour. I also suggest you check the legalities of foreign quota regarding condo and apartment purchase. Indeed though, your part regarding the Hotel act is correct.

 

Here is a direct quote from the ministry of labor in phuket.

 

Long term rental of a foreign quota condo is 100% legal. And a work permit is not required.

[Ronuk]

4 minutes ago, Peterw42 said:

 

Here is a direct quote from the ministry of labor in phuket.

 

Long term rental of a foreign quota condo is 100% legal. And a work permit is not required.

Please do not take anything for gospel EVER here in Thailand what you read in any newspaper or article that is written for the expat community. 

Go directly to the ministry of Labour and ask them. But before you do, read the law regarding foreign quota regarding condominiums. The law is there to stop exactly what your saying is legal.

[mike324]

37 minutes ago, Peterw42 said:

 

Here is a direct quote from the ministry of labor in phuket.

 

Long term rental of a foreign quota condo is 100% legal. And a work permit is not required.

 

I agree its 100% legal for long term. Those foreigners and condo management that are getting caught are doing it short term and mostly through AirBnB, this is why its in the news. 

Edited September 24, 2016 by mike324

[mike324]

17 minutes ago, Ronuk said:

Please do not take anything for gospel EVER here in Thailand what you read in any newspaper or article that is written for the expat community. 

Go directly to the ministry of Labour and ask them. But before you do, read the law regarding foreign quota regarding condominiums. The law is there to stop exactly what your saying is legal.

 

Foreign quota regarding to condos is 49%, is very clear. Not sure why you are making this a big deal which shouldn't be.

[mike324]

OP - I think you need to state what your budget is before we can offer good advice. To be honest, new or old one bedrooms will be hard to sale / rent due to competition. Like another poster said, there is an oversupply of 1 beds, I believe over 70% of units in each condo built in the past 5 years are 1 bedroom, so you can imagine how much supply is on the market. You may be able to sell it easily later down the road if you don't plan on making any money and if real estate prices continue to rise (this is for new units). 

 

If you plan on renting, based on experience, two beds that are over 120 sq at newer buildings are easiest to rent out. Big units in good location are in short supply now. According to CBRE, prices for older condos (15+ years) will start to rise faster as new units are getting too expensive and units are too small, but that does not mean it will be easy to sell, as the buying habit for most Thais is still new condos.

[Peterw42]

6 minutes ago, mike324 said:

 

Foreign quota regarding to condos is 49%, is very clear. Not sure why you are making this a big deal which shouldn't be.

 

Foreign quota condos are subject to the same laws as any other ownership title. there are no restrictions or conditions on the property just because its foreign owned. 

There is no law that says a foreign quota condo cannot be rented out legally.

[likeke]

Buying a condo in a "third world country" is really not a good idea. Save yourself anxiety and sleepless nights by just renting. Rents in Bangkok are cheap relative to Western countries, and is typically 1/3 the price. Why make your life more complicated by buying property here. Two things I always tell close friends who I care about: Don't marry a Thai lady, and don't buy property in Thailand. You can take that to the bank! 

[trogers]

23 minutes ago, mike324 said:

OP - I think you need to state what your budget is before we can offer good advice. To be honest, new or old one bedrooms will be hard to sale / rent due to competition. Like another poster said, there is an oversupply of 1 beds, I believe over 70% of units in each condo built in the past 5 years are 1 bedroom, so you can imagine how much supply is on the market. You may be able to sell it easily later down the road if you don't plan on making any money and if real estate prices continue to rise (this is for new units). 

 

If you plan on renting, based on experience, two beds that are over 120 sq at newer buildings are easiest to rent out. Big units in good location are in short supply now. According to CBRE, prices for older condos (15+ years) will start to rise faster as new units are getting too expensive and units are too small, but that does not mean it will be easy to sell, as the buying habit for most Thais is still new condos.

 

The buying habit for most Thai is still new condos, would make buying new and selling 5 years later non-feasible, as what is now new becomes old...

[1130bobs]

I have rented most places around the world as I was in sales & relocations & company changes were often quick & unplanned even a year or 2 before.  Also owned so:   Rather than distance, size, quality & other issues ; look at it as a financial investment vs your QUALITY OF LIFE.    In USA in most 'good' areas, the rent generally works out to equal the sale price in well under 10 years, thus it is much better as an investment risk (VIEWED AH HIGH RENTAL RATES).  I found in Thailand that this ratio is MUCH higher so that it CAN TAKE 14 - 16 years of rental to equal sales price.  Thus your instincts to not waste $ in rental, which was developed in a western market, must be softened for here.  Second, to think about is how much this rental savings means to you, with your work income.  With a guideline NOT to spend over 25% of your income on housing, I found that when I rented I got something 'acceptable' to me & it usually worked out to 10-15% of my income, so the trouble to buy to maximize this small $ does not make sense to me.  Usually, when buying, the tendency is to move 'upscale' or spend a lot on upgrades after bought.  So now you may be putting 25% - 35% of your income into the mortgage investment.  If you are 'well off', then this is a viable diversification of your assets, however,  if this investment represents a major part of your assets, then many would say the market here is too risky to do this - market, exchange rate, no sale for years (because the poor agent quality makes it much harder than in western countries.  - rent a nice place, & put the effort into your work or a happier life.  my opinion as a retiree lived in many countries / continents.

[mcfish]

Most people renting on the cheap in Bangkok are in a 5k/month dog box because its all they can afford and certainly shouldn't be giving financial advice 

 

A low to low mid end condo a few minutes walk from nana or asoke bts are 30k for 75sqm..thats not cheap! but nearly all expats go for studios to stretch out poorly managed finances and low pensions

 

The problem Bangkok buyers are having now are skyrocketing prices. The new condo prices in my soi next to nana bts have tripled in 10 years!!

Im super glad I bought when I did and probably wouldn't buy here now 

[AsianExport]

Rent cheap in BKK and buy outside BKK in a place that won't sink under water within few years.

[trogers]

9 minutes ago, AsianExport said:

Rent cheap in BKK and buy outside BKK in a place that won't sink under water within few years.

 

Think of accommodation as a factor of production of a working executive. The quality of living outside of the office affects his productivity.

[jippytum]

Buy a resale unit not one off plan . What you see is what you get . Taxes should be 50/50.Check with the manager if the sinking fund has a credit balance before purchase . A healthy balance would indicate a well run building to go with the visual aspect of the common area and the condo you wish to purchase