Thailand real estate guide

When thinking of overseas property for investment purposes the British have invariably and predominantly looked to Spain and France in the past. More recently Bulgaria,The Czech Republic, Poland, Latvia, Croatia and with their accession into the EU on the first of January 2007 Romania now seems a viable option and alternative. For some of the more pioneering Americans Eastern Europe is also a favourable choice for affordable real estate, offering a low cost and comfortable standard of living. Furthermore the majority of the emerging economies within the Eastern bloc and real estate markets are pro active and working hard to attract foreign investment.

A growing number of US citizens are choosing to move north to Canada where real estate can be cheaper,taxation can be lower, healthcare is far cheaper and the standard of living as high as in America. Countries such as Mexico, Panama and Belize are well known as lower cost locations for US citizens seeking an affordable overseas location. Living costs, real estate and taxation are all low. However the main consideration is the affordability and accessibility of healthcare and of necessary treatment and care, each of the three countries mentioned fails in one way or another. Furthermore, younger Americans may struggle to find decent employment or education for their children in Mexico, Panama or Belize.

The British have always been obsessed with property and the expression ‘an Englishman’s home is his castle’ has never rung more true. With the cost of housing within the UK out of the reach of most first time buyers and those first time buyers continually vying for property with buy to let investors more of the early twenties are putting down roots in more affordable countries. As always though anyone considering these locations are advised to act sooner rather than later.

The Sofia Echo in early January reported that developers have worked on entire apartment and villa complexes in smaller and less popular regions with significant funds allocated to such projects. Investors, it seems, showed more interest in getting a new apartment close to a major city, rather than an old house to refurbish. as a result of continual development the price of property in such regions remained almost unchanged throughout 2006. In some regions, the price of property even went down. Varna region registered a 15 per cent price decrease. The average price per square metre in the region dropping from 600 to 510 euro. Supply also brought down the prices of property in the Bourgas region.

With the advent of cheap air flights this has further enhanced the idea of a dream home in the sun. However can accessibility be correlated directly to sustainable investment potential. Thailand is approximately 10000 miles from the US and approximately 6000 miles from the UK, With flying times of approximately 21 hours and 11 hours respectively. Perhaps not suitable to the masses and ensuring a restricted and select ex-pat presence.

Thailand has three main seasons per year. Northern climatic conditions are preferred by Thais countrywide as the coolest and most comfortable. Generally northern temperatures are between 3-5 degrees lower than the rest of the country, Chiang Mai city is a favoured location and the climate is perfect for visitors. Cool mountain air and bright sunny days ensure that this Shangri-la setting will remain a favourite for many years to come. The North also differs during the rainy season and continuous rainfall is quite rare. It will usually rain heavily for a period between 30 minutes to one hour, once or twice a day and soon dries up after the sun appears. The area is then left feeling fresh and cool. The average temperature throughout the year being approximately 26 degrees.

Chiang Mai has a significant expat community and some figures put the number of “farangs”, or westerners at 5,000. Chiang Mai is much of what Bangkok is not. Instead of the flatness of the Maenam Valley one is treated to ranges of forested mountains that sweep northward to Burma. Hill tribes in colorful costumes are common sights hawking their handicrafts around the night market. As Bangkok has no definite city centre, Chiang Mai’s is clearly defined by a moat.

Chiang Mai is certainly easier to negotiate than Bangkok. Walking, bicycling and motorcycling are realistic alternatives to driving. Or if you prefer, tuk-tuks are prolific. A relatively well organized system of songtaews (pickup trucks with benches and canopies) run a sort of shared service around greater Chiang Mai. Some can be hired much as a taxi service. Chiang Mai stands on the banks of the Maenam Ping (river) and quite a number of good restaurants are perched along the banks.

There is also a strong emphasis on healthcare and Chiang Mai has several quality hospitals including Chiang Mai Ram,Chiang Mai University and the McCormack Hospital. Along with the presence of US and UK consulates. ATMs are everywhere and currency exchanges are commonplace. Interest earned on fixed deposit accounts is taxable at 15% and collected by the banks.

Thailand investment potential for overseas property buyers are enormous. Expanding tourism, easy accessibility and low property prices make for an investors paradise.

Thai culture has always been greatly influenced by China and India giving an exotic blend for which The Kingdom of Thailand has become famous. Buyers in Thailand tend to be mostly investors who are looking to cash in on the booming tourist industry however with increasing demand this is set to change.

Overseas investors will be pleased that Bangkok recently opened a new airport, Suvarnabhumi Airport (BKK), often called New Bangkok International Airport, which is 25 kilometers east of downtown. This facility has flights from all over the world on most major airlines. The old international airport, Don Muang (DMK), is open for limited domestic flights.

The Bangkok real estate market is one of the best for international investors who are interested in the Asian market. Research shows that the property market here is much more affordable than other south Asian cities such as Hong Kong and Singapore. Bangkok has a very nice climate year round and is also close to many recreational activities, such as beaches and tropical resorts.

Because of low labour costs and relatively inexpensive housing, many multinational corporations have made Bangkok one of their overseas homes. This has, in turn, drawn a lot of international businessmen and expatriates to the city looking for high quality housing at reasonable prices. There continues to be a healthy demand for property, meaning that investments should continue to rise in value for the foreseeable future.

The city is one of contrasts, with its fast growing urban skyline and many old temples and historical sights. It is also growing increasingly cosmopolitan with high end shopping, entertainment and fine dining. Because of Thailand’s strict foreign ownership laws, apartments and condominiums are the option of choice for most international property seekers in Bangkok.

The new property available in Bangkok is attractive to in the middle and upper-middle income buyers. These properties are typically one and two bedroom units ranging in size between 45 square meters to 80 square meters. Moving up towards the high-end market, new additions were seen in the Sathorn, Silom and Sukhumvit areas, with the majority of condo units offered being two and three bedrooms from 90 square meters to 190 square meters.

My other tip for the top in Thailand is the city of Pattaya which is to be found on the east coast of Tourism in this area appears to be increasing year on year. According to the Tourism Authority of Thailand 5.8 million people visited Pattaya in 2006. The combination of its big, wide beaches, water sports, interesting attractions, sightseeing, shopping, makes Pattaya’s a great place to buy property in Thailand.

In summary Thailand offers a host of opportunities for the international real estate investor.

Potential investors who are currently considering an overseas property purchase in Asia, will probably have Thailand on their short-list at the outset, but upon looking into it will find that property investment in Thailand is currently a two sided coin:

On the one hand Bangkok has recently been listed among the top twenty tourism destinations in the world, which should make a property investment there a good one. Dig a little deeper however and you find that capital appreciation, — previously strong in Thailand — along with all factors to be considered before investing, have been detrimentally affected by the recent political turmoil, namely the September 2006 coup.

Never the less Thailand is still among the best Asian countries for foreigners to invest in, there is no inheritance tax or gift tax, capital gains tax is charged like income tax at the standard rate, and foreigners can own condominiums freehold. There are other ways for foreigners to buy in Thailand but a condominium purchase is the easiest. And even with the political turmoil as it is rental yields are still around the 8% mark in top tourist destination, Bangkok.

Another rising star in Asia’s tourism industry is the Thai island of Koh Samui,which has been largely unaffected by turmoil on the mainland, and where potential investors will find mostly resort property.

As tourism expands on the island, and it begins to attract more of the high end market, as oppose to primarily back-packers, these resort villa properties can fetch yields of 10-12% quite easily, and capital appreciation is conservatively estimated at around the 15%-20% mark.

Total transaction costs are a moderate 10% - 12.3% in Thailand, but there is a little complication over the computation of buying costs; specific business tax and stamp duty are paid on whatever is higher, declared or assessed value — both parties must have their own solicitor.

Overall a Thailand property investment can be a very rewarding endeavour, especially if you are purchasing a holiday home with a view to renting it out when not in use.

Thailand is becoming an ever more popular retirement and choice of country to live with its low costs and beautiful scenery not forgetting of course the world famous friendliness of the Thais themselves. But finding out about the laws governing property ownership here can be confusing. Here are the bare bones of Thai property Law

• A foreigner can own a condominiums long as less than 40% of the condos or apartments in the building are owned by foreigners. Many people believe it to be 49% although this regulation was an addition to the existing law and was only meant to be in place for one year and has since expired.

• A company can own property such as land and a house (and hence the foreigner can buy land and a house via their Thai registered company) as long as no one foreigner owns more that 39% of the company (recently amended from 33%) and total foreign ownership of the company does not exceed 49%.Still ambiguous and under review.

• The Thai wife of a foreigner can own property (a recently changed legal status due to gender equality in the new 1997 constitution revision), in her name only. This is fine as long as you don’t have marital problems. (The same, of course, goes for a Thai husband, but the law was changed recently for Thai wives due to the new constitution guaranteeing equal rights.)

• A foreigner can lease land for 30 years, with an option for another 30 years, the first 30 years are guaranteed they are registered with the Land Department, however the second can be contested.

• If you gain BOI approval you may as a company is able to buy up to one rai of land. Although this is meant for very large investors.

At the end of the day if you are seriously looking to invest in Thailand you should consult a good lawyer who will be familiar with the latest property laws.

One question we are constantly asked is if you have to obtain permission from the government before purchasing property. To buy a condo or apartment in Thailand is very simple if you’re a non-Thai. Most projects have a 51%-49% ownership rule. If the Building is over 51% Thai owned, a foreigner can purchase and own the condo or apartment freehold. If not, you must purchase the apartment as a 30 year lease. Check with the local land office before you purchase if you are unsure about the title deed.

Buying direct from the developer has several advantages: you will get to see a range of properties in Thailand that suit your requirements; you have the benefit of many years experience, as well as a English speaking office to support you in your home country; it may help eliminate any possible misunderstandings; and it helps takes away the stress associated with purchasing in Thailand or abroad.

Transactions and payments are simply made by wiring from you home bank account. It’s always better to let the Thai banks convert your money in Thailand then to let you home bank to convert it to Baht before you wire. This tip along can save you thousands of dollars when you go to wire a large amount. Some developers can “lock in” a rate for you before you wire. Make sure you can communicate with your agent by MSN chat, Skype or text message in case you have any last minute questions while at the bank.

The Thai currency system is based on the decimal system. One That Baht is divided into 100 satangs. Coins range in value from ten baht to 25 satangs and six bank notes are in circulation: 10, 20, 50,100,500 and 1000. Always keep lots of small bills as it’s a big jump between 100 baht and 500 or a 1000. Most street vendors and taxis can’t make change for 1000 baht.

Personal effects, household goods and furniture may be imported duty free. There is very high duty on importing a car. I believe with the hassle of dealing with Thai customs it’s better to buy what you need inside of Thailand and leave most of your personal effects at home.

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