Why Invest in Off-plan Properties in Thailand?
Investment properties can be either condominiums or land & house, with some basic principles applying in each case when buying off-plan, but for ease of reference and clarity, we shall deal with condominiums within this section. If you are looking specifically for land & house please feel free to contact us and we’ll be happy to provide an overview of new developments and those with significant investment or rental potential.
• Off-plan investments in Thailand can offer investors the ability to buy at the lowest price possible and achieve maximum return on investment.
• Keeping your property for a number of years will allow you to benefit from excellent rental income opportunities. Meanwhile you can enjoy a beautiful holiday home and watch your property appreciate in value.
• Buying a condo allows foreigners to buy freely, without the need to establish a limited liability company, provided the foreigner to Thai ownership ratio on your chosen development does not exceed 49%. However, if you choose to buy in a Thai Company you can manage to get even better savings as many developers will offer a substantial discount for buying in Thai Name. Whilst you can save on the purchase, please note that whenever you have a Thai company, you will be required to submit balance sheets each year in arrears, so there’s an ongoing cost associated with this option.
• The Thai government has introduced and is enforcing building standards and regulations to ensure the quality in Thailand is high and that it is also constructed in harmony with the environment. Obviously, as development projects are completed, it may be possible to purchase completed property but this will be priced substantially higher as it is also generating the return on investment for the original investor.
• Quality new investment opportunities in Thailand are always located in areas that offer the greatest potential for capital appreciation on the property. They are invariably in popular tourist areas that will allow investors to generate rental returns.
• Buying off-plan in Thailand allows investors to purchase property in areas that will attract major rental demand and price appreciations at the lowest possible prices and with the best possible finance options. Those who purchase in quality developments early will see the greatest returns on their investment.
How can property be cheaper if bought off-plan – How does it work?
The developer of any project is always exposed to risk. They want to cap this risk as quickly as possible and limit any bank loans they may have. They do this by selling units off-plan at lower prices as the buyers cannot see a physical property at this stage and rely on the location, show rooms, artist impressions, diagrams and computer simulations. This is also a risk for the investor too of course and so it works both ways, although by doing our due diligence and having a conservative risk strategy, those risks can be mitigated.
In addition to the lower purchase price, the investor also benefits from finance structures too and can spread the payment across the term of construction. The investor usually only needs to pay around 25% of the value of the purchase in the form of a deposit, the rest is payable over the construction period at 0% interest.
Once you have decided to invest in off plan property, you need to decide which strategy you will adopt to achieve your return on investment. Are you simply looking to ‘flip’ the property, i.e sell it as soon as the development is finished, or are you adopting a longer term and perhaps more fruitful investment plan in the form of “buy-to-let”.
Maximizing Your Return on Investment in Pattaya, Thailand
Purchasing early – At the start of a development, the developer offers units well below market value for the reasons mentioned above, often termed “Pre-Launch” prices. In Thailand it is also important to buy as soon as possible as the property market is in its early stages of development and prices are still very competitive but already rising. Investors who purchase now will see the greatest profits.
Purchasing the best units – Early investors can purchase the most sought after properties on any given development. The best units always offer highest capital appreciation in the quickest turnaround time, and will also command the greatest rental incomes.
Price increases as development matures – As the development begins to be constructed the units’ value rises. There is normally a completed show home at this stage so buyers are taking less of a risk without the need to rely completely on plans.
Price appreciates as more units sell – As more units are sold the price of the remaining units rises. This is due to buyers being able to see current units as mentioned above. Often there is a phase payment structure in operation which mirrors the increasing value of the properties. To the early investor this means that should you decide to sell your property, it will be worth considerably more at this stage than when you made your initial purchase.
Where to buy in Thailand – As this section is devoted to ‘investment’ then there’s only one place worth considering and that is Pattaya. Sure there are some really beautiful places around Thailand including other resort areas such as Phuket and Koh Samui, but this is where it’s all happening. Pattaya is regarded as one of the biggest growth areas and is developing into an International City, something which has been recognized by world class hotels such as Hilton, Centara, Amari, Movenpick and Holiday Inn who have all expanded here in recent years. There are a plethora of restaurants, shopping malls and more than 30 international-standard golf courses are within an hour’s drive. Pattaya’s other leisure attractions range from the sedate (tropical gardens, Buddhist temples, zoos, fishing and sailing) to the more active (amusement parks, museums, go-karts, horse riding and shooting ranges), ensuring a constant flow of tourists not merely looking for beach pursuits.
The Eastern Seaboard region is also home to many huge industrial estates, with large international companies having production facilities here in Thailand. Car makers Ford, Isuzu and GM all have production plants here, with many expatriate staff. Engineering, shipbuilding, petrochemical, Oil & gas industry is also well established on the Eastern Seaboard. Just to the north of Pattaya is Laem Chabang port, a deep sea port, from which a large portion of Thailand’s import/exports enter and leave.
Reasons to buy in Pattaya
Known among beach lovers and those familiar with its vibrant nightlife, Pattaya is a good place to live and invest. It’s a popular weekend escape from Bangkok and is just over an hour from Suvarnabhumi Airport. In addition to being a popular tourist resort town, it is also attracting more and more permanent expat residents and families, many of whom are employed along Thailand’s eastern seaboard. This all helps keep demand for apartments in Pattaya robust.
As Thai law restricts foreign ownership of land; condos and apartments are the prime option for foreigners investing in Thai property, since up to 49 per cent of the total units in a single building can be owned by non-Thais. This means that Pattaya condos are the primary property sector in this city, with a mature industry and some very nice developments. For a time, values increased by as much as 15-20 per cent per year, yet after the 2008 Global Financial Crisis, the market slowed down somewhat. The end of 2010 and beginning of 2011 has now shown us that the demand has risen again to normal levels. Now we have great opportunities and prices. Pattaya is still considered one of the best condos investment opportunities in Thailand and leasing prospects are considered strong.
Pattaya is very attractive to both westerners and Thai’s because it is very active and much cheaper than other places in Thailand. Pattaya is now only an hour’s drive from the new airport and about 1 ½ hours to Bangkok. This has been a great improvement for westerners, as well as, the Bangkok population who would like to just get away for the weekend and relax on the beach. The most popular places in Pattaya are Jomtien Beach, Cosy Beach and Pratumnak Hill but the landscape shifts as does the demand… so if you’re looking to buy as an investment please make sure you do your homework first.