Monday, June 28, 2010
Sawadee Krab, I am KC the Agent
Tuesday, June 22, 2010
Thai property market recovering but global downturn and political unrest has pushed prices in some areas down to 2007 levels, report shows
The condominium market in Thailand is showing signs of an early recovery as selective investors return to buying properties and real estate stocks, it is claimed.
All major developers are reporting stronger sales than expected after a dismal end to 2008 but lack of finance could end up hindering the tentative recovery, according to a report from publicly-listed Thai condominium developer, Raimon Land.
In the first few months of 2009 pre-sales more than doubled compared with the last quarter of 2008, signalling that the market has already bottomed out, the report says. The outlook for developers has also improved due to lower costs for materials and construction along with reasonably priced plots of land, it adds.
The Bank of Thailand has lowered interest rates four times since December 2008 and a government stimulus package that reduces the Special Business Tax from 3.3% to 0.11%, extends the reduction on transfer taxes from 2% to 0.01%, reduces mortgage registration fees and reduces tax on mortgage interest is having an effect.
Overall the report describes the outlook in Thailand as positive and remarks that off-plan sales, which had been negative, now have a high up-take at 73%. Indeed in some areas demand is leading to increased prices. In central Bangkok, for example, the average price per square meter is being driven upwards by the demand.
But the report also points out that some parts of the country are facing a more mixed market. In Pattaya the real estate market has suffered from a decrease in tourism numbers of 16% and the region is more susceptible to the global downturn and political unrest. Although Russian, British and Chinese investors are still buying.
Unlike in other parts of Thailand the end of 2008 was strong but in the first few months of 2009 off-plan sales dropped off 35.2%. As a result prices are falling. 'The gap between supply and demand is widening, which along with reduced buyer confidence induced by the slow economy and domestic political instability has pushed prices down to levels not seen since late 2007,' the report says.
'It is fair to say we see more glossy sales brochures and property billboards than actual cranes in Pattaya,' the report adds.
However, it also points out that the gap between finished supply and demand could guarantee strong annual returns and re-sale prices are rising. This trend is expected to continue as only a third of launches are expected to be completed in the next two years while the rest will not be finished until 2012 or 2013.
The report concludes that the property market could be boosted further through better access to funding and more foreign investment.
SOURCE: RAY CLANCY THAILAND - THAILAND PROPERTY NEWS
Tuesday, June 1, 2010
The Counterfeit Condo by Bart Walters
When is a condo not a condo? If you find yourself facing such a conundrum, it is highly probable you are in Thailand.
Everyone who has visited Asia has probably purchased at least one bootleg item. A fake Ralph Lauren shirt? A pirate DVD? A Rolex perhaps? And none of us are surprised when the buttons fall off the shirt, the Special Features don’t work on the movie and the watch turns your arm green. The truth is, these aren’t even copies of quality products, they’re one-dimensional cardboard cut-outs.
And so it is with condos in Thailand. For some developers, if it looks like a condo, then by God it’s a condo! I’m not sure how long the idea of condominiums has been around in Thailand, but one thing is for sure … some folks clearly don’t understand the original concept.
When I lived in the US, rarely was a condo building’s management an issue to consider. Some were naturally run more efficiently than others, but a framework of laws concerning condo ownership and management has been in place for a long time and can be strictly enforced. What’s more, US condo laws are decidedly pro-owner. Bad managers can expect little tolerance from a building full of disgruntled inhabitants.
Here in the Land of Smiles, assuming that a building’s management is okay could mean what you bought looks like a condo, but acts like a money trap. Your ability to control the destiny of that property could be hindered or stolen away altogether. If you are in-country for any length of time you’ll start to hear the horror stories.
This is one of them.
The Haunted Mansion of Ban Amphur
A few years ago a friend directed me to a distressed building south of Pattaya near the sleepy fishing hamlet of Ban Amphur. There are a handful of medium-rise condo buildings with access to the picturesque crescent shaped beach. Some of the buildings are quite nice and well maintained; others are not.
A lot of buildings I’ve been to in Pattaya look great from the curb, but soon lose their luster when you break the plane of the front door. The building we looked at was the opposite. Upon arriving, I wondered if the entire 17 stories were vacant. Not one flake of paint remained on the 8 year old tower… it appeared to be naked and shivering on the beach.
What I found inside was quite a surprise; a big functioning swimming pool, double glass elevators and a friendly staff including a gardener who showed us around. The décor was decidedly dated, and everything needed a coat of paint, but the sweet aroma of opportunity was in the air.
One of the staff showed us rooms we could rent and/or buy. What we saw was an array of units ranging from bare shell to fully fitted. Some of the balconies were bigger than my entire condo in Bangkok. One thing was constant; the view of The Gulf of Siam and Jomtien coastline were unrivalled in Pattaya. The quiet glassy bay interrupted only by the long jetty guiding the fishing boats into the seafood market is the stuff of travel posters. We made an appointment to meet the “owner” in one week.
We did some research on the building and found out it had been caught in the squeeze of the 1997 currency collapse. Expansion and development in this area was in full swing when the rug got pulled out. Of the 250+ units in the building, the original developer (“the owner”) had to eat half of them. Early investors ended up with half-finished units they couldn’t sell.
It was a mess, but still able to limp along for the last 8 years. There were a handful of rental tenants as well as some resident owners. During big holidays some Thai families came to party and eat seafood on Ban Amphur Beach. The building was barely alive, but occasionally had a pulse. A view from the balcony revealed some buildings several kilometers north that weren’t so lucky.
The “owner” turned out to be a total Dragon Lady. She is the quintessential Thai-Chinese matriarch, complete with a little “birdhouse” of hair and more Buddha statues in her office than the local temple.
She swamped us with butt-kissing compliments and genuflecting service from her staff. We even got invited to a big “family gathering”. Being Thai-Chinese herself, my assistant warned me not to be pulled into the Dragon Lady’s realm of influence.
I visited the property 5 times in all. Each time the “owner” had a new deal for me. She showed me architectural drawings of planned renovations. She showed me a bid for repaving the parking lot. She said the building would be repainted before the end of the year. She made it sound like this beat up old bunker was about to rise from the ashes.
Her most powerful sales tool however was the display of her earlier catch. The Dragon Lady took special care to point out how many other foreigners had purchased units and were now renovating them to very high standards. There was a Swiss guy living on the 15th, and Englishman re-doing a whole floor on the 10th, and a Frenchman who purchased mover 1,000 square meters to create a mansion on the roof!
I purchased a bare shell with a balcony big enough to play badminton on. At 18,000 THB per square meter it was worth it just to come and watch the sunset.
Eventually I opened my wallet and renovated the place into the coolest pad I’ve ever lived (and I’ve lived in some serious pads).
It wasn’t until I met my fellow foreign co-owners that I realized I’d just joined the “Victims of the Dragon Lady” club. Apparently that paint job had been coming for more than a few years, the pool turned green bi-weekly and several co-owners were engaged in legal battles with this condo-Svengali.
Most importantly, no general meeting of the owners had ever been called and no balance sheets posted. She owned the most units, she was the Juristic Person, she ran the board … it was her building. I had been pulled into to her web despite my assistant’s warnings.
Several attempts have been made to rally the farangs and somehow take over control of the building. The barriers are many. First of all, trying to get expats together for anything other than a free meal is like trying to herd cats. And, even though she’s sold off a unit here and there, she still has the most votes. We can’t win no matter how much we get it together.
Recently we learned that she had systematically mortgaged all her units and borrowed heavily from the bank. Now it appears the bank will take over in the next six months. We have no idea what will happen then.
I fantasize about an investing angel swooping in and turning this place into the Miami-like beachfront resort it could be. But, if the truth be told, I’d be happy just to see a paint job.
A few of us have banded together and hired a lawyer to investigate, get us a list of the other owners and try to be prepared when the power vacuum materializes.
For those of you reading this and saying, “Why don’t you go to court? Isn’t that illegal?” … forgive me for laughing out loud. The idea that a handful of foreigners are going to make any government agency impose any inconvenience on a well-connected Thai family is preposterous. When she’s done milking this cow, she will be conspicuous by her absence.
This story isn’t all downside. The other night my Swiss neighbor and I were sharing a bottle of wine at sunset and discussing the paradox of this building. We live on the edge of town in really cool seaside apartments in a deserted building like something in a movie. It’s quiet, the beach is nice, the staff is friendly … the elevator works. If suddenly a new “owner” arrived to turn the place around, we’d all be living with tile-saws and jackhammers for the next 2 years. That day is of course inevitable, so we embrace this skanky old building while it’s still kind of quaint.
So it’s a great place to live and the end of the management’s tyranny of neglect may be coming to an end soon. And, for the first time, some of the foreign ownership is showing an interest in running the place. Please forgive my optimism.
Several years ago in Phuket I saw a condo turnaround accomplished by a fractured group of foreign owners in a low-rise that was quite successful. Thailand has laws in place, but an unwillingness to enforce them and a lack of coordination by the owners can render the laws toothless. A 2008 upgrade to the Condo Act is supposed to put the bite back in the law. For yours truly, that remains to be seen.
I should point out that this example is the exception rather than the rule. Most modern buildings in Thailand have acceptable management; some are even very professional.
In Bangkok I actually shopped for condos based on the management company called The Unity Group. They managed the building I lived in and were better than anything I’d ever seen in the US. I only looked at condos in buildings under their competent umbrella.
It is important to remember, here in Thailand the responsibility of researching the management and history of a property is on the buyer. There is no MLS or handy government websites to research. It is essential to talk to other owners or investigate other buildings under management. If you get stuck with an unsellable unit in a nightmare building, it’s nobody’s fault but your own.
When foraging for counterfeit goods in the street market, it’s simple … you know they’re fake. When shopping for a condo, exposing telltale flaws may not be so easy. Take your time and make sure you get a condo, not just a cardboard cut-out.
Thursday, May 27, 2010
The turtle quarter...Q2
Thailand’s GDP (purchasing power parity):
$541.2 billion (2007)
$555.3 billion (2008 estimate)
$539.7 billion (2009 estimate)
The following data maps the performance of various sectors of the GDP as of 2008:
Agriculture: 12.3%
Industry: 44%
Services: 43.7%
Of about 64 million people (as on December 31, 2008), the labor force stood at 38.24 million in 2009 and was employed in the three main sectors in the following manner as of 2008:
Agriculture: 42.4%
Industry: 19.7%
Services: 37.9%
Final Words:
So what is the estimated 2010 GDP of Thailand going to be? Will the Redshirts have dont some permanent damage on the image of Thailand s the Land of Smile and thus affect the influx of tourism to Thailand in the next few years? It is all up in the air, however, the Thai government are speculating a steady growth despite the unrest in Bangkok. One thing for certain however, the property investment in Thailand is still seeing higher Return on Investment than its neighbors and it is almost certain that it will stay like that. N.B. Just because Bangkok is in trouble, it does not mean that the rest of Thailand is experiencing unrest - Pattaya, a city on the beach facing the gulf of Thailand is ever growing (in infrastructure and investment!) so come get your share of the opportunities for future investments!
Happy Investing!
Sawadee Krab
Monday, May 24, 2010
A word from the Intern
I have been working as an intern at Town & Country Property for almost 20 days now and I feel compelled to talk about this company on this blog. One of the main reasons why I decided to even put forward my name to Cees, the MD of this company for a possible internship position, was because I am a sucker for tag-lines and let me tell you this; Town & Country Property's tag-line "Good Quality and Service is not a requirement; its our Obsession" got me hooked! I came here with the mission of learning as much as possible and of course, to contribute to the growth of this company as well. I must admit, the first few weeks of me being here has allowed to ascend as a professional in the Real Estate realm and all I can wait for is new projects and advanced networking events. Which comes to remind me that there will be a charity event with networking opportunities at Pullman Aisawan Hotel in Wongamat at the 4th of June, starting at 8 pm!
Join us and see it for your eyes; how true our tag line is!
Living in Thailand - Look at Little Sister by Barton Walters
When most people think of “going expat”, visions of deserted white sand beaches and quaint village markets are conjured up. Moving to a foreign country with breathtaking scenery and warm-hearted people is an escape artist’s dream. But, don’t let the salt-spray get in your eyes … the reality of expat living requires a little more practicality. There are plenty of roadblocks to living the good life many people don’t consider.
Language skills tend to more necessary in remote locations. Even in the Philippines, a country widely perceived to be English speaking, a beach house in Palawan will mean you have to learn Visayan or Tagalog. Trust me it’s not as easy as it sounds.
And, a small town is still a small town. Anyone who’s lived in one knows there is a certain invasion of privacy. Especially if you’re a foreigner; everyone seems to know your business. Remember, you probably won’t be living like a native with native people … you’ll be part of the expat community. Being stuck on an island with a couple hundred people you may not like is not my idea of paradise. After living on the remote end of Phuket through three rainy seasons, I discovered I’m in a high risk group for “island fever”. We used to call it “Mayberry-by-the-sea”.
For sure a person could live without many modern conveniences, learn the language and go native; but what happens when you need medical care? With only a pharmacy/shampoo shop for first aid, a case of appendicitis could do you in before you get to an operating table hours away.
Of course, these are but a few of the barriers standing in your way to expat nirvana. So how do you get the expat life without losing good parts of your current life? You’d have to find a place that offers the modern life but retains the charm of the country and its people. You’d have to find a place where a significant share of the local population spoke English. You’d have to find a place where the expat community is big and diverse enough to provide a circle of friends and support structure. You’d need a city with modern medical facilities, a variety of foods and sufficient entertainment options. In short, you’d need someplace like Pattaya on the Gulf of Thailand.
Pattaya, it’s like New Orleans, Amsterdam and Las Vegas all rolled into one. Nowhere on earth can a person get a massage, have a suit made, and watch orangutan boxing on the same street corner.
What Pattaya has become most infamous for is being an international sex traveler’s playground. Due to its strategic location, Pattaya was R&R destination number one for US soldiers during The Vietnam War. Normally such ports-of-call sprout the requisite cottage industry of go-go bars, massage parlors and various a sundry adult entertainment venues. Pattaya’s smut sector must have somehow been exposed to radiation, as its red light district has taken on a super-charged life of its own.
Taking an evening stroll down the 300 meter stretch of pavement known as “Walking Street” in Pattaya Beach is like being at Disneyland on LSD. Every sensory receptor is overloaded. You are blinded by a display of neon to rival “Glitter Gulch”; summoned by the techno-jungle sound of a thousand pulsating go-go bars; and driven mad by the irresistible aroma of Thai seafood steaming and grilling right on the street.
My advice is to sit down, have a beer and witness, hands-down, the best people-watching on the planet. Gauche, raunchy and unapologetic, Walking Street in Pattaya is the “dark side” Darth Vader was so crazy about.
But, judging Pattaya by this short stretch of two-lane asphalt is a like visiting Times Square and saying you’ve seen New York City, or having your picture taken in front of the Eifel Tower and saying you’ve “done” Paris.
Dismissing the sprawling coastal metropolis that is modern Pattaya because one may find Walking Street’s form of entertainment repugnant is short-sighted. You might just overlook the easiest place to live in Southeast Asia.
Ninety minutes south of Bangkok lays a stretch of golden sand beaches outlining the eastern Gulf of Thailand known as “The Chonburi Coast”. The Pattaya-Chonburi Metro Area, now boasting way over a million residents, is Bangkok’s precocious little sister.
After living in Phuket and in Bangkok, I never thought I’d be a Pattaya guy. Now I’ve lived just south of Pattaya near Jomtien Beach for over 3 years. I find it easier to get up on the Eastern Seaboard soap box every day.
As a long time expatriate I can say with conviction that this area is the easiest place for foreigners to live in Thailand. Unlimited shopping, affordable housing, world renown hospitals, a thriving expat population, a mind-blowing array of good food, nice beaches, acres of golf courses, and of course the legendary nightlife if that’s your thing.
Most expats have migrated to the sleepier resort beaches of Jomtien and Na Jomtien ten minutes south of Pattaya. In high season you’ll catch all flavors of Europeans shedding their winter coats for shorts and sandals here. Condos, hotels and all the tourist convenience abounds, but without the bump and grind of Pattaya. On long holiday weekends Bangkokians swarm south to these beaches, escaping the concrete beehive.
Large expat communities have sprouted up on the sloping hills leading down to Jomtien beach. Housing projects designed for long stay and holiday rentals are everywhere. New roads make it easy for residents to enjoy living near the beach without getting involved in the traffic and hubbub of high tourist season.
Every imaginable cuisine is available in this area as there seems to be an inordinate amount of retired Chefs in the expat population. There’s Thai seafood on the beach; authentic French, Spanish, German, Russian, and Indian eateries; even American-style biscuits and gravy if you get a craving.
When you get tired of having all the comforts of home, you can drive south another 15 minutes and find yourself in a Thai fishing village complete with squid boats and temples. In the little beachside hamlets of Ban Amphur and Bang Saray you could go all day without seeing another foreigner, especially if you are shopping at one of the open air markets, or munching on shrimp and watching the sunset. (All the locals know; the best seafood comes right off the boat in Ban Amphur).
And, if you’re saturated with it all and simply must have a change of scenery, you can jump on a boat to dozens of surrounding islands, or drive to one of two airports.
Suvannabumi International Airport, Asia’s newest major hub, is one hour by car. Newly anointed as an “International”, Utapao Airport is just 20 minutes from South Pattaya with daily flights to Hong Kong, Singapore, Manila and dozens of other jumping off points.
When I put on my investor hat, The Chonburi Coast gives me a warm profitable feeling. It’s all about the infrastructure. New roads, new airports, deep water ports, marinas, public transportation, luxurious modern hospitals, five international schools, giant new shopping complexes, a myriad of housing solutions and one hotly promoted tourist sector combine to make the whole area swell with desirability.
Two economic crises in ten years have beat the property and tourism business up enough to keep prices relatively low. Houses and condos are a good 30% cheaper than comparable places in Phuket and Koh Samui. Villas, high-rise, low-rise, Serviced Apartments … dozens of new projects are underway and on the market offering a truly affordable seaside lifestyle. Rental guarantees and a variety of financing schemes are the newest twists added to attract new investors.
A second home in Pattaya or Jomtien is common among Bangkok business elite. And with buy-to-let investors reaping 8 to 10 percent returns, locals and expats consider the income and slow-but-sure appreciation an attractive place to park money. The dream of “the holiday beach house that also makes you money” is alive and well here.
Just because Pattaya is a renowned beach resort doesn’t mean that’s the only business in town. Several giant industrial parks near Laem Chabang Deep Water Port and the Port of Maptaphut near Rayong help provide a burgeoning middle class including Thai and foreigners working in the country.
Housing estates in East Pattaya are chock full of renters and prospective buyers, providing liquidity for property investors. It’s not just a tourist stop; it’s a real city with a complex economy.
The expat lifestyle down on the Gulf of Thailand is self-defining. You can live as “back home” as you want or go completely native if you’re into it. Last week I watched NFL playoff game live at 8 AM on a Sunday morning. Instead of the traditional drinking beer and eating chicken wings, I was having a Thai breakfast of rice porridge waiting for halftime to take a walk on the beach.
When I want to plug into the rest of the planet I go to Pattaya’s big-ass six-floor beachfront mall. When I want to disconnect from it all, I take a boat to Koh Larn and defragment. As they say here in Thailand, “up to you”.
So; before anyone decides to go native and move to some isolated village where nobody speaks English; before you find out that you too are highly susceptible to “island fever”; before you find yourself in need of real medical care miles and miles from anything but a village pharmacy … take another look at Bangkok’s little sister down on The Chonburi Coast … the easiest place to live in southeast Asia.
Sunday, May 23, 2010
Kissing the Property Frog by Bart Walters
Where I live on the Eastern Seaboard of Thailand, there are well over 300 Property agents and agencies hanging their shingle as purveyors of land, house and all other manner of abode. From corporate conglomerates like Colliers and CB Richard Ellis to humble little shop-house operations like “Location, Location, Location Property Partners”; everyone wants a piece of the real estate pie.
This past week I had the formidable task of sorting this list down to a manageable target and visiting those I thought were most capable of renting or selling my condo near Jomtien Beach. The agent who sold me the unit is the best candidate as his firm also built and now manages the low-rise luxury building. Naturally I listed with him. But, in Thailand there are no rules or even a clearly defined etiquette regarding property listing or sale. So, I decided to go on a road show, listing with as many agents as possible.Lucky for me, my sales agent gave me a short list of companies that met 3 criteria; 1) they were familiar with the building 2) they were familiar with Jomtien Beach and 3) they advertise a lot.
My first visit was to Alan Bolton Property Consultants, a big slick agency that inhabits a huge chunk of ground-floor shopping mall space in the center of town. I saw at least 6 foreign agents and a handful of Thai helpers busily moving about, clicking computer keys and carrying on animated phone calls. The agent who helped me was a young Irish guy with spiked hair and a ridiculously thick accent. He efficiently loaded my pictures and information from my thumb-drive, had me sign the commission agreement, and I was out of there in 15 minutes.
There was no offer to visit the property. My listing would be added immediately to the website. Since the condo photographed well, my listing would be included in the next double page space ad in various local property publications. This was quite obviously a media-lead driven organization. I left wondering how they wrangled all those foreign work permits.
The next stop was what I thought was a mega-shop called Fair Properties. This company advertises heavily and takes up a big corner on a main road between Pattaya and Jomtien Beach. It’s the kind of building people reference as a landmark when giving directions. The giant storefront windows are plastered with dozens of property listings facing out for passersby to ogle; an oversized blue-and-white sign hanging over the road.
Inside the place looked like an empty airplane hangar. In the corner sat one pitiful desk with a young Thai girl slumped over her keyboard eating fried rice and playing video games. After we settled on a language somewhere between Thai and English, she accepted my thumb-drive and jammed it into her computer. Within 3 keyboard strokes she erased all the files on my thumb-drive and staring at me blankly proclaimed, “mot lao”. Roughly translated this means, “finished already”. In other words, she was telling me nothing was on my storage device. She went back to attending her rice and Pokemon game.
Stunned and amazed, I stumbled a few doors down to another well publicized local agent, Seaboard Properties. The place reminded me of one of those “Ice Bars” that are so popular now. Everything was stainless and hospital white. The air conditioner turned down to “glacier”, the 4-girl staff had to wear a few layers of clothing to keep their teeth from chattering.
Three of the agents were clones of each other; manicured, coifed and immaculately dressed in little “Jackie-O” outfits. The fourth agent, and obviously the boss, was an older Asian lady from somewhere other than Thailand. She checked my thumb-drive and confirmed that the information had been erased. “Sometimes they just keep pushing the buttons” she said, apologizing for her “competitor” a few doors down.
Miss Ja, the English speaking clone, helped me fill out an information form while one of the other clones served me a really nice cappuccino. When I left Miss Ja gave me a card with a reference ID number on it. She told me to e-mail the information and my listing would be up in 24 hours. An appointment was made to visit the condo the next day.
During the next week I would visit 7 other property agents. Every experience as varied as the first three. I stayed away from big multi-nationals like CB Richard Ellis as they tend to represent cadres of big developers and really have no interest in selling or renting my one unit for a measly 5% commission. I also avoided the really small mom and pop operators as they tend to be “buyer’s agents” interested more in bargaining than transaction.
Two weeks on, I am reviewing the efficacy of my effort as well as the agents.
Of the eleven agencies I listed with, 6 had me on their website within 48 hours. All 6 featured my listing as “new” or “hot” or some other promotional heading. 3 placed my condo in space advertising in one or more local property and investment publications. 2 visited the property before showing it (counting the agent who sold it to me).
To date the property has been seen by 8 prospective buyers. All were with the 2 agents who had actually seen the property before showing it. It doesn’t take long to separate professional realtors from “list it and they will come” property mills.
But, if the truth be told, I wouldn’t really appreciate the 2 outstanding agents if I hadn’t been exposed to the 9 others. Kissing the property frog … it’s a matter of research really.
About the Author: Bart Walters is a retired advertising executive from Orlando, Florida. He is now a part-time real estate developer celebrating his 10th year in Thailand. Bart lived several years in Bangkok, spent 3 years on the island of Phuket and now resides in Ban Amphur on Thailand’s eastern seaboard.
To view the condo he has for sale go to either http://www.towncountryproperty.com/condos/jomtien-condo/15401.html or http://www.seaboard-properties.com/?page=property&id=1439