Seeking discounts on Thailand real estate

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Seeking discounts on Thailand real estate 
Bangkok Post: 26 Jul 2009
WWW.BANGKOKPOST.COM

HELPING BUYERS LOOK FOR BARGAINS

Good deals may be hard to find, even in today's depressed market, but the services of a good broker may help you find just what you're looking for.

Despite the lingering global recession and topsy-turvy Thai political situation, there are still property buyers looking for cheap deals in Bangkok - but they are finding the market is quite resistant to offering bargains, says Chris Heath, managing director of the local brokerage Soho Properties.

Although these buyers are looking for steep discounts, some do have very large budgets. One of the agency's clients had as much as 75 million baht to spend on a house in the Sukhumvit Soi 105 and 107 area, near Bangkok Pattana School.

"I also have customers looking to buy four- or five-star hotels and we have got quite a few retail customers who are looking at prime locations in Sukhumvit and Silom," said Mr Heath.

However, most of the sellers offering attractive discounts hold units in buildings that have yet to be completed, a market segment that has been hit the hardest in the current slump.

"Most of the buyers now want new buildings that have been completed, so a lot of sellers are actually those still holding tickets on their properties."

In addition to the attraction of a completed unit being able to generate income right away, Mr Heath pointed out that buyers are also concerned that some of the buildings still being constructed may not be finished at all.

However, bargain-hunters are sometimes successful in their search, although this can be a very hit-and-miss affair where individual units are concerned. It is large developers who are offering some kind of discount, but often in the form of furniture packages.

"There are 5 to 8% discounts, which are not really what people are looking for," he said. "They want something with a little bit more meat on it, such as a 20% discount."

As the downturn continues to hit both companies and individuals hard, Soho Properties has accumulated a lot more land for sale than it previously had. This is a major shift because normally people tend to hold on to their land and use it as security for loans. "Most of them get loans on their land and keep it as something to get loans on, just like cash really."

Although one developer has asked Mr Heath to look for land along the planned Red Line light-rail route, most foreign clients are pessimistic about the finishing date of these mass-transit projects and have not shown interest.

This means their areas of choice remain mainly in the Sukhumvit and Sathon zones. "Whereas Sathon development is staying stable, Sukhumvit is expanding as the BTS expands outwards."

There has been a large drop in Asian buyers this year, mainly Singaporeans, Hong Kong residents and Japanese, mirroring the drop in tourism.

Kasikorn Research Centre recently projected that tourist arrivals could fall by 20% this year, to 11 to 12 million while revenue may shrink by 25% to 380 to 400 billion baht.

However, Soho Properties still has a number of US, Scandinavian, British and Australian buyers as well as Europeans and Australians living and working in Singapore and Hong Kong.

"The Asian market has gone down except for the Indian market. There are quite a few Indian customers," Mr heath noted.

They are from India and not locally born, and they are not from super-rich families. Most have businesses in New Delhi or other big cities, and are looking to expand. They are looking for shophouses and restaurants in good locations as well as guesthouses.

Key factors for both expatriate and local buyers include the location and condition of a building. "If it's a brand-new building, obviously it's brand new, so location is the main concern. But for older buildings, the upkeep is a big concern for a lot of buyers."

Another key issue in light of the problems Thailand is facing at the moment is security. "Security is one of the key issues, upkeep of the building includes security and cleanliness of the common areas."

Expat property buyers have other concerns and in addition to a more attractive price, which a weaker baht would help, these include political stability and the visa situation.

"Compared to other countries, Thailand lags behind in incentives for foreigners to stay long-term," said Mr Heath.

A stellar example is Malaysia's "My Second Home" programme, under which foreigners aged 50 or over can get a five-year visa, as well as being allowed to buy freehold property and import a car tax-free.

In Vietnam, foreigners are allowed to buy houses on a 50-year leasehold basis, compared to 30 years offered here.

"Thailand has the upper hand as far as condominiums go - freehold. Vietnam has the upper hand with houses - you can have a 50-year leasehold on a house whereas in Thailand you are looking at a maximum of 30 years."

While Cambodia is a new market, there are some interesting developments there. Although they are still expensive, people are beginning to look at them in the face of the tough visa requirements and political instability here.

"Thailand doesn't seem to be reacting to compensate for these other countries' offers - even Cambodia is now offering good deals for foreigners."

In keeping with the difficult economic environment, Soho Properties has expanded its services to include handling negotiations between landlords and retail clients, many of whom are struggling to survive, especially those relying on the tourist market.

Whether they get a rent reduction or not depends on the landlord, but this agency has seen reductions for one year and then possibly reverting back to the old rate. One customer paid the full 60-year rent in advance, but obviously this was at a major discount. Property owners seem to be receptive to such offers because many are cash-strapped at the moment.

"We are looking at expanding our services, really so that we can get some extra income because obviously we have been hit by the recession."

Visit http://www.soho-properties.com