Are you looking to buy a Bangkok condominium? Having dealt with Bangkok condominiums since 2012, here are some things potential buyers should take note of when making a purchase.
1) Bangkok condos are not cheap
They are cheap as compared to properties in Hong Kong or Singapore. However, if you are looking to buy a Bangkok condominium because it is cheap, then you might be sorely mistaken. A one bedroom unit from a good developer in a decent location like Ekkamai or On Nut would set you back about THB 5-6 million. For a luxurious two bedroom apartment in 98 Wireless along Wireless Road, that will cost you about USD$2 million. Condominiums in the city centre like those along Sathorn and Silom will set you back about THB 10 million for a quality one bedroom apartment. That is almost USD$350,000. If you want something in Bangkok that costs about USD$100,000 to USD$150,000, be prepared to take a look at locations that are far away from the prime Sukhumvit or Silom area. Just as a note for probable investors, prime Bangkok property prices are not cheap. Simply put, the demand for prime Bangkok property is extremely high. Correspondingly the price is going to be high as well. If you are looking for cheap, you really have to look elsewhere. Cambodia, Vietnam and Myanmar perhaps?
2) Getting a bank loan is not that simple
Foreigners are eligible for housing loans to purchase Bangkok property. However, the loan application is not as straightforward as what we are used to in Hong Kong and Singapore where the financial system is so much more matured. In Bangkok, you can loan up to 70% of the value of the property. The banks will also not extend loans to all projects. Usually, if you purchase from an established developer, such a property should be eligible for a bank loan. Always try to purchase something whereby banks are willing to support with financing. Even if you intend to pay the property in full, having financing available for that project would mean a larger pool of buyers in the event you wish to sell the property. Housing loans for foreigners are also not cheap. Rates for foreigners usually start from 5% and the loan tenure is usually 10 to 15 years. That being said, the property prices in Bangkok are already increasing despite the lack of affordable financing options. Many property observers have commented that the Hong Kong and Singapore property uptrend is fueled by easy financing. Imagine if Bangkok had similar financing options, the property prices would rise much faster than they already are rising.
3) Bangkok property prices are rising at a very fast pace
Back in 2013, a one bedroom condominium close to Asoke BTS would set you back about THB 5 million. Prices were about THB140,000 per square meter. Fast forward 6 years to today, developers are aiming to launch properties in the same area at around THB400,000 per square meter. One bedroom units at The Line Sathorn went for about THB10 to 11 million and the development was fully sold out in a week. That is how much the Thai property market has increased in the last 6 years. Moving forward, barring any major economic shock, the pace of increase does not show signs of abating. The Thai government does not have a history and habit of implementing property market intervention measures like the cooling measures which the Hong Kong and Singapore government have done.
4) Consider these factors if you want to resell your unit
Your buyer in the resale market would most probably be a Chinese. They may not be from Mainland China but they may be from places like Hong Kong, Singapore, Taiwan and Malaysia. Pick a number that the Chinese will not shun. Try to avoid the number 4. Also, try not to pick properties on the 13th level. They are usually marked out as level 12A for most developments in Thailand. These are considered unwanted numbers in Thailand as well. Also, try to purchase as high a level as possible. Buyers are usually looking for properties on a high level. If you purchase the highest unit for that particular unit type, your unit can be priced the highest on the resale market and buyers would have to accept that they would have to pay a high price to get your unit. If your unit were on, say level 10, and you priced it higher than another unit on sale on, say level 12, then buyers would just buy the unit on the higher level.
5) Consider these factors if you want to rent out your unit
Look for properties on a higher level. Most tenants prefer units on a high floor. Also, when possible, purchase the corner unit. These units have the most privacy and tenants would prefer such units. Make sure that the unit that you are purchasing has comprehensive condo facilities and the furnishing looks upmarket. The typical tenant in Bangkok is a discerning one. Deciphering a mass market condominium from a luxury one is rather easy. Good tenants will go for high-end condominiums only.
6) The payment scheme varies between developments
For whatever reason, the payment scheme in Bangkok is not standardised. Developers are free to set their payment schemes for their projects. However, the payment scheme for condominium under construction is usually 20 to 30% downpayment and the balance is paid upon collection of keys. Thus, if you want to purchase a Bangkok condo under construction, get prepared to pay up to 30% of the purchase up front. The good thing is that there is no progressive payment and you only need to fork out the balance when the project is completed. At that point in time, you can take a bank loan and start financing it. If you manage to find a buyer before the completion of the property, you can reassign the option to the new buyer. This is subject to the approval of the developer. In this case, there will be no stamp or transfer fees payable. In some cases, the developer may levy a small admin fee to reissue the option in the new buyer’s name.
7) Not all developers have a team to handle international buyers
Buying an overseas property has its risks. Even though Thai property law is well defined, not all developers have an international presence. Many developers in Bangkok are content to sell properties in Bangkok. There are many instances whereby overseas buyers have bought properties from certain developers and when they try to contact the developer, they are faced with issues like language barriers as the developer does not have an English speaking staff to entertain international clients. Certain developers, on the other hand, do set up international offices across the globe to tend to international buyers. It may be wise as an international buyer to purchase from a developer with a local presence. If not, do purchase from an agency with good staff who will handle any property matters on your behalf.
8) Consider purchasing from an agency
Developer prices should be the same across markets and whether you purchase directly from the developer or an appointed agency. If prices are the same, you should go with the agency. The agency should be able to handle your property matters when you collect your key. You can look for the agency to sell or rent your unit or to represent you in any meetings you may need to attend as a shareholder in the condominium. If you buy directly from a developer, the staff may be trained only to sell units from the developer and may not handle after sales matters. There are instances whereby clients have bought properties from the developer and tried to engage an agency once they have collected their keys. You must remember that the agencies, and rightly so, will deal with the units owned by the clients who have bought from them before moving on to yours. You should always have a strong point of contact to handle your properties from day one.
If you are looking to purchase a Bangkok property, do take a look at my other articles on buying Thai property, namely Bangkok property.