Stickman's guide to Bangkok
Stickman Weekly 27/6/2004
This column represents the opinions of the
writer and as such, is not purported as fact!
The Biggest
Investment Of All
It’s nice to have
somewhere to call home. For anyone who has settled in Thailand and is looking at
staying long term, the thoughts of buying a place are inevitable.
What are the issues a
Westerner needs to consider when contemplating the purchase of property in Thailand?
In the West one can assume certain characteristics in the property market over
the long term. Property prices increase, on average, around 10% a
year. Monthly rental is usually around 1% of the value of the
property. And so on. The characteristics of the property market in Thailand appear to be less
certain and from what I have observed, you can't count on out the
aforementioned norms.
If you’ve read this column for very long you’ll
know that I tend to err on the conservative side so it will come as no surprise
that overall, my feeling is that for the average Westerner, buying in Thailand is not necessarily
the best way to go...
Rent Is Cheap
Take the example of a
good friend of mine. He rents a 4 bedroom, 2 level house in Nonthaburi, less than 15 minutes drive from the expressway
at Ngam Wong Wang, meaning that he can leave his
place and be in central Bangkok (read: Sukhumvit /
Siam Square / Silom) in not much more than half an
hour. Even at peak hour, it doesn't take much more than an hour to get
from what is really the outskirts of the city into the city centre. The
monthly rental on his property is 8,000 baht and the landlord is asking
2,800,000 baht for the property. At 8,000 baht a month, it would take
almost 30 years to pay for the property, and that is assuming zero
interest! With no certainty of the value of the property moving at all,
and all of the headaches of home ownership left with the property owner, he is
probably better off continuing to rent.
Ownership Issues
As a foreigner, you
cannot buy a house and have it in your own name. It must be in the name
of a Thai spouse, Thai friends or the Thai fellow who sleeps under the bridge,
down the road. There is the odd exception but generally, the property
cannot be in your own name. This is the red flag of all red flags.
If things go bad, then the property is gone and you have no claim to it.
In the case of a
condominium, you can buy in your own name as a foreigner. There are
certain criteria which must be met such as which floor of the building the
condo is on and the percentage of foreign ownership in that building, but yes,
you can purchase a condo and have it in your own name.
The immigration laws
in Thailand effectively mean
that foreigners must renew their visa each year, every year - and this doesn't
look set to change. What happens if for whatever reason, your visa is not
renewed? Suddenly you have a property in a country which you cannot
enter! Very unlikely, but again, not beyond the realms
of possibility.
Maintenance
In the case of a
condominium, unless it is a particularly well managed building, there are no
guarantees that the building will be looked after for at the same standard as
it was when you first purchased it. This seems to be the biggest
complaint many farangs (read: the bunch who I know)
who have purchased property in Thailand have. The
building is left to the dogs and the value of their condo drops faster than.
The Market
There are no
guarantees that the price of property will move in Thailand. I know of
many houses in the outskirts of Bangkok that sold in the 2 - 3 million baht
range more than a decade ago and guess what, that is still their market
value. Having said that, properties in central Bangkok and anything close
to the skytrain has soared in value over the last 2
years.
Another of the big
issues with buying in Bangkok (or for that matter
all of Thailand) is selling.
In the West, generally speaking, if you want to sell quickly, you can.
You just drop the price 10 - 15% and assuming no extraneous factors in the
market, the property will likely move. In Thailand, it is not quite
like this.
There are definite
perceptions amongst sectors of the Thai population about second hand
places. A lot of Thais simply don't want to buy second hand,
period. And the fact that a farang may have
lived there is a negative perception to many Thais. Yeah, really!
The superstitious nature of the locals also means that if one of any number of
events happen, then suddenly your property is no
longer somewhere they would buy.
And quite frankly,
some of the prices that property in Bangkok is going for are
outrageous, by Thai standards at least. Yeah, you could argue that Bangkok is still cheap by
international standards, but when you look at property prices compared with
other things in Thailand, they seem a bit
stilted.
Finance
In researching this
article, I got a huge amount of conflicting information when it came to
finance. It seems that you CAN get finance locally, though like I say,
the number of conflicting stories here are huge.
But then there is
also the old situation where property purchase by foreigners
have to follow a very strict set of regulations whereby money has to be
transferred in from abroad, into a special type of account, from which the
purchase can be made. Like I say, a lot of
conflicting info here.
My Overall Thoughts
It is scary that
there are so many negatives one must factor in when considering making such a
major purchase, so many things that could potentially go wrong. It can't
be denied that all of these added up together can make even the keenest home
buyer nervous at the prospect of essentially putting their life's savings into
something with no guarantee.
If you have a lot of money, you could end up with a very nice place indeed and
there are some bargains to be had. And with a young population and
improved education, it is likely that demand for property in Bangkok will soar, meaning
prices will move accordingly. But this is Thailand, and as much as we
enjoy living here, I have never had enough confidence in things here to make
that big step and buy property. A car, yes.
Property? Not yet.