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6 ways to avoid being defrauded in a property investment

The Thaiger

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6 ways to avoid being defrauded in a property investment | The Thaiger

By Desmond Hughes

As today’s local Phuket property news is soured by the story of a development ‘scheme’ resulting in losses for investors and third parties, the perception of real estate may be besmirched with negativity, all the while honest families who have elected to take their own risk on the market by developing their land banks, working with architects, designers and contractors to try and provide good solid homes or investment properties, suffer the commercial shockwaves as the inevitable output of publicised property development failure.

I personally know very bright, educated successful businesspeople who have suffered fraud in property markets and I have as much respect for them as I do for people who have never lost on investments.

I have no feelings of ‘this could never happen to me’. Some frauds are seriously difficult to detect, cause embarrassment to the victims which perpetuates or extends the fraud, and unfortunately frauds are a natural result of the freedom available to those that conduct business in any market, regardless of the amount of regulation that exists.

Where there are rules, rules are broken. 

As a humble student of balance, subjective and objective criteria, theoretical analysis of legal systems and regulation, I believe in pre-emptive investment protection or to use a more common description ‘being cautious’.

Therefore, all those who are currently considering diverting all their monies away from property into the exciting world of blockchain and cryptocurrencies, kindly consider the following as guiding principle for navigating the property market with a certain degree of respect:

1. Winning the Last Game Doesn’t Mean You Win the Next Game

Anyone that understands sport will understand the heading. If a private developer has completed 1 or more projects prior, it does not mean that they will successfully complete the next project, or even start it. It is, however, natural to read into the credibility of a developer if they have completed a project well before. However, this should not be taken as any form of implied guarantee of future performance.

Developers can lose money by speculating on other businesses, diverting funds, get into trouble with moneylenders or even reputable but unsympathetic financial institutions. They can also die with no succession plan in place.

The very simple solution to this logical set of facts is to (a) consider buying something that is already built to limit risk or (b) when buying off the plan, demand better payment terms allocating a large percentage of payment to the final payment and review contract and risk carefully.

2. Choose Experienced Lawyers, not the Cheapest Lawyers

Here are some characterised liberally interpreted sound bites close to statements I have heard over and over again over the last 15 years. If you can’t see any issue with these statements, then as many a con artist has said – “you deserve to lose your money.”

“The agent who stands to make commission from the sale recommended the law firm and I chose that law firm without checking their credentials”

“I contacted three law firms and chose the fastest responder which was the cheapest”

“I used the same law firm that represented all of the other buyers before me”

“I used the same law firm that represents the developer”

“I used a law firm because they said they were ‘well connected’”

“I used a law firm because they had some foreigners”

“I used a law firm because they didn’t have any foreigners”

“My lawyer said he studied in my home country for 12 months and understood me”

“My lawyer was polite to my spouse / girlfriend / boyfriend so I felt comfortable with using them”

“The law firm I chose told me that all land is safe it is issued by a Government Department and can never be ‘taken back’”

“My law firm said not to worry that the developer has a huge mortgage or loan and that it is normal for developers to borrow money to develop property. He/She said there was no need to look at the loan agreement or ask the developer about the relationship with the bank as that would be considered ‘rude’”.

“I used a Bangkok Law firm because Bangkok is big. Bangkok is a city. People in Bangkok are cool. I like tall buildings in central business districts – better advice comes from there.”

“I used a Phuket law firm because the parties are based in Phuket.”

“I used a law firm that has the same logo as a law firm that has over 10,000 lawyers around the world, because surely all of the lawyers are good – like the burgers in a fast food chain are also always delicious wherever you buy them.”

I could go on for a few pages more…

3. After you Have Chosen Lawyers, Listen to Them

Let’s say you used a good set of criteria to appoint legal advisers. Then you obtained their advice and you didn’t like it. So you proceeded to ignore them. This is tantamount to choosing a car for its safety features and then disabling all of those safety features before braving the death-filled roads of Thailand.

4. Examine the Fundamental of the Project and Conduct a Real Strengths and Weaknesses Analysis

Think about the following…

  • Type of developer – public company listed on the Stock Exchange versus private developer
  • Private developer – financially sound, happy to disclose financial status, good sets of clean audited accounts, good reputation
  • Marketing strategy – style over substance or a mixture of both
  • Land legality – check the entire history of the land from when it first came into existence. 60 to 90 years or so of documents isn’t a long time in the history of the Universe. Check them all.
  • Understand what legal compliance actually means. Obtaining “EIA approval” just means approval to do something subject to complying with laws. It is the complying with laws part that needs to be checked, not the existence of the conditional approval. “EIA Approved” doesn’t mean “We are compliant with all the laws”. My wife approved me going out with friends for a late night, and she set some conditions such as getting home at a reasonable hour. Whether I met those conditions or not is a matter of review and inspection.
  • Don’t accept shoddy contracts. If the contracts aren’t good, it means there is poor judgment on the part of the developer as to which service provider to use. Similarly they may exercise poor judgment on the carpenters; plumbers; electricians; structural engineers and project management team. Try and look at the whole package.
  • Developers who don’t negotiate are either so good they don’t need to, or so bad they hide behind a wall of ‘no’. Some public companies can’t change their contracts – because they need Board of Director and committee approval to do so. However, some companies hide behind this and some private developers take an inflexible approach to negotiating changes. Choose changes to contracts carefully, only points you really need for comfort and security, but don’t take an off-the-shelf product with defects. Contracts also, like any product, can become aged and past their sell-by-date. Developers cutting and pasting contracts from 2005 aren’t confidence-inspiring organisations.

5. You Will be Punished for Arrogance

Most of my clients are far wealthier than me and I have no shame in that having risen from the metaphorical ashes of a working class family to make my own way in life aided by student grants and part time jobs before obtaining my qualifications and penetrating elite walls and ceilings on my own terms.

I am in a service business, and therefore I must serve those that can afford to pay for knowledge and know how they do not possess, or support for resource they cannot muster. Many such clients freely admit their wealth came from inheritance, from a healthy dose of luck in selling a business at the right time – dot.com boomers being a case in point, or from their own hard and constant graft.

However they came by their money, they do not deserve to be unfairly cheated out of it. Such people do not possess a Midas Touch. They are fallible. The smart ones admit that and behave accordingly.

I offer my respect to those that recognise their own successes and capacity for failure and catastrophe. Those people wearing sunglasses on a cloudy day who won’t make eye contact while they drop their children off at school because you clearly aren’t in their perceived ‘ life club’ are prime targets for life readjustment lessons but I still pity them when they lose, even financially. Life has a strange unfairness about it but many who think they are cheating life are rewarded exponentially in kind.

Don’t be arrogant. Don’t think people with less wealth than you know less. Such persons may have studied far harder than you and have read more books. Think about why they did that. Then pay to get some advice before you make a decision, not during the litigation or dispute process.

6. In Business, Timing is Everything

If a sales person is rushing you to make a decision, is it do you a favour? Is it because they are your “bestest bestest friend” and after two dinners with you and searching for aligned topics of interest suddenly you have ‘connected’ and therefore you must go along for the ride, at their pace and behest.

It does no harm to retain some cynicism about timing. Yes, if the market is hot and rising, being quick to buy makes sense. That is what commodities trading is all about and some have studied that which is different to property by a long stretch but still has some similar principles in terms of profit and leverage.

Unlike damaged grain, if your property target purchase is rushed, you might not be insured against the losses, you may wish you had taken more time to conduct a survey and there may be no ‘association of damaged property investors’ to call upon to help you out.

Contractors and Developers who need you to buy ‘now’ most likely need ‘cash now’ which isn’t a good sign. Yes, professional property developers and agents do not like dawdlers, time-wasters, tire kickers, property viewing tourists and the like – these people costs professionals a lot of wasted time and resource and hinder the effective mechanics of an efficient property market. However, these people exist in many  markets and there are strategies for uncovering the charlatan mystery shopper buyers.

Rushing someone to make a life decision isn’t a good idea.

Plan the timing of your transaction with your advisers, and don’t be swept along the road to a court case at a pace far faster than a court case would be conducted.

At wakes or funerals, it often isn’t appropriate to make jokes or be jolly, or to refer to certain topics that relate to living life when someone dear has passed away.

When property fraud hits the market, it often isn’t fashionable to remind people that there is not just bad in the property market, but a lot of good, for fear of being rebuked as a self-serving property professional. However, the truth of life and humanity is that the world is progressively becoming a better place, Thailand is becoming a better place to do business, and the property market does have more to offer than before. Issues will continue to arise, mistakes will continue to be made, and the bad actors in the market will continue to disrupt progress.

Please stay safe. Please be cautious.

6 ways to avoid being defrauded in a property investment | News by The Thaiger

Desmond Hughes FCIArb
Senior Partner
Bangkok | Phuket
hugheskrupica.com | +66 (0) 828 897 897
Bangkok: +66 (0) 22 872 173
Phuket: +66 (0) 76  608 468



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Phang Nga

Phuket’s hotel and property players look north

Bill Barnett

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Phuket’s hotel and property players look north | The Thaiger

by Bill Barnett of c9hotelworks.com

One of Greater Phuket’s real estate and hotel market’s that has a decided buzz of late is the area up over the Sarasin bridge in Phang Nga.

In Natai, the entry of the Baba Beach Club and nearby Akyra is creating renewed visibility for the broad West Coast stretch of white sand beach.

Two upscale hotels are in the development phase in the vicinity, with one being flagged to an international hotel operator.

Up at the 1,000 plus rai Thai Muang mega-project, movement is once again underway, as is a nearby massive Japanese-led mixed-use project including a golf course.

Land values are currently running amuck in the Koh Kloi area where the AOT (Airports of Thailand) has reportedly acquired land for an upcoming Phang Nga airport which will provide Phuket with a second gateway alternative.

Premium land transactions are taking place, with the most notable being the recent trade of the former oceanfront site in Bodan that was to be at various stages first a Raffles and later a Ritz-Carlton Reserve.

Looking at Phuket’s light-rail initiative, one knock-on effect will be the eventual linkage between the island and larger connection to a broader rail terminus in Koh Kloi. This will likely spur real estate speculators to acquire peripheral locations.

As Phang Nga’s West Coast four land highway expansion moves forward to Khao Lak and beyond, Phuket’s Northern neighbor is seeing a renewed push in its tourism, property and infrastructure.

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Property

Cleaning the concrete and paving in Thailand

The Thaiger

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Cleaning the concrete and paving in Thailand | The Thaiger

With the wet season comes the rain. And with the rain, plus the ongoing hot weather, mould and algae growing on all our outdoor walls and paving.

Rain + algae + mould looks awful and can be very slippery. Stains can also make your investment look old and unwanted. Black mould can cause allergies for some people

You have two choices. Maintain them yourself or get someone in to do it for you. If you would like to save a few baht and do it yourself here are a few proven methods.

Before you even start a few warnings. Don’t use any of these cleaning methods on a large area before you’re completely sure it’s going to work. Try out your chosen method on a small area first to check that it won’t harm the surface and that it actually does the cleaning you expect.

Also, ask around. Many houses in Thailand have concrete, aggregate, paving and tiling outside so we all have the same problems. See what’s worked with others around your area. Also be aware some of the chemicals can be dangerous for you and for the environment. There’s plenty of alternatives these days that are safe and effective.

Whilst there is no magic solution, keeping up regular maintenance is your best answer. Doing a quick, regular clean is going to be a lot easier than, say, an annual clean where it just becomes a lot of hard work, or expense. And messy.

Before you do anything else move all the furniture away, clear the area and make sure any weeds are removed before starting.

Bleach
Beach will remove stains from practically anything. Since pavers and aggregate surfaces are mostly made of concrete, bleach can be a good way to remove stains, black mould and algae from them, if used correctly.

Diluting the bleach is extremely important if you want to protect the color of your patio or driveway. Mix half a cup of bleach with around 5 cups of water, and add a spoonful of dish-washing liquid to it. Bleach is quite dangerous and shouldn’t get in contact with your skin. Wear gloves. It’s also generally toxic for plants so don’t use it around lawns or garden beds.

Spray this using a spray bottle on the surface and let it soak in for 15-20 minutes depending upon how dirty the surface is. A little bit longer for stubborn stains and really long-term build ups of mould.

Scrub the pavers with a brush that has nylon or natural bristles. Rinse off the solution with water – high-pressure water cleaner will add some muscle to the chemical reaction. Let your pavers dry in the heat.

Chlorine
Yeah, the stuff they put into your swimming pool to keep it free of nasty bacteria and the water clean. Chlorine can also be used to clean your patio or driveway, especially the black mould, moss and algae.

Mix chlorine and water (10% chlorine, 90% water) in a spray bottle. Spray the mixture on the paving thoroughly and evenly, and let it soak in for 10-30 minutes minutes. Follow up with scrubbing the pavers to remove any excess dirt or particularly stubborn stained areas. like with the bleach, use gloves and protect your skin from coming into contact with the chlorine. Also make sure that you’ve got good ventilation around the area (your very probably outside anyway).

Chlorine is toxic for you and your plants. If it splashes on your clothes you’ll most likely get bleached splotches so don’t wear your latest Armani purchase whilst using chlorine (same with the full-strength bleach).

Vinegar (acetic acid)
It stinks but vinegar is one of the best choices you could make to clean your concrete pavers and paving. It’s non-toxic and a better alternative around pets and kids.

Spray full-strength vinegar using a spray bottle on the affected parts of the patio or driveway. Let the vinegar soak in completely – say a good 60 minutes or so. Then spray the paving with a mixture of soap and water and scrub with a brush to remove any dirt that may have been overlooked by the vinegar.

Better to use white vinegar as it doesn’t stain.

Soap and Water
This simple combination of soap and water is a safe, reliable combination but needs a little ‘elbow grease’ or mechanical assistance to get the same results.

Start off with a high-pressure washer. Use this first to remove the worst of the stains, mould and algae. Then apply the detergent and water and scrub the rest by hand. Doing this removes the rest of the grunge and goo. These magic machines will blast off just about any mould, mildew or moss. WARNING: Don’t put your hands or anybody else close to the high-pressure stream of water and air!

With high pressure cleaners, at this stage, we haven’t found any places where you can rent these units for an afternoon. But, if you’re going to be doing regular cleaning yourself the investment is quite reasonable – you can pick up a fairly good one for 5,000 baht. They’re always on display near the front of most Home Pro or Thai Watsadu stores. Better still, ask the neighbour if you can borrow theres and buy them a nice bottle of wine as a thank you 🙂

Cleaning the concrete and paving in Thailand | News by The Thaiger

A few other things
For fresh oil or grease stains use baking soda and apply it to the stains. Leave it for a good hour. Remove the baking soda then apply again of the oil or grease stains are bad.

There’s nothing better than regular cleaning. Even if you just regularly sweep the pavers, or spray them with water, it will help prevent the spores settling and starting to grow.

Once all bright and shiny consider using a paving sealer. They are readily available, easy to apply and make the cleaning a lot easier as the spores, grunge and dirt won’t sink into the porous paving surface.

Try one, try all methods. Tell us which works best or any other methods you’ve tried with success or the ones that have been a complete failure.

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Property

Centara strikes deal for three new hotels in Laos

The Thaiger

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Centara strikes deal for three new hotels in Laos | The Thaiger

Thailand’s leading hotel operator Centara Hotels, announced it has signed management agreements for three new properties with a combined total of 216 keys, with Asia Investment, Development & Construction Sole Co., Ltd (AIDC), a well-established enterprise in Laos.  In the UNESCO World Heritage site of Luang Prabang, Centara plans to open an upper upscale Centara Grand Luang Prabang and a midscale Centra by Centara property, both near the town centre. The third property will be under Centara’s new lifestyle brand, COSI, catering to the growing segment of connected, freedom-loving travellers. It will represent a unique offering in Vientiane, the Laotian capital.

The management agreement comes as Laos launches ambitious new plans to promote tourism. In recent years, the government of the Lao PDR has come to regard tourism as a priority sector for driving socio-economic development. It hopes to attract 5 million visitors in 2018 and increasing numbers in the years ahead with a Visit Laos campaign under the slogan “Simply Beautiful.”

According to a new report from the Swiss-based World Economic Forum, Laos ranks 14th among 136 countries in price competitiveness.

“This partnership with AIDC is a great opportunity to expand our footprint into a distinctive country,” said Centara CEO Thirayuth Chirathivat.

“Laos is on the list of more and more travellers to this region, and we want to serve them with the distinct and varied accommodation options to match the travel experience they are seeking.”

Luang Prabang is the well-preserved, old spiritual city at the confluence of the Khan and Mekong rivers. Although well-served by direct flights to its airport and modern amenities, it lives up to its World Heritage status with beautiful temples and traditional riverside life. Bicycles outnumber cars. Delicious baguettes, croissants, cafés and French restaurants hint at the French colonial history in both Luang Prabang and Vientiane.

Pheutsapha Phoummasak, President of AIDC Laos said “We are excited to partner with Centara to bring their trusted brands to these great cities and further promote the tourism potential of Laos. Luang Prabang and Vientiane are very popular destinations for both Thai and international travellers thanks to their perfect blend of history, beautiful scenery and charming character”

The three new hotels are the latest evidence of Centara’s expansion strategy, which calls for doubling the number of properties under its management during the next five years. This latest development will see Centara’s hotel count in Laos reach four with Centara Plumeria Resort Pakse already well under development and scheduled to open in 2020.

Centara strikes deal for three new hotels in Laos | News by The Thaiger

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