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By the Book: Off-plan vs completed properties



PHUKET: With high season well under way, many visitors to Phuket over the next few months will also be property buyers. There are many different considerations for buyers to think about when making a purchase, and one of the first to be made is whether to buy an off-plan property or a completed one.

Both options come with benefits and drawbacks and a lot will depend on the buyer’s appetite for risk.

Purchasing a property off-plan brings the benefit of being able to choose the best units. By the time a condo or villa development is completed, it is certain that the best units will have already been sold.

When buying a condo in Phuket, the highest demand is for Foreign Freehold units. Under Thailand’s Condominium Act 2008, only 49 per cent of a condo can be owned by foreigners. Therefore, delaying a purchase until the condo is completed will almost surely mean missing out on the Foreign Freehold quota.

One major reason for buying off-plan is to generate a larger capital gain through the asset’s appreciation once the development is completed. Capital appreciation in Phuket when buying during the pre-sale period is typically 30 per cent, and five to 10 per cent when buying during the construction phase.

Speculators and investors seek to buy into a new project as early as possible, taking advantage of pre-launch prices. During this period, the developer will still be in the process of obtaining building permits, confirming plans and getting an Environmental Impact Assessment. Developers want to start generating income through sales as early as possible, so they will offer buyers pre-launch incentives usually in the form of large discounts, guaranteed rental returns, finance options and more. At this point, buyers will get the lowest prices and achieve the largest capital gains upon completion.

Another advantage of buying off-plan is that payments for the property can be spread out over the construction period. For condominiums, this can be up to two years and for villas it can be 10 to 18 months.

Additionally, buying off-plan gives buyers greater input into the design of their property, particularly structural changes to the floor plan. Also, buyers can make decisions on decor, furnishings, bathrooms, kitchens and appliances at this early stage.

Obviously, buying off-plan also has potential downsides. There is always a risk that the project might be delayed, or not completed at all, so that buying off-plan is not for the risk-averse.

Unless the developer has a show unit, or an earlier-completed development, buyers will be unsure of the quality that they can expect. When purchasing a completed property, buyers can see, touch and feel the final product, so they know exactly what they are getting.

For investors buying to generate income through rentals, off-plan properties cannot start producing income until completion.

If a development is completed, but not sold out, developers will often offer promotions, such as free furniture packages or free transfer fees. This can be a good option for buyers, although they will not receive the same capital gain in asset value as buying off-plan.

One of the downsides with resale properties is that they will usually require some redecorating or renovation work, in line with the potential buyer’s tastes. Although a lot of redecorating and renovation work can be done for a relatively low cost in Thailand, it still requires time and effort.

Normally when buying a resale property, you would miss out on much of the capital appreciation that could be generated from buying off-plan. However, once the market has recovered, there will be plenty of opportunities that will generate an equal capital gain on both options.

Kevin Hodges, the North Branch and Investments Manager for Siam Real Estate (SRE) in Phuket, has more than seven years’ experience in Phuket’s real estate market. For more information, contact him at 076-324042 Email: or visit

— Kevin Hodges


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