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So you’ve bought a property. Have you checked the management contracts?

Tanutam Thawan

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So you’ve bought a property. Have you checked the management contracts? | The Thaiger
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by Panuwat Somrit – Phuket lawyer specialising in property

Buying or investing in property may seem like a straight forward and easy transaction. You simply pay the money, transfer the ownership and that’s it. But it’s not that way in Thailand.

If it were, there wouldn’t be so many issues related to buying property here. Many foreigners face problems after they have already bought property. They have to appear in court to fight cases, which is a huge waste of time and money.

One such recent issue was at Aspasia. In March this year, ten foreign tenants from the Aspasia Phuket Resort, led by Dutch national Jan Cornelis van Zuilekom, complained to Phuket Governor Chamroen Tipayapongtada that he and other tenants had been locked out of their rooms and had their electricity and water cut off.

(Read more about the story HERE)

The tenants wanted the management to provide them with financial reports, but their request was refused. They then stopped paying the maintenance fee, which resulted in their electricity and water being cut off. The management team claimed that the tenants had no right to see the reports according to their contract, which is why they were punished by having their electricity and water cut off. All of this, the company said, was written clearly in the management agreement.

This can be a good lesson for others to exercise caution. There are many similar cases of this nature in Phuket.

The problem with this arrangement is the ignorance of both parties – the buyer and the project owner – about the management plan or management agreement, after buying or investing in the property.

Buyers or investors mostly focus on the buying and selling agreement, but nobody pays much attention to the management plan. Most buyers and investors are unaware of what else that they have to pay, or what terms and conditions apply for when they live in that property after becoming the owner of it.

There are two types of property ‘investment’: leasehold and freehold.

Leasehold is a long term rental that can last up to a maximum of 90 years, but the contract has to be renewed every 30 years. A freehold transaction is when you actually buy the property.

Every property in Thailand falls under Thai law, as well as each private business’s own regulations. Therefore, investors, especially foreigners, have to be careful and study these laws before they decide to buy or lease under a freehold or leasehold agreement.

Most buyers are cautious when deciding how much they have to pay up front and how much they need from the bank. However, it’s what happens afterwards that causes so many problems.

For example, in some cases, owners have the right to vote on how much in maintenance fees they are willing to pay per year. They also have the right to see the financial documents showing the usage of the maintenance fee, as well as to examine how the juristic persons work. This is usually the case in condos.

In other types of property, the project owner or management team has the right to decide on how they will utilize the maintenance fee. They can even set their own price for water and electricity. The tenants or owners have no right to be involved with management. They just have to pay the maintenance fees as required.

So everything depends on the management agreement between the buyer and project owner. As a lawyer, I strongly advise all parties to carefully consider the management agreement before making any buying or investment decisions. This will highlight what you can or can’t do after you have bought, what the management’s responsibilities are, etc. Be careful; read the management agreement thoroughly and do not limit your focus solely on the buying and selling agreement.

Search for your own Phuket Property HERE.

So you've bought a property. Have you checked the management contracts? | News by The Thaiger

Panuwat Somrit is a Phuket lawyer specializing in property. He has been practicing law for the past six years. He graduated with a Bachelor’s degree in law from Ramkhamhaeng University.

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Interested in more property news or buying property in Thailand - check out FazWaz today!

Local Thai journalist speaking fluent Thai and English. Tanutam studied in Khon Kaen before attending Bangkok’s Chulalongkhorn University.

Property

Thailand’s property market waits for an end to Covid-19

Tanutam Thawan

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Thailand’s property market waits for an end to Covid-19 | The Thaiger

The Coronavirus outbreak poses challenges for Thailand’s property market as potential Chinese condominium buyers remain stranded in China. Meanwhile, some believe that the outbreak may bring opportunities for non-Chinese buyers and in the long-run, the Chinese may be looking for an overseas refuge in the event of these types of emergencies popping up again

Through all this, there will be a certain level of pent up demand for Thai real estate.

Of course, it’s not just the Chinese unable to come and inspect potential buys, the rest of the world is also mostly shut out of Thailand.

Market remains weak

The pandemic is hurting the condominium market as Chinese nationals were accounting for half of the international buyers in Thailand, or 57.6% of the total foreign condo owners in 2018.

Vichai Viratkapan, acting director-general of the Real Estate Information Centre says that 50% of Chinese condo transfers are expected to disappear in the first 2 quarters of this year and the total transfer value by the Chinese will miss the mark of the usual 29 billion baht by about 25% (around 7 billion).

However, since Chinese property buyers only make up 6% of the total international and domestic housing transfers in Thailand, the proportion of total housing transfers in the country is likely to be similar to last year.

Developers looking to sell current stock whilst shelving new projects

CBRE reports that most Thai developers are postponing the launch of new condo projects to focus on clearing existing stock.

“Discounting completed projects to generate quick revenue as a financial lifeboat is the best solution for many of the country’s larger developers whilst the market is in limbo.”

Rathawat Kuvijitrsuwan, head of CBRE Research and Consulting in Thailand believes that, now business is gradually recovering, a few developers have started to launch new condominium projects.

“In the first half of 2020, the Bangkok condominium landscape was gloomy with fewer than 10,000 condominium units launched, which was much lower than the total number of new launches in the past three years of more than 60,000 condominium units per year.”

The Chinese are reluctant to complete transfers

The virus has continued to affect hospitality operators, including hotels and condominiums that service tourists, nationwide. Since China has suspended tours, put restrictions on movement, and locked down cities, home to over millions of people, it also poses a threat to real estate developers as their clients are unable or unwilling to fly.

“Currently multiple off-plan condominium developments are approaching completion, and Chinese clients are unable or unwilling to transfer. Chinese clients who made a reservation in Q4 2019 are requesting a refund and withholding their investment,” said Marciano Bijmohun, Business Development Director at FazWaz Property Group.

He believes every condominium that is in transfer status will see the percentage of non-transfer units rise in the coming months.

“These non-transfer units will cause a big financial hit to developers.”

If a client refuses to transfer, does not comply with the terms and conditions stipulated in the sales and purchase agreement, and decides to release the property, their deposits will be forfeited.

“However, there is some good news, these non-transferred units can be offered with a discount to new clients.”

Also, as China has been susceptible to a few disease outbreaks – from bird flu to the current coronavirus – it may prompt Chinese buyers to look for second homes outside of China.

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Bangkok

Silom Road tops as the most expensive area to buy land in Bangkok

Caitlin Ashworth

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Silom Road tops as the most expensive area to buy land in Bangkok | The Thaiger
PHOTO: Unsplash: Paul Szewczyk

Silom Road, Bangkok’s nightlife district, is the most expensive area to buy land in Bangkok, followed by Phloen Chit Road, according to data the Treasury Department gathered from 2016-2019. The pandemic may have fluctuated the prices, but no data on land value for 2020 has been reported by the department. They also say only asking prices were recorded, so it’s unclear how much the price decreased by during negotiations.

On Silom Road, land prices per square wa are up to 1 million baht while land on Phloen Chit Road have been reported to cost up to 900,000 per square wa. A square wa is about 4 square metres. Land on Rajadamri Road ranges from 750,000 baht to 900,000 baht per square wa. The cheapest areas to buy land in Bangkok are farmlands in the Bangkhuntian district. Land prices range from 500 baht to 10,000 baht per square wa.

Properties on Silom Road are also the most expensive in Bangkok. The price for a 170 square wa 4 storey office on the road costs around 155 million baht, according to the data. The highest asking price was 7 billion baht for a 37 storey office building on Sathorn Road.

Here are the top 10 most expensive areas to buy land in Bangkok:

1. Silom Road at 700,000 baht to 1 million per square wa

2. Phloen Chit Road at 900,000 baht per square wa

3. Rajadamri Road at 750,000 baht to 900,000 baht per square wa

4. Rama I Road at 400,000 baht to 900,000 baht per square wa

5. Wireless Road at 500,000 baht to 750,000 baht per square wa

6. Sathorn Road at 450,000 baht to 750,000 baht per square wa

7. Yaowarat Road at 700,000 baht per square wa

8. Thaniya Road, Pattanapong Road, Pattanapong II Road at 600,000 per square wa

9. Narathiwas Rajanakarin Road at 280,000 baht to 600,000 baht per square wa

10. Ratchawong Road, Sampeng Road at 550,000 baht per square wa

SOURCE: Nation Thailand

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Thailand

Thai condo developers clearing inventory rather than starting new projects

Tanutam Thawan

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Thai condo developers clearing inventory rather than starting new projects | The Thaiger

“With waves of uncertainty and financial stress crashing into the market from the COVID-19 pandemic, most residential property developers have decided to postpone their plans.”

CBRE, the international property consultants, reports that most Thai developers are postponing the launch of new condo projects to focus on clearing existing stock. Discounting completed projects to generate quick revenue as a financial lifeboat is the best solution for many of the country’s larger developers whilst the market is in limbo.

Rathawat Kuvijitrsuwan, head of CBRE Research and Consulting in Thailand believes that, now business is gradually recovering, a few developers have started to launch new condominium projects.

“In the first half of 2020, the Bangkok condominium landscape was gloomy with fewer than 10,000 condominium units launched, which was much lower than the total number of new launches in the past three years of more than 60,000 condominium units per year.”

Since June, CBRE Research says new condominium projects, along new extensions and future routes of mass transit lines, with starting prices under 2 million baht, and those along existing mass transit lines are usually priced lower than 3 million baht.

“On the other hand, there has been no newly launched condominium in the high-end and above segments this year due to the high level of unsold supply and high land cost in prime locations. Investors have become more cautious in spending a large amount of cash during these uncertain times.”

“Some of the newly launched condominiums have had a good sales rate during their first launch. Most of these projects have been launched with a product and pricing that are mainly targeting large demand from buyers with lower-purchasing power and are located in an attractive location with limited available condominium supply in the area.”

But despite the slowdown of general activity and the current sales and promotions to dispose of excess stock, over 60,000 condos are expected to be completed this year and around 80,000 units each year over the next 2 years.

“With over 140,000 condo waiting to be transferred over the next 2 years, there is a possibility that a large number of booked units could return to such a volatile market as some cash-strapped buyers could decide not to transfer their units.”

“The future of the condominium market depends on the direction that residential developers will take collectively. With the 10 year record low number of newly launched condominium projects, this is the moment for the market to correct its long-standing oversupply and overpricing issues.”

CBRE Research believes that there are still opportunities for developers, including the 4 under-construction mass transit lines that are expected to be completed in 2022, the new Bangkok City Planning that will unlock many new locations for condo development and foreign demand that will come back… eventually.

To find the best range of condos, houses and villas, around Thailand, click HERE.

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