A leading legal adviser says the property situation is not as bad as is perceived
After coming to a screeching halt for most of last year, Thailand's resort property markets have bounced back over the past six months with increased activity at the higher end and secondary-market sales also brisk, says Marcus Collins, a partner with DFDL Mekong Legal and Tax Advisers.
To go by transactions that have passed through his law office, a lot of people are making good money on their investments in Phuket even though global economic conditions are far from rosy.
"You would expect that properties would be offered at discounts, but sellers are still making at least 50% on their original investments and in some cases a lot more than that," he said in an interview last week.
"In the transactions I have seen cross my desk and in my office, there is not a single investment where people have lost money. In every case in which we have represented either the buyer or the seller, the seller has made very good money. This leads me to believe that in Phuket, Samui and Thailand in general, good properties are still a very good investment."
Mr Collins added that "higher end" does not just mean super luxury properties in excess of $US1 million (33,180,000 baht), but includes many condominiums and mid-market houses. One seller sold a condominium he had bought for 12 million baht for 20 million baht.
He added that he has also seen people who bought properties for more than one million dollars and all of them have also made money when they wanted to sell.
Mr Collins said this means that the situation is not as bad as is perceived. Yet it has to be understood that people are more cautious about spending money now. This leads to potential buyers looking for really well managed and well designed properties, and of course properties that are completed or are being built so that they can see what they are buying.
"Selling off-plan is no longer an option in most cases, I believe.
"A lot of people are looking for properties that are linked to a hotel or a well-known company."
Mr Collins has seen a fair bit of activity in the condominium market in Phuket, mainly because there actually are not that many condominiums on the island. The other reason is that foreigners can own 49% of the units in a building freehold and this type of a residence is less of a headache for them in terms of absentee ownership.
"But having said that, we have had clients who are very successful selling villas on a leasehold basis and I think people are getting more educated about leasehold structures."
The past repeats itself, with most foreign buyers in the Thai market again coming from Hong Kong and Singapore, as was the case in the past. These two islands have recovered a lot faster than many other places, and there is a lot of money. These buyers are both foreign expats and natives.
"There are also a lot of Chinese buyers in the market and a lot of Russian buyers. We see expats from the region, living in places like Indonesia and Vietnam, who want to have a second home in Thailand. Some of these expats are from the Middle East," Mr Collins added.
As he sees it, Thailand remains one of the top destinations and one of the most attractive places to have a second home.
"We also see a lot of expats who are moving to Thailand and basing themselves here. They may not necessarily work in Thailand but they want to base themselves and their families here," said Mr Collins.
"Expats who used to own properties in places such as Brisbane are selling these properties and moving to Thailand because it's cheaper for them and Thailand has such good infrastructure. It's easier for them to travel anywhere in the world."
While transactions are taking place at the higher end of resort markets, Mr Collins has not seen that many new developments coming onstream.
Although there are a lot being built and being completed, it is unlikely that there will be a lot of investment in new projects.
However, some successful developers who have sold out or who have at least got their money back are now looking around. They believe they can pick up land a bit cheaper because the market is not as crazy as it used to be.
"So they are picky and they are trying to find the best possible locations. There are developers who have done well who are looking to start new developments."
When it comes to lingering Thai political problems, Mr Collins believes a lot of people have become immune to all the bad news.
"There has been so much bad news, there has been the Bali bombing, there has been the bird flu, there has been the trouble in the South, there have been bombs in Jakarta, there has been financial crisis worldwide ... I think people are just shrugging their shoulders, and saying 'disasters happen and life goes on'.
"As for Thai politics, people are probably so tired of everything already and kind of saying, 'Maybe there is going to be another political crisis, but it will blow over too'.
"Politics is politics - I don't think that will change much. There will be continued bickering between the yellow shirts and the red shirts - that is not going to go away very quickly. That is probably a process that will last for years."
DFDL Mekong Legal and Tax Advisers has offices in Vientiane, Phnom Penh, Ho Chi Min City and Hanoi. Mr Collins said the regional firm has seen that a lot of clients buying and developing properties in Cambodia.
"Cambodia has a very attractive beach region and very attractive islands, much like Thailand. We see that there is quite a lot of development going on and the regional airport in Sihanoukville is being expanded particularly with a view to expanding local industry and tourism.
"There has been a lot of investment in properties there and there will be more I believe.
"Vietnam is the same. The Vietnamese coastal area is very long and there is quite a lot of development going on there. Our offices are quite busy," said Mr Collins.
He added that Thailand remains the biggest regional market in terms of resort developments. This is mainly because it has a very mature hotel market.
WIN-WIN: Marcus Collins says profits are high in recent property sales. |
