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Thailand Property Investment Strategies

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Property for living and for investment have different criteria, what investment strategies are available in Thailand? Let’s look at a few options.

Property investment, from my perspective, is better looked at in the longer term. In a rising market there is no doubt that speculators/flippers can buy off the plan and sell for a excellent profit and often quite quickly. This does however require some nerves and a very good understanding of the property cycles, as such not always ideal for the inexperienced.

Thailand like many parts of the world has been experiencing a property boom, numerous housing estates (moobaans) and condominium projects are being built, and by accounts a glut exists in many areas already. As such those areas isn’t where we would be focusing our attention, for example who needs an investment condo in Pattaya where there is already a glut and prospects for profit are probably optimistic. That isn’t to say the right project can’t work out but it isn’t where we would be investing.

In the current environment we have put our investments into Hat Mae Rampheung, a quiet underdeveloped seaside resort near Rayong city, and I’ll outline where and why. This doesn’t mean the reader will agree, but may provide some ideas or thoughts for similar locales. What doesn’t change though is that there is a set amount of seaside property ever available, it always has a location premium, and price in the long term can only go up.

Older Condominiums

We originally moved from real estate agents to property renovators in Chiang Mai prior the current condo building spree and there were quite a few older buildings when a good buy was still possible. These were usually a bit run down, however the build quality, size and location were often better than the current newer projects. Some of course were good for little more than demolition.

If these buildings reached a high enough foreign ownership then the expats would get on the committee and start agitating to improve the property, this often but not always was successful depending on how entrenched the stakeholders that controlled the building were. If successful the building would improve quite dramatically and the sale prices of units would increase correspondingly.

There are a few older buildings in Hat Mae Rampheung, New World, VIP and Royal Rayong being the better properties, although Victory, Sand & Sea and other more down market ones also exist. The three mentioned all are high rise which are no longer allowed to be built, so higher floors have commanding views that can not be duplicated. Royal Rayong had a nice repaint and its prices have already increased, VIP is probably better maintained of the lot but its prices are still moderate.

We bought into New World as see it as the building with the best potential, however this is a buy, renovate and hold for vacationing, so whether its maintenance issues are ever resolved isn’t urgent and only time will tell.

Land

Land often has the best appreciation potential, the downside is that it is not an income generating asset. However large shopping centers and property developers often buy land years ahead of construction, as their research shows where the growth areas will be and they get in early to buy cheap.

So if property development is of interest, then spot the growth areas, buy the land and then sit on it and wait. In Hat Mae Rampheung we have bought several Rai of and will wait, we expect to develop in about 5 years. There is a few moobaans already being built, plus a condo and larger hotel, so there is a bit of activity already, but it is far from booming. We also looked at Mae Phim however the new projects didn’t really grab us as investment material, however it is a nice area to live.

The world economy is looking shaky, so we may well get a bust within the next few years, that really isn’t of concern as we are looking at the longer cycle. Also we prefer to park our money in a tangible asset such as property, if stock markets crash or there are bank runs, we can’t get wiped out. Could prices fall before they rise? Certainly, and if you are parked in cash (assuming banks safe) and can spot the bottom you could do very nicely. Everyone needs to find what approach works best for them and their circumstances.

Rental Income

Hat Mae Rampheung is still a quiet area, buying condos here purely for rental income at this stage will probably be disappointing. Add to that as the condos seem to be slow to sell, more so the pricier they are, doesn’t currently make this an ideal location for a portfolio of condos to rent.

However it might not hurt getting in while prices are still low with a single unit that is part of a wider location portfolio. Keep it as a vacation unit, rent it out a little in the high season to cover costs, this really is a buy and hold area, it really is about the timing.

As a general rule in Thailand, despite more running around, 3 x 1 million baht condos will return better than 1 x 3 million baht condo, that can change though in some areas in Bangkok where there is more demand for high end property. It is all in the selection, know your market before buying anything. And don’t forget that real estate truism is location, location.

We are looking at two options for our land later, both include building our own house on part of it. One is to subdivide some and sell new houses, the other being to build rental properties to keep. As our costs building ourselves is minimized the return on investment will also be better. We will evaluate demand and decide later.

Others may offer very different advise that may well be far superior. For example hotel managed condos in Phuket that give a guaranteed return for x years may pan out well, but do consider are you being charged a premium that actually covers that guarantee, what happens if they don’t finish the project, what can you actually do if they don’t pay you? I’m not disparaging those schemes, just using as an example for buyer beware. Our opinions right or wrong are offered freely, and we aren’t trying to sell you anything.

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