An Alternative View On The Merits Of Purchasing A Condominium
Seemingly the three most important survival factors are a source of food, getting a roof over one's head, and somebody to reproduce with, maybe not in that order but I don't know. Thankfully blessed with living in Thailand that the last item
on this check list this is already accounted for by the time we reach the Immigration queues.
Coconuts are naturally falling from the heavens so that really only leaves locating a shelter.
In trying to be able settle anywhere with some kind of permanence, this has got to be one of the most important factors that will determine if you've got any kind of future in a given location.
Unfortunately what was written on the walls during the pre Khun Taksin days is now well and truly off the wall, to the degree that's it's now in your face. This was a political decision resurrecting their past and present insecurities, highlighting and bringing them to the for with the consequence of enforcing an existing land act regarding purchasing properties through companies. The fact that you could not export nor eat the land were deemed insufficient, prohibiting you from putting even a token gesture of it in your own personal name. This of course did not bode well with the majority who were considering relocating here, to the degree that after a lot of heated debate on the subject, it was finally conceded that that farangs could purchase freehold air (condominiums) in lieu of land itself.
Doing your maths they may add up to whatever one way, but in recalculating them in a different fashion the total result could be somewhat different. So to quote your own rental sum with a ten year tenancy occupation, with no perceived increases of rent, we'd be looking at a figure not that much shy of two and half million baht, okay 2,4000,000 baht exactly.
So the six million dollar question is whether it not possible to invest this kind of sum whereby not only do you not lose its value, but also hopefully at least increase it in line with inflation? Sure the odds as you have correctly stated are stacked against you, but if you look into more deeply I think you will find that even the Thais have been able to find a way to hold onto the value of their assets.
Purchasing a condo you are also investing in all the inherent risks, but can they be minimised with foresight? Reducing these odds so they start to fall into your favoured location must be at the top of the list, either somewhere today that is right in the centre of where everyone wants to walk to work, eat and play, or that tomorrow will have a new BTS, MRT, and canal built on your doorstep to get to these facilities.
Next up I would look at where the Thais like to live and invest themselves, condos that not only have a waiting list to get into but ones that you could also rent out at premium rentals. Maybe old, established developments, that have really built up a consistent recognised reputation over the years, that look into the possibilities that you will be an honourable contributor to their maintenance and sinking funds. See if it's possible to check the books of the management company that is responsible for looking after all the repairs and maintenance, of the proposed block that you are considering making a purchase in.
Sure, you might run into problems with your neighbours in your block, but even ASBO's (Anti – Social Behaviour Orders) have had mixed results in the United Kingdom.
Condominium resales that are snapped up through hearsay that never reach the open market, again there might be an additional pay off for this privileged information, but there's all the likelihood you will get it back when you come to sell.
Going back to the comparison you make, you are doing it on two variable assumptions, current interest rate and currency figures <Currency fluctuations are irrelevant as I have no intention of moving that money out of that market – Stick>, both could either go for or against you. These are markets that even the most avid speculator is loathed to play.
Regardless if you are in a win or lose situation of rent vis a vis interest returns, you are not making any capital appreciation at all, in fact taking inflation into account you are making a capital loss on this capital without taking interest rates into account, it's the same scenario of trying to go an escalator that's coming down, you're lucky if you can stand still. <Looking at many condo units for sale in Bangkok now, it really is hard to see them appreciating much more in value, at least in the sector of the market I would be looking at – Stick>
Yes you're right maybe condominium prices do not go up by a uniform annual amount, however for sure they go up in cycles, currently being in an almighty low trough of one at the moment, as if anything that can go wrong to deflate sales and price increases is currently being practiced by an incoherent government.
Which leads me on to the fact that if anything this might be one of the most opportune times to make a purchase. You've got the whip hand in cases where people have to sell at any price, developers who are disparate just to maintain any kind of cash flow, and banks that have to auction properties that they have had to reprocess.
Buying new for sure you are buying face, but purchasing in the most fashionable, desirable areas means even more, remember who's ever going to see your property, it's the address that counts.
Thais will, I sincerely believe, pay a premium to live or speculate on a condominium in a very desirable area. Sure when those in the Real Estate industry refer to security and investment you have to ask just who they are referring to. When it comes to purchasing off plan if you get the timing right like North Shore you can make a killing, but I pity those speculators who have put down their deposits for Riverside. The omens for another property crash are all around you presently in Bangkok.
So at the end of the day yes for sure it's not a one way ticket, but to develop this kind of intuition doesn't come over night, at least keep a toe hold of interest in the subject for the day that your circumstances may change, so you are in a position to take advantage of it.
This was a reader's feedback to the column I wrote titled "Why I Will Never Buy A Condo" and provides an alternative view.
There is one point that I never made in the original article that is pertinent. I just do not know if I want to be in Bangkok or Thailand long-term and really, with the way the local market is, unless you are sure you're going to be here for a good few years at least, making a condo purchase is perhaps not a wise decision.