Representing the Best Real Estate in Phuket

Some Words of Advice for Newbies

Due diligence is the name given to the process of investigating the details of a potential investment, including the verification of material facts. Wishful thinking, on the other hand, is an interpretation of the facts as one would like them to be rather than as they are.

If you regularly visit online expatriate forums, you will read plenty of stories about people who bought property in Phuket, or anywhere else in Thailand, and afterwards found themselves with big problems on their hands. Which approach do you think most of those investors took when they decided to buy their property?

In fact, many people buying real estate in Phuket appear to exercise less due diligence than they would when purchasing a property in their home country. There are a number of reasons for this. One reason is that decisions are sometimes made in haste due to the time constraints of overseas trips. Alternatively, difficulties and misunderstandings can easily arise when trying to evaluate and negotiate purchases from a distance. Another reason is the language factor, which makes doing your homework just that much more difficult. The intoxicating allure of a foreign country and the fact that Phuket property for sale is relatively inexpensive can also result in caution being thrown in the wind.

Thailand is unique in many ways and it does have its share of problems. But it is not an inherently bad place in which to invest in real estate. It is, however, surely a bad place in which to be a lazy, poorly-informed or inept investor.

There are a number of factors you need to be aware of before committing to any real estate purchase (or long term lease) in Thailand. These include:

- The nature of land titles in Thailand (if you propose to buy or lease land)
- The legal framework that determines how foreigners may (or may not) own or control land, buildings or apartments/condominiums in Thailand.
- Current market conditions such as sales price (both asked and achieved) for both new and older property, rental prices, time taken to sell or rent and
- The fact that in Thailand there can be a huge difference between what is written in the rule book, what you will be told by various people involved in the process, and what actually happens in real-life.

Information concerning the first point can easily be obtained by some research over the internet. You can simply use a search engine to identify relevant pages within, for example, the websites of Thai law firms. This material will give you a good basic knowledge about the subject. Some websites also provide English language translations of relevant Thai laws. If you are interested in condos rather than houses or villas, you might want to locate and study the relevant sources such as the ‘Condominium Act’ which was amended in 2008 to give the buyers more protection.

Reliable information on the second point is more difficult to find, as the topic is complex, the information sources more dispersed, and there is a great deal of misinformation in circulation. Again, a good starting point is the websites of the more reputable Thai law firms AND reputable real estate agencies in Thailand.

Generally speaking, the only real estate in Thailand that can be owned by foreigners is certain condos or buildings built upon land owned by a Thai. These controls on foreign ownership are a major constraint on real estate investment in Thailand and are not about to be liberalized any time soon. Many foreigners seek loopholes or alternative means of acquiring or controlling real estate, but most of these methods feature an element of risk or uncertainty and some are even illegal.

Some of the procedures more commonly discussed in the media or online include:

- Buying through a Thai company
- Buying land in the name of a child
- 30 year leasehold
- Buying land in the name of a Thai spouse with various protections in place such as usufructs, leases, or mortgages

Obtaining accurate real estate market information is equally problematic and takes a great deal of determined searching. There is information out there, but it is neither integrated nor particularly user friendly. Much of it also tends to address only limited segments of the real estate market.

With regards to the last point, many people who are new to the process and idea of buying property in Thailand and just started their research, bemoan the fact that they are having difficulties in obtaining a clear and precise answer to their questions. These people have to understand and realize that this is not Europe or Australia but Thailand and that there often is no precise answer. This is not to say that research is pointless, but it does not mean that you must develop a certain level of general knowledge and then exercise your own judgment.

As well as information that is specific to real estate investment, it is also recommended to spend some of your time to inform yourself about other related issues. What is the best way to transfer your money to Thailand, how to select a bank and open an account and the nature of Thai tax regulations. Factors such as these can have a significant impact on the cost of your investment.

To conclude all the above, I am sure you can agree that you better not go the distance on your own, but that you should get assistance from reputable, experienced professionals.

We here at ‘Tropical Properties’ – Real estate, can assist you with all the above matters.

Source: www.property-report.com

Some Basic Knowledge To Property Investment

Over the many years I have been in this business here in Phuket, I have met with hundreds of property investors. All of them have their specific requirements and taste. And all have their own specific reason for investing in property in Phuket. Still, although everyone is different, has different taste and different requirements, there are still some basics that all need to keep in mind when selecting the property you find the most suitable to invest in.

These are some insights I gathered over the years dealing with these investors that I want to share with you:

Good Location

I know it will sound like a cliché, and I have to admit, it is. But when it comes to making your choice when buying a property, especially when you are buying for investment purpose, be it here in Phuket or anywhere else around the world, it is all about location, location, location. When you are buying a property to live in it yourself, location may be a less significant factor as one may have different preferences in where to live. Some like to live in a quieter location, away from the resort areas and tourists. These people are probably more interested to buy a Villa in Rawai, or an apartment/condominium in Nai Harn. Others will choose to be close to the action with easy access to shopping, nightlife… These people are very likely to be more interested in a property on the west coast of Phuket, be it a house in Patong or a luxury ocean view apartment in Kamala or any other resort area close to the island’s beaches. Proximity and accessibility to schools, airports and hospitals are some other important factors to consider for some. Even when buying to live in the property yourself, it is important to also consider how other people will view the location and even to try to think ahead about how the area might develop and will look like in the years to come. After all, you may one day decide to sell the property. So it is advised to try to be as objective as possible when it comes to deciding on the location.

Is the property located in a good development? Is the area around it already built-up or what could be built there in the future? How about the drain or power cables? Is it close to the main road? How far is it situated from the beach? When choosing the location of the property, these are some of the points to consider when thinking about what will appeal to your potential buyers in the future.

Good Property layout

If you are buying an existing property (i.e. a property that is already 100% completed or a resale), it is important to consider if you are satisfied with the layout of the property. Many of our many clients over the years like to have an open plan living area as this makes the room look and feel more spacious. As we are living in Asia and many of these buyers have spent a significant part of their live in the region, many of them are also taking the ‘Fengshui’ into consideration. If there are many angles and corners in the house, that property will not suite them. But in any case, a good layout will save you time, effort and money in having to redesign the property layout to suite your needs and taste the most. If you are buying a property ‘off plan’ or while it is still under construction, most of the times the developer will be flexible enough to make the necessary changes to the layout to fit with your taste and requirements, as long as that is structurally possible.

Good History

If you are buying a resale property, it might be good to know the history/background of it. Why are the current owners looking to sell? Is the current owner living in the property or is it rented out? These things are important in the making of personal and economic decisions.

Profitable Investment

If the property is for investment, with the intention to generate a good rental return, the potential buyer should also get the information about the expected rental returns or, if it has a history of lettings, the proof of the returns. Does this match with what other properties in the area are generating in rental returns? Then you need to consider if this is acceptable for you.

Another point that needs to be considered when the purpose of the purchase is mainly investment is the expected capital appreciation. What is the average price for similar properties in the same area and how are these prices compared to what they were about 5-10 years ago?
Sometimes it will not be easy to get a straight answer to this as in many areas of the island, 5-10 years ago, there was almost no development of the scale and quality we now have.

TIME TO SOLVE THE TRANSPORTATION PROBLEMS ON PHUKET

For the first time, authorities on Phuket (and in Bangkok) are seriously considering and discussing the island’s public transport needs.

Talks are being held now about tuk-tuks and airport taxis, which is good. Yet it’s as if, somehow, the two are separate problems while in fact they are very much related. Therefore, they will need to looked at in that way.

Minor improvements to public transport are on the way in ‘Phuket Town’. A few more pink seung taew buses will soon be introduced there. This is particularly good news for local people and schoolchildren.

But there is a bigger picture and one of these days, the one-baht coin might drop. ‘Phuket Town’ actually officially became Phuket City some years ago, when the population grew beyond 70,000 citizens.

These days, the entire island of Phuket is a predominantly urban region including adjacent towns and suburbs; like a metropolitan area, with more than one million inhabitants.

Phuket’s villages are constantly expanding. As a matter of fact, some tourists even refer to the whole island as being a ‘city’.

Those who continue to refer to Phuket City as ‘Phuket Town’ are clearly living in the past or longing for the past. Times when towns and villages each dealt with their own problems and their own transport issues in their own way.

But these days are long gone. And until the governing authorities and the tuk-tuk and taxi drivers and the island’s media start treating Phuket as the kind of metropolis it is these days and not as separate villages or towns, a solution to the island’s public transportation needs will never be found.

The flaws in that kind of thinking in the past are painfully obvious. The tuk-tuk system is failing because traditional village rivalries mean that customers have to be charged a return fare, even though the passengers are only going one way.

The customer pays for the tuk-tuk to return empty to the ‘village’. In the efficient, transparent 21st century, there is only one term for that: it is a rip-off.

The same rules apply at the Phuket International Airport. The airport itself is expanding and prospering from a modern approach to air transport. But it is suffering from a 19th century approach to road transport.

Once passengers have landed, it is as though the airport administrators no longer have to live up to the international standards.

Hopefully the realities of the island and its needs will be understood so that a much needed change will come. And it should come rather sooner than later.

 

Incidents of violence between tuk-tuk drivers and tourists are a daily occurrence lately and highlight the need for reforms on Phuket in regard to transportation.

And reform needs to come quickly because these days, with the internet, news travel fast and it is difficult to keep things secret.

There used to be a time when the rest of the world was far away. Not anymore. With applications like e-mail, blogs, facebook and the likes, people all around the world are informed about anything that happens within minutes.

is there anyone out there who hasn’t heard of  the jet-ski scams, and of the world-first insurance scheme that is designed to tame the extortionists and rip-off merchants?

One problem apparently solved, a few more yet to go . . .

While Phuket will continue to be a playground for the elite, more change has to come, and quickly.

Once upon a time, Phuket was able to rely on its natural beauty alone. But As Governor Wichai Praisa-ngob said when he arrived on the island in 2009: ‘Phuket has many problems’.

He has done his best to fix a couple.

nevertheless, because of the Internet these days, the whole world is aware of Phuket’s remaining problems, and watching to see what happens.

Phuket has missed one previous ideal opportunity for reform. A fresh start could have been made after the 2004 tsunami. Many things were promised but nothing ever happened. Instead, greed took over.

The result is that Phuket still has its great beaches and coral reefs. But who wants to come to any holiday destination, knowing they will be overcharged outrageously every time they attempt to travel from point A to point B?

Back in 2005, after the tsunami, at a time when fugitive ex-prime minister Thaksin Shinawatra was swinging the scepter, there was no way his ruling Thai Rak Thai party would even consider spending a single Baht on Phuket since the island has been a long-standing fortress for the opposition Democrat Party.

Now change has come, and more of it is needed on Phuket. The time is right. The world is watching.

It is time for the Government to prevent more tourists ending up with broken arms and busted faces.

It needs to give the island a public transport strategy; something it has required for decades.

It cannot be done in a way that all of the sudden makes more than 1000 tuk-tuk and taxi drivers jobless. But it needs to be done in a way that makes Phuket good value again.

Phuket’s future as a tourist destination for the superrich is assured. But we have to keep this a place where the rest of the world will be able to afford to keep on coming here too.

PHUKET – THE GATEWAY TO THE INDIAN OCEAN

To be the only boat in sight from horizon to horizon, anchored off a deserted tropical island beach may seem like a dream to most sailors. But when you are sailing in Phuket, it is an everyday reality.

Also Phuket’s climate is quite unique amongst cruising destinations. There is no winter and we are also spared from typhoons and hurricanes. The temperature averages between 25 and 32 degrees Celsius throughout the year and the ocean is at an almost constant temperature of 28 degrees Celsius.

Located in the Andaman Sea, Phuket is best known amongst regional sailors for having the most advanced sailing infrastructure in Thailand. As a cruising base, Phuket is unbeatable. The mystical waters, islands and limestone karsts of Phang Nga Bay are just a few hours sailing east from the major anchorages; the stunning Similan Islands are a day’s motor sail to the west, while Burma’s practically unexplored Mergui Archipelago is easily accessible to the north.

To the south is the almost uninhabited Butang Group which is part of the 51-island Hat Chao Mai National Park and is habitat to an abundance of fascinating and unusual wildlife. A short sail east brings you to the mysterious and unspoiled island of Tarutao, just 6 km from the Malaysian island of Langkawi, and only one day out of Phuket. Being a former penal colony, Tarutao abounds with interesting caves and hidden creeks leading into the mountainous interior, a primal world where time appears to have been standing still.

Phang Nga Bay itself, bordered by Phuket, Phang Nga and Krabi provinces and boasting more than 100 islands and sheer-sided mountains rising out of the ocean, has produced some of Thailand’s most spectacular tourist images. This has turned Phang Nga Bay into a popular tourist destination with day tours and kayakers exploring the islands and sea caves. Despite of this all, the bay is practically deserted by mid-afternoon.

For sailors who prefer as much luxury and convenience as they possibly can get with their sailing, Phuket is already home to three international-standard marinas: The Yacht Haven Marina, Boat Lagoon Marina and the recently opened Royal Phuket Marina. The latter one was voted ‘Best of the Best Marinas’ by British Airways’ First Class in-flight magazine, First Life. Much more marinas are in the planning stage.

Boasting only one regatta until a few years ago, there is now plenty of choice, in terms of time, style and location, for those who prefer to mix a touch of action with their sailing holiday in Thailand.

The Phuket King’s Cup Regatta, soon to organize its 20^th edition, attracts around 100 yachts and is held early December. The Phang Nga Bay Regatta, which is bringing together around 40 competitors and is more relaxed compared to Phuket’s King’s Cup Regatta, takes place at Chinese New Year, against what must be the most dramatic and spectacular scenic background of any regatta in the world. Phuket Race week, now in its second year, also plays an important part in the regatta calendar. This one is being staged in July when it is windier because of the southwest monsoon.

Whilst the competitive fun of racing in tropical waters is why people take part in Phuket’s regattas, they all leave with great memories of the beachside regatta

OFFSHORE-FUNDED PURCHASES

You want to buy overseas property but mortgages are not available through the local banks and there is no financing from the developer’s side as well. So what do you do?

Before going to search for unfriendly lenders who all of the sudden have something else more important to do when they see a foreigner coming in, or when you call you’re your bank overseas and you are put on hold for nearly half an hour after they realize you are that adventurous expatriate who had the nerve to leave his country of birth to move to a sunnier climate, think again. Rather than looking to far, it might be worth looking closer at your asset column for an alternative way of freeing up funds that you can put to work elsewhere.

Releasing equity from your existing property is a well documented way of raising cash through a traditional re-mortgage facility. This might be worth investigating if you already have some equity as well as easy access to a friendly lender who is not allergic to expatriates. If not, then fortunately there are other ways to raise capital:

Asset backed lending from existing portfolio structures

Many expats and retirees living overseas will already have an offshore investment vehicle or Portfolio Bond that has over the years, with top ups and investment returns, risen to a valuation of 1 million USD or more. In many cases that can be used as collateral to get access to an advance secured by the portfolio itself. A lending ratio of 50% loan to value would, in this example, release 500,000 USD cash lent to the investor on a rolling term base. The underlying assets in the portfolio would have to be of a low risk nature at outset to qualify, and then be conservatively managed going forward, but even so can still provide a return higher than the interest cost of the loan.

There are risks involved if the portfolio valuation were to fall below a certain limit which could in theory lead to a margin call from the lender, so a word to the wise here is to avoid cross currency loans and risky stocks at all costs. That being said, the times of lending against highly aggressive portfolios are largely behind us as we enter a new world of cautious lending strategies being adopted by banks. Most banks will now only look to lend against low to moderate risk assts such as blue chip stocks, investment grade bonds, government gilts and professionally managed unit trusts.

An experienced investment professional should be able to structure your portfolio in line with the bank’s requirements prior to submission of an application, and so with proper monitoring and a full understanding of the risks involved and how to mitigate them, this can be a very powerful tool for high net worth investors looking for funding for new investment opportunities.

Overseas Pension Transfers

In April 2006, it was announced that individuals with UK pension rights who have, or will become, non-resident in the UK for tax purposes, can move their accumulated pension benefits to a ‘Qualifying Recognised Overseas Pension Scheme (QROPS)’ approved by Her Majesty’s Revenue and Customs (HMRC). You can think of it as an International Pension Plan or Offshore Pension Scheme.

The principal advantages of moving to an overseas scheme are:

 

-         No liability to UK income tax taken (for those who are non UK resident for tax purposes).

-         The ability to pass on the entire pension asset to the next generation without punitive UK tax charges (currently up to maximum 82% of the entire residual pension fund for those who have not purchased an annuity by the age of 75).

-         The option to take up to 25% tax-free in cash as a lump sum.

-         No requirement to purchase an annuity or alternatively secured pension.

-         A wider investment choice including the acquisition of residential or commercial property, scheme loans, and self-investment options.

-         Benefits can currently be taken at the age of 50, although this will be increased to the age of 55 from April 2010.

-         A regular income can be paid from your QROPS direct to your bank account and assets can be held as well as payments made in many currencies helping you to manage the risks in exchange rate fluctuations.

-         Those who wish to transfer their pension assets to a more flexible environment with fewer investment restrictions.

-         Any UK national who wants their pension scheme to be potentially able to purchase overseas property.

-         Any UK national who is moving overseas to live in a country whose pension rules are restrictive (i.e. France) and where they would be forced to purchase an annuity they do not necessarily want (most European States).

-         Those who wish to preserve their lifetime pension funds for the benefit of their families.

Whoever could be interested should check out the possibilities of transferring their accumulated pension rights overseas as soon as possible. Not in the least because of the potential risk that the UK government could change or amend the rules, resulting in a missed opportunity.

Source: Private Portfolio Services Offshore