PROPERTY BANGKOK REPORT
The housing situation in Thailand is looking bleak for homeowners who are paying mortgages off. More jobs are going and unemployment is starting to increase. The government has helped the workers by their 200baht per each social welfare worker fund but this is only a temporary measure. The Red shirts of Thaksin are mobilizing to upset the Country even more so the country could find themselves in more of a mess. Is it a good time to buy---only if you have adequate funds and buy a condo but do your homework first.
IS PROPERTY STILL A GOOD INVESTMENT IN BANGKOK AND THAILAND?
Developers in good financial health
The Nation March 18, 2009
Listed firms 'learnt from the financial crisis of 1997' Most of Thailand's bigger property developers, who are listed on the Stock Exchange of Thailand, have debt-to-equity ratios lower than 2:1, showing that they remain financially healthy despite the economic downturn. A survey by The Nation has compared figures filed by 25 listed property companies for 2008 with those they filed for 2007. Fifteen of the 25 reported a debt-to-equity ratio at the end of 2008 that was lower than 1:1. Another nine firms reported debt-to-equity ratios higher than 1:1 but still lower than 2:1.
Areeya Property recorded the highest debt-to-equity ratio of 2.33:1, or up 7.87 per cent from the figures of 2.16:1 at the end of 2007 (see table).
The chairman of international law firm Baker & McKenzie (Bangkok), Kittipong Urapeepatanapong, said the financial results of Thailand's property firms showed a healthier status than 11 years ago, when they faced the 1997 financial crisis. Most of them learnt from that crisis to manage their cash flow and debt. As a result, most of them now have the financial good health to see them through the new economic crisis.
Land & Houses' senior executive vice president Adisorn Thananun-narapool said his company managed its cash and debt to maintain a debt-to-equity ratio below 1:1 because that status gave the company sufficient flexibility to endure a financial crunch. The company's debt-to-equity ratio is now only 0.62:1, and although that is about 6.89 per cent higher than the ratio of 0.58:1 at the end of 2007, it is still lower than the industrial standard of 1:1, he said. Land & Houses also tries to manage its inventory and cash flow so that it has enough cash for annual investments rather than borrowing from banks or issuing debentures, and this policy has maintained a debt-to-equity ratio lower than 1:1 since the 1997 financial crisis, he said.
LPN Development's managing director Opas Sripayak, whose company reported a debt-to-equity ratio of 0.58:1 at the end of 2008, said the company's management had learnt from the 1997 crash. At that time LPN Development was burdened with a debt-to-equity ratio of more than 3:1. So it has learnt to manage its total debt to maintain a debt-to-equity ratio lower than 1:1. To achieve this, it spends its own cash rather than borrowing from banks, and when it does need a project loan from the bank, it speeds up repayments when the project is complete to hold its debt-to-equity ratio lower than 1:1. That is better than the industrial standard, he said. LPN Development believes the economic downturn will not have a serious impact on its financial results this year. Although its presales may be lower than those at the start of last year, its revenue and financial status continues to be strong enough to sail through the crisis, Opas said. Preuksa Real Estate's chief executive and managing director Thongma Vijitpongpun said his company had strict management policies concerning the use of its own cash rather than borrowing from banks. "We speed up construction and deliver to our customers within 120 days after they buy from our projects. That speeds up our cash receipts so that we can invest our own cash and borrow less money from the bank," he said.
.LAND AREAS: 1 rai = 4 ngarn = 400 wah2 = 1600 m2; 1 talang wah = wah2 = 4 m2; 1 acre = 2.53 rai & 1 ha = 6.25 rai
To date foreigners may own
- a unit in a registered Condominium
- a building (as distinct from its land)
- a registered leasehold of up to 30 years for all types of titled land (and/or buildings).
- a company can purchase land and buildings only.
- more than 49% of a condominium unless in Company form.If BOI status different
- foreigners can own land being not over 49% in a proper Business orientated company but cannot secure a mortgage. Under BOI can buy.
- if you invest 40m baht you can buy 1 Rai of land in Thailand outright
A 30-year lease can be a good idea with right to renewal to a freehold purchase, or a Thai company (7 PARTNERS) can be established with Thai majority shareholders. Foreigners only own 49% shares in a company but there are restrictions and rules to this as you must have a business running and audited. The other way is to lease for 30 years with R of R or to use an Usufract or superficies to assist you. We can assist you to make sure your company is safeguarded. Remember if you need advice ask us.
Beware as its not the first time when foreign Business partners have been cheated by Thai partners. It has happened a lot. Never have a limited Partnership in Thailand and make sure the Lawyer you use is straight and unbiased towards you? Go to www.chiangmailaw.com for any help or www.thaiexpatlaw.com
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WHEN TO PAY FOR YOUR PROPERTY
1/. Never pay deposit or booking fee over the Internet. See what you buy first
2/. Look at progress payment reports when, & how much
3/. Check the builder before you sign
4/. Talk to neighbours & others about the Moo Baan or buildings.
5/. Have a person on site to inspect interim work for you
6/. Do not be bullied into progress payments before work completed. If so then some middle man is getting his cut.
7/. When in doubt ask. Seek advice
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- We work for you (Both Thai & foreign consultants )
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- Because you have the benefit of foreign help with our Thai lawyers and expat consultants
If you have a property to rent, sell or lease in Thailand then WRITE TO US as we can advertise for you in our hardcopy news in Chiangmai . BANGKOK REAL ESTATE Please go to : www.bangkokrealty.biz