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I traveled recently to Southeast Asia to attend a real estate conference. Real estate brokers and developers from all over the world attended the meeting of FIABCI in Bangkok. Some of our topics of discussion included "Mega changes in the Worldwide Real Estate market in 2020", "Differences and similarities in Professional Practices", "Property Investment after Tsunamis" and the "Impact of Petroleum Costs and Energy Prices on Real Estate".
In Bangkok, Thailand there are newly built homes in private gated communities owned by nationals and expats, alike. These luxury homes include marble and granite finishes as well as a swimming pool, fountains, central air conditioning and large closets and bathrooms. The prices run from $200US a foot to $250US. Starting prices are from $875,0000US to over $3,000,000USD.
For those who can’t afford this price home, there are a number of condos and of particular interest are those being built in the seaside resort of Pattaya. Pattaya was until recently was more of a commercial town than a resort. It has a larger population than its more expensive neighbor, Phuket. A group of European managers with Raimon Development are overseeing construction of contemporary designed condominium towers overlooking the beautiful beach of Pattaya. Pattaya is now is the nearest major tourist destination to Bangkok.
Buyers have quickly responded to the condominiums being offered. A number of towers have been sold out in the pre-construction phase for delivery next year and the following. One can purchase a studio, one bedroom or two or three bedrooms unit. The look is modern with a use of local stone and exotic hardwoods. Prices here are competitive. You can purchase a unit for $500,000US for a two bedroom on a lower floor overlooking the pool with a view of the ocean. Your choice of a spectacular penthouse can cost you $3,000,000USD, pre-completion.
Homes and condos are designed following rules for good feng shui. An architect would not think of designing a property without this element included in his decision making process. A developer would not be able to sell his national clientele a property without providing good feng shui in the design of the home, as well as the design of the common areas.
International and national buyers have a choice of paying cash or obtaining mortgages with rates under 9%. Foreigner buyers have to meet certain criteria to purchase homes in Thailand.
Why are foreigners considering Thailand to retire? According to James Batt, a local developer, retirees can afford a completely new lifestyle for a fraction of what it would cost in most developed countries. If a foreign community additionally provides a service-minded population and good infrastructure, there are more compelling reasons to select a retirement home away from your country of origin.
In Thailand, research indicates that as of 2005, 48% of the retirees buying in the resorts of Pattaya and Phuket are over 50 years old. The majority of buyers are from Europe, especially the UK, Scandinavian countries, and the US.
The cost of living in Thailand is 1/3 of the cost in major European countries. Mercer HR Consulting’s "Cost of Living" survey ranks Bangkok as the 125th most expensive city in the world out of a total of 144 cities.
The country is a democracy under a constitutional monarchy with an elected government now in its second four-year term. Thailand is considered generally a safe country, with security as a priority.
Thailand, in addition to its natural beauty and climate, has international hospitals under foreign management, international schools, world-class golf courses, huge shopping complexes, and many entertainment and recreational areas.
Large communities of foreigners are scattered around Thailand’s beaches and highland cities, due in part to the warm tropical weather, with temperatures for most of year at 25-35 degrees Celsius.
What are the difficulties of retiring in Thailand?
With the influx of foreign retirees, there will be a growing demand for retirement properties. Some regulations will need to be improved including visa procedures, property ownership and financing laws. To currently apply for a retirement visa, a foreign individual must be over 50 years old. In addition, he has to transfer $20,000US to a local bank account or provide an income certificate guaranteeing income of not less than $1,625US per month.
Ownership laws are a consideration, as well. Presently, foreigners are not allowed to hold title to land alone. Foreign ownership in condominium projects is restricted to 49% of the total saleable area. To get around this requirement, some overseas buyers purchase property via a Thai holding company structure. This holding company structure was being closely examined, however, by the government when I was in the country in May, 2006.
Restrictions exist regarding the financing of properties in Thailand by overseas buyers. Wire transfers to pay mortgages must be in foreign currency through a local bank account. Thai commercial banks are not allowed to grant loans directly to foreigners, although Bangkok Bank’s Singapore branch has now begun issuing mortgages to foreigners in overseas currencies.
Thailand is known as the "Land of Smiles", for its hospitality and service-minded people. The Tourism authority of Thailand uses these features strongly in their advertising campaigns.
Currently retirees are a large demographic group influencing developers in Thailand to build to their needs. There are now hotel managed properties with nursing services and planned activities, as well as world class golf courses. Full service management companies can now not only maintain the property, but also organize activities and provide medical care.
Of course, one has to think about weather patterns as the whole is experiencing changes in climate. The Thai National Disaster Warning Center works closely with warning centers in Hawaii and Japan through their vast network of medical communication links, radio, television, SMS text message facilities and warning towers. Three warning towers have already been installed in Patong Beach since the 2004 tsunami. Each one covers a radius of about 1 km. 15 other towers will be installed in the coming months.
The Island of Phuket received 3.47 million passengers in 2005. The west coast is the most developed side of the island, with access to the white-sand beaches of the Andaman Sea. Most branded hotels are located nearby. Phuket is the most famous part of Thailand and has long attracted celebrities who have bought homes on this island.
The east coast of Phuket Island has recently become an alternative, offering more affordable prices. Despite the lack of beach frontages, part of the west coast features a nice sea view and has easy access to the airport, international schools, hospitals, golf courses and retail facilities. The west coast is expected, however to remain the area of choice for foreign communities and continue to bring a premium in property purchase prices.
The influence in Phuket of world-class architects, designers, builders and professional service companies is ensuring smoother sales. These professional services have boosted the Phuket real estate market to international levels, leaving Bali as the only resort rival in the region.
What strongly attracts foreigner buyers to these locations in Southeast Asia? My observation is that American, Canadian and European buyers want a beach/ocean/warm climate combination in a country, which is friendly to them. They also want a good quality of life at a lesser cost of living.
Mexico is also an attraction to these same vacation buyers and retirees. The decisions these buyers make of where to buy include: distance to the area, safety and stability of the country, and value for their money. Mexico has the closeness to the rest of North American as well as beautiful beaches and a great climate. It will continue to attract second home buyers who are not retirees yet. Those who are retired and don’t need to be close to the US or Canada, can now look at Thailand as an option for a home.
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