Global Direct Real Estate Investment Likely To Be Down By 30% In 2008

After a record year in 2007 for direct real estate investment globally, with volumes up 8% every year to US$759 billion, Jones Lang LaSalle has observed on the stances for 2008 in its latest Global Real Estate Capital report. The firm estimates global investment market volumes for 2008 to be low by 30% on 2007. The Americas and European investment markets will definitely see a solid decline in full year volumes and, though Asia may be more flexible, volumes will not attain the heights of 2007.

Decreased debt accessibility and investor confidence would continue for much of the first half of 2008 as the impact of the debt squeeze keeps on to flow through markets, and central bankers and financiers work to alleviate and encourage the debt markets. The circumstances are being aggravated by agitation about the global economy, especially about major economies like the US, the UK and Japan.

Jones Lang LaSalle sees several factors that will hamper volumes this year; consumers and sellers adopting ‘wait and see’ policies; prices having sharp in 2007 in a lot of major markets; a misalignment between consumers and sellers’ price prospects; decreased accessibility of debt, tougher lending decisive factor and improved debt costs; decreased enthusiasm and ability to transact large lots sizes, a narrower range of investors; and more demanding due conscientiousness which leads to longer transaction processes.

Mr Horrell notes, “Though, we do not look forward to a planned and intended withdrawal of capital from real estate in 2008, or investors to considerably adjust their shares to the asset class. Forecasts for 2008 continue to be positive and the long-term trends in real estate, like the growing reliability of real estate as an investible asset class, improving precision, urbanization, and limited supply, continue to be encouraging drivers.”

At the same time as domestic investment stayed somewhat around US$400 billion internationally in 2007, close to 2006 volumes, cross border investment raised by US$58 billion to $357 billion in 2007 and of that, inter-regional investment ended up as US$242 billion.

BAHT Strength: Allusions for Real Estate Market

The fast increase in the US dollar-Thai baht exchange rate has mostly been considered as limitation of the US dollar around the globe, and in recent times by continued inflow of foreign capital to Thailand, mainly by means of the stock market. Thai baht power has not only turned out to be a major fear for exporters, although also has allusions for Thailand’s real estate sectors.

At the same time as some economists support the government to decrease interest rates more in effort to restrain the baht strength, low interest rates would facilitate property developers held back with borrowings. They would also do good to the residential sectors as credit for home purchases will be inexpensive for buyers. Though, we hope that the impact of the strong Baht would be more depressing than optimistic on the real estate sector.

With domestic utilization, investment and government expenditure slowing in these time of political turmoil, growth of the Thai economy has basically been determined by exports. As conditions for domestic factors are likely to get better if political issues are resolved over the medium term, the near term position continues to be damaged by the risk the strong baht creates to the export sector.

The industrial property sector is probably the sector most depressingly impacted by the strengthening of the Thai baht. Regardless of high capacity consumption rates, manufacturers, mainly those in the export sector, come out reluctant to invest further at this time, in part because of apprehensions that further approval of the currency will break their competitiveness in global markets.

Besides manufacturing, the stronger Thai baht has reduced the pleasant appearance of residential and resort real estate in Thailand. A lot of of these properties are targeted at foreigners either residing in Thailand as a second or retirement home, or for vacation intentions. These overseas buyers have been getting a smaller amount for their dollar as the domestic currency has strengthened.

The similar trend applies to real estate from a broader investment viewpoint. Although Thai properties still appears cheap compared with similar product in several other markets around the Asian Pacific region, the prices have increased considerably when quoted in US dollars.

If foreign investors make a decision to get hold of real estate assets in Thailand now, they may have to pay around 8% more, comparing to the beginning of 2008, due the baht positive reception.

Thailand Should Take Advantage from the Projects

In this age of globalization, the partition between East and West appears to have become hazy. However things are still done in a different way in the two halves of the world, and this definitely applies to property growth. In the UK, for example, some perceptions unknown to Thailand's market could be very welcome.

For example, says Joel Feldman, managing director of Akando Co Ltd, why shouldn't developers be grateful to make their projects promote the wider society?

Akando is constructing 275 out of 700 flats at FP Condominium in Lat Phrao Soi 48 for the UK-based Lizmans Property Fund. And, in spite of the disagreement with his own financial interest, he would prefer to observe such developments adding significance to their cities.

"Honestly, that is what the administration should make certain. It shouldn't be about trying to satisfy developers and to let them make their earnings. If they can't make their earnings then they don't do it,'' he says.

In London a developer cannot get planning permission for any project over 14 units without a transaction in social housing for key workers like firefighters, police officers, schoolteachers and nurses. For the reason that workers in these professions cannot have enough money for the city's property prices, the British government has gratified developers to participate in a subsidized scheme.

''The key worker is permitted to pay money for a shared ownership with the government having 50% of it. It's a lower price although it's still done to the necessary quality and conditions,'' he says.

Mr Feldman also sees a useful comparison with the UK in the advancement of the Thames and the Chao Phraya rivers. ''If you stare at the Docklands, South Bank and all the way up the [Thames] river this time they have made an astonishing renewal,'' he says.

Unsurprisingly, Mr Feldman is also eager on protecting old buildings. In his outlook, preservation orders should be extended to take in the modest buildings that uphold Thai traditions. Mr Feldman adds that he sees no cause why buildings in Thailand should be estimated to last only 15-20 years.

Ascon Is All Set For B16bn Dubai Deal

Ascon Construction Plc, is all set to win its first overseas project by finalizing a 16-billion-baht deal to build 12-storey residential towers in Dubai. Chief executive Pattanapong Tanumathaya said the construction contract was likely to be awarded by September. Starting in October, the construction is due to be finished in 30 months.

The agreement, part of a 100-billion-baht complex, is for the building of 20 towers in the first part of the entire project, which consist of approximately 200 buildings, Mr Pattanapong said.

Ascon has set up a completely owned branch in Dubai to submit bid for the project. The subordinate will also look for other construction projects in close by regions like Abu Dhabi, he said. Nearly 5,000 construction workers are being employed for the Dubai project, mostly from India, Pakistan, and Nepal, he added. ''We have put various efforts into building our report overseas to reduce risks of focused only on local works as in the past,'' he said.

Distant from the Middle East, Ascon has also searched for business prospects in neighboring countries like Cambodia and Vietnam.

Mr Pattanapong said the company had also been discussing with a budding local partner in Abu Dhabi, which had showed its interest by means of a letter of plan to get a stake of Ascon, a move the company welcomed.

The Thai company has as a result chosen a consultant to carry out due conscientiousness on its share value.

''The new partner would help fortify our financial status by bringing in fresh funds to be utilized as working capital for future projects,'' he said.

In the neighborhood, Ascon is looking forward to bidding for the construction indentures of the government's planned nine mass-transit rail lines in Greater Bangkok. The contractor has joined the bidding in August for a contract worth 6.5 billion baht to construct a depot for the Purple Line.

In 2009, the government is likely to call bids for five other lines, all of which Ascon would join.

Similar to other construction companies, Ascon has been badly affected by sharp hikes of building material prices, mainly steel, in addition to the increases of least labour wages in June.

Thailand's Property Market Experiences More Concern Although Basics Remain Strong

Till now, the fallout from the global sub-prime emergency has had a large impact on the Thailand's property market. Professional demand has hindered well, at the same time as capital markets and investment volumes have been changed a lot.

Occupier demand is persistent, with some concern entering

Occupier demand hindered well in the region’s office markets in the first quarter of 2008. Office renter's have a new spotlight on costs, although it is still to be imitated in headcount declinations. Together with nominal new supply in most markets in Thailand, vacancy levels in the office sector have stayed at low, time and again sub-frictional, levels. Rentals have reached new elevated levels in key financial markets.

Till now, there has been a varied reaction in the office markets most susceptible to the sub-prime fallout. A sharp declination in rental growth is in progress; Many places are also experiencing the beginnings of a reduction in pre-let rates, at the same time as a few places has begun to support itself for decreasing demand along with its fundamental financial services tenants. Steady with the final inclination, the devolution from costly CBD locations to cheaper peripheral sites is key to the real estate policies of numerous corporations. For instance, leasing activity in Bangkok was determined in secondary locations, reflecting renters increasing understanding on the subject of occupancy costs.

Expediency presented by the Mass Transit BTS and MRT lines in Bangkok are drawing corporations to set in fringe locations where facilities and relieve of access remain excellent although occupational costs can be 30-40% lower than setting in a prime grade CBD building. Back-office functions especially are taking benefit of these cost savings by decentralizing.

Buoyant labour market circumstances and solid domestic spending in the majority of markets keeps on supporting the retail sector transversely all over the region. Likewise, the high-end residential sector has sustained to experience strong leasing and sales activity.

Real Estate Market of Thailand in Ten years

The real estate market of Thailand has shown a strong upturn in the past ten years and as the economy of Thailand was hit by financial crisis in 1998. Whereas property assets have valued from lows posted in the consequences of slump in the late 1990’s, rental and capital values in a number of sectors have by now increased above pre-crisis crests.

The property market of Thailand has gone through a long journey. The industry has seen both the best and the worst, from the superior levels reached in the early 1990’s to the lows suffered following the financial crisis in 1998. Many sectors have by now bounced back to levels never seen earlier.

The impact of economic reduction in 1998 on the property market was ruthless as it happened at a time when lots of real estate sectors were already oversupplied. What made it poorer was that fresh projects continued to be developed in those days motivated in large part by assumption rather than to accomplish real end user demand or meet long-term investor necessities.

Compounding a sharp reduction in demand (e.g., the shutting down of 56 finance companies), a profusion of office space supply further spoiled market circumstances. In spite of the postponement of a lot of large-scale office developments, over 270,000 sqm of new-fangled office space entered the market in 1999, pushing the average vacancy rate to about 40%. Consequently, rentals keep on sliding.

On the other hand, it was not until the end of 2001 that office rents decreased at an average rate of THB 376/sqm/month. Office rents lastly began getting better in 2002 and are now averaging THB 666/sqm/month, or 2.5% above the maximum level in 1991. The overall common vacancy rate for Bangkok office buildings is now about 13%.

The Bangkok retail market was among the real estate sectors toughest hit by the economic crisis. Market circumstances in the sector critically declined in 1998 as buyer spending and demand dropped, and leasing activity withered. The decrease in demand for retail space in 1998 resulted in elevated vacancies at Bangkok’s retail centers.

Older Office Buildings get renovated

As office rents continue to rise, there is a growing tendency of corporate occupiers searching for superior new buildings in “fringe” places with outstanding infrastructure support. Though, occupiers who like better prime locations in the CBD region are forced to consider secondary grade office buildings in prime locations that present more reasonably priced rents as alternative. Taking in this tendency, a few landlords with older buildings have carried out renovation of their buildings in efforts to make certain highest rental rates. Others jump on the bandwagon to keep up competitiveness.

There are three older office buildings with more than 63,000 sqm of combined space whose renovation was or will be finished in 2008, and more buildings are likely to take in renovation in the second half of 2008.

Renovation is a return-maximizing policy that landlords of older buildings can employ in current market circumstances. With strong ongoing levels of occupier demand and the need of new Grade A supply pushing rental rates upwards, landlords with a few well positioned buildings may completely renovate and re-release their buildings as re-branded properties to the market to increase competitiveness and maximize rentals.

Companies whose office lease will terminate in a little while may be surprised by the latest rental rates asked by the landlords when discussing lease renewal. At the same time as the usual office lease term in Bangkok is 3 years, the average rental of office space has augmented by 50% in the last three years. Those taking up space in Grade A buildings in the CBD area may bear more as rentals are quite elevated than secondary Grade buildings. There is no uncertainty that an escalating number of companies are searching new Grade A buildings in fringe places or secondary grade buildings in the CBD as alternatives to keep away from higher possession cost.

After renovation, a few secondary buildings in well positioned areas could get noteworthy rental growth rates ranging between 20% - 30%, depending on the value of renovation. Though, the new rentals would still be very aggressive compared to Grade A buildings in the same locality and permit a striking investment return from renovation.

Renovation could also be a nice approach for investors looking to invest in the Bangkok office market, where Grade A buildings obtainable for sales are restricted.

Shinawatra Family Plans to build up a Luxury Project

The Shinawatra family plans to build up a luxury apartment project consisting of a hotel, condominium and villas for sale at $2-3 million each on a 160-rai plot on Mai Khao beach in Phuket in 2009. As per an industry source, the project was not associated to the family's property arm, SET-listed SC Asset Corporation Plc.

''If SC were to build up resort in tourist hotspots outside Bangkok, it would take a few years, not in 2009. This may be the family's personal investment,'' said SC vice-president Kree Dejchai.

The real estate consultant Colliers International expected the project would need an investment of minimum 10 billion baht, not including land cost. The market price for land plots on Mai Khao beach is approximately 10-12 million baht per rai.

Mai Khao is rising as a striking area to local and overseas investors because land prices are lesser than for other beachfront areas on the island. Patong beach, for instance, can cost 30-40 million baht per rai and accessible plots for new development are limited.

Mai Khao is just a 10-minute drive from the airport and the majority of the land is still detained by local people who do not want to hang around for price approval.

In the last decade, there was no fresh development on Mai Khao apart fromthat of the JW Marriott Hotel. Minor International Plc, which have the JW Marriott, plans to launch the luxury villa Anantara at prices of 20,000 baht per night in September 2008. By the end of 2008, it will build up a four-storey building housing a Villa Market supermarket and high-end restaurants to assist its guests.

The family of ex- Prime Minister Thaksin Shinawatra, purchased the Phuket plots with the help of its representatives late in 2007.

A Dubai-based group also paid out US$60 million to get 180 rai on Mai Khao from Thai owners and it plans to spend another $250 million to build up a Venice-style hotel. Additionally, a Hong Hong-based investor is acquiring 380 rai, and a joint project between local and foreign investors is taking another 100 rai to build up a 5-6 star hotel and luxury villas.

SC Asset, in the meantime, will be sticking to its foundation business of mid-market residential development in Bangkok for the time being, as per Mr Kree.

Property prices rising in Rayong Market area of Thailand

For the time being, the silent seaside town of Rayong is most likely known as much, possibly not always reasonably, for pollution as it is for property. Though, its thriving real estate market is starting to attract investors' attention.

Over the past three years, takings have definitely been inspiring. In older buildings, costs for a few condo units initially attained in non-performing asset sales have by now doubled.

A 36 sq m studio unit at the towering V.I.P. Condominium positioned at Mae Ram Phueng Beach that was promoted in 2005 for 500,000 baht is now costing 900,000 baht. After renovation, a 70 sq m one-bedroom unit has increased from one million to 2.5 million baht.

One of the champions in this movement is Jens Brochner Nielsen, CEO of D2 Real Estate, who says demand for this type of properties now far exceeding supply.

''Over the past two years we have sold around 120 units in the V.I.P. Condominium, and there is nothing for sale at this time,'' he said. ''It's correct that owners will put up these condominiums again for sale in the resale market however there are no NPLs anymore.''

He says the development's reputation replicates how far the well-liked observation of Rayong varies from the truth. In his analysis, pollution from the Map Ta Phut industrial estate is less persistent than normally assumed. The region's eastern side is generally agricultural and "very clean''.

Even the seabed of Mae Ram Phueng Beach, where plenty of high-rise condominiums are situated, is confined and dirty water cannot be released there.

However also key to Rayong's demand is a cost point that remains low in comparison to other resorts _ in spite of the rises of the past three years.

''Costs have certainly increased in Rayong although they have not reached the top so far and even if we go into a slump _ when costs generally decreases in Thailand _ in Rayong they will remain steady,'' said Mr Nielsen.

Owners Cautious Of Lowering Costs for Properties

A broadened bid-ask spread has came out in major real estate markets across Asia, because property owners, hold up by solid market fundamentals, remain unwilling to lower their asking rates, as per CB Richard Ellis' Asia Pacific Investment Market Report for the second quarter of 2008.

Even though Asian markets have been pretentious by slowing economic growth and disturbed capital markets, economically sound institutional investors, together with pension and independent wealth funds, stay active across major cities in Asia, and direct commercial property transactions in Asia were up somewhat year on year in the first half of 2008, as per the company.

Numerous large transactions were accomplished in Thailand, with the center of attention squarely on hospitality properties and the countries major resort markets, where investment response remained healthy on the back of continued growth in the hospitality and tourism sector. Many hotels in Phuket changed hands, with a few to be modernized and rebranded. Land transactions incorporated the sale of a freehold plot for about Bt1 billion on Koh Siray, and this trend will keep on like this because a number of investors realize large capital gains from holding properties for the past 2-3 years.

Investment movement in the Bangkok property market, in contrast, was highlighted by getting hold of a plot of land in Sathorn for Bt1.4 billion by AIA, representing that investors retain buoyancy in the sector's prediction. Other prominent transactions in the capital incorporated the sale of many hotels and commercial properties.

Regionally, Japan persistently attracts most of the investor's interest, accounting for more than 30 % of Asia's biggest investment transactions. Banks and financial institutions have been cutting lending activities in 2008 in Japan. Extremely leveraged investors as a result sought to decrease liability by bringing assets to the market and this resulted in a recosting of residential, suburban retail and fringe offices properties. Though, asset pricing for the best situated and utmost quality properties remained comparatively firm.

Global Economic Slowdown Affecting Commercial Real Estate In Thailand

Regardless of the constant sub-prime crisis in the US real estate market, the straight impact on Thailand’s economy and real estate markets has been negligible. On the other hand, apprehensions are increasing as few economists consider that the slump in the US economy has not yet reached the base, and the degree of its impact is yet to be discovered.

These concerns are replicated by a more careful business approach implemented by both local and international companies in Thailand. Especially, large international companies have turn out to be extremely sensitive about possession costs. Despite the fact that the leasing activity in Bangkok in the first quarter of 2008 was upbeat, most of leasing transactions were intense in buildings offering monthly rentals less than THB 500 per sqm per month, at the same time as the average rental of Grade A space in the central business district (CBD) is more than THB 650 per sqm.

Government policies have not showed effect till this time
In view of the fact that the coalition government was formed, a number of economic incentive policies have been introduced. A few of these policies are straightforwardly encouraging to the property sector, like the abolition of the 30% reserve on foreign capital investments, approvals of mass transit projects and property stimulus measures concentrating on associated tax reduction on property sales transactions.

Though, effects from the majority of these policies have not yet been appreciated. There may be some time delays between the execution of the authentic policies and their effect on the economy and the property market. As a result, we suppose that the impact will ultimately be seen over the next quarters.

In addition to this, the government should thrive to reduce impacts from the fuel price crisis and deal with risks from the global economic recession; we can look forward to considerable improvement of the demand in the property market in the second half of 2008.

Demand Base of Foreign Home- Buyers Increasing

The high-end and luxury condominium market in Phuket reported high sales in the tourism season in 2008. At the same time as buyers from UK, US and the Scandinavian nations keep on to produce the main demand, the demand base has been extended by the improved concern of buyers from Russian, the Middle Eastern and Asian countries.

A study has been conducted recently of the high-end and luxury condominium market in Phuket of prices ranging between THB 92,000 to THB 128,000 per sqm. The study paid attention on the sales activity over the peak tourism season i.e. between November 2007 and March 2008.

Findings from the study illustrate that the supply of high-end and luxury condominiums augmented by 13% in terms of the number of units being promoted to just more than 700 for the peak season. Projects being promoted in the high-end and luxury segment are normally small in scale in comparison to the broader market, with an average of 38 units per development or segment. Individual projects present as less as 12 and as many as 100 units under master plans.

Out of the promoted units, around 56% had been sold by the end of the peak season, with foreign buyers making the most of the purchases. Contrasting the urban centre of Bangkok where Thais corresponds to a considerable portion of demand in most condominium projects, the resort market of Phuket draws mainly foreign buyers, who benefit condominium units on both freehold and leasehold terms. At the same time as usually the bulk of these foreigners would be British, American or Scandinavian nationals, wealthy individuals from China, Russia, India, Korea and the Middle Eastern countries are representing a rising source of command. This tendency is reflective of the increase in the number of tourists from these markets.

Approximately 73% of the units sold were situated in Phuket’s West. In the same time, rates per square meter in this area increased by 5.8% on average before the peak season.

Outlook for the Phuket high-end and luxury condominium market continues to be promising. The increasing reputation of Phuket as one of the world’s top resort destinations will keep on drawing buyers from all over the world searching for a holiday or retirement home overseas.

Bangkok Property Market Expects Impact of Incentive Measures

Regardless of the successful formation of the new government and the launch of policies to improve the Thai economy, peripheral factors like increasing fuel prices and the global economic delay continue to surpass economic forecasts in Thailand. Emotions in the property market have afterward remained depressing with the deliberate growth of demand in major property sectors.

There was a probability that the Thai economy would develop following the formation of the new government. The same anticipation was set in the property sector where demand depends mostly on economic conditions. Although the government and some economic houses adjusted the economic growth protrusion for Thailand growing, the agreement is that the Thai economy improved at a moderately slow rate in the first quarter of 2008. In addition, it has also been depressingly exaggerated by a number of external factors -- be it the fuel price crisis or apprehensions over the global economic slowdown. These incidences have a negative attitude on the demand in the property market, both in the residential and commercial segments.

Fuel price hike continues to hit real estate

The continued hike in fuel prices has persistently hit the property sector in various ways. On a bigger scale, it is motivating the cost of living in Thailand to increase considerably. This will certainly affect demand in the residential sector as consumer spending power is concentrated and buyers are more careful to be dedicated to loan burdens.

On a smaller scale, the fuel price hike has increased construction costs. It is expected that construction costs in Thailand increased by 15% on average in 2007, due to increased costs of construction materials because of the fuel price hike.

An instant impact of the increasing development cost has been considered in the residential sector. For instance, the average selling prices of condominiums in recently launched projects in central Bangkok increased by 15% from the same period of 2007.

Medium Priced Condominium Sales in Bangkok Continues To Be Steady

While the rate of fresh launches of high-end condominium market has decreased, extensions of the BTS and MRT have driven new development in the middle and upper-middle parts in central Bangkok. Significance of the inner north area of Bangkok has heated up with huge increase of both supply and demand, as per the international real estate services firm, Jones Lang LaSalle.

Jones Lang LaSalle’s research intimates that most recent units launched in Bangkok since 2007 are located in the middle and upper-middle parts, consisting of comparatively smaller unit sizes -- studios and one-bedroom units. In 2007 alone, 11,480 units were launched in fresh projects. Approximately 50% of the fresh units launched are situated in the inner north area of Bangkok.

The preface of new supply in Bangkok has been driven by probable demand for medium priced condominiums in closeness to bunch transportation access. Actually, few projects in high-demand areas like Phaholyothin and Lad Prao were supposedly sold out within a week of launch. The Phaholyothin area has turn out to be one of the most well-liked areas, given its suitable way in to the BTS sky train and more plentiful facilities in the area.

In the luxury and high-end areas, developers have turn out to be more conventional, as proved by the decreased growth rate of fresh launches. The number of fresh units launched in the luxury and high-end areas in 2007 goes down to 40% from 2006. This decrease reflects the shortage of probable sites suitable for high-end condominium developments and developers.

Determined by increased sales in the middle and upper-middle segments, the sales rate for marketed projects is now approximately 80%, which is 70% in early 2007. The total number of units sold in 2007 was 12,300, exceeding the number of fresh units launched during that year.

Bangkok Property Market Expects Impact of Incentive Measures

Regardless of the successful formation of the new government and the launch of policies to improve the Thai economy, peripheral factors like increasing fuel prices and the global economic delay continue to surpass economic forecasts in Thailand. Emotions in the property market have afterward remained depressing with the deliberate growth of demand in major property sectors.

There was a probability that the Thai economy would develop following the formation of the new government. The same anticipation was set in the property sector where demand depends mostly on economic conditions. Although the government and some economic houses adjusted the economic growth protrusion for Thailand growing, the agreement is that the Thai economy improved at a moderately slow rate in the first quarter of 2008. In addition, it has also been depressingly exaggerated by a number of external factors -- be it the fuel price crisis or apprehensions over the global economic slowdown. These incidences have a negative attitude on the demand in the property market, both in the residential and commercial segments.

Fuel price hike continues to hit real estate

The continued hike in fuel prices has persistently hit the property sector in various ways. On a bigger scale, it is motivating the cost of living in Thailand to increase considerably. This will certainly affect demand in the residential sector as consumer spending power is concentrated and buyers are more careful to be dedicated to loan burdens.

On a smaller scale, the fuel price hike has increased construction costs. It is expected that construction costs in Thailand increased by 15% on average in 2007, due to increased costs of construction materials because of the fuel price hike.

An instant impact of the increasing development cost has been considered in the residential sector. For instance, the average selling prices of condominiums in recently launched projects in central Bangkok increased by 15% from the same period of 2007.

Land Ownership Titles in Thailand

There are several different kinds of land ownership in Thailand, the bulk part of which do not permit for the officially authorized right to build any apartment or residence on that land. We only advise that you should only think about 3 types of land ownership documents;

NOR SOR 3: This is the lowest land ownership title which permits for lawfully building a property and an instrument verifying the use of land issued by the government to the owner of land not a possessory title. This land title can be utilized as a deed or to use the benefit of the land as a proprietor. Nor Sor 3 is issued for a certain plots of land and is not related to other land plots. This creates troubles in authenticating the land area. There are no indicators to show the boundaries of the land.

NOR SOR 3 GOR: Is a legal land title with the similar legal basis as Nor. Sor. 3. The variation being that Nor. Sor. 3 Gor is set by means of an in-flight survey to set the points and the land area. It is feasible to authenticate a nearby land area. It always uses the identical scale of 1:5000. There is no requirement to publish any legal acts, and it is feasible to partition (divide) the land into minor plots.


CHANOTE (Freehold Title): A Chanote is an official document for possession of land. A person having their name shown on the legal document has the officially authorized right to the land, and can use it as proof to prove the right to government authorities. The legal document has been issued by means of GPS to set the area and boundaries of the land, which is a perfect technique. Any officially authorized acts may be done right away, as per the right of ownership. Land partition of above 9 plots must be carried out as per the Land Allotment Law, Section 286. This is the most protected kind of land title and is greatly recommended.

Property Ownership in Thailand

In Thailand there are basically two types of Property ownerships. One is Individual property ownership and second is corporate property ownership.

Individual Property Ownership in Thailand
Normally, foreigners may not possess property in Thailand. There are a few exceptions to this law, which are related to condominiums and BOI (Board of Investment) promotions to permit corporate housing in selected areas, dependent on observance with investment terms of the BOI promotion and condominium ownership. There is time and again talk of a few changes in the law which will let foreigners to possess land; it is improbable that this will take place anytime in the near future. The patriotic approach to land possession is so engrained in the law and the Thai culture that is doubtful to overturn. That being said, one former Minister of the Interior said, “I don’t appreciate all this excitement about foreigners possessing Thai land, it is not as if they will take carry the land with them when they leave!”

Lately in 2003 with the beginning of the Elite Card, foreigners who meet the criteria for this card may buy land in some of the specific areas in the country for their own use. The price of an Elite Card is Baht 1 million.

Corporate Ownership of Property
Thai corporate structures are quite comparable to western corporate structures. Thai law gives permission to PLC’s, LLC’s, Limited Partnerships, Ordinary Partnerships, and a range of other types of corporate bodies. Once these are created, they are referred to, in Thai legal terminology, as Juristic Persons.

Juristic Persons in Thailand, which are possessed by a Thai majority, are regarded as in terms of property ownership, to be a Thai person and as a result, may possess property in Thailand. Note that equitable ownership, which Thai law addresses, does not inevitably associate to actual control of the Juristic Person. The most admired form of corporate land ownership is the Limited Liability Company (LLC).

Possession of Land by Foreigners in Thailand is Restricted

Possession of land by foreigners is strictly restricted in the Kingdom of Thailand. That being said, it is not impracticable for a foreigner to attain interest in real estate in Thailand. Foreigners are permitted to buy apartments although should abide by strict rules and fall within some specific conditions. In recent times, Thailand has passed legislation that would let foreigners to buy condominiums. Also through the deliberate use of corporate law, forming corporations to hold title to land is another alternative used by foreigners to hold land titles.

LAND
Under the Land Code of Thailand, a foreigner may possess a land only by desirable quality of a provision of an agreement permitting the person to obtain immovable property. Prior to 1970, Thailand had completed 16 such agreements with countries together with, the U.S.A., England, Germany, France, and Japan. Though, since 1971, foreigners or popular foreign-owned companies have not been capable of possessing land or buildings with land in Thailand.

Though, the Thai Land Code has been afterward modified to let foreigners to buy land for residential purposes since January 19, 2002. The land bought for residential purposes under the modification cannot exceed one rai (just about 1600 sq. meters). The following set of laws and conditions must also be met:

1. Transferring funds more than Baht 40 million to Thailand for investment and maintaining such investment for more than 5 years;

2. You have to get authorization from the Minister of the Ministry of the Interior;

3. The land to be purchased must be positioned in Bangkok Metropolis, Pattaya City, or Tessaban (Municipality), or in the area mentioned as residential zone as per the law of Town and Country Planning and must not be in a military safety zone as per the law of Military Safety Zones;

4. If a foreigner, who is granted authorization to purchase such land, does not make use of the land for residential purposes within 2 years from the date the registration for land attainment is made, the Director General shall have the power to dispose of such land.

Foreigners Buying Condominiums

For foreigners to be suitable to buy a condominium in Thailand they have to make available a proof to the Land Department that the finances in foreign currency have been dispatched from abroad. Devoid of such confirmation the Land Department will not authorize the transfer of possession to the foreign purchaser.

While purchasing a condominium you have to be a little bit careful. You should read the following instructions with awareness and pursue them correctly to make certain that you don't face any problems in the future. The Thai authorities are not flexible on this subject.

Advices to Overseas Condominium Purchasers on Remitting Funds from Abroad

1.Remittances must be sent in just the same name as that on the purchase agreement, i.e. if Alfred Rose is the buyer then the name Alfred Rose must be there on the remittance advice. A. Rose or Rose Enterprises are objectionable.

2. Transfers of funds should be done in foreign currency only and not in Thai currency (Baht), i.e. if you are operational in US Dollars then remit in US Dollars. Never remit in Thai Baht.

3. The bank being paid the amount should be intimated in advance that the transfers will be done and you will have to ask for a transfer certificate to be given away to the Land Department at the time of transfer of the possession.

4. The intention of the remittance should be declared on the remittance advice. It should be written as “For the Purchase of a Condominium”.

5. If the receiving bank is that of the developer or seller just make sure in advance that this bank will provide you with a transfer certificate.

Sales of Condominiums Dependent on Four Types of Taxes

In Thailand, foreigners are allowed to own condominium units with less than 49 % of the total area of a condominium building. On the other hand, overseas buyers are needed to transfer the funds for the procurement from abroad or take out the money from their local nonresident bank account.

Purchasing a condominium may appear comparatively easy. There is generally a cooperative sales agent all set to help in completing the documentation for you to sign on the dotted line. When it comes time to sell, though, it is significant that you prepare yourself with a fundamental understanding of the prices linked with a sale, with the intention that you can take these into concern when agreeing a price.

The sale of a condominium is dependent on four types of taxes and fees that are each paid to the related government office: government transfer fee, specific business tax (SBT), stamp duty and withholding tax. Under the law, only the government transfer fee is shared evenly between the consumer and the seller, and the left over taxes are the liability of the seller.

The computation of the government transfer fee is quite simple, with the amount payable 2 % of government evaluated value irrespective of the genuine selling price.

The SBT is a special tax on a few business transactions. It applies to the sale of a condominium by a person at the rate of 3 % of the government evaluated value or sale earnings, whichever is more. This tax is to be paid if the condominium is sold within one year of purchase if the individual has registered the condominium as his or her official residence in the government household registration system or if the condominium is sold within 5 years of purchase in other cases.

The stamp duty is to be paid to all condominium sales that are not dependent on SBT. The rate is 0.5 % of government evaluated value or the selling price, whichever is more.

Seamico Chief Chaipatr Goes For Investment in Land

Though Seamico Chief Chaipatr Srivisarvacha makes available lots of prospects for consumers to invest in different types of assets, does not have sufficient time to take care of his own finances.

"I'm somewhat a conservative person. I must have given additional time to my own individual finance. But until now, I've given preference to something else," the CEO of Seamico Securities, says.

As a managerial of a securities firm, Chaipatr cannot invest in stocks for the reason that it would infringe the regulation on the subject of conflict of interest. Therefore he invested in something else that would not disobey the regulation and need less consideration than investing in stocks. He invested in land.

"I invested in land just similar to my father. I think they are assets. The cost of land permits us to make long term investment. The cost increases quite high eventually if we stick to the perception of location, location, and location… Population globally increases along with time, and comparatively, the size of obtainable land gets smaller along with time," he said.

One and a half year ago, he invested in a plot of land in Khao Yai in Nakhon Ratchasima at Bt300,000 per rai and lately somebody offered to pay money for this land at Bt1.2 million a rai.

Looking into the usual overall investment case of Asians, land would consist of a major proportion to the side from other assets, together with cash and stocks, he says.

"Land investment is not that conventional as it is dangerous at a definite level. Contrasting stocks, land is not liquid. Although you can utilize it to guarantee with banks for loans," he says.

Chaipatr said he invested in land, especially in land plots that are big in sufficient quantity to commercialize in Bangkok, the provinces, and overseas. One should think about purchasing Bangkok apartments rather than renting them. Once one pays off the credit for apartments or condominiums, one turn out to be the owner and can sell with current rate.

Panichewa Family Investing In B800m Condominium Project

The Panichewa family, the biggest shareholder of Unique Engineering & Construction and the Don Muang Tollway, has collaborated with Singapore-based construction firm TEE Group to invest 800 million baht to build up a condominium project in the Ratchaprarop area.

Chartchai Panichewa, chairman of Chewathai Ltd, said the Singapore partner, which has familiarity in mechanical and engineering construction, would add to the latest property project. "We have no experience but we have resources. The partner can lend a hand to control construction and expenses during unpredicted construction circumstances. With their significant engineering, we can build up the project with viable costs," he said.

The 1 billion-baht Chewathai Ratchaprarop Condominium will be situated on a two-rai site next to Century Park Hotel on Ratchaprarop Road, consisting of 329 units sized between 35 and 300 square meters and priced approximately 70,000 baht per sq m. Construction will begin in November and is planned for completion in 2010.

Mr Chartchai considers these prices are striking as other recently launched condominium projects in the same area were quoted between 80,000 - 90,000 per sq m. "We are latest in the Bangkok property market. We have to utilize low cost to lure buyers,'' he said.

Regardless of an official launch in September, the developer has by now sold 50 - 30 units by Thais and 20 by Singaporeans who saw the project's road show in Singapore. Approximately 100 Singaporean home-buyers on the waiting list would visit the location shortly.

The location is striking as it is around 700 meters from the Airport Link and 600 meters from the Victory Monument BTS station. The company is looking forward to have 50% sales by the end of 2008.

Launched in March of 2008 with registered capital of 100 million baht, Chewathai is 51% detained by Mr Chartchai and the remaining by the listed Singaporean firm. It is preparing to get listed on the Thai stock market in the coming 5 years and Mr Chartchai would lure his family members to invest.

Panichewa Family Investing In B800m Condominium Project

The Panichewa family, the biggest shareholder of Unique Engineering & Construction and the Don Muang Tollway, has collaborated with Singapore-based construction firm TEE Group to invest 800 million baht to build up a condominium project in the Ratchaprarop area.

Chartchai Panichewa, chairman of Chewathai Ltd, said the Singapore partner, which has familiarity in mechanical and engineering construction, would add to the latest property project. "We have no experience but we have resources. The partner can lend a hand to control construction and expenses during unpredicted construction circumstances. With their significant engineering, we can build up the project with viable costs," he said.

The 1 billion-baht Chewathai Ratchaprarop Condominium will be situated on a two-rai site next to Century Park Hotel on Ratchaprarop Road, consisting of 329 units sized between 35 and 300 square meters and priced approximately 70,000 baht per sq m. Construction will begin in November and is planned for completion in 2010.

Mr Chartchai considers these prices are striking as other recently launched condominium projects in the same area were quoted between 80,000 - 90,000 per sq m. "We are latest in the Bangkok property market. We have to utilize low cost to lure buyers,'' he said.

Regardless of an official launch in September, the developer has by now sold 50 - 30 units by Thais and 20 by Singaporeans who saw the project's road show in Singapore. Approximately 100 Singaporean home-buyers on the waiting list would visit the location shortly.

The location is striking as it is around 700 meters from the Airport Link and 600 meters from the Victory Monument BTS station. The company is looking forward to have 50% sales by the end of 2008.

Launched in March of 2008 with registered capital of 100 million baht, Chewathai is 51% detained by Mr Chartchai and the remaining by the listed Singaporean firm. It is preparing to get listed on the Thai stock market in the coming 5 years and Mr Chartchai would lure his family members to invest.

How to Retain a Property's Value in Thailand

In Thailand, the variation between the value of an old property and that of a new one is massive.

In the case of high-end condominiums, older units are usually sold for value less than Bt80,000 per square meter, whereas units at recently launched projects are priced between Bt120,000 - Bt150,000 per square metre, or higher. In spite of the higher costs, home-buyers still choose new units over older ones. From where does this massive difference in costs happen?

One reason is that the plan of latest projects is normally improved than the older ones. Although the most important and repeatedly ignored factor is the maintenance of a property.

Lack of appropriate and regular maintenance can make a building age and lose value rapidly. Maintenance comprises of both day by day and periodic upkeep of a building like servicing of appliances, wiring, pest control, gardening and so on.

You have to take a lot of care while carrying out maintenance work. For instance, using the inappropriate type of cleaner on wood or stone floors can make them stained or even destroy them.

Redecoration of lobbies and common areas, and landscaping should be done in every 7 - 10 years. Maintenance and redecoration work must also be carried out within a unit. That will help you to sell or rent your apartment at a good price.

Recently, luxury condominiums managed by hotel operators received strong sales data regardless of the higher costs as buyers are ready to pay a premium for convenience. Consumers are looking forward to high service-and-management standards that can maintain the value of their properties in the long term.

Currently, common-area fees in high-end condominiums are approximately Bt40 - Bt50 per square metre. The revised Condominium Act clearly describes the common area and the tasks of the juristic person. The resale value of older units should not be lower than the costs of new condominiums. A good illustration is Somkid Gardens, which is nearly 15 years old however is still believed to be among the finest properties and fetches value at par with several new luxury properties.

Strong Demand Helps To Sell 50% of Units at Pattaya Project of Major Development

With strong demand for apartments in Pattaya (Thailand), Major Development has been able to profitably sell 50 % of the units at its luxury condominium project, Reflection Jomtien Beach Pattaya.

This project is of approximately Bt3.3-billion and was launched in the second quarter of 2008 and makes available 330 units. The project targets both local and overseas consumers, Major Development managing director Suriya Poolvoralaks said.

Research by the company revealed that 5 million foreigners visit Pattaya once or more than once every year. There is a strong demand from overseas buyers seeking a second house or a retirement house in Pattaya. This is for the reason that projects in Pattaya gives more amenities and the island is only just an hour-and-half's drive away from Bangkok.

Major Development's project is situated on Jomtien Beach. It mainly has the 55-storey Oceanfront Tower with 102 units and the 42-storey Oceanview Tower with 228 units.

The project makes available six kind of units: one-bedroom units with utilization area between 58 - 60 square meters; two-bedroom units with utilization area between 109 - 110 square meters; two-bedroom duplex with utilization area of 96 square meters; three-bedroom units with utilization area of 205 square meters; three-bedroom duplex with utilization area ranging from 181 - 202 square meters; and, penthouses with utilization area ranging from 179 - 340 square meters.

Prices of the above mentioned units begin from Bt100,000 per square meter. The project is most likely to be completed by 2011. "We think our project will definitely attract home buyers as they can have a beautiful view of the beach from their room and feel close to nature," Suriya said.

Firms Consider Ways to Attract Buyers amid Likely Increase in Interest Rates

With the minor achievement of the government's economic package and a hike in interest rates on mortgage loans expected, developers are considering a change in plan for the second half of 2008.

The trouble of home-buyers will increase around 5-6 % because of increasing rates and elevated apartment prices. This will reduce their interest in property investments in the second half of 2008. Keeping this in mind, developers are trying hard to look for new ways to stir things up on the sales front.

Land and Houses is preparing to stick to its policy of making available apartments at initially predetermined construction prices, in order to attract consumer. It has priced apartments at Bt 3 - 5 million. The developer hopes the low-cost Bangkok apartments and government tax incentives to increase sales and assist the company meet its sales target of Bt21 billion in 2008.

Land and Houses director and senior executive vice president Adisorn Thananun-narapool said elevated inflation and the predictable hike in interest rates were not the only aspects that would lower home-buyers' procurement power. Worsening buyer buoyancy will also play a significant role in keeping them from house hunting, he said.

Asian Property Development plans to decrease sales of condominium projects for which the company has required environmental-impact-assessment licenses. This is for the reason that condominiums take longer time to build. "This approach will protect consumers if the projects do not pass the assessment or there is requirement for any modification in building plans," a company source said. The developer is preparing to launch 10 projects worth a combined Bt18 billion in 2008, among which five worth Bt10 billion are condominiums along the Skytrain.

Preuksa Real Estate is concentrating on projects of Bangkok apartments in Bangkok's central business district and on the outer reaches of the city. The company is purchasing construction materials beforehand and speeding up projects, with the intention of keeping prices down.

Developer Plans To Invest In Bt 7-Billion Projects on Praditmanutham Road

Property developer KE Land is planning to put approximately Bt7 billion on four projects around Praditmanutham Road, which is situated under the Ekamai-Ram Indra Expressway, in the next 3 years.

The company's managing director Kaveepan Eiamsakulrat told that half the sum would come from the company's cash flow and the left over would be loaned from a bank.

The four projects are two retail centers, a detached apartment project and an office building. One of the retail centers designed is part of the second stage of the high-end Crystal Centre. The second project, the Bt 2-billion Crystal Design Centre, is going through construction and is likely to be complete by May or June of 2009. The combined operation space of the retail projects will be somewhere between 40,000 and 50,000 square meters.

Sale of the Bt1.5-billion luxury detached apartment project, Grand Crystal, has started. The apartments will most probably be ready for delivery in 2009. The office project will offer utilization space of approximately 20,000 square meters. The Bt 2-billion project will be complete by 2009.

KE Land has possession of approximately 200 rai of land on Praditmanutham Road. The two retail centers and detached apartment project will occupy only 42 rais. The company is making arrangement to take up three additional projects spanning 100 rais in the area. The rest will stay undeveloped.

Kaveepan said the company is paying more attention on projects that produce rental income for the reason that land prices on Praditmanutham Road are too elevated currently to develop apartment projects for sale.

"We are paying attention in developing condominium projects although are not planning any now as it is still too early to build up those type of projects on the land. However in the next 3-5 years, we will start on those type of projects on Praditmanutham Road," he said.

The company hopes rental income will produce around 70 % of its revenue by 2010. The remaining will come from the sale of apartment projects.

Malaysian Contractor Seeking More Work in Thailand

After building Baan Ua-arthorn low-cost residential apartments in Thailand, the Malaysia-based contractor Bina Puri plans to look for further construction work from the private sector, bidding for five projects of approximate value of three billion baht. ''The Thai financial system remains healthy and will persist to develop in the next 10-15 years, seen from the population which is twice the Malaysian population,'' said the company's executive chairman, Dato' Mohamed Feisal Bin Ibrahim.

The bidding result for these five projects will be declared within September 2008. In the middle of increasing construction prices, the groups fill pays complete attention on cost and construction management, in addition to speed as its potency. It is also looking to build up some Bangkok apartments and Bangkok offices in Thailand.

At present, the Thai unit is managing construction of some residential apartment projects with an entire construction amount of 16.5 billion baht, together with TCC Capital Land's S&S Condominium and Areeya Property's three 'a Space' projects.

On the other hand, it has combination with Deva Development in a turnkey contract for Baan Ua-arthorn low-cost apartments with 31,100 units and total construction amount of 13 billion baht.

Dato' Mohamed said the company utilized a fresh tunnel formwork system to restore conformist resistant concrete post-and-beam structures with unbreakable concrete shear walls. ''This plan with the hi-tech advances added more inner space,'' he said.

The definitive benefit of the use of a tunnel form system with shear wall design is investment in terms of construction time, decreased workers and elevated structural reliability for the buildings, he said. At present, Bina Puri Group has construction jobs of approximate value 21 billion baht in hand, among which 40% are in Malaysia. It aspires to attain 6.2 billion baht in revenues by the end of 2008, among which 5.5 billion would come from Malaysia and 700 million from Thailand.

Developers tie up with banks to present extraordinary financing packages to consumers

With interest rates on mortgages are likely to increase from 0.5-1% in 2008, developers are tying up with banks to present financing packages to attract home-buyers in the second quarter of 2008. The marketing push comes at a hard-hitting time: buyer's buoyancy has been seen dropping and the political chaos is showing no signs of lessening.

Commercial banks have by now started hiking rates. Kasikorn-bank increased fixed-term deposit rates by 0.35 - 1.25 % in the first week of June. The bank increased its least lending rate, least overdraft rate and least retail rate (MRR) to 7.25 %, 7.5 % and 7.75 %.

Bangkok Bank has raised key lending rates by 0.375 %, increasing the least lending rate to 7.25 %. The minimum overdraft rate has increased to 7.5 % and the MRR to 7.75 %. Siam Commercial Bank's minimum lending rate is now 7.25 %, the minimum overdraft rate is 7.5 % and MRR is 7.75 %. Asian Property Development senior executive vice president Visanu Suchatlumpong said the company has tied up with Siam Commercial Bank to present two financing packages to home purchasers between June to August.

The primary package makes available 0 %mortgages for the initial 6 months of the loan. For the left over period, the mortgage will be set at the MRR. The next package makes available a fixed rate of 2.25 % for the starting year and then an MRR of 1.5 %.

"Most consumers opt for the second package as they consider interest rates will increase considerably with price hike to nearly 6 % in 2008. Though the rates increase by 1 %, home-buyers have to compensate 6 - 7 % extra in monthly payments. " he said.

Prinsiri is making available 0 % financing and a chance to prevail a Honda Jazz to purchasers who go for its Northern Town project.

Company Taking Over Projects from Overseas Financers Facing Legal Issues

Rachatanee Group, a property division of Boon Vanasin, is raising its deals in Koh Samui, Surat Thani province, in the first half of 2008 by taking over on hand Bangkok apartment and Bangkok office projects from overseas financiers who are in front of legal troubles. The projects are of approximate value of Bt 4 billion.

The group is also making some strategies to take over Bangkok apartment projects which include unfinished projects and undeveloped land of around 200 rai of the value Bt600 million in the second half of 2008, group chairman Boon Vanasin said.

"Many foreign investors who have earlier purchased land to build up apartments in Thailand through their contenders have decided to get rid of their projects to Thai investors, after the Thai government turn out to be more authoritarian with overseas investors, following the Foreign Business Act at the end of 2007. We are determined to raise our investment in this locality for the reason that we see more overseas buyers who want to purchase a second home in Koh Samui," Boon said.

Right now, Rachatanee Group has apartment and hospitality projects of approximate value Bt 10 billion on land of around100 rai in Koh Samui. The company has sold 80 % of the initial phase of its project of value Bt3 billion and expects to sell the rest by the end of 2008. The initial phase will be delivered to consumers in 2009.

The group also has five apartment projects of approximate value Bt1 billion in Phuket.

"Our business will pay more attention on tourist hot spots, particularly Koh Samui and Phuket, aiming overseas financers who want to purchase a second home or retirement home in these places. Therefore our business has not been affected by Thailand's financial and political troubles," Boon said.