The results of the Prian webinar with Intermark Global experts: we talked about investments and more.
Experts
- Anna Kovalenkova – Head of Thailand at Intermark Global
- Ekaterina Orlova – Director of the International Investment Department at Intermark Global
- Kirill Vyalykh – CEO of Phuket9
About the entry threshold
If you are interested in passive investments and you are not even planning to come to Phuket, we advise you to consider objects from $ 120 thousand. This is the lower bar for investment real estate: if the budget is smaller, in our experience, at least one of the factors determining liquidity subsides – location, quality of management, level of construction, distance from the coast (we call resort facilities remote from the sea by a maximum of 500 meters, renting which for daily rent you can get a yield of 7-8% per annum), specific characteristics…
This does not mean that there are no cheaper offers in Phuket. We have real estate starting at $75 thousand, but its projected profitability is less. You can find options for less than $ 70 thousand, but we do not recommend them at all, since we do not see who they can be resold to in the future.
Options from $ 120 thousand, of course, projects at the excavation stage. Perhaps you could find something ready-made in covid at this price, but now you need twice as much money for this. That is, a ready–made unit in a good location with high-quality repairs, infrastructure and a management company is at least $ 200 thousand.
Read also: The procedure for purchasing real estate in Thailand
About the management company and short-term lease
According to Thai law, without a tourist and hotel license, it is impossible to rent an object on a daily basis (that is, the most profitable) lease.
A hotel license is issued to complexes with hotel infrastructure. And it is not in all projects that still generate daily income. They are not fined while the moratorium on verification is in effect. But it’s hard to say how long it will last – three or five years. But what is clear is that according to current requirements, not all residential complexes will be able to obtain a license, now it is difficult even for large players.
And – strangely – about 30% of developers do not even announce the appearance of this license in future projects, which can be called resort projects. We are watching with interest how such real estate, which does not have a hotel license, but is declared as an investment property, will be sold…
The buyer should carefully look at how the management company is connected with the developer. If he is a third party who is connected with the client by a separate contract, but has nothing to do with the developer, this is a complicated legal story that the client cannot influence.
About non-resort condominiums
For an investor, there are no disadvantages in such projects – these are great options. Complexes remote from the sea with minimal infrastructure – a swimming pool, a roof garden – designed for those who live on the island permanently. Not luxury, but quite high-quality housing.
A huge advantage of such houses is the low entry threshold. Literally $50 thousand. Of course, we are talking about long-term rentals here, and the marginality of such projects is 3-5% per annum, since this is cheap housing. But it is easy to rent out, there are no problems with settling in and you do not need a hotel license.
Unfortunately, there are few such projects on the island, and the quota for foreign owners may be modest – for example, not 49%, but 15%. Moreover, this quota is regulated by a developer who simply will not sell you an apartment in full ownership. This is a kind of manifestation of patriotism: Housing is being built primarily for Thais.
About income
On lease, owners can earn from 5 to 10% per annum in baht, and investing in an object during construction – up to 25-30% within two years. There are fixed income offers – a kind of alternative to a deposit. In this case, you can count on 6-7% per annum.
The rental pool option is chosen by those who want to invest, but sometimes live on their own. In this case, the income is distributed in the ratio of 40 to 60% in favor of the management company, which bears all expenses. Since gross revenue is divided, the owner’s income can sometimes reach 10% per annum.
Of course, the real profitability is now increasing due to the growth of the tourist flow. But do not forget about the competition. For example, about 30 residential complexes are being built in Bang Tao. When they are all put into operation, competition will increase, which will negatively affect the rental cost.
Fixed income is more attractive to an investor, as it does not depend on real occupancy rates, and all responsibility for regular payments lies with the management company.
Most investors enter the Phuket real estate market with a planning horizon of five to seven years. Accordingly, flipping – buying at the start of sales for the purpose of resale with an increase in price by the deadline – is not so common here. And this is despite the fact that only during the construction period, the project on average becomes more expensive by 35%.
Read also: Phuket Real Estate. Investments with a yield of 5-10% per annum
About payment
You can pay for real estate in Phuket by SWIFT transfer, and some developers have the opportunity to accept payments, including in rubles. The latter is relevant when buying an object in the projects of the company Phuket9. The organizational structure of the developer allows, in particular, Russian clients to make transactions remotely from the territory of the Russian Federation.
Also, in the near future, the site will be able to instantly book facilities. It will be possible to reserve real estate using a Russian bank card.
See also: Ours abroad: how Russian-speaking immigrants live in Thailand
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