Tuesday, 29 November 2016

Re-Purposing Property in Thailand



Thai law is a minefield. It is not consistently applied and in many cases foreigners are allowed to have de facto ownership of land and property, especially if they have a Thai partner. Despite strict and xenophobic laws regarding land ownership the Thai way is not to mount witch hunts against groups in society.

Part of the reason for this is the common Thai belief in 'live and let live'. While many Thais may harbour nationalistic notions about Thailand being for the Thais they tend to shy away from individual acts of revenge; rather they bow to hierarchy and follow the line of headmen and other influential local people.

Another reason for this turning a blind eye attitude is the lack of clear lines of power in Thailand. Outside of Bangkok are fiefdoms focussed around policing and other areas where 'tea money' and personal influence are important. Regimes change in Bangkok, new regulations are made and the memos are not passed on; or if they are then they are ignored. A clear example of this are visa laws. They change and often the changes are not reflected on the ground. The recent fiasco with 10 year visas is an example in point.

The point of this digression is that you if you are considering re-purposing your property in a rural area of Thailand you don't necessarily have to apply for planning permission at the land office. Putting feelers out in the local community is a good idea, though. You see dozens of 'hotels' on Agoda that were clearly once residential villas designed as a place to live, not as a business. They have become spas, yoga centres, retreats, diving accommodation and even backpacker hostels. There seems to be an acceptance with re-purposing private property in Thailand.

And it makes sense from a utility point of view. The jungle takes its toll on villas. The wood gets attacked by insects, the ground shifts, building faults appear, rats come etc. The best way to keep a property well maintained is to use it.

Recent trends in tourism show a growing interest in 'activity-based' holidays. People want to go to the jungle or the beach and ride mountain bikes, qualify as a scuba diver, get a teaching certificate in yoga, detox. The list goes on. English teaching, learning Thai. Mastering kite boarding. Working out in a Muay Thai gym. It is a big part of the Thai tourist economy.

Places like Sri Thanu in Koh Phangan have re-branded themselves as yoga centres par excellence. Several unused bungalows, guest houses and private villas in the area have now managed to tap into this income stream by re-inventing themselves as dorms, yoga studios, cafes, luxury accommodation that comes with a yoga package.

Especially if the changes to the property are superficial. If just a change of furniture and decor is needed then why not go for it? You might have on your hands a business with a reasonable rate of return; you might interest buyers; you might discover that also really love yoga or mountain biking. Finally it should be mentioned that people are prepared to pay more for niche activities and often want packages and turn-key holidays so that they can totally immerse themselves in their holiday mission.

Thursday, 10 November 2016

Property Sales and Travel Infrastructure in Thailand



There are two types of buyer in Thailand, as elsewhere in the world. There are those who look for value and want to fix up a place to sell for a profit; and those who want a ready-made proposition for either personal use or for commercial use. The returns are lower normally in the second category but the thinking is that the risk is also smaller.

This can all be a matter of perception. And indeed, con artists will work hard to influence perceptions in their favour. With risk it is believed comes greater rewards.

The same division can be seen at work in terms of small businesses, especially in limited commercial spheres like the Thai islands where space is limited and the distance from Bangkok is a key factor in planning holidays for many people. In these places a pioneer will try something new like a raw food cafe or a silent disco bar. The locals shake their heads until one of these ideas results in a successful business. The imitators soon follow.

When selling a property in Thailand one way of balancing the risk factor of relying on leases, shell companies or compliant Thai front people is to stress the benefits of the locale. One of the main things that people looking to buy a villa in Thailand look at is travel infrastructure. For short term rental tourists need easy access to a residential property, especially from Bangkok.

This has been one of the reasons for the success of places such as Koh Samui and Phuket - they have easy access to an airport. While tourists can tolerate long distance flights to Thailand, they get more frustrated with travel the closer they get to the holiday property. If the last leg drags people perceive a place as 'in the middle of nowhere'.

As well as being able to mention that a property is close to an airport it is also important to mention the proximity to the nearest rail line. Thailand trains are reliable, cheap and cover the north to the south of the country. There is also a line going east-west linking Bangkok to the border town of Aranyaprathet next to Cambodia.

New stations, line extensions and new lines are all being planned. Thailand train travel has great potential. It opens up not just Thailand but is on the verge of linking up Thailand to Cambodia and to the rest of South East Asia. It is an exciting time for rail enthusiasts. It is now possible to book many of the train journeys in Thailand  and beyond online. This is another convenience that goes a long way to mitigating the hassle of long legs to a journey.

The same goes for ferry trips. Many of the main ferries from the mainland to the southern islands of Koh Samui, Koh Phangan and Koh Tao are now possible to book online.

As you can see the national travel network in Thailand is a major asset for Thai tourism. It encourages visitors to venture to the far flung parts of the country and even enjoy the trips. It helps tourists get to their final destination quicker. In short it helps rent and sell properties in Thailand just as being near a BTS stop helps when renting out a Sukhumvit apartment.

Saturday, 19 December 2015

The Value of Beach Land

Before discussing the value of property and land in Thailand the reader should be reminded that in Thai law a foreigner can own a property but not the land on which it sits. The usual recourse around this legal nonsense is to allow foreigners to take out 30 year leases on land.

Does this mean that after 30 years the foreigner effectively loses the right to use a piece of land on which his or her property resides? Well, many developers put in clauses in their sales contract promising that another 30 year lease will be granted for a small fee. This is dependent on the owner of the land honouring their legal agreement to appear down the land office and register another 30 year lease.

Whether land is located on or next to a beach or in a city or rural location should not make any difference to this legal arrangement. An important proviso is that rural land is off limits to foreigners unless the land is bought in the name of a Thai wife.

However, in terms of tourism beachfront land is the easiest to sell. Tourists want to be as close to the sea as possible. Moreover, beachfront restaurants and resorts on average do much better than similar businesses set back from the beach.

It is possible to find beach land available to rent. Often there is a shell business already on location with the option to carry on this business or to try something else. There is an issue of knocking down structures on a rented piece of land.

From the perspective of global warming, there is the ever-increasing risk of rising water levels removing beach and the subsequent threat of structures getting flooded in the rainy season.

Another issue with beachfront land is that it was traditionally viewed by Thais as less valuable than land inland where the farming possibilities are better. For this reason, beachfront land was often left  in inheritance to second children and daughters. Dealing with Thais with smaller inheritances who might be looking for higher returns to make up for a shortfall in income increases the temptation for double dealing.

Finally, Thai developers are often on the lookout for the next big location in tourism. The strategy is to identify a beach popular with backpackers where land can be had for relatively cheap prices and then to construct luxury hotels that massively increase room rental prices. This is a strategy not open to foreigners unless they are well-connected in Thai society.

Even then possible sites for such a plan such as Bottle Beach on Phangan Island require the acquiescence of land owners. In the case of Bottle Beach they are holding out either because they want to protect their beach or because they are expecting a big pay day in the future.