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.

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.

Living the Dream in Thailand

Despite all the uncertainty about the body politic in Thailand, much of it connected to two men – Thaksin and his Royal Highness – foreigners still continue to flock to Thailand looking to live out their dreams. Thailand is a place where the sun nearly always shines, where there are superb beaches, great dining options and the local culture encourages people to take it easy.

While those looking to escape the rat race may be enticed by the laid back attitude prevalent among Thais they should look a bit deeper into Thai culture. For every success story of a foreigner setting up a bar, resort, villa or shop in Thailand there are a hundred sad stories. The temptation for people in the UK and elsewhere in the developed world is to cash out – to sell the house or business, take out the pension and move to Thailand to spend the rest of their life in the sunshine.

When you look at prices for renting a business in Thailand or buying land it all seems very doable. There are plenty of middle men in Thailand prepared to act as go-betweens to sort out the legal requirements and the visa. There are thousands of potential customers in the form of holiday makers, ex-pats and wealthy Thais from whom a self-sustaining lifestyle can be made. What can go wrong?

 Plenty.

Firstly, the situation with visas is a moveable feast in Thailand. Every change in government or regime in Thailand comes with its own brand of nonsense to publish on the matter. The latest bunch has cracked down hard (supposedly) on English teachers and dive instructors working in the Kingdom on tourist visas. Other administrations have made noises about stopping the loophole of Thai registered businesses with foreign shareholders buying land in Thailand.

 Foreigners have to continually jump through hoops to extend their resident visas for Thailand. Only those working for big corporations don’t have these headaches. Typically you have to leave the country regularly to renew a visa; have to show evidence of funds in Thailand and have to deal with Thai bureaucrats and immigration officers as well as bank staff who all seem to have their own interpretations of the rules. Some of them seem to just hate foreigners.

Further scratching beneath the surface reveals a Thai attitude that can be best summarised as ‘wait and let them leave’. Many Thais will sign a lease for however many years with the expectation that sooner or later the foreigner will run out of money or enthusiasm and they will be left with land or business unit they can lease out again. If on the rare chance the foreigner does succeed there is always the possibility of not renewing a lease and taking over a ready-made successful enterprise.

For example the bars on Haad Rin’s Full Moon Party beach change management every few years as foreigners realise they are not living the dream. The monthly windfall is taken away by the Thai landlord. Moreover the bucket shacks between the bars seem to pick up a good percentage of the punter’s booze cash.

Another example out of millions is the Phanganer clothes shop in Thongsala (see above picture). It is up for rent. The brand is established, the location looks good; the shop is smart and new. However, if you check out the www.waybackmachine.org you will discover the place has been up for lease since August 2013. What looks like a steal has not generated much interest.

Thai Forum is littered with villas for sale for bargain prices. The second hand market for villas is bad. Real estate agents make more money selling new builds and off-plan builds. They skewer the market in their favour.

All of this is not to say that the dream of living and working in Thailand is a lie. Plenty of foreigners marry Thais and carve out their little niche. Some do very well running budget Bangkok hotels and ex-pat bars. Some seem happy in the boondocks farming rubber.

What is certain is that you should never rush in. Do due diligence and then do it again. Don’t forget you could just get a cheap villa rental for a year and not commit the bulk of your savings into a lifestyle project that could go horribly wrong.