The Edge by Sansiri

[brutox]

14 hours ago, dickygozinya said:

Well since you only have 58 posts, perhaps you are not yet familiar with the Thailand Pattaya market.  ...

... ALSO, these prices on the list are for  (1) FOREIGN NAME  OWNERSHIP, which some people believe is more desirable as a foreign named owned unit can sell to another foreigner and pay a transfer fee.   If the unit is Thai quota - but purchased by a foreigner with the use of a Thai company, Any future foreign purchasers can simply take ownership of the Thai company and be named as the new managing director of the Thai company and avoid a great deal of transfer fees......

As others note, dickygozinga, your understanding of Thai property development and Thai property law is .. mmmm .. stunning.

You are obviously without proper legal counsel, who would advise you that Thai nominee companies created for the purpose of foreigners owning Thai free hold property are .. totally .. illegal .. full stop .. end of sentence .. end of paragraph .. end of statement.

If you are relying upon your 'prominent Hi-so Thai' girlfriend's expertise, or that of any of her circle, and have not verified independently your legal status in these transations, then you are in much deeper shit that you know.

You apparently believe (erroneously) that your ownership rights in a nominee company are protected with all sorts of fanciful machinations, such as preferred shareholder rights, synthesized shareholder loans, pre-executed share transfer agreements, whatever .. these are held in court as circumventions and distortions of Thai property law and are illegal .. the courts will hold that the Thai majority shareholder has total ownership control of the nominee company, and its assets .. total .. uhh, your property is fully owned by your Thai girlfriend, to dispose of as she wishes .. attempting legal recourse only exposes you to having broken Thai law by entering into an illegal land holding .. (ahhhh, soooo sorry).

You would do well to spend some of "the bundle" you made on The Edge flip, on the THB 15-20,000 necessary to get a proper legal opinion letter and briefing on the subject from a real law firm .. global firms in Bangkok will read it to you chapter and verse, not the local law firms pretending to be international with a few farang 'advisors' (farang are prohibited practicing law in Thailand) .. try Baker McKenzie, Clifford Chance, Allen & Overy, Linklaters, and DLA Piper .. I think all still have offices here with lawyers qualified in property law.

You are not appearing as much of an authoritative resource here, dickygozinga .. uh, no .. not at all.

 

[brutox]

1 hour ago, dickygozinya said:

AW.....   Sounds like someone didn't get to participate in the pre-sale and won't be " make a small profit, assuming they can find a bigger fool to buy from them. "    So sorry for you.    I made a bundle off of the pre-sale in  The Base.   The base had TWICE as many rooms for sale as the edge, and The Edge has views - stolen from being in front of The Base.  Now the market for Condo's has significantly change and there is a GLUT of old units in the market - but location, location, location and NEW condo's seem to retain demand - if you don't believe this - price a condo in the Northshore - average cost per SQM is 94,000, and that is considered an OLD building.

NOW I know that most of us on this forum are NOT the obnoxious type of Westerner, my Thai friends talk about........ The reality is the majority of Westerner's are losing relevance as buyer's of condo's, and rapidly losing importance as a tourist block in Thailand as "Hordes of middle class Chinese (mostly those who were denied large families due to the taxes imposed by China after the one state allowed child),  with no 'cost efficient, place in China', to spend their new middle class wealth.  Also the growth of 'wealthy Chinese' and rapidly expanding college educated Thai's (known by some as -  'Bangkokians'), middle class is swooping in to push out westerners and take advantage of any existing - but seldom enforced Thai laws on the books to nudge out Westerners  where profits are concerned.   It would seem wealthy Thais consider the only relevant Westerners now those few who have married to build a family, and have Thai children.

I speak to dozens of 'well off' Thai's at business functions, pretty much daily .   Most of these 'upper middle class Bangkok Thai's', would prefer not to engage with 'those type of Westerners who come to take advantage of the Thai economy, and care little of Thai culture, and have zero desire to learn Thai and constantly are telling Thai's - "You need to learn English", especially, the kind of Westerner, that Thai people are very cognizant of who only care about Thai females from the nose to the knees. 

Even the few single digit millionaires (which thanks to the USA stock market bump), are many of us here, have noticed a 'cooling' of Thai's interest in westerners, which I began to notice before I was fortunate enough to be coupled with my prominent HiSo Thai lady.

I mean no offense, dickygozinga, but you are sounding more and more as a bit of a newbie here .. wish you, your 'prominent Hi-so Thai Lady' and your money good luck in Thailand .. go get 'em tiger!  

Report back to us in 2 years how this all turns out for you.

 

[gambler]

4 hours ago, dickygozinya said:

It would seem wealthy Thais consider the only relevant Westerners now those few who have married to build a family, and have Thai children.

I speak to dozens of 'well off' Thai's at business functions, pretty much daily .   Most of these 'upper middle class Bangkok Thai's', would prefer not to engage with 'those type of Westerners who come to take advantage of the Thai economy, and care little of Thai culture, and have zero desire to learn Thai and constantly are telling Thai's - "You need to learn English", especially, the kind of Westerner, that Thai people are very cognizant of who only care about Thai females from the nose to the knees. 

Even the few single digit millionaires (which thanks to the USA stock market bump), are many of us here, have noticed a 'cooling' of Thai's interest in westerners, which I began to notice before I was fortunate enough to be coupled with my prominent HiSo Thai lady.

WTF has this arrogant anti-western rant got to do with the topic ?     

[brutox]

28 minutes ago, gambler said:

WTF has this arrogant anti-western rant got to do with the topic ?     

Aww c'mon, gambler, give him a break .. he is quite obviously new to Thai property investment (and quite possibly Thai culture in general), and he is still unclear about just what he has gotten into.

He'll come around, or he'll be drawn into the Thai Vortex's interminable death spirals, whose massive gravity will suck him in and crush his bones, eyeballs and 'nads into so much subnuclear detritus (eee-yuk!), kept in a jar proudly displayed on a shelf in his 'prominent Hi-so Thai' girlfriend's laundry room.

 

[Kahoy]

4 hours ago, brutox said:

 

• At THB 25,000/month, what are the alternatives at this price point and how do they compare to The Edge?

 

Lat year I rented a luxuriously furnished 68 square metre one bedroom apartment at The Pride for 25,000. I have been offered one bedroom apartments there for 17,000. 15 to 20,000 should get you a decent one bedroom at The Urban.

13,000 will get you a high floor furnished apartment at Unixx. 

20,000 will easily get you a one bedroom at The Axis.

The Edge studios are a lot smaller than these one bedroom apartments and you won't have to wait for a lift every time you go anywhere. I rarely shared a lift with anybody at The Pride.

[DaffyDuck]

I was fortunate enough to be coupled with my prominent HiSo Thai lady.

ROTFLOL

[Pheat]

14 hours ago, dickygozinya said:

If I sell to a thai as the unit will be in my ladys name who is Thai it will be a no extra cost 

ROTFLOL

[Scuba+]

Lat year I rented a luxuriously furnished 68 square metre one bedroom apartment at The Pride for 25,000. I have been offered one bedroom apartments there for 17,000. 15 to 20,000 should get you a decent one bedroom at The Urban.
13,000 will get you a high floor furnished apartment at Unixx. 
20,000 will easily get you a one bedroom at The Axis.
The Edge studios are a lot smaller than these one bedroom apartments and you won't have to wait for a lift every time you go anywhere. I rarely shared a lift with anybody at The Pride.

Yes much better value those condos with a good location. With the Edge and Base it sounds like its all about speculation not value, speculators don't care

[Harry Brown]

Ok lads tone things down a bit before it goes too far please.

 

[SirL]

Good analysis, but I would prefer to look at it the other way around, starting with net rent achievable and discounting back up to get a DCF valuation.

In London, 5% net rental yield would be wonderful.  I've owned and rented apartments in London for many years on gross yields of maybe 3%, and still the properties rose in value.  You may call these London valuations crazy (I do), but markets can remain crazy for longer than individual investors remain solvent.  If 3% gross yields are common and acceptable out in a Liquid market like London residential, that suggests Pattaya yields can drop, and so valuations rise, a long way yet.  The sort of analysis you present would have made London properties look crazy expensive for most of the last couple of decades, during which they have steadily risen further.  I have found that trends in demand and cash flow are more relevant than discounted valuations.

Maybe if the bulk of investors in these condos are Chinese, the comparatives for valuation (things like yield%, price/sq metre, comparative condo valuations) should be based on Chinese metrics, not Pattaya or Thai metrics.  If, for example (and I've no idea if this is true, I'm just making this up), newly-built modern condos in big Chinese cities were priced on lower yields, higher prices/sq metre and the read across comparative condos were expensive, then I'd bet Pattaya condo prices have plenty of upside. A lot of new London residential construction seems to have been sold to Asian investors, who have proven willing to pay much higher valuation metrics for London property than your numbers appear to suggest for Pattaya.  If, for example, bank funding for these sort of condos was likely to become more easily available, that would help future valuations.  Do Chinese investors sense a tidal wave of future Chinese holidaymakers approaching that'll increase demand for these type of condos?  What do other Asian investors think of likely future currency movements of the baht compared to their own currency?  Political changes, to permitted foreign ownership quotas, the likelihood of a casino in Pattaya, or whether AirBnb is allowed to continue to operate in these condo blocks, may be important to valuations.  Chinese investors are very different from you, and if this is a market in which they are the dominant players with people like you reducing, then I'd be reluctant to bet against them.

[jiz]

Recently I looked at a condominium unit for sale. Luckily I noticed the giant exhaust fan that sounded like a freight train in the neighboring property. 

Only a fool would buy into an off plan/unfinished project here. Especially when there are around 50,000 desperate sellers of empty condos between Pattaya and Jomtien.

 

[dickygozinya]

22 hours ago, brutox said:

I rather agree with you madhat .. my sense is that these units are overpriced for the Pattaya market .. there seem to be an ample number of existing units that offer better value .. for the same price, I believe resale units in the relatively new, higher quality beachfront condos make far more sense.

Well, dickygozinga, let's consider madhat's view of The Edge.

Here is something about which to think .. there are 3 categories of buyers in this market for this asset class (condos):

• Speculators, who are trying to flip the units before they have to close on them at building completion; they are seeking to sell down to the next two buyer categories;
• Investors, who acquire the units and rent them out seeking annual yield and asset appreciation; and,
• End users, for whom this purchase is their home.

Property valuations in the Thai condo asset class are significantly driven by the second group of buyers. 

There are three generally accepted methods for appraising a property value:

• Replacement value;
• Comparably priced units; and,
• Net operating income capitalization.

As an example, I will use the latter method applied to the THB 5.0m cost of the 27M2 unit madhat cites above .. here is the stripped-down simple math:

• A 5.0% net annual yield is the generally accepted target return by Thai investors, who significantly drive the rental market
• Investment = THB 5,000,000
• Net annual income = 5,000,000 x 5.0% = 250,000/year

To this net annual income, the owner's annual cost of ownership must be added, such as agency rental commission (equivalent to 1 month's rent), building maintenance fees (say, THB 40/M2/month), owner's unit maintenance costs (say 5.0% of gross rent) .. adding these together, the annual cost of ownership is:

• Agency rental commission = 250,000/year  / 12 months = 20,833
• Building maintenance fee = 40/M2/month x 27 m2 x 12 months = 12,960
• Owner's unit maintenance costs = 250,000/year x 5% = 12,500
• Total annual cost of ownership = 20,833 + 12,960 + 12,500 = 46,293/year

So, for the owner to make their 5.0% net annual yield, this additional cost of ownership is added to the net annual income to arrive at a gross annual income sufficient to meet a 5.0% net annual yield:

• Gross annual income = net annual income 250,000 + annual cost of ownership 46,293 = 296,293/year
• Gross monthly income = 296,293/yer / 12 months = 24,691/month

[ I assume this unit is 100% occupied, which is a huuuuge gap in this analysis .. the months it typically takes to rent out a vacant unit rips holes right through this analysis. ]

So .. now .. this is where market knowledge is critical .. can this unit reasonably rent for THB 25,000/month? .. if it is unreasonable, then the investor category of buyers will lower their purchase offer price to meet whatever the market will bear .. they will significantly drive the market price.

From what the market will support in monthly rent, just run the numbers backward .. that will tell you if the cost is reasonable .. although, end buyers for whom this is a home can reasonably pay more, since this is not strictly an investment decision .. but, this sort of analysis provides useful data points to them for determining a fair market price.

 

Here is the question to the locals who know the Pattaya condo rental market:

• What is the reasonable monthly rent for a 1-bedroom, 27m2 unit at The Edge?; and,
• At THB 25,000/month, what are the alternatives at this price point and how do they compare to The Edge?

 

Good analysis - I never intend to rent the unit, and my lady certainly does not want to own or handle any residential rental income property.  She and her family are strictly into Commercial property.     

As many have already said here.   This is all about Speculation.....I know FEW who keep "pre-sales off plan" condos.   The cost of speculation in a Thai name unit is minor.  It's a gamble much like a poker game.  You weigh the speculation losses on a few units by the one or two that pay off sufficiently to result in a profit.

[dickygozinya]

22 hours ago, brutox said:

As others note, dickygozinga, your understanding of Thai property development and Thai property law is .. mmmm .. stunning.

You are obviously without proper legal counsel, who would advise you that Thai nominee companies created for the purpose of foreigners owning Thai free hold property are .. totally .. illegal .. full stop .. end of sentence .. end of paragraph .. end of statement.

If you are relying upon your 'prominent Hi-so Thai' girlfriend's expertise, or that of any of her circle, and have not verified independently your legal status in these transations, then you are in much deeper shit that you know.

You apparently believe (erroneously) that your ownership rights in a nominee company are protected with all sorts of fanciful machinations, such as preferred shareholder rights, synthesized shareholder loans, pre-executed share transfer agreements, whatever .. these are held in court as circumventions and distortions of Thai property law and are illegal .. the courts will hold that the Thai majority shareholder has total ownership control of the nominee company, and its assets .. total .. uhh, your property is fully owned by your Thai girlfriend, to dispose of as she wishes .. attempting legal recourse only exposes you to having broken Thai law by entering into an illegal land holding .. (ahhhh, soooo sorry).

You would do well to spend some of "the bundle" you made on The Edge flip, on the THB 15-20,000 necessary to get a proper legal opinion letter and briefing on the subject from a real law firm .. global firms in Bangkok will read it to you chapter and verse, not the local law firms pretending to be international with a few farang 'advisors' (farang are prohibited practicing law in Thailand) .. try Baker McKenzie, Clifford Chance, Allen & Overy, Linklaters, and DLA Piper .. I think all still have offices here with lawyers qualified in property law.

You are not appearing as much of an authoritative resource here, dickygozinga .. uh, no .. not at all.

 

Thanks Brutox.  BTW, in my 17 years of working for IBM and HP in Bangkok, I met a few (granted it was only three), "farang", that are licensed to practice law in Thailand.  You would be correct to assume they married into the "proper families", to grease the skids.   They have gone through the cumbersome and costly process of learning Thai and passing the Thai language test, and etc.... then becoming a Thai citizen.   Google is your friend when you want to eviscerate the bullshit so many spew out.     

As for a Thai company, realize that the proper manner to protect yourself is to create a "contract for a personal LOAN - Which is 100% legal provided you don't charge interest above what is considered usury for personal loans in Thailand (17%).   As a personal loan you are not impersonating a bank, etc....   Now the collateral  for the contract- being the assets of the Thai company and the property held by the company (and yes I have been successful in going to the Land Office and), having a stamp entered into the chanote indicating a lien is outstanding against the property and the Land Office will not transfer the property until the lien is released.  Easy for me to get a signature on the contract for this, since my lady is a shareholder - it's hardly a problem.   

And just for grins to you....my legal council is WFW in Bangkok.   And if I think back, I believe I remember the principal saying this:  " I have to inform you  blah,  blah,  blah,  (I think however the tone of the person saying 'Blah, Blah, Blah', must be what makes the company less of a problem),  BUT, that said, it has never stopped us from creating the companies, and our clients benefiting."    

So if this is completely illegal, then I believe there will be a long line of people seeking to have you provide them with the name of proper representation to battle in court, to sue for damages then, huh?   

 

[Harry Brown]

@KittenKong

@jiz

@dickygozinya

@Tarl

@Pheat

 

Guys strictly no discussion on gambling.

 

Some of you are continuing to argue and de-rail the thread. you were warned once, but chosen to ignore that friendly reminder.  Please stay on track and stop trying to one up each other.

[Tarl]

21 hours ago, Harry Brown said:

@KittenKong

@jiz

@dickygozinya

@Tarl

@Pheat

 

Guys strictly no discussion on gambling.

 

Some of you are continuing to argue and de-rail the thread. you were warned once, but chosen to ignore that friendly reminder.  Please stay on track and stop trying to one up each other.

Cool, didn't see the warning. Appreciate you drawing it to my attention.

[taylor1975]

On 28/05/2018 at 02:22, dickygozinya said:

Good analysis - I never intend to rent the unit, and my lady certainly does not want to own or handle any residential rental income property.  She and her family are strictly into Commercial property.     

As many have already said here.   This is all about Speculation.....I know FEW who keep "pre-sales off plan" condos.   The cost of speculation in a Thai name unit is minor.  It's a gamble much like a poker game.  You weigh the speculation losses on a few units by the one or two that pay off sufficiently to result in a profit.

What if you can't sell it before all the payments are due? ...just keep lowering the price until it does sell?

What % profit do you aim for? ....do you tend to sell just after the building is finished or?

Are the sale prices of the base units similar? 

[dickygozinya]

On 6/1/2018 at 01:49, taylor1975 said:

What if you can't sell it before all the payments are due? ...just keep lowering the price until it does sell?

What % profit do you aim for? ....do you tend to sell just after the building is finished or?

Are the sale prices of The Base units similar? 

Well if it can't be sold at a profit before the construction is complete in about 2.5 years.   We will probably just rent it out, or sell at a small profit to a Thai before the unit is lived in.   Oh I forgot - prior to sale, at least 10% is usual profit that is easy to get, as the BULK buyers that hold out entire floors, or the last few reserved unit by builder Sansiri are almost always marked up by 20%.

[blueye44]

Some good info here esp Brutox. My experience so far with my condo and the Base/sansiri all good so far no regrets  glad i didnt buy the front unit tho

[taylor1975]

2 hours ago, dickygozinya said:

Well if it can't be sold at a profit before the construction is complete in about 2.5 years.   We will probably just rent it out, or sell at a small profit to a Thai before the unit is lived in.   Oh I forgot - prior to sale, at least 10% is usual profit that is easy to get, as the BULK buyers that hold out entire floors, or the last few reserved unit by builder Sansiri are almost always marked up by 20%.

Thanks. I know little about property investing, but eager to understand it, mainly the risk/reward situation. 

Even in the scenario of selling at 20% profit at completion, over 2.5 yrs thats only 7.5% pa return. Appreciate the repayments are staggered over the 2.5 yrs, but you have to keep these expected repayments accessible, so arguably uninvested or you end up encashing something at an inopportune time.

Then the risk of ending up owning and renting the condo (which you've said you don't want), with an illiquid asset, producing income which may cause tax considerations. 

For the return, it feels like there are easier ways to do it. For me, there is quite a risk premium on assets you can't sell quickly. 

[usexpat46]

1 hour ago, taylor1975 said:

Thanks. I know little about property investing, but eager to understand it, mainly the risk/reward situation. 

Even in the scenario of selling at 20% profit at completion, over 2.5 yrs thats only 7.5% pa return. Appreciate the repayments are staggered over the 2.5 yrs, but you have to keep these expected repayments accessible, so arguably uninvested or you end up encashing something at an inopportune time.

Then the risk of ending up owning and renting the condo (which you've said you don't want), with an illiquid asset, producing income which may cause tax considerations. 

For the return, it feels like there are easier ways to do it. For me, there is quite a risk premium on assets you can't sell quickly. 

Also many times the original owner will be required to pay into the sinking fund.  Its determined by the developer and based upon the size of your unit,  i.e. 400 baht per sq meter.  Another cost will be the CAM fees as that could also be a 12 month fee upfront.

[taylor1975]

45 minutes ago, usexpat46 said:

Also many times the original owner will be required to pay into the sinking fund.  Its determined by the developer and based upon the size of your unit,  i.e. 400 baht per sq meter.  Another cost will be the CAM fees as that could also be a 12 month fee upfront.

Agreed, but i deliberately ignored fees as with any investment, there is usually some form of cost. It was the risk/reward i was interested in understanding ....and anything glaringly obvious to the experienced folk that have done it.

[dickygozinya]

17 hours ago, taylor1975 said:

Thanks. I know little about property investing, but eager to understand it, mainly the risk/reward situation. 

Even in the scenario of selling at 20% profit at completion, over 2.5 yrs thats only 7.5% pa return. Appreciate the repayments are staggered over the 2.5 yrs, but you have to keep these expected repayments accessible, so arguably uninvested or you end up encashing something at an inopportune time.

Then the risk of ending up owning and renting the condo (which you've said you don't want), with an illiquid asset, producing income which may cause tax considerations. 

For the return, it feels like there are easier ways to do it. For me, there is quite a risk premium on assets you can't sell quickly. 

Agreed.  I would not do this if I was not planning on marrying my Thai fiance.  

The monthly payments until the project is completed are incredibly low for Thais.   Initial down payment is only 80K baht and monthly is only 8,000 baht until project completion.  As this is a new building the sinking fund is opened by the Juristic Person Manager of the building.  Now the following is strictly from what my Fiance tells me she read in the contract, so take it for what thats worth.  " The JPM have already been issued authority to a percentage of the funds from the existing building collections and builder set aside for sinking fund." 

Oh She (fiance), told me CAM fees ANNUAL 15,600, first 6-months of fees included in contract price. .   HIGH but so are the amenities,

[taylor1975]

7 hours ago, dickygozinya said:

Agreed.  I would not do this if I was not planning on marrying my Thai fiance.  

The monthly payments until the project is completed are incredibly low for Thais.   Initial down payment is only 80K baht and monthly is only 8,000 baht until project completion.  As this is a new building the sinking fund is opened by the Juristic Person Manager of the building.  Now the following is strictly from what my Fiance tells me she read in the contract, so take it for what thats worth.  " The JPM have already been issued authority to a percentage of the funds from the existing building collections and builder set aside for sinking fund." 

Oh She (fiance), told me CAM fees ANNUAL 15,600, first 6-months of fees included in contract price. .   HIGH but so are the amenities,

Didn't expect such low repayments. That must be quite a teaser for the opportunity of selling prior to completion. 

Good luck with it. Thanks for the info 

[dickygozinya]

On 6/3/2018 at 18:17, taylor1975 said:

Didn't expect such low repayments. That must be quite a teaser for the opportunity of selling prior to completion. 

Good luck with it. Thanks for the info 

I Want to MAKE sure I was CLEAR on WHY the Repayments are low!    This unit was purchased as a THAI OWNED (my fiance), unit.   If the unit were purchased by a foreigner, as a foreign free hold unit - I.E. Unit can be sold from foreigner to foreigner, that Down Payment and Monthly Payments are VERY high.    Foreign Owned units require a monthly repayment of baht25,000/month to baht40,000/month payment BEFORE building is completed.   ALSO on the 6th. month and 18th. month point - the payments for ONLY those months.  Are 3-times the payment amounts of the other months.

For example.  IF  THE  UNIT  IS  BOUGHT  AS  A THAI  NAME  OWNED UNIT -  Only on month 6, I will pay baht36,000.   ONLY on month 18, I will pay baht60,000.   All other months are paid at about baht 8000/month.

I hope that is clearer to calculate the total amount that will be paid BEFORE the balloon payment of the balance of the original selling price when the building is ready for occupancy.   

[KittenKong]

Instalments from Thai buyers are kept very low to encourage sales. The entire economy is riddled with debt (not that many western countries are a lot better in that respect).

More smoke and mirrors.