Never Buy A Condo in THAILAND!

Summary

In this video, the host warns viewers against buying condos in Thailand, citing issues such as foreign ownership restrictions, overpriced real estate, low occupancy rates, high maintenance fees, and poor construction quality. Despite the challenges, he presents two exceptions where buying a condo might make sense—if you’re a long-term resident seeking stability or an experienced investor able to secure a good deal. Ultimately, he stresses the risks involved, especially for those unfamiliar with the local market, and suggests renting might be a better option.

Takeaways

• 😀 Foreign ownership restrictions make it difficult for non-Thai nationals to buy condos in Thailand. Only 49% of units in a building can be sold to foreigners, and they are generally priced higher than Thai-owned units.
• 😀 Resale of condos in Thailand is challenging because foreigners are only able to resell to other foreigners, creating a limited market for buyers and renters.
• 😀 Maintenance fees for condos can be substantial, especially for newer, amenity-filled buildings. Special assessments for repairs and upgrades may also add hidden costs.
• 😀 Thailand has an oversupply of condos, particularly new ones. Cultural preferences for new properties mean older buildings often struggle with occupancy rates, and you may be competing with new units that constantly outdo older ones in terms of amenities.
• 😀 There is a risk that new tax laws could increase taxes on expats and retirees, potentially destabilizing the already weak real estate market and further reducing condo values.
• 😀 Many new condos in Thailand have low occupancy rates (around 30%), which affects both their resale and rental potential. Low occupancy may also lead to neglected maintenance and deterioration in property quality.
• 😀 Construction quality in Thai condos often falls short of expectations, with many buildings experiencing premature wear and tear. Even though new buildings may look appealing initially, they often suffer from poor craftsmanship.
• 😀 As a foreigner, hiring reliable contractors for repairs or maintenance can be difficult and expensive in Thailand. Quotes for basic work can be inflated, and language barriers complicate finding fair pricing.
• 😀 Seasonal variations in rental demand, especially in tourist-heavy areas like Phuket or Koh Samui, mean that condos may sit empty for extended periods during the low season, which can affect rental income.
• 😀 Thailand lacks a proper MLS system for rentals, which leads to confusion for both renters and owners. Rental listings are often outdated, and agents may not maintain accurate or responsive contact with potential clients.
• 😀 Property prices in Thailand, particularly in tourist-centric areas, are rising and rivaling Western prices, but the potential for real estate appreciation is minimal. Buyers should expect little to no return on investment over time.

Q & A

Why is it a bad idea for most people to buy a condo in Thailand?

The primary reasons include foreign ownership restrictions, which make condos more expensive for foreigners, low resale potential, high maintenance fees, and a saturated market with new condos constantly being built. Additionally, rental yields are low, and occupancy rates in many condos are as low as 30%, which affects the overall value.

What are the foreign ownership restrictions when buying a condo in Thailand?

Foreigners can buy condos in Thailand, but only if 49% of the units in the building are sold to foreigners. This means that foreign buyers are limited to half of the available units, which are often priced higher than those sold to Thai citizens.

Why is reselling a condo in Thailand difficult for foreigners?

Foreigners can only resell their condos to other foreigners, not to Thai citizens. This creates a limited pool of potential buyers and lowers resale value. Additionally, Thai buyers typically prefer cheaper units, so the market for foreign-owned units is smaller.

How do maintenance fees affect condo ownership in Thailand?

New condos, especially those with extensive amenities like infinity pools and gyms, often come with substantial maintenance fees. While property taxes in Thailand are low, these fees, along with potential special assessments for building repairs, can add significant costs for condo owners.

What impact does the high rate of new condo construction have on the market?

The rapid construction of new condos floods the market, which dilutes the value of existing properties. This constant influx of new developments, with increasingly competitive amenities, reduces the desirability of older units and drives prices down.

Why are Thai buyers less likely to buy used condos?

Cultural factors in Thailand make Thai buyers prefer new properties over used ones. There’s a stigma around buying used properties, especially condos, as they may be associated with previous occupants or even negative events like deaths, which makes new properties more desirable.

How do seasonal fluctuations affect condo rentals in tourist-heavy areas?

In tourist-heavy locations like Phuket or Koh Samui, occupancy rates can vary drastically between high season and low season. During the low season, rentals are sparse, making it difficult to secure tenants. This seasonal variation can affect rental income and make owning a condo as an investment risky.

What is the issue with the rental system in Thailand for condo owners and renters?

The rental system in Thailand is disorganized, with no centralized listing service like MLS. Multiple agents often list the same properties, leading to outdated or inaccurate information. This lack of organization makes it challenging for owners to find reliable tenants and for renters to secure a property.

What are the challenges faced by condo owners when it comes to maintenance and repairs in Thailand?

Owners, especially foreigners, often struggle to find reliable and fairly priced workers for repairs or maintenance due to language barriers and inflated quotes. Many service providers take advantage of foreigners, charging them much higher rates than locals for even simple tasks like painting or minor repairs.

In what cases could buying a condo in Thailand be a good idea?

Buying a condo in Thailand might be worthwhile if you're certain about staying long-term, have a good understanding of the local real estate market, and can afford to pay in cash. Additionally, some may find comfort in owning property for personal use, or for those with extensive real estate experience who find a rare deal with significant potential.