Buying Off-Plan Condos in Bangkok
Many people thinking of buying a condo in Bangkok consider buying an “off-plan” condo.
That is, buying a condo unit where construction work has not yet commenced on site. Buyers simply select the condo unit they want “off the project plans” from the developer’s sales office.
There is definitely an appeal to many people to be the very first owner of a brand new, modern condo in Bangkok.
Key benefits of buying off-plan condos in Bangkok
Some of the key benefits of buying off plan include:
- the design of the condo will be modern and the facilities up to date;
- buyers can pick the aspect and layout they want;
- the initial pricing may increase as construction is underway;
- if the condo is to be developed by one of the better known SET (Stock Exchange of Thailand) listed developers, the ongoing management will probably be of good quality.
If you are thinking of buying off plan, always make sure you agree to buy from a reputable developer with a track record. In any event, here are some great tips of things to be aware of:
Once you have viewed the show unit, reviewed the floor layout plans, studied the specifications of the building (including details of parking areas) and selected your condo unit, the developer may agree to offer an off-plan payment scheme similar to the following:
- You pay an initial “holding deposit” to reserve the condo unit you want, perhaps Baht 50,000;
- then pay a more substantial deposit on signing the sales and purchase agreement;
- followed by a series of payments as construction commences and progresses;
- with a final payment upon completion of the condo unit, and before it’s handed over to you
Whilst this staging of payments is a definite benefit of buying off-plan, foreigners still have to buy an off-plan condo without a loan or mortgage. That is, unless the developer has set up a special scheme to enable foreigners to access debt. If this is the case, it goes without saying that the detailed terms of any arrangement need careful scrutiny.
Things to consider when buying off-plan condos
- A developer will probably have a very nice “show” or “display” unit on or nearby to the site. However, they will not usually start construction work on the main building until they have firm bookings for at least 50-60% of the condo units in the development.
- This is partly as, whilst they will have a construction loan in place, part of the development cost will be funded by deposits for the condo units made by purchasers;
- So, whilst the developer will have a preliminary time frame for delivery of the condo unit to you, completion will really depend on when they have “sold” enough units to be ready to start construction;
- Most reputable developers will give a building defect warranty and the duration and extent of this will should be disclosed in the contracts that you sign;
- The condo show unit will, invariably, be beautifully fitted out and very appealing in terms of décor and furniture used. But, make sure:
- you have a written list of what is or is not included in the price you are agreeing, as you don’t want any surprises later. Some basic questions include: is all or some of the movable furniture included? Are the air-conditioners? If there is wallpaper in the show unit, is the developer providing wallpaper to your unit? Or even providing the kitchen cabinets?
- to double check the size of the show unit with the size of the unit you are buying as some, not all but some, developers will make the show units larger than what they will actually build. That is, if you are buying a 60m2 condo unit, the show unit may, in fact, be 65m2, giving a feel of being so much more spacious!
- bear in mind that, in many of the more popular condo developments which are sold off-plan, there will be many “investors” buying. In other words, people who sign to buy a condo unit at the initial launch and then, as the development is close to being “sold out” will “sell on” their contract to those who want to buy in the development but have missed out. These contracts may carry a premium of maybe Baht 30,000 or 50,000 or more and, in a stronger market, may change hands 3 or 4 times before the person who plans to actually live in the condo buys the contract;
- you may also see that, in a number of new condo blocks, whilst all of the condo units have been sold, they are never occupied. This may be as buyers are just “parking” their money for the longer-term, expecting prices to rise over a 2-3 year horizon and they will then sell;
- some new developments offer “guaranteed rental returns” to purchasers. If such a scheme is available in the condo block you wish to buy in, make sure you read the small print and know:
- is the investment return “gross” or “net” of operating expenses? If net, what are the primary expenses to be deducted to calculate the net return?
- how long will this return be payable? 2 years, 3 years or longer?
- how does the scheme fundamentally work and the allocation of returns made? For example, do you get a return if only your unit is occupied and rented or is the rental of all units in the rental pool “pooled together” and then shared between participants in the scheme?
Generally, the better rental schemes are operated by a developer who has a recognised brand name. This may be a hotel or serviced apartment operator who has a track record of success in this field;
- finally, relative to other, older condos in the market, the pricing of a new condo may be slightly higher per m2. Some developers such as Sansiri or Magnolia can command a significant premium for the condos they build (“brand reputation”). However, this is more to do with the fact that they hold their value rather than there being an exponential increase in quality compared to other condos.
Buying off-plan branded condos in Bangkok
The exception to this may be for “branded condos”, a development often adjacent to a luxury hotel (ie Ritz Carlton or Mandarin Oriental) and to which a major internationally known hotel group puts its name. There the quality has to be high—but so is the price tag!
Buying a condo off-plan in Bangkok is very popular. Whilst it is prudent to take legal advice and do legal due diligence for any property purchase, perhaps it’s more important to do so for a new condo unit as you are ‘buying” something which is not yet built!
You also want to make sure that you get what you are contracting for and when the developer will deliver.