Potholes on the road to luxury Thai living

BANGKOK: Resort housing developments in Thailand generally have fancy Web sites, catchy slogans, glossy magazine ads and even prominent sponsors, and launch parties at five-star hotels.

What they often do not, however, is money for the construction of the actual building.

Many non-Thai developers, in the country that is heavily dependent on customer deposits to finance construction because it is prohibited banks in lending to foreign companies are cautious and even lending to foreigners, through a locally established companies. So, if developers are not enough units sell-off plan, the buyers find their cash sitting on the edge for a year or two - or, in rare cases, forever lost.

"A lot of projects started, never because of funding difficulties," said Larry Cunningham, managing director of Phuket One Real Estate. "First-time developers often only have enough money for the purchase of land with building no. If you do not have enough revenue, it will never be built. In the future, this could be very negative for the market."

If the economy sours, as it is in Thailand, after the army to power in September 2006, the buyers mostly dry and projects delayed or dropped. Investors can usually recover, but their money by the time they come back to the market in search of a home, construction costs and other expenses may jumped significantly.
No statistics are kept, how many projects will be advertised and later abandoned or delayed, said Sopon Pornchokchai, managing director of the Agency for Real Estate Affairs, a Bangkok consulting. But construction delays are on the agenda, he said, and the Thai government has failed to take steps to protect consumers, in the ten years since a regional financial crisis saw many buyers in Thailand sometimes lose money on buildings, many of whom are still in March skyline of Bangkok.

"This is a problem that should be solved already 10 years old," Sophon said. "Developers need their own funds or, if they money from customers, it should be in an escrow account and released in accordance with a construction schedule. Caso, developers can deposit and the purchase of a Mercedes."

Nevertheless, property managers and buyers say that the Thai luxury market is certainly maturing, as one by an influx of major international brands such as Four Seasons, W, Raffles, Shangri-La and Jumeirah, which are much capital to blueprints in buildings. For smaller developers, buyers say it is important that their track record.

"I would probably be cautious about investing in an off-the-drawing-board project, but it would all depend on the developer's reputation," said Ole Soltau, director of the Hong Kong-yacht-building company Bondway companies. Soltau has purchased several pieces resort property in Thailand in the last ten years.

Nevertheless, he adds, high-quality projects and are abundant in those days. "The profile of the developers has changed a lot in the last five years," he said. "In the past, it was often small" cowboy outfits of guys with little or no experience. These days find many of the large, heavy, international developer, a project in Phuket, in terms of the security of the completion of projects , the quality of education and supervision, makes life easier for first-time buyers. "

Resort real estate sales fell last year in Thailand by the government riot, although many executives are optimistic that sales will pick up this year, when the new elected government proves stable. Condominium sales in Bangkok has remained strong, but as buyers snatched up units in projects built in the vicinity of planned mass transit routes.

Foreigners can buy freehold property and homes in Thailand, although the funding is difficult to obtain. Prior to the coup, typically Foreigners bought freehold villas, detached houses with land, a nominally Thai subsidiary. But a debate on the foreign-business laws sparked by a major deal with the family of remote Prime Minister Thaksin Shinawatra asked authorities to crack on corporate nominee structures are now the most real estate sales to foreigners are leasehold.

Foreigners can 30-year leases can be renewed twice. Lawyers are constantly on the lookout for ways to enhance the security of the leases, so that they can essentially be guaranteed, but for 90 years, since the foreign ownership laws remained in limbo since last year, which are still untested in court. For some time, the government has to increase the lease period to make comparable with other countries in the region, although this action is unlikely to be a priority for the new government.

Although still the top resort Phuket real estate market in Thailand in December 2004 devastated by the tsunami, the Andaman Sea coast to the tourists and developers flock to Samui, an island in the Gulf of Thailand, against the active fault lines lurking under the Indian Ocean. Many saw an opportunity for a quick buck in the property boom, but a scandal last year in which fake land titles was an important development that has led to many negative press.