Selling a condominium unit 4 times one year before the building is even completed
Whilst discussing with another broker the resale of a condominium unit in the Phrom Phong area, I discovered to my surprise that the broker was in negotiations to sell that unit for the 4th time, and the condominium itself was a whole 1 year from the date of completion. In fact, it���s still a bare shell!
How is this possible you may ask? You may think that most buyers want to see what they are buying, but this is not the case.
Basically, there is a huge amount of traffic in the resale of condominium units prior to the completion of the condominium. It seems that the ���buy new��� culture in Bangkok is so great that property speculators are having a field day. Whereas an off-plan sale from the developer might set you back 80,000 Baht per square metre, these units are being mopped up by property speculators who, shortly after putting down the initial deposit, will contact the broker and ask them to resell the unit, typically adding on 5% to 10% of the initial purchase price.
Take a luxury condominium unit with an initial purchase price from the developer of 15,000,000 Baht. Shortly after signing the sales and purchase agreement, and putting down the initial 10%, the owner will try to resell the unit at say 16,000,000 Baht. This would make them a clear 1,000,000 Baht profit, from an initial investment of just a few million Baht. The maths is simple; a successful speculator could make 30%-40% return in a few months. And because there is no transfer of title deed involved, there is no 2% transfer fee or 3.3% stamp duty. But is this right that an individual can sell an asset and make so much money and not pay taxes?
The second buyer could also be a property speculator, and buy the unit for 16,000,000 Baht and sell it again shortly after for 17,000,000 Baht. But where does it stop??
Well each condominium has its own potential. Regardless of the fact that there are literally hundreds of new condominium blocks being constructed, only a few have the potential for massive gains, because only a few have the key ingredients; namely ���location, location, location���. Many have the potential of some gains. The key is (apart from having a bit of starting money), to gage the economic booms and busts, which is of course easier said than done. We have experienced a growth period, which one might expect to continue for a little while longer, but perhaps its best to wait a few months until the current political turmoil has passed (or however long it takes) before getting back on the bandwagon. However, with construction levels and real estate prices reaching or even exceeding post 1997 crash levels, time is running out.
If you���ve bought a new condominium unit and want advice on what options may be available to you, contact us a Soho Properties (02) 651 3930-1.
Author: Neil Simmons, Director of Soho Properties, published in the Bangkok Post