Doing Business in Thailand

To buy or not to buy in Thailand?

This is one of the questions that many careful investors are asking now.

Of course due to what happen in Thailand in 1997 where many banks and developers went bankrupt and where hundreds of buildings where left unfinished a lot of buyers are wondering whether it is the right time to buy a property in Thailand?

Indeed not only Thailand was affected by the 2008 financial crisis but it has also suffered two years of political crisis.

This would ignore that Thailand bankers and real estate developers have learnt the lesson of the previous financial crisis and that they have all since by far more cautious since then.

Thailand impressive ranking record

Truth is that Thai business community, especially Thai banks and Thai top developers have all well learnt the lessons from the 1997 crisis.

This is why Thailand’s had such impressive comparative ranking as an investment destination at end of 2008.

Not only does Thailand score well as an investment destination but in addition Thailand was, according to a study of OCBC Bank, prompted by the current global financial meltdown, ranking at end of 2008 in the top 8 of more than 50 economies worldwide (Singapore is no. 1) most likely to overcome the serious 2008 economic crisis.  This OCBC report that examined risk levels awarded Thailand full marks for its long-term economic fundamentals.

When everything is for the best in the best of all possible Thai worlds

Life is full of paradoxes and one of the paradox in the real estate sector is that the two years political crisis have helped developers to brace themselves against the consequences of the current financial crisis.

Because of the political crisis Thailand top developers in Bangkok have started to reduce the number of the new projects launched as soon as middle of 2007.

In 2007 there were fewer projects launched than in 2006, in 2008 there were fewer projects launched than in 2007, and now in 2009. It will be to the point when condominium average supply that was around 20,000 new units per year in Bangkok will soon decrease down to less than 10,000 new units per year matching the demand.

This is one of the reasons why real estate prices did not drop but to the contrary have slightly increased this year.

Why should you buy now?

It is our opinion that buying now a ready for transfer or even an off-plan condominium unit is the right thing to do.

Buying a completed unit or even off plan (providing you do not purchase from a First Time Developer) is the right thing to do because prices will not drop and if the world economy is back on track by end of 2009 or first quarter 2010 then there will be a two years window period where the supply will be lower than the demand because the demand for condominium units will increase more quickly than the offer at it takes around 3 to 4 years from blank page to project completion.

Therefore even if the economy is back on track in 2010 it will be 2015 before we are back to 2004-2006 average supply numbers which should result in an substantial price increase.

What should you buy?

We recommend you to buy condominium in Bangkok, Hua Hin, Phuket or Pattaya but only within projects launched by top Thai Developers such as Raimon Land, Sansiri, Preuska, Land & Houses and so on as those developers financial situation is more healthier than the financial situation of smaller developers.

Note: This post is an excerpt of Rene Philippe Dubout first book: “How to Purchase Real Estate Offshore Safely: The Case of Thailand” published in february 2009

This post was first published by Rene-Philippe Dubout on the 06/07/2009 and was first posted on his former blog www.howtopurchaserealestateoffshore.com

About the Author:

The author Rene-Philippe DUBOUT is a lawyer since 1990 when he was admitted to Geneva bar (Switzerland). He practiced as a litigator there for 10 years until he moved to Thailand in 1999. In 2002 he founded with a group of Thai lawyers Rene Philippe & Partners Ltd a local law firm that specialized in Cross Borders Investments and Real Estate. He has been lecturing in several Thai Universities and a speaker to numerous conferences and seminars. He is the author of a must read book:”How to Purchase Real Estate Offshore Safely: The Case of Thailand”.

http//:www.renephilippe.com

© Copyrights 2009 – Rene Philippe Dubout – This article may be reprinted if information about the author, the websites, and the URLs remain intact.