Bangkok Resale Condo Market Continue to Grow
Many buyers in downtown Bangkok have begun considering resale, or second-hand units as the prices of new condominiums continue to rise, according to CBRE Thailand.
Since the fourth quarter of 2018 there has been an increase in demand for exiting second-hand units on the market, the property consultancy says. Buyers can benefit from bigger unit sizes and more affordable costs than those at newly launched projects, as the older units can be cheaper.
There are two types of resale units. The ones that are completed ready-to-move in units where the title has been transferred fro the original buyer. And the units in buildings under construction that investors want to resale before transfer of title.
The total supply of completed condominiums in downtown Bangkok the third quarter of 2018 was 145,350 units according to a survey by CBRE Research. Prices of these units range from 55,000 to 350,000 baht per square meter, which depends on the grade and age of the building and how well it has been maintained.
Newly launched luxury condominiums in downtown Bangkok now sell from 300,000 to 600,000 baht per sqm and they are generally smaller than ones in older completed buildings.
According to CBRE Thailand head of Advisory and Transaction (Residential Sales) Pornpimol Phuengkhuankhan, the market for resale-before-completion units is more active right after a project launch if the building sells out and there are no units left for sale by the developer.
Resale activity of uncompleted units will drop during construction, and usually picks up again as it gets closer to completion, she said.
The purchasers pay the seller the amount already paid to the developer plus the profit. Then the original sales and purchase contract is assigned to the new buyer, who takes responsibility for future payments to the developer.
Usual payment terms for high-end properties in the central business district (CBD) offered by developers are 10% on signing a sales and purchasing contract. During the construction period 10-20% is paid with the balance paid on transfer of title at the completion of construction.
Depending on how many monthly down payments remain will determine how much the new purchase will pay to the developer. An important fact is that the developer must sign the assignment agreement as well as the seller and purchaser for the contract transfer to be valid.
A determining factor for the purchaser to consider this type of sales is the reputation of the developer and its track record to deliver the quality of product described and promised in the sales material.
The sales process for a completed building includes signing a standard sales and purchase contract with a deposit, usually 10% of the sale price. Transfer of title at the Department of Lands is 30 to 60 days after signing the sales purchase agreement. The total balance is paid to the seller at the department on title transfer.
When a purchaser considers a unit in an older building they must consider how good the original construction quality was, how well the building has been maintained and the condominium juristic person office financial status. The juristic person office is the entity jointly contracted by all co-owners that provide building maintenance and manage the common areas of the property.
Most Thai buyers have preferred purchasing new buildings since the original Condominium Act was passed in 1979. Rather than buy a second-hand, completed property they prefer to buy units off-plan from a developer or resale units from an investor before completion.
"However, since the price difference between new launches and older, completed properties is now becoming so great, buyers who want a unit to live in are looking increasingly at existing developments as new ones are priced beyond most Thai buyers' budgets," said Ms Pornpimol.
"Buyers are increasingly willing to give up the prejudice against previously occupied condominium units in return for the ability to buy a larger unit for their money."
Keep in mind that there is a wide range of quality among existing developments, with some older projects being as good as new properties while others were poorly built originally and/or have been poorly maintained.
Buyers looking at existing buildings should do due diligence on the construction quality and condition of maintenance as well as gain understanding of the financial situation of the juristic person office to estimate the probability the building will be well maintained and appreciate in the future, Ms Pornpimol said.