Investors often ask us: where is it more profitable to buy, in the primary or secondary market?
The resort real estate market in Thailand is now experiencing its dawn. In Pattaya, real estate for foreigners has been built since the 2000s. The secondary market is also in the process of formation.
Prices
Real estate prices are growing steadily, on average by 5-7% per year. No owner who bought a property a few years ago wants to sell it cheap! Yes, there are “urgent sales” below the market, when someone desperately needs money. But developers also periodically have special offers and experienced agents will always tell you about them.
Installment plan
It is almost impossible for a foreigner to get a mortgage in Thailand. However, when buying real estate in the primary market, you can count on interest-free installments for the construction period. The apartment complex is usually built in 1-2 years. Some developers offer additional installments for a few more years after construction is completed at 3-5% per annum. You can relax in your apartment, rent it out in your absence and pay for it with rental income.
When buying on the secondary market, you must pay the seller the entire amount at once, because it is impossible to get a mortgage.
Purchase procedure and transaction costs
Transactions in the primary market, where the developer acts as a seller, are technically very simple. The developer’s offices operate on a flexible schedule. Accountants, lawyers, managers – a whole team of professionals ready to solve any of your questions. And you don’t have to pay for it!
When buying real estate on the secondary market, get ready to pay for the services of a lawyer to check the object, draw up a 3-sided contract, make payment and register the property. Thus, transactions on the secondary are technically more difficult and costly.
Property type
Until 2014, Russian-speaking investors purchased apartments and villas mainly for recreation. At that time, developers did not save on square meters, and buyers did not save on spending. The minimum area of a 1 bedroom apartment was 40-50 square meters. m, and from 2 – about 100. Many complexes of small villas with a garden and a swimming pool were also built.
Now developers live by the principle: “smaller footage pays off faster.” They build mainly small apartments with 1 bedroom measuring 25-30 sq.m. It is these complexes that are taken over by hotel chains and investors acquire them mainly to generate income. Usually no one is going to live and rest there.
At the same time, the elite real estate market is developing – penthouses of 200 – 300 square meters, luxurious villas of 500 – 1000 square meters. Luxury real estate saves owners a decent amount of money on accommodation during their holidays, brings a stable income and grows very well in price.
State
Quality standards, materials, designs – everything is changing rapidly. Real estate built 5-10 years ago can be very different from the modern one. In addition, in a humid climate, housing deteriorates and wears out faster. Every 5-7 years it is necessary to change air conditioners and communications.
When buying on the secondary market, you can immediately see who and how managed it. Be prepared to invest in renovations. Especially if the apartment was actively rented out!
The primary housing is new, modern, fashionable, everything is under warranty (for appliances, windows, doors – 1-3 years, for load-bearing structures – up to 5-10 years).
Encumbrances, profitability, related contracts
When buying in the primary market, you receive the entire package of documents from the developer. When reselling, ask the seller to provide all contracts and add. agreement, because its obligations will automatically pass to you.
For example, you are going to buy an apartment in order to rent it out through your agent or yourself, and the previous owner signed a document that he has no right to rent it out. Or he has already given the apartment to the hotel’s rental program for several years and you cannot get out of it.
And everything would be fine, but perhaps the seller agreed to a guaranteed rental income for several years. In this case, you will receive income not from the price at which you bought, but from the lower price at which the previous owner bought. There are many nuances! Be sure to understand under what conditions the object was purchased by the seller and what restrictions you will have.
Let’s summarize:
It makes sense to buy small apartments for investment or luxury luxury penthouses and villas on a primary property. On the resale there is a good selection of spacious apartments and small villas in residential complexes, but you need to be ready for renovation.
If you are limited in funds, choose objects under construction, where prices are minimal at the construction stage, there is an installment plan and you do not need to invest in repairs.
In any case, there is less and less land near the sea, and its prices are getting higher. So hurry up and invest your money!