Last week we covered the ownership of property by foreigners in Thailand and some of the pitfalls and possibilities. This gives rise to the question of how foreigners can actually finance the purchase of a property here.
Currently foreign ownership of property in Thailand is restricted to strata title leasehold apartments and condominiums for the vast majority. Some methods are available to own land but these are rare and sometimes not quite legal.
There are six major methods to finance the ownership of a property in Thailand and today we will look at three of them.
1. Cash is king: Until very recently this was the most common method of purchasing property in Thailand. As an expat owner it was expected that you would have sufficient resources to produce the cash required. Comparative prices have now increased and made property more expensive. This is partly because there are more sources of finance and these have also become more commonly available to Thai nationals. Demand by foreigners has also increased, pushing prices higher.
2. Local mortgage finance: In recent years Thai banks have vastly expanded the variety of mortgage products available to Thai nationals. A limited umber of Thai banks also consider applications by foreigners, and many restrictions apply if you are not Thai.
Foreign banks that have local operating licences may also offer mortgage financing. Because a foreign bank may not have legal title to land, it must have a local bank licence status to enter this market sector. To my knowledge there is only one foreign bank with a local licence offering mortgages to expats here.
At present the rules applied by the banks offering mortgages to expats say that you must have a current valid work permit for Thailand and it must have been held for at least a year, or sometimes two. So, if you are retired or if you do not live in Thailand but wish to invest, you are highly unlikely to be granted such facilities.
Mortgages are generally offered for 10 to 15 years, with a maximum loan repayment completion age of 60, and at a loan-to-value (LTV) ratio of approximately 60% of the property value. Interest-only loans are not offered, so you must have a repayment mortgage loan to be reduced to zero over a relatively short period.
While there are no official figures on the success rate of mortgage applications by foreigners, anecdotal evidence suggests it is very low at just 5-10%. This shows just how difficult it is to obtain this type of finance.
3. Owner or developer finance: This is a relatively new method and is largely used for foreigners because of the difficulties they encounter when trying to finance a property purchase. The arrangement is simple, based on an agreement to purchase a property from a seller, partly using instalments to pay the price. Developers will tend to offer averages of, say, 25% of the purchase price to be paid over a period of, say, five years or more.
Depending on the individual agreement, financing may be granted at a nominal or very low interest rate. So, if you see a condominium for sale but you do not have all the finance in place, there may be a way to arrange this with the developer. In the case of a new development, there may be some time between the purchase date and the project completion date. During this period you may be able to accumulate more resources for your purchase.
A private purchase may also use this method. Where the seller is an individual this may make the difference between a fast sale and a long wait for the seller to realise the transaction. It may also help you secure your property where you weren't quite able to raise the necessary funding.
Be careful and make sure to have any agreement drawn up by a lawyer to ensure both parties are protected, and have your own lawyer review this agreement to make sure it will be acceptable to you.
All three of the above approaches may seem a bit daunting. Next week we will discuss the three other options that are more popular with expats, and with which they seem to have more success.
Sunday, September 12, 2010
Emerging markets funds: Turkey, Singapore, Thailand (Emerging Index) | The Emerginvest Stream
ETF iShares MSCI Thailand (THD)
The Thai economy was crushed in 1998 during the Asian currency crisis, but more than 10 years later, she returned in much better shape. Exports grew only in the last year the most in 20 years by 46.3 %. However, most economists predicted more than a 30 % drop.
Base rate of the Bank of Thailand is now 1.5 % but is expected to grow this year to 6 %. Even the International Monetary Fund predicts growth in the economy this year by 8 %.
Exporters in Thailand can also celebrate. Many European, Japanese and U.S. companies moving their production to Thailand mainly from China because of price increase. Sales to the United States and Europe jumped 37 % and to China 26 %.
The Thai economy was crushed in 1998 during the Asian currency crisis, but more than 10 years later, she returned in much better shape. Exports grew only in the last year the most in 20 years by 46.3 %. However, most economists predicted more than a 30 % drop.
Base rate of the Bank of Thailand is now 1.5 % but is expected to grow this year to 6 %. Even the International Monetary Fund predicts growth in the economy this year by 8 %.
Exporters in Thailand can also celebrate. Many European, Japanese and U.S. companies moving their production to Thailand mainly from China because of price increase. Sales to the United States and Europe jumped 37 % and to China 26 %.
Bangkok Post : Thai-Lao business blossoms
The value of cross-border trade between Thailand and Laos is forecast to reach 80 billion baht at the end of this year, as the Thai government is pursuing a new strategy to optimise free trade agreements.
The Asean Free Trade Area (Afta) agreement, which took full effect in January, was becoming a key driver for Thailand's border trade growth, said Commerce Minister Porntiva Nakasai.
Mrs Porntiva made the comment at the first Thailand-Laos Border Trade Festival: Gateway Grand Sale in Nong Khai province.
The festival runs until tomorrow and features outstanding products from both countries as well as business matchmaking events.
Border trade between Thailand and neighbouring countries totalled 639.16 billion baht last year, down 10.4% from a year earlier because of the effects of the global recession. Thailand's overland exports fell 10.8% to 366.11 billion baht and imports were down 9.8% to 273.04 billion, according to Foreign Trade Department statistics.
Cross-border trade between Thailand and Laos was totalled 71.98 billion baht in 2009, a drop of 12%.
But Mrs Porntiva has forecast that border trade will reach one trillion baht over the next three years, now that Afta has cut tariffs on thousands of Asean products to between zero and 5%.
Border trade is also a good channel for acquiring low-cost raw materials with low transport costs, she added.
Mrs Porntiva said the ministry would open three more permanent checkpoints _ in Loei, Nong Khai and Amnat Charoen _ bringing the total on the Thailand-Laos border to 11.
The Asean Free Trade Area (Afta) agreement, which took full effect in January, was becoming a key driver for Thailand's border trade growth, said Commerce Minister Porntiva Nakasai.
Mrs Porntiva made the comment at the first Thailand-Laos Border Trade Festival: Gateway Grand Sale in Nong Khai province.
The festival runs until tomorrow and features outstanding products from both countries as well as business matchmaking events.
Border trade between Thailand and neighbouring countries totalled 639.16 billion baht last year, down 10.4% from a year earlier because of the effects of the global recession. Thailand's overland exports fell 10.8% to 366.11 billion baht and imports were down 9.8% to 273.04 billion, according to Foreign Trade Department statistics.
Cross-border trade between Thailand and Laos was totalled 71.98 billion baht in 2009, a drop of 12%.
But Mrs Porntiva has forecast that border trade will reach one trillion baht over the next three years, now that Afta has cut tariffs on thousands of Asean products to between zero and 5%.
Border trade is also a good channel for acquiring low-cost raw materials with low transport costs, she added.
Mrs Porntiva said the ministry would open three more permanent checkpoints _ in Loei, Nong Khai and Amnat Charoen _ bringing the total on the Thailand-Laos border to 11.
Rabies vaccinations advised before travel to China, parts of Asia - CNA ENGLISH NEWS
aipei, Sept. 12 (CNA) Amid outbreaks of rabies in China and some other parts of Asia, the Department of Health (DOH) urged would-be travelers Sunday to get vaccinated against the disease before departing for those regions.
No human cases of rabies have been reported in Taiwan since 1959, apart from a single case imported from China in 2002, and no animal cases have been reported since January 1961, according to Council of Agriculture data.
Citing statistics compiled by the World Trade Organization, Chou Chih-hao, deputy director of the DOH's Centers for Disease Control (CDC) , said there are about 50,000 fatal rabies cases in Asia every year.
However, the number of rabies fatalities on the Indonesian island of Bali, one of the most popular destinations for Taiwanese holidaymakers, has doubled to 53 so far this year from 26 for the whole of 2009.
In China, rabies has claimed 1,178 lives among the 1,296 reported cases up to August this year, compared to 2,213 cases with 2,131 fatalities for the whole of 2009.
Vietnam, meanwhile, reports an average of 9,000 cases every year, while India has around 30,000 cases per year.
Rabies, or hydrophobia, is a viral disease that causes acute encephalitis in mammals. It is most commonly transmitted through a bite from an infected animal, but occasionally through other forms of contact. Left untreated, the disease is almost always fatal.
Chou urged the public to get the three-stage vaccination one month before departing for rabies-affected areas, and to try to avoid contact with animals such as dogs, cats, bat
No human cases of rabies have been reported in Taiwan since 1959, apart from a single case imported from China in 2002, and no animal cases have been reported since January 1961, according to Council of Agriculture data.
Citing statistics compiled by the World Trade Organization, Chou Chih-hao, deputy director of the DOH's Centers for Disease Control (CDC) , said there are about 50,000 fatal rabies cases in Asia every year.
However, the number of rabies fatalities on the Indonesian island of Bali, one of the most popular destinations for Taiwanese holidaymakers, has doubled to 53 so far this year from 26 for the whole of 2009.
In China, rabies has claimed 1,178 lives among the 1,296 reported cases up to August this year, compared to 2,213 cases with 2,131 fatalities for the whole of 2009.
Vietnam, meanwhile, reports an average of 9,000 cases every year, while India has around 30,000 cases per year.
Rabies, or hydrophobia, is a viral disease that causes acute encephalitis in mammals. It is most commonly transmitted through a bite from an infected animal, but occasionally through other forms of contact. Left untreated, the disease is almost always fatal.
Chou urged the public to get the three-stage vaccination one month before departing for rabies-affected areas, and to try to avoid contact with animals such as dogs, cats, bat
MACAU DAILY TIMES - PATA Travel Mart to open in Macau
Macau is for the first time to host the Pacific Asia Travel Association (PATA) Travel Mart which will take place from September 15 to 17 at the Venetian Macao Resort Hotel.
The event is expected to attract 1,000 participants and guests to the SAR.
Following the PATA Annual Conference in 2005, Macau is to host the PATA Travel Mart for the first time. More than 300 buyers, 500 sellers and 50 media representatives from around the world will gather in Macau for the event.
PATA will cooperate with the Institute for Tourism Studies (IFT) and the Hong Kong Polytechnic University to organise a full-day seminar “Human Resources Challenges in the Tourism and Hospitality Industry: Promoting Industry and Academic Collaboration” at the IFT tomorrow. The goal is to provide a forum for academia and industry practitioners to exchange opinions on issues of the supply and demand of qualified employees in the travel and tourism industry.
The 3-day travel mart event will provide a platform for 900 buyers and sellers to establish networks and seek business opportunities. In addition to workshops and case studies, tours to Macau’s world heritage sites will be organised for participants.
The event is expected to attract 1,000 participants and guests to the SAR.
Following the PATA Annual Conference in 2005, Macau is to host the PATA Travel Mart for the first time. More than 300 buyers, 500 sellers and 50 media representatives from around the world will gather in Macau for the event.
PATA will cooperate with the Institute for Tourism Studies (IFT) and the Hong Kong Polytechnic University to organise a full-day seminar “Human Resources Challenges in the Tourism and Hospitality Industry: Promoting Industry and Academic Collaboration” at the IFT tomorrow. The goal is to provide a forum for academia and industry practitioners to exchange opinions on issues of the supply and demand of qualified employees in the travel and tourism industry.
The 3-day travel mart event will provide a platform for 900 buyers and sellers to establish networks and seek business opportunities. In addition to workshops and case studies, tours to Macau’s world heritage sites will be organised for participants.
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