Neil McDonough

Perils of the Thai property market

Some pitfalls to watch out for in terms of after-sales service


Even when setting out to write this blog I am in two minds if I am doing the right thing. On one hand I want to convey a message from one group of professionals to another, and to warn people entering the Thai property market for the first time, or their umpteenth time, of a few pitfalls to watch out for. On the other hand I can see how this blog may be construed as a bitter man ranting....I assure you it is not the second, and I will try my best to avoid appearing as such.

In the last few years, I am sure you have noticed if you are resident of central Bangkok that there has been massive growth in the number of condos, apartments, serviced apartments and even hotels that have been built or are under construction. There really is no getting away from the fact that whilst the West is undergoing its biggest recession since the 1930's and the housing market is in a coma, Thailand is bounding along, building 10 000's of residential units in and around Bangkok. However as any shrewd investor knows, not all these units are equally as valuable and anyone investing in this market needs to hand-pick which properties are worth the money, which properties will retain their value and which properties will indeed become a worthy asset in the future.

With thousands of condo units to pick from in literally thousands of new condominium blocks, it can look a daunting task, and on first glance, it looks pretty much the same. I mean if you are going to invest in a location like say Phrom Phong, why not just choose the cheapest building in that area, or even better just choose the cheapest unit per square meter in a building that on paper offers the facilities and amenities you are looking for? Well this would be one way to go about it. But it would be far from the shrewdest way.

Unfortunately with any market that is fast developing, there is always the ‘me-too' factor, and any expat that has lived in Thailand for a number of years will be able to testify to how much Thailand is a breeding ground for ‘me-too' entrants to any market. Does anyone remember the snooker fad when James Wattana was the national hero, or Paradon with tennis. Or perhaps the Green Tea phase, where suddenly everything needed extract of green tea in it. Or the coffee phase which still seems to be holding on (however I have seem some of the coffee stalls retreating in some areas).

What these fads demonstrate regardless of what market they are in is that suddenly a market becomes so flooded it is difficult to tell the chaff from the wheat. However as time draws on the lesser players retreat and the quality players remain. Now what has all this got to do with real estate?

Well if you happen to buy a coffee from one of the stalls that sells an undesirable poor product, you will know not to waste 40 Baht at that place again. However if you have bought a property from a developer who has entered the market as a ‘me-too' player, you are going to be decidedly more angry when you realize the property you have just spent a few million Thai Baht on (or even borrowed) suddenly is not living up the expectations that the sales person gave you. And perhaps as the months and years progress you see that the maintenance of the building, the building materials and general quality of the structure is not what you hoped for.

This is why it is always important to research the market before you make a purchase. None of us can expect to be experts in all fields and so it is important to consult someone who is, like a reputable real estate agent with experience and pedigree in the field.

This also applies when you are looking to rent a property in Thailand. Again as in the above examples there are reputable and quality players in the Thai real estate markets, but there are also many ‘me-too' entrants. Politely and in the nicest possible terms these people can be referred to independent agents or freelancers. However judging from some of the stories we have heard they can be charlatans or even scam artists.

If you are looking to rent in Bangkok or anywhere in Thailand, we always recommend you use a reputable and experienced real estate agency. In a previous blog I have outlined some of the reasons we advise this  However what we never advise is that you opt to find a property with a freelancer, a ‘me-too' player in the market.

Freelance operators are often found advertising on websites with free on-line classified adverts, such as craigslist.com. Although it is true that many reputable property agents may use this form of advertising, it is much easier to spot if they are reputable as they will link to their official website where you will find details of their legally registered company. All this gives you an introduction into the peace of mind needed when you are entering into the property market.

We have heard horror stories in regards to freelance agents, such as not turning up for meetings, disappearing when a problem arises, giving false names, changing their telephone numbers regularly and their web based email addresses. In addition we have heard about them renting properties without the landlords knowledge or consent, and running off with deposits passed over to them in good faith by unsuspecting renters.

In all the above it becomes almost impossible to find and locate a person who has given false information, contact details and even aliases. In contrast if you are dealing with a reputable tax registered company with a registered company address (as all companies must have), you have a fall back. And believe me no reputable company is going sully their reputation by trying to rip-off individual clients. These businesses are here to stay and their reputation means far more them then any singular amount of money or deal.

So really although all the above is commonsense and obvious, it is still worthy of note. At the end of the day by using a reputable property agent you have peace of mind, weight on your side in any dispute with the landlord and access to a large amount of information from a person who cares about your self interests and their own reputation. With a freelance agent, a ‘me-too' player, you have none of these benefits and may be falling into a money pit!

Quick Tips on how to spot freelance agents:

1. Do they operate on a web based address e.g. @gmail, @hotmail etc?
2. Do they have a website with ‘Contact Us' details with an office number you can call (should be landline)?
3. Do they have a registered office you can visit if you need to?
4. Does their Business Card have registered Company address and an office number you can call I you need to check anything?




Comments

Surprisingly good points mentioned here. Just moved to Bangkok myself and found a place with an agency, but was told by a mate that he got ripped off by a freelance type about 5 years ago he contacted on-line. Bloke ran off with 15k of his money, then disappeared. Naivety I suppose, but then others use these freelancers today...guess people are getting stung all the time.

By Dave, Sukhumvit (17th November 2010)

So, what you're saying is that you should not trust anyone on 'craigslist' with either a hotmail or a gmail account?
'Craigslist' is for individual landlords or future tenants (many of which will have only a gmail or a hotmail account being as they are individuals looking for custom or else a potential tenant willing to become that custom - isn't that the whole idea of 'craigslist'?) From my understanding it should not be abused by companies flooding it on a daily basis for their own means...surely that is not to be trusted? Frankly, in my opinion, people would do well to make their own (educated!) minds up!

By kate, bangkok (16th November 2010)

great articles! keep 'em coming!
bottom line, you have to do your research: lots of companies copying others...trying to get their name out there...but afterward, poor management teams dont maintain the place.

By derek, ratchada (10th November 2010)

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