A Guide On Buying Phuket Property From Abroad

When the coronavirus pandemic struck in early 2020, professionals from across the globe began to find out that their normal working dynamic had been changed dramatically. Many industries were forced to evolve just to remain competitive and Phuket’s thriving real estate sector was no exception, which made buying Phuket property from abroad become slightly more appealing.

As the world began to adapt to social distancing guidelines, wearing masks and even working from home, people started to become more comfortable with the idea of ‘Buying Without Visiting’ both condos and villas in Phuket.

In this article, we will provide you with some excellent tips to help potential Phuket property buyers cover all bases when considering buying Phuket property from abroad.

The current market in Phuket is most definitely a buyers market and the age-old say ‘in adversity lies unexpected opportunity’ has never been more apt than in today’s current situation. Buyers and developers alike are finding more and more enticing deals surrounding the Phuket property market, making ‘social distance’ buying more common, and we’re not just talking 2 metres apart!

COVID-19, and its many variants, have probably been more responsible for general lifestyle changes across the globe than any other notable event in the last five decades. Workforces were told to work from home instead of the office every day. Flash lockdowns led to a huge increase in online sales and food delivery services and many local businesses were forced to close.

Phuket’s real estate industry was also a victim of the changes that the pandemic has brought with it. Owners, Agents and Developers across the island were forced into adapting to the current climate and doing whatever was necessary to help overcome new problems. Restricted travel took the ability to view a property in person away for some time, paving the way for new property marketing ideas. For developers, it meant that they began to offer more enticing deals and for foreigners with available cash, it meant an opportunity to pick up a quality property at a discounted price.

The pandemic has also helped to shine a spotlight on technological advances that are available to the Phuket real estate sector, allowing developers to showcase their properties in a digital format. Smartphones can be found in nearly every household now, giving potential buyers a quick and convenient way to view properties online through photos, videos, virtual tours and even live video chat tours.

It’s not uncommon for investors to hunt out bargains when there is “blood on the streets”, and if you’re considering buying Phuket property from abroad in today’s market, you may see yourself getting an exceptional bargain on a villa or condo.

If you’re looking for a forever home to move into yourself, buying remotely may not be an ideal scenario as by not being physically in the property, you may not be able to get the right ‘feel’ for the place. It makes a difference being able to run your hand across the countertop, tap the walls with your knuckles, experience the views and the fresh air. After all, a forever home is exactly that, a home forever.

If you’re looking for an investment property though, the main concerns you will have with any property is if it’s secure, safe and that the developer’s promises of high-quality build and on-time completions have been met. For this, you’ll want to search for a reputable developer that has a solid track record. Also, one that is renowned for delivering on promises made.

If you’ve been toying with the idea of getting hold of a condo investment in Phuket, especially at a discounted price, this might just be the perfect time for you to jump into the market. Phuket’s property market has never really seen a lot of booms and busts, but there have been a few times that dips in the market have benefitted investors. Now does have a sense of ‘opportunity knocking’ and has the potential to be the perfect time to invest in property.

Here are our top tips to help you purchase a condominium in Phuket, even if current restrictions prevent you from visiting the island.

Only Work With Experienced Property Agents

Perhaps the most obvious but certainly first on our list when it comes to buying Phuket property from abroad, you must work with an experienced property agent. Nine times out of ten, if a property deal comes with issues, it’s down to incorrect or flat out bad advice from their agent.

Proper research into your estate agent of choice should reveal that they are not just a salesperson intent on telling you everything that you want to hear. A professional agent will list the cons of development alongside the pros, providing that there are cons of the development. If a property development does sound too good to be true, the chances are that it is and you are not getting the right information. A good agent also acts as an advisor or consultant.

Don’t limit your line of questioning to be just about a property. Ask about the island and its areas, or the laws that will affect you when it comes to purchasing a property. A good agent will be a knowledgeable agent. It’s important to find out as much as you can, as missing even the most minor detail can lead to much larger problems down the line.

Keep The Lines Of Communication Open With Your Agent

The cost of international calls used to be astronomical, making calling abroad something you would only choose to do in case of an emergency. But with the emergence of Skype, Whatsapp, Facebook and other platforms, you are free to contact your agent to discuss properties from little to no cost. Keeping those lines of communication open mean that you will be able to get all the information that you need when you need it.

From the outset, you should make sure the communication with your agent is regular and over the phone. Don’t rely on text or emails that can go unanswered or undelivered. Speaking with an agent lets you address your issues or ideas in real-time and regular communication will also help you build up trust with your agent.

The cost of international phone calls was once too prohibitive to justify spending all day, every day talking to people around the world.

But with the advent of Skype, WhatsApp and other platforms, agents can speak with any prospective clients for free. Likewise, you are free to call an agent to discuss a property and you need not worry about the cost of a lengthy conversation. In other words, there is no excuse not to converse with your agent whenever you like, so that you receive all the information you need to make to make a decision, and later to ensure that you are involved throughout the sales process and are receiving regular updates.

Right from the outset, make sure you are having conversations with your agent, rather than relying on the use of texts and emails. Speaking with an agent helps you to express many of the ideas you have – ideas which, quite simply, would take too long to type.

Not only that but speaking to your agent regularly also helps to build trust, allowing you to better assess whether they have your best interests at heart in regards to buying Phuket property from abroad.

Do Your Own Research And Get To Know Phuket

We’ve found that anyone open to buying property in Phuket remotely is already familiar with Phuket. If on the other hand, you’re an avid real estate investor looking for a new area to purchase property in, then it certainly pays to do some research first.

Many new resorts are launching in regions that, to be honest, may struggle to fill their 700 rooms since these areas are not as popular with tourists. We’ve discovered that visitors to Phuket who eventually buy property here tend to look for condos in the areas where they’ve spent the most time. These are usually mature regions that are already very popular with tourists, which is unsurprising.

Buying in an undeveloped location, in our opinion, may not generate the expected rental returns because it will only attract a tiny fraction of visitors to Phuket. To avoid a letdown later, stick with the regions that are already popular, areas that are already surrounded by attractions and amenities… and, of course, the areas that tourists frequent.

Choosing an undeveloped or unpopular area on the island can be the difference between a good long-term investment and a bad one.

Give Your Agent As Much Information As Possible

The best method to ensure that you find the ideal condo is to provide your agent with a clear picture from the outset. Let them know exactly what you want – in as much detail as possible – obviously the more information that you can provide for them, the better job they can do for you.

One key issue that should be made clear to your agent before the search begins is your budget, or at the very least a price range. There might be a significant difference between low-cost condos and the higher-end options offered. Your agent must know exactly how many rooms you want, as well as any specific features you want in the property and any other requirements you have.

For example, if Phuket is somewhere you frequent often and you want to make the most of your spare time on the island, the location on the island may be the most significant factor for you. If that’s the case, make sure the agent understands precisely which areas are on your radar. For example, we’ve discovered that most people want to be close to a variety of attractions and that some people demand a sea view or, at the absolute least, to be near the beach.

By outlining as many criteria as possible when you first meet your agent, they will be able to filter down the options, allowing you to choose the best-suited house while minimizing unnecessary delays.

Be Discerning, Keep Asking Questions

When it comes to gathering research about buying Phuket property from abroad, our suggestion is to question everything — it’s the key to buying a property remotely. If necessary, irritate your agent; after all, they are supposed to assist you. To put it another way, make the agent earn their commission by working hard for you.

Make sure you’ve dotted all of your “i’s” and crossed all of your “t’s” so you can make an informed decision when purchasing property remotely in Phuket. There are no foolish inquiries, and no detail is too little.

When you choose your condo, it should be because you’ve made a good comparison between other units, you’re familiar with the island’s location, you believe in the finished product’s quality, and you’re confident that the developer can deliver on the promises listed on the conditions of the Sales & Purchase Agreement.

View Video Walkthroughs Of Potential Properties

Technology moves at a breakneck speed these days, but it doesn’t take long for everyone to catch up.

Global business is increasingly being performed using online chat programs like Facetime, Zoom, WeChat or WhatsApp, just as our children also now do online classes using Zoom or Google Classroom and parents speak with relatives and friends all over the world on Skype.

We now have the capacity to present any product to buyers anywhere in the world, including real estate. This might include putting up a live video feed from your agent for a personal walk-through presentation of a home if you have the time. If you can’t make it to the live tour, you can have video footage sent directly to your phone, email inbox, or Dropbox account.

Videos are a great method to get a feel for the property or showroom from afar. This is the most significant element of the remote buying process in the majority of cases, and sometimes when you see a property something just ‘clicks’. You know you’ve found the right one for real, even if it’s only a virtual tour.

Educate Yourself On The Buying Process

Although this is number seven on the list, it is always a good idea to ask these questions early in the process. If you decide to move forward with your new partnership, the initial phone chat with your agent should include an explanation of how to buy remotely and how that process works.

Obviously, the first step of buying Phuket property from abroad is to locate a condo property that checks all of your boxes. But it’s probably helpful to know and comprehend what comes next, even before you start looking for suitable investment properties. So what does buying property in Phuket remotely entail?

Overall, it’s quite straightforward. Your property agent will supply you with as much information as you request, including video walk-throughs of each condominium or villa, once they have identified the homes that suit your criteria.

You’ll definitely have a budget in mind and will scrutinize the pricing of what’s offered, but keep in mind that these are typical “base prices” with add-ons. Foreign freehold upgrade is the most typical additional price, which is normally between 300,000 and 500,000 THB per unit. However, one of the most appealing aspects of this “buyer’s market” is that several developers are currently offering freehold upgrades.

Installation of water and electric meters, payment of the sinking fund, and common area fees are all frequent add-ons to the base price of new builds or off-the-plan condos (you may need to pay the first year in advance). Each one is insignificant and will be factored into the final price you negotiate with the developer.

The next stage is to put a deposit on the property and sign a reservation agreement after reaching an arrangement with the owner or developer that is satisfactory to both sides. This acts as a holding deposit, ensuring that no one else can purchase the unit you’ve chosen.

The Sales & Purchase Agreement, which spells out all of the critical specifics of the sale, including payment terms, is the following stage. You would ordinarily have up to 30 days to sign this contract (counting from the time you signed the initial reservation agreement and paid the deposit).

The reservation agreement can be emailed to you, signed, scanned, and returned as a soft copy, but the Sales & Purchase Agreement must be printed. This will be signed by the project directors and sent to you through DHL or TNT. You will always be given two copies of this, one of which you will be requested to sign and return to Phuket through courier. You keep the other copy for yourself.

When it finally comes to having the property registered in your name, you can either travel to Phuket yourself or, if that is not possible, ask your lawyer to do so on your behalf by providing them Power of Attorney. You can also delegate Power of Attorney to the developer, allowing them to register the property on your behalf. This must be done in person at the local Land Department, and someone must be there to act on your behalf if you are not present.

One more point on registration, which is a big draw for investors and frequently comes as a pleasant surprise: Thailand’s real estate taxes are among the lowest in the world. Typically speaking, the cost of registering your freehold condo in your name with the local Land Department is 3.15% of the condo’s purchase price, which is technically 6.3% but is split with the developer.

Don’t Be Fooled By Unrealistic Promises

How can a condo developer guarantee a 10% annual return for 15 years? We find this type of offer difficult to fathom because it is completely impossible from a financial standpoint.

We apologize in advance if we offend any purchasers who have been duped by this marketing strategy in the past, but you’re not alone. It’s amazing how many people believe such a ridiculous promise.

Even in the busiest of Phuket’s ‘high seasons’, when investment properties provide outstanding profits, 10% is perhaps a bit unrealistic, especially if you intend to achieve it consistently and net of all operating costs, charges, fees, and taxes. While 10% growth in a single year is a pipe dream, over 15 years, the word “impossible” does tend to come to mind, unfortunately.

Other promises made by developers, such as the “Buy Back Option,” should be carefully considered by investors. When a developer pledges to buy back your unit after 5, 10, or even 15 years, often at a profit, this is known as a “Buy Back”.

The first thing to keep in mind concerning a buy-back option is that most developers move on to the next project once the previous one has sold out. The company that worked on your project has closed, and future projects will be developed by a new entity. This means there’s a chance you won’t be able to enforce the buyback.

However, there will be established developers, and an expert lawyer can at least ensure that this aspect of the deal is in your favour. Such a clause in the agreement is legally enforceable as long as the developer continues to operate and is not insolvent. We’ve heard of owners who have taken developers to court and won.

Always Buy Foreign Freehold

As previously stated, the rates listed on a condo unit normally do not include the freehold upgrade package, as well as any related fees and taxes. It may also exclude the furniture bundle, while some developers have begun to include furnishings in their prices.

Nothing here is meant to be deceptive, so if you have any questions about the price, just contact your agent. You’ll undoubtedly want your condo furnished, and you’ll have to pay taxes whatever, but there’s a significant difference between a freehold and a leasehold property, and you should be aware of it.

The Thailand Condominium Act (1979) grants foreigners access to purchasing freehold ownership of up to 49% of a condominium project’s unit floor area. Since this percentage is unlikely to alter, these apartments will be in high demand for resale and will retain their value. The leasehold option, on the other hand, will almost certainly not.

Your condo unit’s freehold title is recorded in your name with the local Land Department, and ownership is in perpetuity – it will always be yours. Foreign freehold ownership is the ideal way to go if you want a stable, safe, and secure investment.

Our recommendation is to never settle for anything less than a foreign freehold condominium unit. Because some units will be advertised as Thai freehold, make sure it is a foreign freehold. In the hands of a foreigner, a Thai freehold is only a leasehold for a foreigner.

Make Sure The Purchase Is 100% Legal

The Phuket condominium market has been growing for decades to include greater control to protect international investors. Throughout this evolution, the government has attempted to ensure that the established rules and laws are followed.

One of these laws, in the real estate market, pertains to the leasing of villas and condominiums to the millions of tourists who swarm to Phuket each year.

It is theoretically unlawful for condo owners to rent their units to vacationers who are only staying for a few days or weeks on the island. The Thai government has made it apparent that they aim to enforce these rules and crack down on unlawful rentals now that the topic has entered the mainstream media.

The hotel sector, in case you hadn’t realized, is the intended benefactor of this law. Every year, hotels invest billions of Thai Baht into the economy, and they are furious that condos and villas in Phuket (and elsewhere in Thailand) are stealing revenue from their legitimate enterprises in flagrant violation of the law.

To avoid your otherwise fantastic investment becoming a “dud,” be sure the condominium you’re buying is completely legal and has all of the appropriate permissions to rent to visitors daily.

This is a significant problem, and developers are aware of it. We didn’t have many hotel-licensed condominiums (also known as condotels) in Phuket just five years ago. There are already over 20 of them, with more on the way.

This market segment is booming to the point where major hotel brands — household names in the hospitality industry – are stepping in to operate these properties. Because these companies thrive in the worldwide hotel market, they are interested in operating the condominium as a legal hotel/condominium resort, complete with the necessary licenses.

Remember To Always Use A Lawyer

We cannot highlight this point strongly enough; in fact, we have done it multiple times in previous articles. When buying real estate in Phuket, you should always use an experienced lawyer. Not only can the lawyer perform due diligence on your behalf (see Number 12), but he can also ensure that the Sales & Purchase Agreement contains all of the necessary terms to protect you entirely.

Your lawyer is there to answer any of your legal inquiries, and it is their responsibility to defend you as the buyer. Having someone on your side at all times offers you that extra sense of security and ensures that everything goes as smoothly as possible.

Thailand has laws and processes that are different from those in your native country. Your lawyer can help you protect yourself as much as possible, ensuring that any commitments made by a developer are upheld in court.

Due Diligence May Cost Extra, But It’s Worth It

We’ve always personally conducted due diligence on developments before featuring them on our property guide, however, you may want to conduct your research with your lawyer. Even if you opt to work with a different firm, we would still recommend that you undertake due diligence about buying Phuket property from abroad with an experienced lawyer.

If the project isn’t going as planned (e.g., it’s still a pile of dirt or a grove of trees with no activity or other red flags), a little additional due diligence is well worth it. A due diligence investigation will look at the developer, the land title in question, the location of the condo if access is unrestricted, and whether any factors could lead to the project being denied owing to a failed Environmental Impact Assessment (EIA).

If only for the sake of a little peace of mind, the additional expense of due diligence pales in comparison to the cost of problems that arise later – problems that could have been spotted during due diligence.

Educate Yourself On ‘Free Stay’

When you purchase a new condo in Phuket, you will be given a certain number of days each year to enjoy your investment by taking a vacation. This varies for every project, but it usually ranges from 14 to 28 days, depending on the time of year that you decide to visit.

As a general rule, the ‘high season is the most valuable for rental, so there will be less time available. There are even blackout periods during which owners are not permitted to stay. These normally occur between the 15th of December and the 15th of January, but they may also overlap with Chinese New Year or western school holiday times.

Keep in mind that this only applies to investment condos that are either condotels or part of a rental scheme. Your ownership is unaffected, but as a rental property, your access is restricted by the terms of the Sales & Purchase Agreement or the Rental Agreement.

A free stay is usually offered with the purchase of an investment unit in Phuket. It’s possible that it was left out of the Sales & Purchase Agreement, so double-check.

Any qualified lawyer, of course, will ensure that nothing is left out of the sales deal. If you enjoy spending your vacations in Phuket, you might be able to bargain for a few extra days at the time of booking.

Get Regular Updates On The Development

Most developers will keep investors up to date on the status of their projects regularly. This is normally in the form of a newsletter with photos, which is frequently a Dropbox link with a video of the construction site.

Because most real estate brokers on the island spend a lot of time travelling to keep up with new developments, they may even take a short personal video of you when they come to see you. Because construction times are visibly spaced out, a lovely personal video every couple of months can be reassuring to purchasers, and it surely adds to the value of the service provided by your selected agency.

Leave Your Agent A Review

If your real estate agent has proven their worth by guiding you through the entire purchase process of buying Phuket property from abroad, be sure to thank them. And nothing makes a professional in any sector happier than having a happy client laud their work to others.

If you’re happy with your agent’s efforts on your behalf, leave a positive review on Google or ask them where you may leave a comment about the service you received.

Summary

If are set on buying Phuket property from abroad and have the correct counsel, Phuket real estate may be a great investment. It’s a very lovely island with enormous future possibilities. If you want to invest but can’t make it to Phuket, make sure to follow these basic guidelines:

– Work with only the most experienced real estate agents
– Clearly explain your investment criteria
– Gather all necessary information to assist you in your purchase
– Attempt to comprehend the purchasing procedure
– Be wary of promises that are too good to be true
– Always purchase foreign freehold property
– Check to see if your apartment has a hotel license
– Always choose an experienced lawyer
– Expect to pay a little more for thorough due diligence