by kevinyeo | Oct 16, 2018 | Bangkok Property Market Updates, Legal, Tax & Due Diligence
Property developer Siamese Asset Co is unconcerned about the central bank’s loan-to-value (LTV) limit on mortgage lending, as it already collects a down payment of 20% of the unit price.
It plans to launch two new condo projects worth a combined 10 billion baht in the next two months.
Managing director Kajonsit Singasansern said the new requirement for LTV ratio of 80% the Bank of Thailand asked financial institutions to comply with from Jan 1, 2019, will have no effect on the company’s existing or new customers.
“We have collected a down payment of 20% at our condo projects for many years, so we don’t need to be worried about this new rule,” he said. “It only hurts our competitors.”
There was one project, Blossom Condo @Fashion, where the company collected a down payment of 15% of unit price because the project was in the lower-priced segment, in which most buyers were first-time purchasers.
Last Thursday the central bank announced it would require home buyers to make a down payment of at least 20% of the home value for new mortgages worth at least 10 million baht, as well as for second homes.
“We will continue with our policy of 20% down payment at our new projects as most of them are high-priced, where buyers have strong purchasing power and can pay a high down payment,” Mr. Kajonsit said.
Next month Siamese Asset plans to launch a new luxury condo project, The Collection, worth 4.8 billion baht. It will be located on a 2.1-rai plot on Ratchadaphisek Road, opposite Benchakiti Park.
The project comprises 443 units sized between 33.8 and 135.35 square meters and priced at 6.2-45 million baht a unit, or 240,000 baht per sq m on average. It plans to offer a guaranteed yield of 5% for two years.
The project targets both real demand and investors, estimated to account for 60% and 40% of buyers, respectively, and aims for 70% presales on the launch date.
By year-end, Siamese Asset plans to launch a mid-priced condo worth 5 billion baht located on 2.5 rai near Ratchadaphisek subway station. It comprises three towers with 600 units.
by kevinyeo | Mar 12, 2018 | Bangkok Property Market Updates, Legal, Tax & Due Diligence
The land windfall tax is expected to help fend off a property market bubble as developers take care to avoid tax liabilities that will come into effect if the value of unsold residential units exceeds 50 million baht.
The tax should compel property developers to be more cautious in assessing market demand, said a source at the Finance Ministry.
A draft bill on the land windfall tax, now under consideration by the Fiscal Policy Office, capped the ceiling at 5% of the inflated price, but the applicable rate will be decided later.
Those liable for the tax must own land within a radius of five kilometers of a station serving high-speed, double-track or electric trains, or of the on- or off-ramp of an expressway. Those who own plots within 5km of building-restricted zones such as airports or ports will also be required to pay the tax.
Landlords whose land value is inflated will be charged the land windfall tax every time ownership is transferred from the time when the transport infrastructure project’s contract is signed until the project’s completion.
Once transport projects begin operations, those owning land for residential and agricultural purposes will not be liable to pay the tax, while those who have land for commercial use and whose value is higher than 50 million baht will be subject to the tax upon ownership transfer.
Only property developers for which the leftover units of their projects are valued in excess of 50 million baht will be taxed in the event that land ownership is transferred after the launch of an infrastructure project.
For condominiums, the tax base will be the difference between the sale price and valuation on the effective date of the law. For new or under-construction units, the valuation will be 20% of the average valuation of condominiums in the same area.
But a one-time tax will be applied to cases where land ownership is transferred after a transport infrastructure project starts. That means other landlords on plots for which the tax has been paid will no longer be subject to the tax.
Owners of land near infrastructure projects launched before the land windfall tax take effect will be exempt from the levy.
The Finance Ministry source said a property developer working on more than one project in the same area may be taxed less for the second or third project than for the first one to create a fair tax payment system, as such developers would have already paid the land windfall tax.
For instance, the first project could be taxed at 3% and the second one at 1%.
But the second project could be charged at the same rate as the first if the government determines that its unit prices are higher on account of infrastructure project development, the source said.
by kevinyeo | Dec 24, 2017 | Bangkok Property Market Updates, Investment Analysis, Legal, Tax & Due Diligence
The average price of condominiums could grow at least 8% in 2018, despite the looming land and buildings tax, says property consultant Nexus Property Marketing Co.
Managing director Nalinrat Chareonsuphong said the land and buildings tax, due to come into force in January 2019, is unlikely to harness the increase in land prices in Bangkok, allowing condo prices to keep rising.
“There is unlikely to be forced sales among landowners who are pressured by the land and buildings tax,” she said.
“If the tax is effective, they have options to apply to their assets anyway and will not need to sell the plots.”
As land prices will keep rising, condo prices will also rise next year. This year the average selling prices of new condos in Bangkok rose by 8% to 130,600 baht per square metre from 121,000 baht per sq m last year.
The average increase of condo prices in the past five years was 9% per year.
Pathumwan and Ratchathewi districts saw the highest increase in condo prices, with a rise of 16% to 234,000 baht per sq m on strong demand.
Land costs in these locations were also higher while new condos were limited in supply over the past several years.
For inner-city locations, the average selling price rose by 12% to 210,700 baht per sq m. In Yannawa and Klong San districts, where condo sales were healthy, the average selling price also increased by 12%. In Bangkok outskirts, the increase in price was slight at around 5%.
According to Nexus’ market research, the number of new condos launched in Bangkok this year hit the highest in a decade with a total of 62,700 units from 128 projects.
The new condo supply launched this year was 15% higher than the five-year average, which was some 53,600 units per year.
The total condo supply in the market was 550,000 units.
The highest increases in condo supply were seen in Phra Khanong-Suan Luang area with 14,400 units or a rise of 23%; Phaya Thai-Ratchadaphisek with 13,200 units, an increase of 21%; and Thon Buri-Phetkasem with 8,900 units, or growth of 14%.
The new supply in these three locations accounted for 58% of the total of new condos launched in Bangkok.
The Phra Khanong-Suan Luang area also saw the largest number of new projects launched, while the Pathumwan-Ratchathewi area saw the highest increase in prices with a rise of 16%.
In 2017, new demand for condo sales in the market totalled 57,300 units, which was 14% higher than the average sales over the past five years, or some 50,400 units per year.
The total condo sales rate in the market stood at 90%, while the total sales of condos in the market rose to 496,100 units.
The number of unsold condos in the market is around 53,900 units.
In 2017, the average sales rate of new condos launched in the market was roughly 62%.
Phra Khanong-Suan Luang, Phaya Thai-Ratchadaphisek and Pathumwan-Ratchathewi saw the highest numbers of condos sold.
The Pathumwan-Ratchathewi area saw the highest new condo sales rate at 88%.
In the past five years, the condo market expanded to outer city locations. The zone where condo area growth was the highest was Thon Buri-Phetkasem with a rise of 107%, followed by Tiwanon-Rattanathibet (76%) and Chaeng Watthana-Pak Kret (68%), when compared with 2016.
Ms Nalinrat said the property market next year will see growth of over 10% in the amount of new supply.
“Next year the property market will be in transition, driven by various factors including foreign investment, exponential growth in Cambodia, Laos, Myanmar and Vietnam, the ageing population and technology for new property developments,” she said.
