For obvious reasons, due diligence does not apply to those renting an apartment or condo in Bangkok, but for investors it is useful to have a checklist of what you should be looking for when buying a property.
There is a difference in what is called buying off-plan and a ready-made condo, which often amounts to a developer buying an option on a plot of land, drawing up a 3D model of what it would look like, marketing it and waiting for the deposits to start filtering in before starting construction.
If you buy off-plan with a reputable developer such as SET-listed Noble Development Plc, you may be lucky and receive a good yield in the years ahead if you are a buy-to-rent investor. You will benefit to a large extent from the discounted prices offered during the early days of the development and profit from a significant capital gain from buying into a young project.
However, you should also make sure that the developer’s Initial Environmental Examination (IEE) report has been properly filed and that it has been approved and granted. You should also check to see if the IEE report is in line with the developer’s on-going construction plans. It is also wise to ascertain from the courts if the seller is involved in any dispute relating to the land or is being sued by any other buyer.
But choosing to invest in the Bangkok property market in an off-plan development it is always going to be risky, with political volatility, exchange rate fluctuations and the capriciousness of the global capital markets to take into account. Should the project fail to take off and you find out later on that the developer is in deep financial trouble and unable to repay your deposit, this is no doubt because you did not carry out proper due diligence. For this type of investment, be warned that while you can make significant gains on your money, it is always going to be a gamble.
However, let’s assume that you are not going to buy a condo off-plan but simply make the purchase for your own personal needs. In this process it does make sense to gather as much information about the property before you part with your money as you can, as it will avoid many problems that could have been avoided later on. And this means doing your homework and carrying out the best research you can.
The first step in the due diligence process will involve looking for a property at a price your budget allows in an area you would like to live in. Once the agent has found you suitable properties you can then make visual inspections. You may really like one of the properties you are shown but you will then need to find out about the quality of the construction and how it will be maintained. All too often people have bought a property only to find that within three years or so the common areas have deteriorated due to neglect or the developer has used sub-standard building materials.
You will also need to find out if the title to the land of the current occupier is in good order from the land office and what if any other developments are likely to take place, as you do not want your cityscape views obscured by a new high-rise that is about to be built in front of your property.
Carrying out due diligence can save investors from making a poor investment, including experiencing maintenance issues that can rankle over the years to come. So make sure to you know as much as you can about the property before you undertake an investment in any Bangkok condo. One example of an excellent development that we highly recommend is The Met, a 69-storey condominium in Sathorn that won the Bronze Emporis Skyscraper Award and the Singapore President’s Design of the Year Award in 2009 and the German The International Highrise Award in 2010.
For an example of a luxury 2 bedroom condo at The Met, please click here.