Each profession has its own specific terminology, and the Thai real estate market is no exception. Let’s figure out together how to understand an unfamiliar vocabulary, because if you want to buy property in Pattaya then you may come across some terminology.
But before we get started, we’ll give you one simple piece of advice: be curious and ask the meaning of every new word you come across in the process of buying a property. You can ask your broker, developer or lawyer. It is important to understand all the details and avoid double interpretations.
Real Estate In Thailand
1. Market Participants, Real Estate Selection
- Builder, or Developer is a legal entity that acts as an investor in the process of implementing a construction project. He assumes all the risks of the project and is legally responsible to buyers of real estate. The developer hires the necessary contractors for the construction of the project, and after its commissioning, transfers the real estate to the management company.
- Investment property is real estate built and purchased for the purpose of generating rental income. Key indicators of such housing: proximity to the sea, proximity to iconic tourist sites and infrastructure. The owner receives income from renting it out, as well as from the increase in real estate prices when reselling it.
- Apartments, Unit – this is the name of the more familiar “apartment” in an apartment complex or condominium. Important note: the number of rooms is counted by bedrooms, not taking into account the living room. That is, a one-bedroom apartment is a 2-room apartment that has one room – a living room and one room – a separate bedroom.
- Condominium is a complex of apartments with a common area. As a rule, closed type with 24/7 security. The infrastructure of the complex is located on the common territory. Apartments in condominiums can be registered in the ownership of citizens of other countries.
- Condominium Infrastructure, Complex Infrastructure, Common Area – this is everything that is inside the complex of apartments or villas and is publicly available to residents: gyms, children’s clubs and playgrounds, swimming pools, spas, bars and restaurants and more. Naturally, the greater the composition of the infrastructure in terms of diversity and quality, the greater the price per square meter of housing. These additional costs will pay off with further leasing, because complexes with richer infrastructure are better rented out and have a higher ROI.
- Infrastructure of the Area is a characteristic of the property showing the availability of all the places necessary for recreation and life. The main ones, of course, are shops, beaches, restaurants and massage parlours. Unlike the infrastructure of the complex, the rule here is not “the more the better”, but rather, “the closer the better”.
2. Important Documents
- The Condominium License is a certificate confirming that the apartment complex meets the requirements for a condominium, namely: the public area allocated for infrastructure occupies at least 30% of the land area, and a public road with a width of at least 7 meters.
- Chanot is a certificate of ownership of the land. This document outlines the boundaries of the site and indicates all its owners.
- Environmental Impact Assessment – This certificate is issued before a building permit and is one of the 2 main documents indicating that the developer has received all necessary permits from the state.
- Construction Permit – the name speaks for itself – is a permit issued by the state of Thailand to the developer for the construction of a particular facility. Often apartment sales start before obtaining this permission – these are certain risks, in return for which developers offer low prices or higher percentages of guaranteed programs.
- Blue-book or House-book is a document, the receipt of which marks the final stage of entry into the property. This is a small blue book with basic information about the owners and the property.
3. Receiving Income
- Investment Return is a business term, but that’s what people buy property in Pattaya for – to earn money from renting out. The indicator is measured as a percentage and shows the amount relative to the purchase that you will receive as income. For example, if a developer talks about “7% annual return on investment”, then he means that you will receive 7% of the value of the purchased property in your bank account annually.
- Property Capitalization or Capital Gains is the increase in the value of your property over the period of ownership. For example, in the city of Pattaya, the development area is limited, while the tourist flow is growing from year to year. This leads to an increase in real estate prices of about 7-10% per year, depending on the area.
- Guaranteed Rental Return, Guaranteed Income, Guaranteed Rental Program is a contractual obligation of the developer to provide income to the property owner through the management company. The contract fixes the duration of the guaranteed income and its value as a percentage, relative to the value of the acquired property.
Property For Sale In Thailand
If you plan to purchase real estate in Thailand, then visit Thailand-Real.Estate website. You won’t need to know any difficult terms for that, just make sure you have decided on your budget, figured out the type of property you prefer, and here you go!