Buying off plan: guaranteed profit at resale?

Buying off plan from a professional and serious developer offers plenty of advantages such as getting a brand-new property, the developer guaranty, brand new facilities, and a payment plan for whose coming at the early stage of the launch of the project.

The sales speech I often hear from the sales teams is” you’re guaranteed to make a profit if you buy off plan and resell when the condo is delivered or even before if you resell your down payment”.

Unfortunately, it doesn’t work this way.

Regarding the resale of a down payment, which is usually 30% or higher if the construction has already started, rules are the same than for a fully paid condominium. The funds must be transferred from a foreign bank in a foreign currency to the buyer’s Thai bank account or the developer’s or the buyer’s lawyer bank account. When the ownership of the condominium is ready to be transferred at the land office, a document will be requested: the F.E.T. form (Foreign Exchange Transaction). This document will stipulate that the buyer has transferred the funds. If this document is not provided, then the ownership cannot be transferred to the buyer’s name. You understand it is not possible to have a change of payer during the process, therefore, no possibility to sell your down payment legally. Please do not listen to the usual “do not worry, it is like this in Thailand”. Thailand is regulated, and one must follow the process to have peace of mind.

Regarding an eventual profit at resale when the building is delivered and the condominium is registered at the land office, it also doesn’t work that easily. Let’s take the example of a 500-condominiums building. Let’s be conservative and say that only 30% of the foreign freehold units are on the resale market at the same moment (500 X 49% X 30% = 73.5). You can be certain that on the 73 sellers, most are motivated but some are desperate and willing to take a huge loss on their investment as they need a fast income. On top of this, developers have usually a few remaining units to sell to “close” the project and achieve the magical “sold out” status. Developers will always have a much higher margin for negotiation than an individual has.

What will happen is that prices will start to drop for some units and if you’re not in need of selling, then you will have to wait for all the similar but cheaper units to be sold to attract any interest on the market.

As usual, I have plenty to say on the subject, do not hesitate to contact me.