Buy Property Koh Samui – is now the time?

Purchasers should focus on real estate opportunities.

Let’s look at why it could be a good time to buy property on Koh Samui. Whilst we wait for the borders to reopen in Thailand. It’s a good time to search for a house in Bophut for instance. As this is a popular area to look for property for sale.

If you are stuck at home, then searching for a house for sale online is a practical way of understanding the market. You can look at the popular areas to buy property. Koh Samui has many districts and areas to research. Areas such as Lamai, Bophut, Chaweng and Maenam are all very popular with house buyers from abroad. If your search is successful you might find you are ready now. So this might well be the time to invest in property on Koh Samui.

Now that the immediate impact of Covid-19 is to stall all but a few from selling their homes. Some property owners can’t wait. In this respect, there are some discounted deals to be found. So now it’s worth taking a look at some of the good value property on Koh Samui. And on the flip side, there are many buyers who are unable to come to Koh Samui, stifling demand and making it a great time to buy property on Koh Samui.

Ko Samui Property supply levels

The general Koh Samui property market is not in freefall. But there certainly is more supply. This has meant that owners have been willing to discount due to competition. Making a sensible offer for a new or resale property you are interested then might not be a bad idea. 

At Samui Property Locators, we have had inquiries from some pure investors looking for bargain properties. Generally, on Koh Samui these deals only come about rarely. Even in this period with struggling low demand. Generally there are specific circumstance why a property is heavily discounted, and its normally the experienced agent that sniffs these property deals out.

Also when these types of people come along, they tend to waste a lot of time with multiple agencies. A quick phone call or polite information exchange tends to close down the topic. When we do find a deal, only then will be contact this type of client.

More often we tend to match properties to our clients through becoming intimately aware of their likes and dislikes. For a property deal to go through we fully understand also the budget and constraints. We also have fair knowledge of the sellers propensity to accept an offer.

Samui property prices are holding up

We are a buy with cash based market. This means that buyers tend to be wealthy. Alternatively, they use Koh Samui to buy their primary residence rather than their country of origin. This tends to be the case with foreign expatriates that have lived in Dubai or Abu Dhabi for instance. They enjoy the lifestyle offered by living abroad. So opt to continue to do this in Thailand.

With no mortgages available to foreign buyers this tends to mean fewer bargains. Owners are generally not indebted to a bank or credit institution. This means that they have bought with cash or savings. Foreclosures to coin an American terminology are rare.

The opposite is true for businesses, hotels and resorts. The commercial side of the market has had casualties as this is more lending based. And they rely heavily on the income stream generated by tourists to pay bank interest. The lock down in Thailand has had a dramatic effect on business, evidenced by the large number of premises advertising for rent.

Koh Samui House Price levels

In this period (late 2020), Koh Samui houses on sale prices have been lower. And we expect property prices to remain soft over the next 6 to 12 months. Especially as Thailand will still in lock down mode at the end of 2020.

The outcome is that some of the new properties on offer are worth following up on now. Even if you cannot visit in person, now its time to look to Buy property on Koh Samui.

Market conditions and factors to consider

Chinese dominated the real estate market in 2018 and 2019. Some entrepreneurs focused on this market. Chinese developers came into Ko Samui, buying land and building solely for Chinese customers. It seemed that a lot of bigger agencies suddenly had Chinese speaking staff.

Volume of new developments seems to be increasing; even with no appreciable extra demand. There are visible signs on this hillsides of preparation work. Whether it be cutting back overgrown trees or cutting in roads.

Advertising on Facebook is very common now. It prevalent with properties offered for sale. Some agencies are very good at promoting this way. There seems to be a lot of supply coming onto the market of resale villas.

In general terms no one property agent has rights to sell a particular villa on Koh Samui. Although some brokers do try to set up exclusive arrangements with the property seller. In our opinion this is anti-competitive. And more importantly it never helps the seller. Real Estate agents guarantee marketing a property aggressively. In practice in our experience this does to happen.

Factors effecting time to Sell

The average time to sell property in Koh Samui varies considerably. Bargain properties sell quicker. Luxury villas on sale at a good price sell. Again watch out as sometimes the developer is selling a Lemon. The price offered is just not achievable.

Some properties have been on the market for a few years:

• Inevitably this is because of firstly, unrealistic selling price. Then again, after several months the seller drops the price to activate interest.
• Secondly, basic legal problem with the land, building permit or road access issues. These are not uncommon and found during due diligence period. The problem buyers sometime experience is not carrying our the correct investigations.
• Thirdly, an unsound legal structure of the land and house. Too many or too few Thai shareholders. Nominees without evidence of investment in the Thai company to own assets.
• Fourth, incorrect accounting. The Thai Company set up to carry the assets, land and house does not comply with Thai accounting standards.
• Understated Property and land values on the balance sheet.
• The land might be evident but the building cost of the villa might not show up. This can happen if the building has never been transferred by the lawyer of the seller at the land office.
• We sometimes find that the building permit is in the sellers name, or the house book has not been transferred correctly. Indeed another cause of deals to fall through is both seller and buyer not acknowledging the tax implications of the transaction. Then arguing on who is responsible for the payment of tax. It’s not simply just the case to refer to Thai law.
• Finally, because of construction deficiencies in the or even neighboring construction on new projects. Sometimes villas are unsaleable because of potential for sea views to be blocked.

Concluding all these issues prior to signing the initial contract is the mostly likely way for a deal to be successfully concluded.

Impact of currency movements

But there has been a slowdown in demand caused by the Baht currency strength and the limits to Chinese moving money out of China. Sometimes investors from China have bought sight unseen. They relied on slick marketing from some agents and developers to guide them. Gimmicks that in some cases have left them making a bad and costly decision. It of course takes time for these cases to be fully uncovered. But we are now in the period where the time is running out to make excuses. Firstly, as to why construction is still unfinished, Secondly to blame delays on other factors.

Investments in Ko Samui Property

This is not to say that there are not new projects worthy of investment. There are some that are fantastic in every aspect. We do identify these options for our clients. And in practice the developers that have delivered in the past do tend to get it right again. It is uncanny that actually many times we do sell properties from the same developer. Look out for more articles on what and how to buy property on Koh Samui.

This blog post on buying property on Koh Samui is written by John Jepson, Co-founder of Samui Property Locator.