Buying an Apartment in Phuket

I’ve now been living in our new apartment in Patong, on the Thai island of Phuket, for two weeks and I think it is high time I showed my readers what it looks like.

As usual with things like this – or maybe it’s just with me – there is a tale to be told.  This is how we bought the apartment.

In September I had dispatched my wife to Phuket with the goal of scoping the place out for a property purchase, and once she’d finished playing about with her mates here, lying in the sun, visiting the tourist spots, and her mother had invited herself over on a cheap flight via Turkmenistan, she found a few property agents.

Property agents in Thailand?  Yes, they are pretty much as you’d expect them to be.  The first one I spoke over the phone to was a Londoner who sounded as though he was off the set of a Guy Ritchie film.  Within two minutes he was giving me:

“Vuh fing is Tim, what you go’a understaaan’ is there ain’t much proper’y abaaaat right naah, know what ah mean?  So yer really be’r off ‘avin’ a look at my mate Daz’s place, ‘cos  it’s probably vuh best yer gonna find araaand ‘ere at the price wot your lookin’ for.”

What he was trying to tell me was that – surprise, surprise – there isn’t much property for sale and that he only has one or two properties on his books but one of them belongs to his mate Daz and it’s a brilliant property, the best he’s ever seen, and really if I don’t buy that on the spot then I’m stupid.  His mate’s apartment was nice, but it was small and overpriced.  My response was along the lines of:

“Let me stop you right there.  I’m looking to buy a decent apartment somewhere in Asia, if I can find one at the right price.  I’m looking at Phuket because I have it on good authority that there are some such decent apartments there.  Now you are telling me that apparently there isn’t much to buy in Phuket, information for which I am most grateful, because now I know to stop wasting my time here and instead I can look elsewhere.  In fact, I don’t think I’ll bother buying property after all, I think I’ll keep it in cash.”

He quickly changed his tune:

“Ah, rooooight!  I see wot yer on abaaat now.  Nah, ah’m not sayin’ there ain’t proper’ies in Phuket, ah’m sayin’ right nah ah don’t ‘ave ‘em on my books, see?  Nah if yer want, ah can spend a few weeks lookin’ abaht so that when ya come ‘ere in a few weeks ah’ll ‘ave some apartments to show ya that are more sui’ed to what yer lookin’ for.”

Translation: rather than just trying to flog you whatever I have on my table right now, one of which is a mate’s place which I’ve clearly been instructed to sell way over the market rate, I’ll actually do what I am supposed to and help you find a property which you might actually be interested in.

I noticed I had the same problem when I briefly looked at properties in London in August: every estate agent told me that there wasn’t much on the market so all I could really do was look at the two or three properties they had in their window on any given morning and pay the asking price.  No thanks.

So, off the agent went to do his best, which wasn’t very impressive.  I’d already told him I wasn’t interested in leasehold, mainly because the maximum lease is 30 years after which you have renewal rights, but the process and costs of renewal are vague at best and nobody seemed to know much about it.  Everybody except the estate agents – who, by contrast, were full of enthusiasm for them – advised that freehold was a much better option.  So my criteria was freehold or nothing.  After a week or two my wife was called up to view a couple of apartments, which we were initially interested in.  I asked a few questions, which took an age to get an answer for beecause the owners were not in country, and out of reach, etc. etc.  After a couple of weeks the agent said he’d got through to the owners but it transpired that the apartments were leasehold.  These properties had been on this chap’s books for some time, and were advertised as freehold.  If this chap was happy to advertise property through his agency that he knew nothing about, and attempt to sell them anyway, I wasn’t interested in working with him.  So we ditched him and started to use a Belgian fellow my wife had met.

A Belgian? I hear you ask!  Why would a Brit dump a fellow countryman and use a dodgy continental to help him navigate the dangerous waters of a foreign property purchase?  Truth is, we all learned something in Dubai during the property boom there.  Probably the last person I would trust selling property abroad is a Brit, and when I heard this guy was a Belgian I was somewhat relieved.  I never read too many stories about Belgians being prosecuted for selling dodgy timeshares in Spain in the 1990s.  And whereas the continentals who are in real estate over here do genuinely seem to be in the business, the Brits are often selling property in between hanging about seedy bars, selling holidays, making money “over the internet” with their fingers in a dozen other pies.  Del Boys.  Chancers.  Call ‘em what you want, I’d take my chances with the Belgian any day.

And so we did, with my wife finding a new development on the southern outskirts of Patong which was nearing completion.  She poked the Belgian (who is huge and looks like Steven Seagal but is very polite, seemingly honest, and efficient) into getting her a look at it.  She was impressed, sent me some photos, got a few questions rapidly answered, and after a few more weeks we narrowed the search down to two apartments with our preference being the newly built one.  I turned up in early December to look at them myself, liked what I saw of the new condominium, and decided to proceed with that.

The first step was to pay a deposit to take it off the market and to agree a price. The seller – also the developer – was a loud-mouth New Yorker who had clearly made his money elsewhere and decided to go into real estate, or he was spending his Dad’s money.  I got the usual garbage about how there were only two units left and they could go at any minute, and he couldn’t move on the price, etc. etc.  I agreed his asking price once the agent privately told us the developer had been forced to reduce it by over 10% because it wasn’t selling previously, with the agreed price subject to an inspection.

The next thing I did was to try to find an inspection company in Patong, which if you go on the internet seems easy enough.  However, the first chap (an expatriate) I called demanded 100% cash up front; my response was that half now, half later is normally what I’d have expected, but he was insistent that “this is the way I work” and that there is no other company who can do it.  Knowing your competitors is a pretty fundamental rule of any business, and this chap clearly didn’t: within ten minutes of that particular conversation I had an appointment with another, half the money up front and the rest on issuance of the inspection report.

So I turned up at the condominium with the inspection company in tow, ready to do an inspection on the apartment I was considering buying.  Within ten seconds of climbing out of the car, the chief of the inspection company announced that this development is rubbish and I’d be much better off buying in a new development, which her company just so happened to be building and managing.  No thanks, I said.  Let’s just concentrate on the job at hand, shall we?

And this is a problem with inspection companies in Patong, and I would guess all over Thailand.  Far from being independent, I have since found out they are usually part of another development company, and sometimes even made up of the maintenance crew from a rival development.  All they are doing is some work on the side, getting an up-close gander at their competition’s handiwork, and steering as many potential buyers in their direction as possible.  I heard later that the first chap I’d approached had a record of doing this, and sure enough by the time the inspection was completed with the second company I’d received an email from one of their representatives asking me if I’d be interested in an exciting new development which was much better than the one I was currently looking at in that the units were smaller, the prices were higher, and thus far the development was a muddy field due for completion, erm, sometime in the future.  No thanks.

Anyway, in we trooped to carry out the inspection: me, the developer’s rep. and the inspection company reps.  Giggling like schoolchildren, the others thought they’d be complete in twenty minutes.   I told them if they don’t have three hours free now, we should all come back tomorrow and do it, assuming I am still interested.  That got their attention.  The first thing I noticed was that the inspection company was useless.  They didn’t bring even a pen and paper, let alone a proper inspection report template.  There was no methodology to their inspection, just two blokes randomly poking about spending half the time on their mobiles, whilst the developer’s rep. wandered in and out willy-nilly.  I blew my top.  I said we’re all going to do this together, starting in one room, discussing each item we find, agreeing on the problem and the course of action, and what’s agreed gets written down.  If not, I’m off and I’ll buy the other place.  I’d spent $1,000 on this inspection, and was about to shell out a princely sum for the apartment itself, and I thought if I’m not the one in the driving seat then who the hell is?

A bit of background: I did a similar job for a living in Sakhalin, albeit on industrial buildings.  I got taken on by Sakhalin Energy in the closing stages of their infrastructure projects to ostensibly provide mechanical engineering and construction oversight of the fit-out and utilities installation of the new buildings, which were being constructed by a Russian subcontractor.  One of my jobs was to look at every inch of the completed building with the department we’d be handing over to, recording each and every defect we came across.  Once you’ve done this a few times, especially on buildings thrown up at a snail’s pace by a shoddy Russian builder and his even shoddier subcontractors, you know what to look for.  I told my inspection crew all of this, told them that I would be drawing up the punch list as per oil industry norms complete with corrective actions and dates, and that contrary to appearances I wasn’t a complete fuckwit.  After that, I got full cooperation.  They looked a bit shellshocked, to be honest.

Insofar as buildings go, ours wasn’t bad.  Other than the formwork being as rough as a beggar’s arse, the overall structure of the building was sound.  Thai regulations are strong enough that new buildings aren’t going to fall down about your ears like they sometimes do in places like Turkey and China.  It is the finishing quality that goes astray, once the basic structure is up and most of the money spent, the main contractor moves most of his crew onto the next job leaving the fit-out and finishing to a gang of cowboys with minimal supervision.  I doubt this loudmouth New Yorker knew the first thing about construction supervision, so unsurprisingly the finishing was pretty poor.  Not that I’m bagging Thais here, I’ve seen similar works done in the UK and they’re appalling there too.  I believe most countries can do a decent building job, they just need the correct supervision and be working under the right incentives.  Remove one or both of them, and the whole thing goes to pot.  Unless you’re in Germany, in which case a recession-hit, bankrupt developer turns out a house which a British developer could only describe in his brochures.  Anyway, they’d done a pretty good job of the important stuff, such as laying the floor tiles, installation of the windows, drainage, etc.  There were several small things which needed attention: cabling not fixed properly, wires not terminated correctly, pipes not secured properly, rubbish painting, inadequate door seals, etc.  All stuff easily fixed.

Then there were a few items which were not so easily fixed, a result of poor design decisions.  Firstly, they’d installed a rather daft spa bath on one of the balconies, which when tested didn’t work and when inspected revealed the chrome fittings to be pitting, and the whole thing looked to be a bit of a shoddy installation which comes as no surprise when you realised it was an indoor-spec unit installed on an outside balcony, in a coastal environment.  Within half a year the chrome would be corroded through along with any other hidden fittings, and the white plastic will be ruined by UV light.  Loudmouth didn’t want to hear it, but I told him unless he could show me the manufacturer’s specification which allowed outdoor installation then he should replace it with one that did.  In the end, we agreed they’d remove the thing completely and reduce the price.

Secondly, rather than using timber decking on the balcony they’d gone for cement board, which is normally found on ceilings and walls.  It’s shortcomings are obvious, even more so when the heavily-built Belgian put his foot through it not once but twice.  Loudmouth was there when it happened, and immediately leapt in with an explanation that the supports (it was a suspended floor) were spaced too far apart.  I pointed out that the cement board was unsuitable for the application, or at least I would have had Loudmouth not interrupted me with some nonsensical explanation as to why cement board is actually okay, despite people’s feet going through it all the time.

“Not an engineer, are you?” I asked.  He looked at me, puzzled.  I carried on:

“I am.  Cement board is strong in compression, hopelessly weak in bending.  Regardless of the spacing of the supports, there would still be a cantilever requiring bending strength which the cement board just doesn’t have.  That’s why it is not used as decking as you have done.  Timber would be the material to use.  It’s strong in bending, see?”

To which he replied:

“Oh, you can’t use timber because of termites.”

To which I replied:

“Then why did you make the supports from…(bending down, peering)…what looks to be untreated timber?  Here’s what I want.  Rip everything out, put in properly treated timbers on properly treated supports.”

If he wanted me to pay the asking price, he didn’t have a lot of choice.  Hence we now have the only timber-decked balcony in the whole complex, and very nice it is too.

Thirdly, the railings around the balcony were pitted and corroding: not a good sign for a new building.  So I asked them if the material was the right specification for a coastal environment. 

“Huh?”

Punchlist Item No. 26: replace railings with material suitable for coastal environment.  They did.  We now have better, stronger railings than anybody else.

And so it went on, 42 items in total.  Now I’d hired a Thai lawyer on the recommendation of the Belgian to handle the purchase for me.  For about $1,600 he ensured all the paperwork for the sale was done correctly, there were no anomalies with the land registration (tales abound of expats buying apartments in a condominium only to find the developer never actually owned the land and has since done a runner), minimised my tax bill and made sure the foreign currency transfer was all in order using his own escrow account, and most importantly, got all 42 punch list items included into the sales contract to the effect that I don’t pay the last installment until all remedial works are completed.  Sure enough, that’s what happened.  I had a few emails from Loudmouth asking me to complete the payment and transfer the ownership, each being replied to with “Have you finished the work yet?”, which rarely got a response in turn.  By the time I arrived a couple of weeks ago everything had been finished, and they’d done a decent job of it thanks to my wife’s supervision (her previous incarnation was an overseer on the White Sea Canal).  My lawyer came around yesterday with the ownership documents, which I asked him to put in his company’s safe deposit box in the bank.  They get left lying around here and they’ll end up chucked in the bin with last week’s TV guide or something.

So, in short, here’s what I found worked:

1) Spend a few months looking.  You need to look at loads of places to get a feel for what is actually available in terms of quality, size, and price.  Speak to people about what is around. Sure, every expat is going to offer his opinion even if he washed up on the beach that morning, but you need to gather as much information as possible and start to sift through it.  Sooner or later you’ll see a pattern emerge, and you’ll have an idea of what’s what.  Use mutiple agents, and settle on the one who seems the most keen to show you the greatest number of places, including those you have found yourself.  All of this isn’t going to take two weeks, so forget coming here on holiday, looking at a few places, and putting down a deposit on your last day.

2) Consider prices on a per square metre basis.  We found places cheaper than ours, which both of us couldn’t fit in at once.  We found places bigger than hours, which cost twice as much.  In terms of what we paid per metre square, we got a steal compared to anywhere else.  Consider the location.  You might get a fantastic view of the whole town, beach, and sea from that place halfway up the mountain, but are you really going to want to walk 500m up a 45° incline every day?  Similarly, being bang in the centre and close to the shops and bars is handy enough, but make sure you don’t end up with a gang of hookers standing under your window every evening.  And avoid off plan.  Most of the places I saw for sale were waste ground surrounded by impressive billboards.  If quality is crap when a unit is unsold, imagine what it’s going to be like for a unit which has already been paid for.  Completion dates are vague and hopelessly optimistic, usually having not taken into account the 1-2 year stoppage the financial crisis has brought to most construction projects.

3) Don’t be in a hurry.  Be flexible.  Keep your options open.  When negotiating with a developer or owner, always have another option – and I mean, somewhere you are genuinely content to buy instead – if the current one falls through.  Be a bit of an arsehole if you have to, especially if the developer is being one himself.  I had Loudmouth say to me several times that he didn’t really need to sell this place, etc. etc.  Yeah right.  You’re a developer mate, if you don’t sell units in your project, you’re sunk.  And we just so happen to be in the middle of a global financial crisis which has sent Thai property crashing through the floor and I bet you don’t have too many boys fresh off a Russian oilfield walking through the door with ready cash in their pockets, do you?  You don’t really want to sell?  Okay, I really don’t want to buy.  Let’s stop pissing about, then.  I’m off to the other place I saw this morn…oh, what’s that?  You do want to sell after all.  Remember, you have the money, you hold all the cards.  Be prepared to walk away having bouught nothing at all, and you’ll get a good deal.

4) Use a lawyer.  I read the expat forums here and find people asking for advice on what papers should be obtained or submitted when, what the process is for registration, etc.  Nightmare stuff.  Find a lawyer, point to the apartment you want to buy, and tell him you’ll wait for him to email you advising the next course of action.  It worked for me.

5) Use an inspection company guardedly.  Mine was okay for testing the electrics, mainly because I didn’t have a multimeter and my fingers were too fat to fit in the sockets.  And they did highlight a few useful things to do with the air conditioning.  But they are not independent, and probably not worth the price they charge.  Use them for a second opinion if you can afford it, but you’re better off either doing the inspection yourself or getting a mate to help you.  They take no responsibility for anything anyway, and they don’t do the structural inspections that they imply they will: read the small print on their websites.

And that, in a nutshell, is the story of how we bought our apartment in Phuket.

Now, if you’ll excuse me, I’m off for a swim.

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3 Responses to Buying an Apartment in Phuket

  1. Tatyana says:

    Contractors are the same everywhere. Just yesterday a classmate, Japanese architect who works for an engineering company in NJ, asked me if I can recommend an honest and efficient construction management Co in Manhattan, to oversee the construction of an interior retail project. I raked my brains in vain…

    The balconies saga is hilarious (for those who doesn’t have to empty their own wallets…); tell me this: how come if the floor boards were so flimsy, they put on a spa tub?!?Untreated wood beams under a heavy-loaded tub? Geez.
    Good catch, Tim.
    [that from a bit of an expert in punch-lists and walk-throughs...14 years in interior architecture.]

  2. Natalie says:

    emmmm, i think opening your own Building Inspection Company could become a good way to make money =)
    Did you think about that? you are about 100.000 times better than those Thai guys.

  3. Pingback: White Sun of the Desert » A View of Life in Phuket

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