Property developments 4.0
Projects such as The Ritz Carlton Residences, Marque Sukhumvit, 98 Wireless, Four Seasons Private Residences and The Residences at The Mandarin Oriental Bangkok make the headlines. Other, less prestigious development remain in the shadows and have to convince the investor by their overall quality, including the legal structure.
The great ease of property developments in Thailand
It can be safely claimed that Thailand is for decades the property developer’s paradise. Thailand’s natural abundance of countless amenities and attractions makes it easy to sell Thai property like hotcakes. The sourcing of undeveloped land, the division into parcels and the quick commercial exploitation with a handsome profit margin granted property developers for a long time virtually the license to print money.
When the demand for property outstrips supply considerably, the intrinsic quality of particular characteristics of the property does not have a large impact on the commercial performance of the venture. The consequence of this success story is that the industry standard went south. To accept some bold property offers is nothing for the faint-hearted foreign investor.
Thailand’s property industry trivializes and plays down the significance of legal investment structures. The unobstructable sea view is more important than the undeniable compliance with Thailand’s foreigner legislation. The size of the swimming pool is more significant than the size and scope of the protection package against the influence of the Thai participants.
Resurrection of compliance, protection, and enforceability
In times of political uncertainties, Thailand’s property sector remains a solid economic force. However, the quota of risk-hungry investors is declining while the public knowledge and awareness of investment risks and disadvantages is increasing. The time to cherry-pick the naive buyer and ignore the well advised and the risk-conscious investors might come to an end.
In addition, new (Chinese) groups of property investors might not be accessible to the tempting old marketing techniques. They rather require a convincing investment structure than the this-is-how-it-is-done-in-Thailand sales gimmick. They might ask for a comprehensive property due diligence examination and, as a worst case, look for legal advice from independent legal counsel.
From a property developer’s viewpoint, it is a reasonable approach to revisiting existing investment structures, even if they have been proved as acceptable for years. The continuation of a conventional structure will certainly not result in dead stock and unsaleable commodities. But there are good reasons to believe that this will not skim the full market potential. From the point of view of competition, this is uneconomical and silly.
Some innovative thoughts on the legal marketing of property developments: https://www.linkedin.com/pulse/alternative-legal-marketing-thai-property-dr-ulrich-eder
Legal support and assistance in property developments
PUGNATORIUS assists and supports in the customized design, the swift realization and a proper maintenance of sophisticated property developments. The law firm is well experienced with investment grade corporate structures and frequently repairs and upgrades improper and illegal companies. PUGNATORIUS has a special know-how in setting up high-end corporate solutions to protect the foreigner even against a dishonest and malicious co-shareholder.
In the view of PUGNATORIUS, it is bad marketing to show the customer the product and let him alone in the legal structuring of his foreigner investment. Many THB 30 million property investments base on a THB 30,000 corporate structure and the developer is ethically responsible for this flagrant imbalance. “Up to you” is not a reasonable answer.
Instead, the developer should give the customer the information and opportunity to strengthen his legal position when it comes to compliance with the foreigner legislation and protection against Thai participants. This could be understood as an upgrade to property development 2.0.
The developer can try to hide legal risks and downsides to fool the customer. However, more and more customer are not easily taken by surprise. Therefore, it makes perfect sense to identify such legal issues by the developer before the customer points his finger at it. A due diligence controlled and managed by the developer avoids such bad surprises and disappointed investors which run away from the deal for the wrong reason. Property development 3.0 is the best approach to avoid this.
The customer requires legal information and assistance and it is the easiest approach to offer this by the developer in an ethical procedure. The buyer can be provided with solid legal opinions on his questions. By this, the developer’s legal counsel can be the direct contact person to facilitate the process to get things done. Property development 4.0 makes sense, is economically wise and avoids legal disputes before and after the deal is inked.
Details and the law firm’s consultancy offer are available on request. PUGNATORIUS Ltd. advises on various property developments and has an extensive work-product archive for each type of private and commercial real estate project. The law firm developed special knowledge, know-how, and experiences regarding the structuring of property development. Secure your property development in paradise.