All Forum Posts by: Priti Donnelly

I agree with all 5 points on the original post as well as affordable, high yield, and openness to foreign markets. With all of this in mind, commercial asset class will generate higher yield than the residential sector. So that would be the purchase (fractional or full) of hotel suites.  I am not familiar with all international sectors, but I am familiar with Thailand.

Thanks everyone for your input. Your various perspectives, questions, concerns have been eye-opening and appreciated, given my post shouldn’t have even been here in the first place. I won’t be contributing further to this thread. You are welcome to contact me directly.

@Carlos Ptriawan

I  had a chat with the developer to get more information around capital gain and leasehold. For the record happy to arrange a call if anyone reading these posts are interested.

To clarify, in Thailand, a foreigner cannot own 100% of residential condos; 51% of the apartments has to be owned by Thais and 49% can be foreign owned. This, however, is not residential. It is a commercial class asset and therefore, exempt from this rule. 100% is allowed.

The first project is scheduled for completion April 2024. In case of unforeseen circumstances, if the project is not completed by the third year, the developers will return the funds to those requesting it, as stated in the contract. They own the land outright with no debt so have the ability to do so. Also, they have been vetted by Wyndham (Ramada is the brand) for 9 months and granted their licence to all 6 hotels.

In Thailand, as with anywhere with leaseholds, there is a point at which capital growth will decline. It is more of a market for rental yield, rather than long term capital growth. The 60 year leasehold advantage is that owners of the suites can be certain that the Thailand owned land will not have to be renegotiated before then, with additional fees upon renewal. Just a point of interest regarding your question about Bali. The developer lived there for 7 years. His son is developing 12 pool villas in Bingin Bali, all sold to foreigners, no locals. They paid USD $300k for a 25 year lease. At the end of 25 years, the lease will need to be renegotiated with the land owner for another agreed upon sum.

Regarding yield, international hotels increase their nightly rate each year, which is why rental yield will continue to rise. Plus, short term rentals with international hotels generate higher returns than residential properties. Most buyers of these suites purchase for cash flow with the intent of owning the suite for 10 years, sell, and reap the rewards of capital growth plus income. Those that are buying for retirement are making more of a lifestyle purchase.

95% of sales to date are foreign buyers from Australia, Japan, UK, Russians and others, as I mentioned, but Russians do not own most of Pattaya. You would find more Russian ownership in Phuket.

@Carlos Ptriawan

Because this is a commercial asset class, the appreciation of the suites is based on occupancy rates in the area. In this area in Thailand, the average annual capital gain from 2009 to 2020 sat at around 5.43%. What it will be upon completion is speculative, but not likely less than 5.43%. Yes, UK, US, Australia, Canada, would be better for those seeking capital gains, but again highly speculative. This market is more for affordability, higher yield and stable returns. These suites can be used for primary living and when the suite owner is not there, Ramada will rent it out to generate income. Buyers have been a combination of over 50 planning for retirement, average mom and pops, Australians, Japanese, Canadians, Russians. Chinese buying market is now opening up. Yes, it is more of a lifestyle purchase. 

@Mike Lambert a lease and leasehold are not the same thing. And my words were, "It's not for everyone, but the units are selling fast," to let you know there is popularity. If you have decided this is not for you, that's fine. But no need to twist my words out of context.

@Mike Lambert let me clarify, under this structure, you would be the owner of the suite, not a lessee. That's the appeal. As such, ROI would come from yield plus capital gain. It's not for everyone, but the units are selling fast.

@Mike Lambert actually by owning the suite there are capital gains as well. The average from 2009 to 2020 was 5.43%. Why would you calculate over 60 years? The buyer can sell whenever they want.

Of course, there are many other options. 

@Mike Lambert you are correct in your language, it is a "payment plan" and not financing. 

@Carlos Ptriawan sorry for the delay. I had to check with the developers on a few of your questions.

1. It is a commercial class asset, 60 year leasehold

2. The cons of investing in Thailand are that it is governed by Thai law, something you might not be familiar with. That being said it is a popular place for foreign investing because of its democracy.

3. The main difference between foreign an local is the percentage of ownership. With residential condos only 49% can be foreign owned. But, under a commercial class, it can be 100% foreign ownership.

4. Several countries have agreements with Thailand to prevent double-taxation.

5. Insurance for hotels and resorts and their individual rooms are paid under international insurance policies through Ramada hotels. This is part of the operational costs.

6. With new freeways, high speed train, upgraded airport and other infrastructural developments in the area of the hotel, land and real estate have seen steady capital growth.

Happy to chat on a call if you'd like  more information.

@Dan H.

Could you clarify what you mean about the risks from China?

I am going to assume to mean what if travel restrictions are imposed on them once again? The project is 1 hour from Bangkok with a population of 14 million people. So, in case of international travel restrictions, occupancy rates won’t be affected as a large number of visitors are only an hour away. The developers are not relying on the international market for yields and returns.

If that was not what you were referring to, please clarify. Thank you.