Property Speculation Bangkok: Renovating the right way to make profits

Property Speculation Bangkok: Renovating the right way to make profits
  By Neil Simmons for the Bangkok Post
  
  Following on from the article I wrote on 27th March, which covered property speculation in Bangkok, we have noticed an increase in the time taken for property speculators to 'flip' their condominium units. Why? Perhaps because, following an increase in construction costs and off-plan sales prices, speculators are having to sell at a price to end users that may be prohibitively expensive, especially following several recent increases in interest rates and the associated increase in mortgage costs.
  
  When it comes down to it, some people don't feel completely comfortable in buying into a condominium that is still under construction. Perhaps they were stung during the 1997 economic collapse. Perhaps they are concerned that the same thing might happen again. There is of course a level of risk involved. Property speculators take on this risk, and over recent years many may have profited well from doing so.
  
  However, given that there have been a number of new units entering the market over the last year, the supply of speculator driven 'resale units' in new condominiums has increased, which means that the end user will commonly have a choice of a number of units in any one condominium, increasing the competition between speculators, and the end user is in a stronger position to negotiate the price down.
  
  As such, for many property speculators, investments returns are not only taking longer to come to fruition, but the profit margin is also on the wane.
  
  How are these speculators going to continue to make good profits? Where will they look next? Well, recently a speculator acquired a bare shell penthouse unit in an older condominium with the sole intention of renovating the unit and re-selling at a profit.
  
  The speculator employed a reputable interior renovation company to refurbish the unit in it's entirely.

As the unit was bare shell, it needed much more than just a fresh lick of paint. But, the purchaser was daring enough to take this challenge on, and after 3 months of renovation works, the unit was marketed and sold within 6 weeks at a profit of 30 of the total amount spent on the unit, including the renovation work.
  
  In fact, many individuals or companies make a good profit from looking around for a good deal, and then gutting the unit and making it look really nice; often not necessarily using the highest grade materials, but looking really nice. The difference in achievable prices between units 'A', with the old Formica scratched fitted wooden furniture and smelly carpet, and unit 'A' with the new modern furniture and bright shiny tile flooring and concealed lighting, could be as much as 40.
  
  However, having been project manager for a number of fit-outs of condominium units in Bangkok, we know that it's not as easy as ABC. There are of course a whole number of hurdles, pitfalls and two steps forward followed by one step back. You need a good team of interior decorators and most importantly a good supervisor or foreman at the helm.
  
  Even if you do manage to get the above, you would still be well advised to ensure that the work is regularly supervised, to make sure that the workmen are not mixing too much sand with concrete to save costs etc. The other problem that is often experienced is when a 2 month fit out job ends up taking 6 months.
  
  Perhaps the best way to overcome this problem is by making sure that you get qualified references of the contractor before giving them the job, and be very 'hands-on' during the refurbishment period to ensure that the project remains on time and within budget.
  
  So when you're next out property hunting, don't always judge a book by its cover, try to visualise what could be.
  
  You can contact Neil at sales@soho-properties.com
  www.soho-properties.com