IN Thailand’s slumping housing market, anxiety is building and some people are on the brink of panic.
When new property tax laws come into effect next year, just months away, they will have to pay a hefty price for owning too many homes, apartments, land plots, office buildings and shophouses.
And because it’s a rich man’s problem, they won’t get public sympathy or support. No one’s going to block roads, take over airports or march to Parliament for them. They are on their own.
So if you had amassed a mountain of properties and you have put your name on more than one title deed, you are probably going to be hammered.
Last month, property developers warned that if you own 1,000 square wah of prime land valued at 1 million baht a square wah, you will have to pay 3 million baht in taxes a year. Some landowners don’t even make half of that a year.
So when things get bad, who do you call? Forget Ghostbusters. Try instead The Bangkok Residence 88 Company, a fairly new agency that could save your life.
Its CEO Thanyanum Punyasakulwong says people need professional services in good times as well as bad times. But she found people have been disappointed when they employ big agencies but obtain tardy results.
“I often wonder why they go to foreign-name companies? But it is true that we have so few local companies providing these services,” she says.
“In recent months, we have seen our business expand dramatically. We have doubled in size to about 3 billion baht annually and we are still growing about 20 per cent a year.”
So when things get bad, demand actually spikes. She says the firm will probably break 3.5 billion baht easily this year.
“About 70 per cent of our clients are Thais, the rest foreigners,” says Sanchai Chatrawatanakul, the agency’s business development director.
“We are becoming better known as a property agency since the global financial crisis in 2008.”
When the agent matches buyers and sellers successfully, word goes around quickly. The calls start coming in fast and furious.
“The key is to understand that most property transactions are between 2 and 6 million baht,” he adds.
If sellers are asking for huge sums and have overly ambitious targets, they are bound to be disappointed. Only an honest agent will admit this, he adds.
In contrast, most housing developers tend to do the opposite – their objective is to mark up prices as much as possible.
So they spread the rumor that condo prices are now 100,000 baht per square meter, which no one can prove or disprove.
“What our clients need is someone who can help them locate buyers or renters,” says Ms Thanyanum. “We are successful because we provide honest appraisals and realistic results.”
Also to its advantage is it does not need to tag a high fee just because it is a big branded name.
This is very true in a market dominated by a few big players. But some won’t bat an eyelid if your portfolio is less than 100 million baht. They are just too busy serving their elite clientele. Sounds like a “premium bank” exclusively for high net worth types? You can probably bet on it.
And as the demand for property is huge while supply of services is limited, small clients simply cannot compete for talent.
Major clients take the lion’s share of the resources and manpower. The rest have to settle for scraps.
In such a situation, agents like The Bangkok Residence 88 find a sweet spot, a niche position to dominate.
Small retail players know that if they go to big agents, they will be standing in a long queue with near-to-zero chance of securing even a return call.
For them the choice is simple, go to Ms Thanyanun’s outfit and save time, cost and aggravation.
The Bangkok Residence 88 Company is building up a bigger database and gaining tractions in a market segment big players ignore. Ms Thanyanum is also now involved with erecting a townhouse community off Sukhumvit 103.
It began a few years back with two small projects.
“We are now confident of constructing a bigger site,” says Mr Sanchai. In the previous years, small agencies like Plus Property and Aquarius expanded from being purely services to becoming home-builders. That meant veering away from its traditional core businesses into a more risky arena.
To be sure, the temptation to cannibalize the market is hard to resist. Transaction fees on average is about 3 per cent. The mark up for condo developers, on the other hand is about 20 to 30 percent.
So the key is to keep a balance in selling for clients and competing against them.
Bangkok Residence is taking baby steps, starting small and resisting going broke on a mega projects.
It also fully realizes that it is at the tail end of a boom-bust cycle. No marks for guessing how that ends.
TOP: Bangkok’s skyline with numerous high-rises looks impressive but the new property tax laws will hit some people hard.
INSET: Ms Thayanum Punyasakulwong. CEO of The Bangkok Residence 88 Company (center), speaks at a recent interview
By Cimi Suchontan