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source: The Nation June 23, 2008
In Thailand, the difference between the value of an old property and the price
of a new one is huge.
In the case of high-end condominiums, older units are generally sold for less
than Bt80,000 per square metre, while units at newly launched projects are
priced between Bt120,000 per square metre and Bt150,000 per square metre, or
higher.
Despite the higher prices, we find buyers still preferring new units over older
ones. From where does this huge difference in prices arise?
One reason is that the design of new projects is generally better than the older
ones. But a more important and often-overlooked factor is the maintenance of a
property.
Lack of proper and regular maintenance can make a building age and lose value
quickly. Maintenance includes both daily and periodic upkeep of a building such
as servicing of appliances, wiring, pest control, gardening, etc.
A lot of care needs to be taken while carrying out maintenance work. For
example, using the wrong kind of cleaner on wood or stone floors can make them
discoloured or even ruin them.
Renovation of lobbies and common areas, and landscaping needs to be undertaken
every seven to 10 years. Maintenance and renovation work also need to be carried
out within a unit. That will make it easier to sell or rent at a good price.
Of late, luxury condominiums managed by hotel operators have seen strong sales
despite the higher prices because buyers are prepared to pay a premium for
convenience.
Buyers are expecting high service-and-management standards that can preserve the
value of their properties in the long term. Maintaining buildings to meet such
high standards comes at a cost.
Nowadays, common-area fees in high-end condominiums are about Bt40 per square
metre to Bt50 per square metre. With inflation on the rise, the fees may not be
enough to cover the cost of monthly maintenance. As condominiums follow the
multi-ownership model, it is also not easy to reach an agreement on increasing
fees.
In a positive change for building management, the amended Condo-minium Act
clearly defines the common area and the responsibilities of the juristic person.
The resale value of older units need not be lower than the prices of new
condominiums. A good example is Somkid Gardens, which is about 15 years old but
is still considered a premium property and fetches prices at par with many new
luxury properties.
With land scarce in the central business district, it is worthwhile for old
buildings at prime locations to improve management standards. It would be a
miscalculation not to maximise on the benefits of a property's location simply
because the building is in a poor condition.
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