Characteristics of Condominium Projects Selling with A Yield-Guaranteed Method to Buyers

Abstract

          Condominium projects (project) that sold by offering the guaranteed yield to buyers under specified conditions or guarantees the guaranteed yield rate tends to increase. In this regard, the operators of those projects are managed by leasing out in various ways to repay the buyer. This research aimed to study the physical characteristics of projects and the guaranteed yield rate provided to buyers and sales conditions, including analyzing the factors that affect the guaranteed yield rate using data collection from 21 February – 31 August 2019 via the websites. Sites that have been sold in this type of project and selected only the completed projects throughout Thailand as a sample group, found that there are 67 projects. In addition, the methods of interviewing the entrepreneurs or the participants in the project development were analyzed by grouping, comparing and using descriptive statistics including inferential statistics.

            The study was found that 1) Most of the projects were constructed between 2012 – 2019, which are located in provinces with tourist attractions and developed by operators outside the Stock Exchange of Thailand. Most buildings are on more than 8 stories high. There are studio type to 3-bedroom type for sale at a price of around 90,000 – 100,000 Baht per square meter. The main facilities are the reception area and the restaurant area. 2) Entrepreneurs have brought the project to be rented out for both short and long term. In order to generate revenue and pay as compensation, it is for the buyer. Most of them 82% give a low guaranteed yield rate of 5-7% per year, followed by a medium and high guaranteed yield rate of 7-9% per year and more than 9% per year. 3) The yield guarantee is divided into 2 forms which are (1) The warranty period is more than 5 years (5-20 years) and after the contract is expired, the buyer can choose the conditions whether to manage the room themselves or renew the contract with the project or sell the condominium unit back to the project depending on each project. (2) The warranty period is less than 5 years (2-5 years) and after the contract is expired, the buyer will be given ownership of the condominium unit back. 4) The main factor that has a statistically significant influence on the guaranteed yield rate is warranty period for returns. By long warranty period give higher return rate than the project which provides short return period.

            This research revealed characteristics of condominiums that are sold by the guaranteed yield rate that exists in the Thai real estate market. It will be beneficial to those interested in buying the project, especially understanding the nature and source of the conditions truly before buying decision. This is to help reduce the risk of investing in real estate in such a manner.