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Although it may seem arbitrary, the price of land in Krabi has several determining factors. Below, we explain what they are and how to find out if you are getting your money’s worth
The value of land in Krabi
RECENTLY at Krabi Property, we received classified adverts selling land with a sea view in the Ao Nang area. One was selling at 1.5 million per rai; the other for a staggering 35 million baht per rai.
When faced with figures like these, there is a tendency to think that landowners just make it up as they go along; and there is certainly an element of this, particularly in the volatile land market in Krabi. The old cliche of the owner seeing a white face, or even a Thai out-of-towner, and the price instantly doubling still unfortunately holds true in some cases.
Throw in agents - both companies and well-meaning individuals - and, with the large commissions involved, you frequently end up with chaos: in a small town like Ao Nang, potential buyers may well find themselves being taken to see the same piece of land by three different people, each time with a different price tag!
However, not all prices will be over-inflated - an important point to remember before you wear yourself into the ground looking for something cheaper. "The one thing that you can be sure of," according to Robert Reynolds, the managing director of Krabi Consultants, "is that there are no more 'bargains' to be had in Krabi. Prices [the real ones] are now comparable with other beach areas in Thailand as people know the service infrastructure - hospitals, cinemas, shopping malls - is on its way."
So how do you know if you are getting value for money? The first step is to educate yourself, especially if you are new to the Krabi area. If there is a discrepancy in price in what seem to be similar plots there is normally a good reason for this - that may not at first be obvious.
There are usually several factors that influence the price of a piece of land; and these also happen to be some general considerations to think about when deciding where to invest your money.
The biggest determiner of land cost is, of course, location. Land near to the beach will be more expensive than that further away. Be warned, however, with limited land available the price increase is not linear, but exponential - going up in value several times over as you approach the shore.
For this reason, most residential properties on the mainland tend to be further away from the beach. But once you are outside a 2-3km perimeter it can be hard to determine what you should be paying. As always, local information is key. They may look the same to you, but some areas are considered to be more upmarket than others, often for intangible reasons such as they are safer or have ‘good families’ living there. If possible try to find out who your neighbours are, or will be (if an empty plot).
Known future developments can also have an impact on prices - again, this is something you can only find out about by talking to local people, or employing the services of an experienced agent. Companies such as Krabi Consultants charge upfront for viewing properties - mainly as they also provide insider advice as to what is most suitable for the client.
Other points about location: proximity to a main road, or town / village centre tends to bump up the price; land further away may be quieter, but can involve access issues - if you buy anywhere ‘off-road’, you will need to discuss how you can access the land with the owners on your perimeter. Once agreed, creating the road will usually be at your expense, so this should be factored into your end price.
The second biggest factor in price is the type of land paper, as this will determine what the land can be used for, and if the ownership can be legally transferred. If the land is cheap, it may well be because the ownership is contestable, or because planning permission will be impossible to secure.
The type of land paper available should thus be established as early on in the process as possible. It is advisable to invest only in land with a Chanote Tee Din or Nor Sor Sam Gor paper, as these are the most secure - although even these carry no weight in the case of land on a hill. Such land, often with sea views, may seem attractive, but if above the 80m mark, even with legitimate title deed, you will not be able to build any permanent structure on it, as this is against Thai law.
If buying land to build your own house, rather than for speculative purposes, there are several other factors to consider. Robert Reynolds says: "These days, every local villager is aware of the value of his or her property. If they are willing to sell the land cheap, it usually means there will be hidden costs. Infrastructure is the biggest variable. Check if the land has mains electricity access and a reliable water supply. If the answer is no, you could find yourself spending several hundred thousand baht to install pylons and dig a well."
Digging a well means the land will have to be surveyed: some areas may sit on a rock shelf that makes access to the water table impossible. Look at how the land lies: land fill or levelling costs can also add a hundred thousand or so to the price tag. A piece of land with ready access to all the infrastructure and a public road can thus be double the price of that without.
Even when buying a completed house, land will be the major component of the price as building costs are relatively cheap. "Construction costs can be controlled," says Reynolds. "For a high quality, western standard build, you are looking at anywhere up to 25,000 baht per square metre. A local quality home can be had for around 10,000 baht per square metre. Anything on top of this will be land cost." One tip to increase the value of your home is to go for a bigger plot (and smaller house if necessary).
One final piece of advice from Reynolds is to "price everything you can in the neighbourhood", to get an idea of the real market value of the land. This, plus any extra costs of adding infrastructure, should give a good idea of how much to pay.
Small print: of course, if you have been doing your property homework, you will already know that land cannot be bought outright by foreign individuals. This article therefore applies to those buying in the name of a Thai spouse or relative; in legitimate partnership with Thai people through a company in which they are a minority shareholder; or considering a long term lease (as prices come close to outright purchase for leasehold agreements of 30 years or longer).
Above: A beautiful and remote spot may seem appealing - until you factor in the costs of adding basic infrastructure like electricity and running water
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