Buying Apartments During Construction or Ready to Move In?

Buying Apartments During Construction or Ready to Move In?
It may seem obvious that buying an apartment in Phuket during construction is more profitable than purchasing an already completed property. But let's look at the advantages, disadvantages, and risks of investing in Phuket real estate and determine the benefits in numbers.

Buying Apartments During ConstructionBenefits of Investing at an Early Stage
80% of apartments in Phuket9 projects are purchased during construction. Approximately 10–20% of apartments are sold before the condominium construction begins. However, most investors wait until the necessary permits have been obtained. The main reason for investing at an early stage is the attractive price. The price of apartments in condominiums under construction usually increases by 10–15%. In addition, at the beginning of construction, there is a much larger selection of apartments available for purchase.

Risks of Buying an Apartment During Construction
At present, the main risk remains a prolonged process of obtaining a construction license. Obtaining the necessary permits for some projects can take more than 2 years. Although when reserving an apartment, the investor pays only part of its value — usually 20–40% — this money will be “frozen,” meaning it will not generate any profit.

Buying Ready Apartments
Obvious Advantages of Ready Property:

• Minimal risk of unfinished construction or prolonged construction
• Opportunity to evaluate the property in person
• Opportunity to use the apartment immediately
• Rental income immediately after registration

A less obvious advantage of the higher price of a completed property is the correspondingly higher income from the income program.

Explanation: income under the developer's program is calculated as a percentage of the apartment's value. Of course, in the case of a sale, the difference between the initial price and the final price will be important.

Difference in Returns Between Completed and Under-Construction Apartments
Let's calculate how significant the difference in income is when purchasing a completed property and a property under construction. This is a simplified formula to clarify several other less obvious benefits of investing.

For example, let's consider two similar properties in terms of price and value at the end of the rental program.

1. Investment in a completed apartment: 4,800,000 THB (20% higher)
2. Investment at the construction stage (apartment under construction): 4,000,000 THB

Rental program terms: 7% per year for 8 years.
Period from the start of construction to completion: 2 years
Sale of the apartment at the end of the rental program: 6,000,000 THB

The difference in investment returns between a completed property and a property under construction amounted to 0.475% per year, or 3.8% over 8 years. A completed property provides a higher “instant return,” while in the long term and in the event of a sale, buying at the construction stage generates a higher return.

By purchasing a completed apartment at a 20% higher price, the investment loss amounts to just 3.8%. In some cases, this difference may be offset by the lower risks associated with a completed property, as well as the ability to start using the property and receiving rental income as soon as possible.


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