Article | Intelligent Investment
Don’t Overlook the Importance of Property Appraisal in Thailand
Understanding how property valuation works and how property appraisers will determine the value of that investment.
July 21, 2022
What is property appraisal?
Thailand remains one of the most attractive destinations in Southeast Asia for real estate investments, and it doesn’t matter if you are buying or selling, or whether your interest is in residential, commercial, or industrial property—at some point you will need a property appraisal.
Property appraisal is the unbiased valuation of a property, usually carried out by an independent, qualified appraiser, such as CBRE. Property appraisal is central to the process of buying and selling real estate because if you’re buying a property or selling a property, you need to know how much that property is worth before a transaction can happen. If a property isn’t correctly appraised, important decisions will be made based on inaccurate data, resulting in either a loss of income or maybe even the opportunity to buy or sell the property at all. Correspondingly, a property that is accurately appraised brings with it several benefits to everyone involved, most specifically that the price of the property is a fair reflection of its market value.
Real estate is a serious investment. For many of us, buying a property will be among the most significant purchases we ever make. That’s why it’s important to understand how property valuation works and how property appraisers will determine the value of that investment. The following section will briefly explain the basics of property appraisal in Thailand.
The factors in a property appraisal
There are a number of factors that come into play when getting a property valuation. Residential is just one area of property appraisal, and for the sake of simplicity this article will mostly cover such valuations. However, a core strength of CBRE’s valuation department is also commercial real estate (e.g., land, shopping centers and en-bloc office buildings), as well as luxury hotels and villas—the kind of which you see in places like Koh Samui and Phuket.
So, when starting the process of a real estate valuation, the appraiser will first look at the size of the property. Obviously a 5-bedroom villa will have a higher value than a 2-bedroom villa in a similar location. Second, they’ll look at the quality and type of a property’s fittings (or in the case of an industrial property things like clear height and floor load capacity). Third, a property appraisal must take into account the structure of a building; obviously a building that was poorly constructed and is in need of repair will be valued lower than one built to a high level. Fourth concerns the location of the building; for example, a condo situated in a desirable area of Bangkok next to a BTS or MRT station will be given a higher value than a property far from public transport and other amenities. A couple planning on starting a family will place high value on a potential home’s proximity to schools, parks and playgrounds.
Finally, an accurate real estate valuation will mean looking at the sales history in the surrounding area. A competent appraiser must pay attention to such market trends. So, if a new mass transit station has been built in a certain location—say, the expansion of the MRT or BTS to a new neighborhood in Bangkok—appraisers will take this into account, as the construction of such stations invariably increases demand for property in that area. When combined with the market conditions (and these can be affected by things like COVID-19 or an economic downturn) it will contribute toward a more accurate valuation.
Who carries out property appraisal in Thailand?
A person who is trained in real estate valuation and property appraisal is known as a certified property valuer (CPV). In Thailand, licenses for the role of “key valuer” are granted by the Securities and Exchange Commission (SEC) and the Thai Valuers Association (TVA). Among other things, such licensing means the field can act independently, free of political interference, and meet international standards to ensure objectivity and fairness. This should come as a reassurance to foreigners who may be buying a property in Thailand for their own use, for example a villa for their retirement. Such a major life purchase necessitates valuers or appraisal companies to be trustworthy, reliable, and competent.
Why else is property appraisal in Thailand important?
In addition to its centrality in real estate transactions, property appraisal plays a central role in financial reporting. Most players in the real estate industry, from funding institutions to developers to investors, need accurate property valuations and appraisals for their annual reports. They must rigorously adhere to established auditing procedures. If they don’t do this, inaccurate impairment figures in the balance sheets can lead to legal trouble. Because of the importance and complexities of this, companies such as CBRE are often hired to consult on these matters.
Hopefully the whole process is a little clearer now that you’ve read this article. If you want to know more about property appraisal or real estate valuation in Thailand or want to hire a professional property appraisal company in Thailand, please contact CBRE.