Off-plan buyers in Bangkok: early birds or early worms?

In property, as often in life, things tend to turn out well for the early bird. But with the market in its current state, we should also consider the fate of the early worm.

For many years, the sharpest investors in Thailand's property market have reaped solid gains by buying off-plan. By committing early to projects, they have picked up discounts from developers as well as capital gains from a rising market.

But, of course, buying off-plan has always had its risks. Projects offer incentives precisely because of the potential downside. If early buyers commit to a project that fails to catch the market's interest, their condo could never even get built.

As a rule, buying off-plan is a tricky process, requiring a thorough understanding of the market. Buyers must be confident of the developer's financing and must be sure their project has a market for resale or rental.

Luckily, in Bangkok's current market, all this careful research and consideration is no longer necessary. For the capital, the decision-making process has been streamlined - basically, don't do it.

Bangkok's property slowdown has both taken the shine off buying off-plan while, on a more positive note, it has opened up alternative routes for picking up bargains.

For a start, volatile exchange rates and uncertain economic trends have ramped up the risks - especially for buyers with their assets in another country.

It is no longer safe to assume your finances will be in the same shape in three years' time that they are today. Off-plan buyers, who will pay the bulk of their units' price on the building's completion, are therefore leaving several hostages to fortune.

One risk is a skittish exchange rate. Over the three years that your condo takes to be built, its price in dollars, euros or sterling could rise substantially.

Are you also sure that you will still be able to get the mortgage you need when it's time to pay the balance for your condo?

The world's banks have undergone a change of heart in the downturn. While never profligate with credit, Thai banks have now tightened their demands on developers. They may no longer lend to projects without pre-sales of 40% or 50% of their units, which makes it likelier that developments fail to find finance and never materialise.

What's more, the main point of buying off-plan - substantial capital gains - is undermined by Bangkok's current market conditions.

Expats already in Bangkok who buy off-plan must continue to rent accommodation until their condos are ready - while, in the meantime, they see no return from their investment.

In the past, this disadvantage could be outweighed by picking up a unit at a bargain price. Over recent months, though, early buyers have been reselling before their units are transferred.

And if you are after a good deal, these condos are probably your best bet. The ideal opportunity could, for instance, be in a development due to complete within a few months.

At least until these resale bargains are mopped up, I see only one compelling case for buying off-plan in Bangkok: to get your hands on a building's most desirable units, such as roof-top penthouses.

That said, property outside the capital is a slightly different matter.

In resort towns, the gains from buying off-plan are higher. In the provinces it is very feasible to negotiate a substantial discount. It is not unusual for prices of resort condos to have risen by 50% by the time a development is completed.

The delay between buying off-plan and actually getting your unit is much shorter outside Bangkok. Unless you are buying a condo in a building with 20 or 40 floors, you can expect to be able to move into your new home within 12 or 20 months.

In addition, off-plan projects in resorts can also offer higher-quality design and construction than existing buildings.

For now, though, Bangkok has an ample offer for buyers. In the capital, your dream home is probably out there on the streets, not on an architect's drawing board.