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BANGKOK 23 February 2019 05:17

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I've read a couple of very-very sceptical threads here about investing into New Nordic development projects with guarantees of 9%/10% rent for 5, 10, 15... years and a buy-back option. But the discussions used to be three years ago. Since then New Nordic has finished a number of projects in Thailand and are expanding to other South-East Asia countries, even Africa. So, it looks like it has been working so far. Also they build a full tourism cycle with hotels, condominium blocks, restaurants, tourist agency, investment fund which looks like a right thing to do. Did anyone have any recent experience with them or any relevant insider info?

 

Also, it looks like their formula is overpricing the property well above the market. However, from the perspective of an investor who is interested in the yield rate, it does not matter so much as long as the buy-back is guaranteed. Is it really so? I have no illusions about guarantees for 10-20 years. But would it be relatively low risk to buy leasehold an apartment in New Nordic Phuket or Samui projects for just three years opting for a buy back?

 

They include the guaranteed rent and the buy back obligations as addenda to the leasehold purchase and sale agreement. If I am not mistaken, it means that they are kind of separate from the agreement that is going to be registered in the Land Department. Does it mean they are legally binding at all or not? I mean not only in the extreme case they go bankrupt but in general? Ot is it very likely to end in a response "Sorry, we can't buy your apartment now" and nothing can be legally done with that?

 

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Has anyone actually had their unit repurchased for the previously agreed price? Just wondering.

 

11 hours ago, GeorgeWolf said:

Also, it looks like their formula is overpricing the property well above the market.

I cant see any other way they could they make it work.

 

11 hours ago, GeorgeWolf said:

They include the guaranteed rent and the buy back obligations as addenda to the leasehold purchase and sale agreement. If I am not mistaken, it means that they are kind of separate from the agreement that is going to be registered in the Land Department. Does it mean they are legally binding at all or not?

They cant be part of what is registered at the Land Office. And I suspect that there will be clauses and fees and obligations in the guarantee that make it much less desirable than it appears from the posters.

 

Why do you mention leasehold? Who in his right mind would buy a leasehold condo here when they can be bought freehold?

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This is Thailand,  even after years of court battles and you winning the case it's highly  unlikely they would honour their contract. Plenty  of other ways to invest that offer security and are regulated.

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Good post.

yes only on their leasehold units they give 10% rental returns and a buy back option.

It is a good way for them to get rid of these units for high sales prices.

personally i never get an impression their buildings have an high occupancy rate at all very often it looks empty. Curious to read comments from folks who did bought therre.

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New Nordic guarantees 9% rent for both freehold and leasehold but a buy-back option only for leasehold. Buying an over-priced apartment (for example, 27-28 sq. meters studio for over 4,000,000 baht in Bang Tao, Phuket project) freehold looks like an even riskier option, no?

Edited by GeorgeWolf

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15 hours ago, GeorgeWolf said:

New Nordic guarantees 9% rent for both freehold and leasehold but a buy-back option only for leasehold. Buying an over-priced apartment (for example, 27-28 sq. meters studio for over 4,000,000 baht in Bang Tao, Phuket project) freehold looks like an even riskier option, no?

You  have answered  your own question 

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16 hours ago, GeorgeWolf said:

New Nordic guarantees 9% rent for both freehold and leasehold but a buy-back option only for leasehold. Buying an over-priced apartment (for example, 27-28 sq. meters studio for over 4,000,000 baht in Bang Tao, Phuket project) freehold looks like an even riskier option, no?

I think the only way to find this out  is to buy in each project  a 4 M bht unit and let us know in ten years how it has worked out for the achieved rental returns and the actual resale value of the 2 properties .

Edited by Destiny1990
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On 1/20/2019 at 8:58 AM, KittenKong said:

I cant see how this can possibly be a sustainable business model. In fact it looks like a Ponzi scheme.

No doubt, its simply amazing people even need to ask the question. Give Warren Buffet a steady low risk 4% in today's market and he would take your hand off. 9% what nonsense, anyone who falls for that quite frankly deserve everything they get!

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Beautiful project at absolutely stunning Coral beach, but, if it is to good to be true,,,,,,,,,,,,,,,,,, and 50 minutes away from the city. If I had the money to waste, I would buy one of the penthouses there, no doubt. Hope they conserve the beach and marine life better than other projects. 

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5 hours ago, Hummin said:

Beautiful project at absolutely stunning Coral beach, but, if it is to good to be true,,,,,,,,,,,,,,,,,, and 50 minutes away from the city. If I had the money to waste, I would buy one of the penthouses there, no doubt. Hope they conserve the beach and marine life better than other projects. 

What u talking about?

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7 hours ago, smutcakes said:

No doubt, its simply amazing people even need to ask the question. Give Warren Buffet a steady low risk 4% in today's market and he would take your hand off. 9% what nonsense, anyone who falls for that quite frankly deserve everything they get!

But you can get 19% a month investing in Durian and other such things.... 

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On 1/20/2019 at 3:04 AM, GeorgeWolf said:

New Nordic guarantees 9% rent for both freehold and leasehold but a buy-back option only for leasehold. Buying an over-priced apartment (for example, 27-28 sq. meters studio for over 4,000,000 baht in Bang Tao, Phuket project) freehold looks like an even riskier option, no?

If this scheme is anything like a few others in Patong, the lease agreement states that the owner can only occupy it for one month (or so) a year.

 

Consider another angle...........you have paid a lump sum up front and holiday in the unit for one month a year, then after 11 + years you will have gotten your original payment back in interest and had 11 holidays in it. A lot to pay for 11 holidays.

 

Then the buyback kicks in and what price will an 11 yr old small condo fetch, unless they guarantee a price?? And older buildings generally don't fare well in Thailand with regards to resale.

 

Other things to consider.............will the developer still be around in 11 + years to buy it back; will the agreement be honoured and if it isn't what options do you have; bankruptcy is common as are dubious contracts/developments (ACE Condos and The Park to name a couple); any "fish-hooks" in the small print and so on.

 

IMO this could be fraught with danger...........so buyer beware! 

 

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