Grand Hillside Chiang Mai Thailand an investment opportunity

Why invest in property in Chiang Mai and Thailand?

According to the UN Commission for Trade & Development, Thailand has been named the “4th most attractive nation for Foreign Direct Investment”. GDP growth is very high, at a steady 5.5% per annum sustained for the past 5 years. The Thai government is due to invest £27million into northern Thailand. Located in the northern most region of Thailand, Chiang Mai is Thailand’s 2nd largest city and one of the “World’s 5 most desirable cities” (American Express Travel & Leisure).

Growth: With the opening of a 2000 km highway from Chiang Mai through Laos to China, the once lengthy trade route from Thailand to China is now to be bisected, literally opening the flood gates for business. FDI from Japan and China is already very high. Coupled with a booming tourism industry growing at 25% per annum, a large demand/supply in-balance exists in Chiang Mai. Demand is high and rising.
Hotel Demand: With only a handful of 5-star hotels in the city, planning restrictions being imposed to prevent high-rise development and 3m visitors already enjoying Chiang Mai every year, 5-star hotel buildings are expected to experience the highest demand over the next decade. Yields are high and set to stay.
Grand Hillside: The Grand Hillside will be managed by the international Pan Pacific hotel management group. It will be the newest 5-star hotel building to come to market. KPMG are providing all legal services, controlling the escrow account and backing the project. The investment package enables investors to acquire growing assets already producing high yields with minimal cash, with full management therefore keeping the investor’s hands’ clean. The Grand Hillside Chiang Mai is the right investment in the right market at the right time.
Hands-free: Investors will own freehold apartments, fully furnished, managed by Pan Pacific (one of the World’s highest quality brands) for at least 10 years. With such high demand, the Grand Hillside is able to guarantee a 10% income per annum for the owner, NET of all management and maintenance and service costs. This guarantee is fixed for the first 3 years, after which income is predicted to rise to around 14%, making a truly hassle and hands-free investment.
Cash-flow positive: Ownership is freehold and Bangkok Bank will assist all buyer’s purchases by offering a mortgage from 50% - 70% loan-to-value subject to status. This enables a cash-flow positive investment, i.e. no further funds are required after purchase to maintain the property, quite the opposite.
Profit: Crucially, Thailand has an extremely attractive taxation situation. Almost all of the capital appreciation over the coming boom years will be realised and pocketed by all those wise enough to invest now.

Prices start from

Studios (44 sqm) THB 3,391,497 ~ US$ 89,500
1-bed (76 sqm) THB 5,850,217 ~ US$ 154,200
2-bed (132 sqm) THB 10,174,491 ~ US$ 268,100

Pan Pacific has carefully selected the Grand Hillside due to its prime location at the heart of Chiang Mai, central for the booming tourism and business industries in this area. Hotel buildings in Chiang Mai such as the Sheraton, the Four Seasons and the Mandarin Oriental, all charge from $350 per night. So based on these figures and with Grand Hillside’s prime location - in easy reach of the key shopping centres and historical sites of the old town - the high rates applicable to these properties make it feasible to provide the investment package offered.

For the first 3 yrs an annual return of 10% per annum NET OF ALL SERVICE, MANAGEMENT AND MAINTENANCE COSTS is guaranteed to apartment owners.
For those with a personal interest in the beautiful northern Thailand region, an option to take 9% per annum guaranteed return + 15 days per year personal use is available.
From year 4 onwards, return provided will be equal to a pro-rata share of the net operating profit (including revenues such as food, beverage, conferences, business centre, health & spa, telephone, retail, etc). With the large influx of investment capital in to the region, the infrastructure improvements and with Pan Pacific history of 3 years to establish their place in the Chiang Mai marketplace yields after the first 3 years are predicted to be up to 14%.

Mortgage: Mortgages are available from Bangkok Bank, these range from 50%-60% loan-to-value and are subject to status and terms & conditions. (Subject to status)

Possible Returns:

These calculations are assuming a studio of purchase price US$ 89,500, with a 50% loan-to-value repayment mortgage with 15 yr repayment period at 6.5% interest;
Example Purchase Price: US$ 89,500
50% loan-to-value mortgage: US$ 44,750
Cash invested: US$ 44,750
Closing costs (tax & legal): US$ 6,814 (ask a consultant)
Total Cash Invested: US$ 51,564

Grand Hillside & Pan Pacific provide an investment return to investors. This is taken from their Net Hotel Operating Profit, less their profit & management & maintenance costs, and is guaranteed at 10% per annum for the first 3 years;
10% Guaranteed Income: US$ 8,950 per annum
Ongoing costs (tax & fees): US$ 1,342 per annum
Annual Net Income: US$ 7,608 per annum ~ 8.5% net yield

With this net income, considering the mortgage repayments to be made, this results in a CASH-FLOW POSITIVE investment, with an Annual Gain putting cash in your pocket every year. Note with the high demand and growing market and restricted supply, by year 3 the income is predicted by Pan Pacific to reach 14%;
Annual Mortgage Repayments: US$ 4,678 per annum
Annual Gain: US$ 2,930 per annum CASH-FLOW POSITIVE

For a complete Return on Capital Employed assessment, including the capital loan reduction and also assuming a very conservative annual appreciation of 10%, the total profit over the first 3 years alone would be;
Current appreciation: 10% per annum (compound)
Property Value after 3 years: US$ 119,125
Property appreciation: US$ 29,625
3 yr Gain: US$ 8,789
Mortgage Capital Reduction: US$ 8,950
Total Profit: US$ 47,363
Return on Capital Employed: 92%
Annualised: 31%