Condoleezza Rice

Condoleezza Rice (born November 14, 1954) is a professor, diplomat, author, and national security expert. She served as the 66th United States Secretary of State, and the second in the administration of President George W. Bush to hold the office. Rice was the first black woman, second African American (after her predecessor Colin Powell, who served from 2001 to 2005), and the second woman (after Madeleine Albright, who served from 1997 to 2001 in the Clinton Administration) to serve as Secretary of State. Rice was President Bush's National Security Advisor during his first term. Before joining the Bush administration, she was a professor of political science at Stanford University where she served as Provost from 1993 to 1999. During the administration of George H.W. Bush, Rice served as the Soviet and East European Affairs Advisor during the dissolution of the Soviet Union and German reunification. When beginning as Secretary of State, Rice pioneered a policy of Transformational Diplomacy, with a focus on democracy in the greater Middle East. Her emphasis on supporting democratically elected governments faced challenges as Hamas captured a popular majority in Palestinian elections yet supported Islamist militants, and influential countries including Saudi Arabia and Egypt maintained authoritarian systems with U.S. support. While Secretary of State, she chaired the Millennium Challenge Corporation's board of directors.[1] In March 2009, Rice returned to Stanford University as a political science professor and the Thomas and Barbara Stephenson Senior Fellow on Public Policy at the Hoover Institution.[2][3] Early life Condoleezza Rice (whose given name is derived from the Italian musical expression, Con dolcezza, which means "with sweetness")[4] was born in Birmingham, Alabama, and grew up in the neighborhood of Titusville. She traces her roots to pre-Civil War African Americans in the American South,[5] where her family worked as sharecroppers. She is the only child of Presbyterian minister Reverend John Wesley Rice, Jr., and wife, Angelena Ray. Reverend Rice was a guidance counselor at Ullman High School and minister of Westminster Presbyterian Church, which had been founded by his father. Angelena was a science, music, and oratory teacher at Ullman.[6] Early education Condoleezza Rice as an undergraduate student at the University of Denver Rice started learning French, music, figure skating and ballet at age three.[7] At age 15, she began classes with the goal of becoming a concert pianist. Her plans changed when she realized that she did not play well enough to support herself through music alone.[8] While Rice is not a professional pianist, she still practices often and plays with a chamber music group. Rice made use of her pianist training to accompany cellist Yo-Yo Ma for Brahms's Violin Sonata in D Minor at Constitution Hall in April 2002 for the National Medal of Arts Awards.[9] High school and university education In 1967, the family moved to Denver, Colorado. She attended St. Mary's Academy, a private all-girls Catholic high school in Cherry Hills Village, Colorado. After studying piano at the Aspen Music Festival and School, Rice enrolled at the University of Denver, where her father both served as an assistant dean and taught a class called "The Black Experience in America." Dean John Rice opposed institutional racism, government oppression, and the Vietnam War. Rice attended a course on international politics taught by Josef Korbel, the father of future Secretary of State Madeleine Albright. This experience sparked her interest in the Soviet Union and international relations and made her call Korbel "one of the most central figures in my life."[10] Rice graduated from St. Mary's Academy in 1970. In 1974, at age 19, Rice earned her BA in political science, Phi Beta Kappa, from the University of Denver. In 1975, she obtained her Master's Degree in political science from the University of Notre Dame. She first worked in the State Department in 1977, during the Carter administration, as an intern in the Bureau of Educational and Cultural Affairs. In 1981, at the age of 26, she received her PhD in Political Science from the Josef Korbel School of International Studies at the University of Denver. Her dissertation along with some of her earliest publications, centered on military policy and politics in Czechoslovakia.[11] Early political views Rice was a Democrat until 1982 when she changed her political affiliation to Republican after growing averse to former President Jimmy Carter's foreign policy.[12][13] She cites influence from her father, John Wesley, in this decision, who himself switched from Democrat to Republican after being denied voting registration by the Democratic registrar. In her words to the 2000 Republican National Convention, "My father joined our party because the Democrats in Jim Crow Alabama of 1952 would not register him to vote. The Republicans did."[14] However, despite her party switch, Rice served as foreign policy advisor to the presidential campaign of Democratic U.S. Senator Gary Hart of Colorado during the 1984 primaries.[15] Academic career Condoleezza Rice during a 2005 interview on ITV in London Rice was hired by Stanford University as an Assistant Professor of Political Science (1981–1987). She was promoted to Associate Professor in 1987, a post she held until 1993. She was a specialist on the Soviet Union and gave lectures on the subject for the Berkeley-Stanford joint program led by UC Berkeley Professor George Breslauer in the mid-1980s. At a 1985 meeting of arms control experts at Stanford, Rice's performance drew the attention of Brent Scowcroft, who had served as National Security Advisor under Gerald Ford.[16] With the election of George H. W. Bush, Scowcroft returned to the White House as National Security Adviser in 1989, and he asked Rice to become his Soviet expert on the United States National Security Council. According to R. Nicholas Burns, President Bush was "captivated" by Rice, and relied heavily on her advice in his dealings with Mikhail Gorbachev and Boris Yeltsin.[16] Because she would have been ineligible for tenure at Stanford if she had been absent for more than two years, in 1991, she returned to Stanford. She was now taken under the wing of George P. Shultz (Ronald Reagan's Secretary of State from 1982–1989), who was a fellow at the Hoover Institution. Shultz included Rice in a "luncheon club" of intellectuals who met every few weeks to discuss foreign affairs.[16] In 1992, Shultz, who was a board member of Chevron Corporation, recommended Rice for a spot on the Chevron board. Chevron was pursuing a $10 billion development project in Kazakhstan and, as a Soviet specialist, Rice knew the President of Kazakhstan, Nursultan Nazarbayev. She traveled to Kazakhstan on Chevron's behalf and, in honor of her work, in 1993, Chevron named a 129,000-ton supertanker SS Condoleezza Rice.[16] During this period, Rice was also appointed to the boards of Transamerica Corporation (1991) and Hewlett-Packard (1992). At Stanford, in 1992, Rice volunteered to serve on the search committee to replace outgoing president Donald Kennedy. The committee ultimately recommended Gerhard Casper, the Provost of the University of Chicago. Casper met Rice during this search, and was so impressed that in 1993, he appointed her as Stanford's Provost, the chief budget and academic officer of the university in 1993[16] and she also was granted tenure and became full Professor[17] Rice was the first female, first minority, and youngest Provost at Stanford.[18] She was also named a Senior Fellow of the Institute for International Studies, and a Senior Fellow (by courtesy) of the Hoover Institution. Provost promotion Former Stanford President Gerhard Casper said the university was "most fortunate in persuading someone of Professor Rice's exceptional talents and proven ability in critical situations to take on this task. Everything she has done, she has done well; I have every confidence that she will continue that record as provost."[19] Rice’s Stanford appointment was considered, by Casper, an effort to address concerns about alleged bias at Stanford University. Casper told the New Yorker in 2002 that it "would be disingenuous for me to say that the fact that she was a woman, the fact that she was black... weren't in my mind."[20] Balancing school budget As Stanford's Provost, Rice was responsible for managing the university's multi-billion dollar budget. The school at that time was running a deficit of $20 million. When Rice took office, she promised that the budget deficit would be balanced within "two years." Coit Blacker, Stanford's deputy director of the Institute for International Studies, said there "was a sort of conventional wisdom that said it couldn't be done... that [the deficit] was structural, that we just had to live with it." Two years later, Rice announced that the deficit had been eliminated and the university was holding a record surplus of over $14.5 million.[21] Special interest issues Rice drew protests when, as provost, she departed from the practice of applying affirmative action to tenure decisions and unsuccessfully sought to consolidate the university's ethnic community centers.[22] Return to Stanford During a farewell interview in early December 2008, Rice indicated she would return to Stanford and the Hoover Institution, "back west of the Mississippi where I belong", but beyond writing and teaching did not specify what her role would be.[23] Rice's plans for a return to campus were elaborated in an interview with the Stanford Report in January 2009.[24] She returned to Stanford as a political science professor and senior fellow at the Hoover Institution on March 1, 2009.[25] Music Yo-Yo Ma with Rice after performing together at the 2001 National Medal of Arts and National Humanities Medal Awards Rice is an accomplished pianist and has performed in public since she was a young girl. At the age of 15, she played Mozart with the Denver Symphony, and to this day she plays regularly with a chamber music group in Washington.[9] She does not play professionally, but has performed at diplomatic events at embassies, including a performance for Queen Elizabeth II,[26][27] and she has performed in public with cellist Yo-Yo Ma. She has stated that her favorite composer is Johannes Brahms, because she thinks Brahms's music is "passionate but not sentimental." On a contrary note, on Friday, April 10, 2009 on The Tonight Show with Jay Leno, she stated that her favourite band was Led Zeppelin. Private sector Rice headed Chevron's committee on public policy until she resigned on January 15, 2001, to become National Security Advisor to President George W. Bush. Chevron, for unspecified reasons, honored Rice by naming an oil tanker Condoleezza Rice after her, but controversy led to its being renamed Altair Voyager.[28] She also served on the board of directors for the Carnegie Corporation, the Charles Schwab Corporation, the Chevron Corporation, Hewlett Packard, the Rand Corporation, the Transamerica Corporation, and other organizations. In 1992, Rice founded the Center for New Generation, an after-school program created to raise the high school graduation numbers of East Palo Alto and eastern Menlo Park, California.[29] After her tenure as secretary of state, Rice was approached in February 2009 to fill an open position as a Pac-10 Commissioner, but[30] chose instead to return to Stanford University as a political science professor and the Thomas and Barbara Stephenson Senior Fellow on Public Policy at the Hoover Institution. She has also been discussed as possible commissioner of football. Early political career In 1986, while an international affairs fellow of the Council on Foreign Relations, Rice served as Special Assistant to the Director of the Joint Chiefs of Staff. From 1989 through March 1991 (the period of the fall of Berlin Wall and the final days of the Soviet Union), she served in President George H.W. Bush's administration as Director, and then Senior Director, of Soviet and East European Affairs in the National Security Council, and a Special Assistant to the President for National Security Affairs. In this position, Rice helped develop Bush's and Secretary of State James Baker's policies in favor of German reunification. She impressed Bush, who later introduced her to Soviet leader Mikhail Gorbachev as the one who "tells me everything I know about the Soviet Union."[31] In 1991, Rice returned to her teaching position at Stanford, although she continued to serve as a consultant on the former Soviet Bloc for numerous clients in both the public and private sectors. Late that year, California Governor Pete Wilson appointed her to a bipartisan committee that had been formed to draw new state legislative and congressional districts in the state. In 1997, she sat on the Federal Advisory Committee on Gender-Integrated Training in the Military. During George W. Bush's 2000 presidential election campaign, Rice took a one-year leave of absence from Stanford University to help work as his foreign policy advisor. The group of advisors she led called itself The Vulcans in honor of the monumental Vulcan statue, which sits on a hill overlooking her hometown of Birmingham, Alabama. Rice would later go on to give a noteworthy speech at the 2000 Republican National Convention. The speech asserted that "...America's armed forces are not a global police force. They are not the world's 911."[14][32] National Security Advisor (2001–2005) Rice, Secretary of State Colin Powell, and Secretary of Defense Donald Rumsfeld listen to President George W. Bush speak about the Middle East on June 24, 2002 On December 17, 2000, Rice was named as National Security Advisor and stepped down from her position at Stanford.[33] She was the first woman to occupy the post. Rice earned the nickname of "Warrior Princess," reflecting strong nerve and delicate manners.[34] On January 18, 2003, the Washington Post reported that Rice was involved in crafting Bush's position on race-based preferences. Rice has stated that "while race-neutral means are preferable," race can be taken into account as "one factor among others" in university admissions policies.[35] Terrorism During the summer of 2001, Rice met with CIA Director George Tenet to discuss the possibilities and prevention of terrorist attacks on American targets. Notably, on July 10, 2001, Rice met with Tenet in what he referred to as an "emergency meeting"[36] held at the White House at Tenet's request to brief Rice and the NSC staff about the potential threat of an impending al Qaeda attack. Rice responded by asking Tenet to give a presentation on the matter to Secretary Donald Rumsfeld and Attorney General John Ashcroft.[37] When asked about the meeting in 2006, Rice asserted she did not recall the specific meeting, commenting that she had met repeatedly with Tenet that summer about terrorist threats. Moreover, she stated that it was "incomprehensible” to her that she had ignored terrorist threats two months before the September 11 attacks.[36] Subpoenas In March 2004, Rice declined to testify before the National Commission on Terrorist Attacks Upon the United States (the 9/11 Commission). The White House claimed executive privilege under constitutional separation of powers and cited past tradition. Under pressure, Bush agreed to allow her to testify[38] so long as it did not create a precedent of presidential staff being required to appear before United States Congress when so requested. Her appearance before the commission on April 8, 2004, was accepted by the Bush administration in part because she was not appearing directly before Congress. She thus became the first sitting National Security Advisor to testify on matters of policy. In April 2007, Rice rejected, on grounds of executive privilege, a House subpoena regarding the prewar claim that Iraq sought yellowcake uranium from Niger.[39] Iraq Rice was an outspoken proponent of the 2003 invasion of Iraq. After Iraq delivered its declaration of weapons of mass destruction to the United Nations on December 8, 2002, Rice wrote an editorial for The New York Times entitled "Why We Know Iraq Is Lying".[40] Leading up to the 2004 presidential election, Rice became the first National Security Advisor to campaign for an incumbent president. She stated that while: "Saddam Hussein had nothing to do with the actual attacks on America, Saddam Hussein's Iraq was a part of the Middle East that was festering and unstable, [and] was part of the circumstances that created the problem on September 11."[41] Weapons of mass destruction In a January 10, 2003 interview with CNN's Wolf Blitzer, Rice made headlines by stating regarding Iraqi WMD: "The problem here is that there will always be some uncertainty about how quickly he can acquire nuclear weapons. But we don't want the smoking gun to be a mushroom cloud."[42] After the invasion, when it became clear that Iraq did not have nuclear WMD capability, critics called Rice's claims a "hoax," "deception" and "demagogic scare tactic."[43][44] "Either she missed or overlooked numerous warnings from intelligence agencies seeking to put caveats on claims about Iraq's nuclear weapons program, or she made public claims that she knew to be false," wrote Dana Milbank and Mike Allen in the Washington Post.[45] Rice characterized the August 6, 2001 President's Daily Brief Bin Ladin Determined To Strike in US as historical information. Rice indicated "It was information based on old reporting."[46] Sean Wilentz of Salon magazine suggested that the PDB contained current information based on continuing investigations, including that Bin Laden wanted to "bring the fighting to America."[47]

Condoleezza Rice

Role in authorizing enhanced interrogation techniques A Senate Intelligence Committee reported that on July 17, 2002, Rice met with CIA director George Tenet to personally convey the Bush administration's approval of the proposed waterboarding of alleged Al Qaeda leader Abu Zubaydah. "Days after Dr Rice gave Mr Tenet her approval, the Justice Department approved the use of waterboarding in a top secret August 1 memo." [48] Waterboarding is considered to be torture by a wide range of authorities, including legal experts,[49][50][51][52] war veterans,[53][54] intelligence officials,[55] military judges,[56] human rights organizations,[57][58][59][59][60] [61][62][63][64] the U.S. Attorney General Eric Holder,[65][66][67][68] and many senior politicians, including U.S. President Barack Obama.[69] In 2003 Rice, Vice President Dick Cheney and Attorney General John Ashcroft met with the CIA again and were briefed on the use of waterboarding and other methods including week-long sleep deprivation, forced nudity and the use of stress positions. The Senate report says that the Bush administration officials "reaffirmed that the CIA program was lawful and reflected administration policy".[48] The Senate report also "suggests Miss Rice played a more significant role than she acknowledged in written testimony to the Senate Armed Services Committee submitted in the autumn."[48] At that time, she had acknowledged attending meetings to discuss the CIA interrogations, but she claimed that she could not recall the details, and she "omitted her direct role in approving the programme in her written statement to the committee."[70] In a conversation with a student at Stanford University in April 2009, Rice stated that she did not authorize the CIA to use the interrogation techniques. Said Rice, "I didn't authorize anything. I conveyed the authorization of the administration to the agency that they had policy authorization, subject to the Justice Department's clearance. That's what I did."[71] She added, “We were told, nothing that violates our obligations under the Convention Against Torture. And so, by definition, if it was authorized by the president, it did not violate our obligations under the Conventions Against Torture.”[71] Secretary of State (2005–2009) Main article: Condoleezza Rice's tenure as Secretary of State Rice signs official papers after receiving the oath of office during her ceremonial swearing in at the Department of State. Watching on are, from left, Laura Bush, Justice Ruth Bader Ginsburg, President George W. Bush and an unidentified family member. On November 16, 2004, Bush nominated Rice to be Secretary of State. On January 26, 2005, the Senate confirmed her nomination by a vote of 85-13. The negative votes, the most cast against any nomination for Secretary of State since 1825, came from Senators who, according to Senator Barbara Boxer, wanted "to hold Dr. Rice and the Bush administration accountable for their failures in Iraq and in the war on terrorism." Their reasoning was that Rice had acted irresponsibly in equating Hussein's regime with Islamist terrorism and some could not accept her previous record. Senator Robert Byrd voted against Rice’s appointment, indicating that she "has asserted that the President holds far more of the war power than the Constitution grants him."[72] As Secretary of State, Rice has championed the expansion of democratic governments. Rice stated that the September 11 attacks in 2001 were rooted in "oppression and despair" and so, the US must advance democratic reform and support basic rights throughout the greater Middle East.[73] Rice has also reformed and restructured the department, as well as US diplomacy as a whole. "Transformational Diplomacy" is the goal that Rice describes as "work[ing] with our many partners around the world... [and] build[ing] and sustain[ing] democratic, well-governed states that will respond to the needs of their people and conduct themselves responsibly in the international system."[74] As Secretary of State, Rice traveled widely and initiated many diplomatic efforts on behalf of the Bush administration. As of September 7, 2008 Secretary Rice has visited 83 countries, traveling for 2118.19 hours (88.26 days) over a total distance of 1,006,846 miles (1,620,362 km).[75] Speculation on 2008 presidential campaign, views on successor There had been previous speculation that Rice would run for the Republican nomination in the 2008 primaries, which she ruled out on Meet the Press. On February 22, 2008, Rice played down any suggestion that she may be on the Republican vice presidential ticket, saying, "I have always said that the one thing that I have not seen myself doing is running for elected office in the United States."[76] During an interview with the editorial board of the Washington Times on March 27, 2008, Rice said she was "not interested" in running for vice president.[77] However, in a Gallup poll from March 24 to 27, 2008, Rice was mentioned by eight percent of Republican respondents to be their first choice to be Senator John McCain's Republican Vice-Presidential running mate, slightly behind Mike Huckabee and Mitt Romney.[78] There was speculation that she was not chosen as a Vice-Presidential candidate because of rumors that she was a lesbian, which could have soured evangelicals to the ticket.[79] Republican strategist Dan Senor said on ABC's This Week on April 6, 2008, that "Condi Rice has been actively, actually in recent weeks, campaigning for" the vice presidential nomination. He based this assessment on her attendance of Grover Norquist's Americans for Tax Reform conservative leader's meeting on March 26, 2008.[80] In response to Senor's comments, Rice's spokesperson denied that Rice is seeking the vice presidential nomination, saying, "If she is actively seeking the vice presidency, then she's the last one to know about it."[81] In August 2008, the speculation about a potential McCain-Rice ticket finally ended when Governor Sarah Palin was selected as McCain's running-mate. In early December 2008, Rice praised President-elect Barack Obama's selection of New York Senator Hillary Clinton to succeed her as Secretary of State, saying "she's terrific". Rice, who has spoken to Clinton since her selection, said Clinton "is someone of intelligence and she'll do a great job".[82]

Better rent than buy condominium in Thailand

>> Tuesday, February 24, 2009


In recent weeks I have received several enquiries with regard to buying real estate property.  These have inevitably been from a middle-aged (or older) expatriate who has decided to settle in Thailand with the girl of his dreams that he met last month or the  month before, who loves him so much that she�s leaving her place of work in Soi 8 or Pattayaland Soi 2 to settle down in the nice little house she�s found for them somewhere along Jomtien Beach.


Usually, the enquirer wants to find out why the property cannot be held in his own name, and if it�s okay to put it in his girlfriend�s name.

Some of these enquirers are so na�ve that they even ask how they can obtain a mortgage on the property.  �Oh dear,� I think when I hear these tales, �Not another one��

For their own protection


At the height of the currency crisis in 1997, Thailand had agreed with the IMF to liberalise its laws with regard to foreigners owning real estate in Thailand.

The matter was debated in parliament and the press at great length, and the usual jingoistic (some would say xenophobic) statements were aired that if the protectionist laws were amended, we greedy farangs would sweep in and buy up all the land in Thailand and exploit the poor innocent Thais in our typical colonialist fashion.

(I wonder why the fact that Thais or anyone else with money can buy any amount of landed property in the U.K. or U.S.A. is never aired as a counter-argument, and neither the British nor Americans seem terribly worried that their country is going to be taken over by colonising Asians  but that perhaps is another topic for another day.)

So the debate went on and on, and announcements were eventually made that the law was going to be amended to allow foreigners to lease up to 1 rai of land for up to 30 years, on which to build a residential property  provided this was preceded by a remittance equivalent to 10 million baht of hard currency from overseas deposited in a bank in Thailand.


However, like several other politically unpopular bills, this one also is still pending, as far as I�m aware.

Nonetheless, some local real estate firms trumpet in their advertisements that foreigners can now own their own property.  But this is just a clever ploy to get you through their doors.  The mechanism which has been used for years to get around this protectionist law has not in fact changed.

The facts

An expatriate can own a condominium in his own name provided not more than 40% of the apartments in the condominium complex are owned by foreigners.  That has been the case for a long time already.

But if you want to buy a house or land, an expatriate can only do so through a legally registered company, of which a single expatriate cannot own more than 39% of the shares (recently amended from 33%), and collectively not more than 49%.  

You also need at least six Thai partners to hold the remaining shares (although you can go a long way to protect your interests by being the sole authorised signatory and ensuring these local partners sign their undated resignations and share transfer deeds at the time of setting up the company.)  

Of course, you could avoid the costs & hassle of setting up a company by putting the house in your wife/girlfriend�s name.  This will undoubtedly make her very happy  even happier than the visits you made to her favourite gold shop and motorcycle shop (which are the usual precursors to visiting the real estate agency.)  

However, what happens a year or two down the road when you have a major disagreement about something, or her Thai �husband� shows up (they all seem to have them squirreled away somewhere)?  You, like so many before you, may find yourself standing on Jomtien Beach with only your passport in one hand and a bag of clothes in the other�and your life savings gone. 

Getting a mortgage

In U.K., U.S.A. or Europe, getting a mortgage on a property is almost taken for granted.  Few people are in a position to buy a property for cash on the table.

The relatively low price of property in Thailand means that many expatriates who decide to settle here are tempted to buy a residential property, or a shophouse for their girl-friend to run a travel agency, beauty salon, snooker hall or beer bar on the ground floor, while they love  I mean live  upstairs.  

Some of the more na�ve ones imagine that they can just march into a local bank and get a mortgage on the strength of the property and their "personal" guarantee on behalf of their girlfriend.

Sorry, but that isn't going to happen.

Unlike in the West, where the title to the property guarantees the bank in the event of default, and an endowment or insurance policy its money in the event of the borrower�s dying, laws in Thailand to help banks recoup bad debts were only implemented last year, and the efficiency of the court system is such that it could take up to 10 years to recoup defaulters� bad debts. 

Banks are not interested in holding real estate on their books, since this is a non-performing �dead� asset; they want to recover the money they lent, to lend it to someone else and earn interest on the loan.

Understandable, since they're in the money business, not the real estate business.

Look at the numbers of non-performing loans (still around 43% of total loans issued by local banks), and the high percentage of mortgage defaulters, and that might give you some inkling why banks here have virtually stopped offering new mortgages on real estate.  

In Europe, banks can seize collateral property and sell it on fairly quickly.  Here, in a depressed property market, even auctions have proven less than totally successful in moving those real estate properties which banks have been able to repossess against defaulting loans.  More often than not the few meagre bids have not reached the bank's reserve price, and the bank simply withdraws the property from the auction.

Obtaining a mortgage anywhere will depend largely on the ability of the borrower to repay the loan.  This will be evaluated by the lending institution on the basis of stability of employment income and past credit record.  

Nowadays, even local business people with good credit records are having great difficulty obtaining mortgages.  Typically, they have to show they have at least the value of the mortgage on deposit in the bank already, and are prepared to keep it there as collateral. 

So if you're prepared to deposit the value of the property in the bank  in her name, of course  she might be able to get a mortgage if she has a good employment record and her regular salary is sufficient to repay the loan.  And of course the property then has to be in her rather than your name.

But to imagine that an expatriate boyfriend (who could leave the country any time) will be accepted by any bank as guarantor of a mortgage being applied for by a local lass whose employment record comprises working in a go-go bar for a year or two, and whose average bank balance has been perhaps 400 baht a month, is naive in the extreme.

Part 2


Last week I offered my opinion that the only reasonably secure way of protecting your interests if you're thinking of buying a residential property is by forming a company and making yourself sole authorised signatory of that company.

Inevitably, some readers will disagree, and some will undoubtedly be writing vehement letters of protest to the Editor of this publication protesting that they�ve been married to a Thai lady for X number of months/years with no problems whatsoever, and that they're absolutely sure she will never do the dirty on them as regards the property which they've been living in so happily, and which is registered in her name.

Well, if she married a farang some years back, Thai law precluded her continuing to own either land or a house in her name after that marriage was legally contracted.  So that would tend to indicate that perhaps the "marriage" wasn't fully legal, or the land title slipped through a bureaucratic loophole somewhere�

(More flurries of protesting letters will undoubtedly be spawned by those remarks!)

Anyway, this unfair law was recently amended, so a Thai wife can now legally continue to own land or a house which she owned before the marriage, without fear that the authorities might negate the land title if ever she tried to sell it.  Similarly, a Thai lady legally married to a farang can now own and ­ more importantly  register property in her own name.  

But like any other valuable investment, putting property in someone else's name  no matter how much you may trust them at the time  is fraught with danger, and leaves you potentially open to abuse.

Would you rather trust your life-savings to a bank or your housekeeper?  I know many of you cynics will say, � Depends on which bank.�  But I think you get my drift.
 

Similarly with your house.  There have been far too many reports of gullible farangs being thrown out of the house they paid for  with no recourse in law ­ to ignore the fact that it happens.  And far more frequently than most macho men would care to admit to their drinking buddies...

Things to consider 


Potential property investors  here or anywhere  should look at five things:  long-term demographics, supply, demand, tax, and inflation.

First, let's look at the supply & demand situation in Pattaya.  There are far more residential properties available than there are potential buyers.  Some have stood empty for years.  So, one could reasonably conclude that it is a buyer's market, right?  Wrong.

Most people don't like to lose money.  And Thai property owners are no different.  Having had to pay inordinately high interest rates to the banks if they had a mortgage on their property (which they may still be paying), or a substantial amount of pre-devaluation Baht if they paid cash, they are fundamentally averse to suffering a loss on the property  even, it seems, when they start running short of cash.

I know of several cases where people prefer to borrow money on the street� for 4%-5% a month interest, using their property as collateral against the loan, rather than try to raise a loan from a bank (which these days is not only a difficult and lengthy process but might still be refused), let alone sell their property at a loss.

Property prices were expected to drop by some 30% after the economic crisis in 1997.  But real estate agents will tell you that property prices have fallen comparatively little in the past three years  unless the bank is beating on the owner's door demanding repayment of a non-performing loan.  It seems Thai landlords prefer to leave a house vacant than suffer a capital loss on their investment.

Rent or purchase? 


Then, look at the ratios between the purchase price being asked and the rental price for the same property.

In the USA and UK, the "standard" rule-of-thumb for value/rental is around 100-120 times.  In other words, if your house is worth $100,000 and in a prime location and good condition, you can expect to get

perhaps $830-$1,000 a month rental income from it.  (Of course, you have to pay taxes, rates, maintenance costs, insurance, agency fees, etc., so you may end up with only 5%-6% net return per annum on your investment property.  In real terms, not a very good nor a very flexible investment.  But that�s another subject for another day.)  

Here in Pattaya, however, the rule-of-thumb ratio seems to be more like 200 times.

For instance, the "average" shophouse sells nowadays for Bt.1.3-1.8 million, depending on location.  Those same shophouses would rent for perhaps Bt.6,500 to Bt.9,000 per month respectively.  Which means the purchase price is about 200 times the rental price.

In other words, you would have sunk an amount of capital into buying the property which would be equivalent to paying 200 months� rent (which for those who don�t have a calculator handy is 16 years and 8 months.)  

Alternatively, the same Bt.1.3-1.8 million wisely invested in secure medium-risk offshore investments could reasonably be expected to generate an income stream averaging 10% p.a.  or Bt.130,000-180,000 a year, while leaving the capital intact and securely yours.  

Renting that property for a year would have cost you only Bt.78,000-108,000 from this income-stream, so you would still have money left over for fun or whatever. 


Simple arithmetic tells you it makes better economic sense to rent rather than having your capital tied up in a property which is unlikely to appreciate much in value and almost certainly not beat inflation, if past history of the property market is any indication of future trends.  

Location, location, location


Another point to consider is location.  That property may be located in a "good" area now, but who knows whether that area will have become more popular or less popular 10 years hence?  

"Ah," you say, "But that's how I'll make a capital gain!" Yes, if the area improves.  But you might have to swallow a capital loss if the area deteriorates  and that has happened many times in many "select" spots of Pattaya which are booming one year and deserted the next. (And, I freely admit, vice versa.)

So as far as making a capital gain on an investment property is concerned, that is very much pot luck.

Housing estates and even condominiums are subject to the same whims & fancies, it seems, although admittedly much less than commercial property.  
 

But consider whether you would be content living in the same house in the same location for the next 16 years.  Because that's the rental equivalent of purchasing the property outright.  

It is more likely that you will want to move to another location perhaps quieter, cleaner, newer  sometime during that period.

Then you've got the problem of finding a buyer for your house perhaps in a deteriorating neighbourhood� You could easily lose money on your investment if you move, not to mention the taxes you will have to pay either when you sell or buy the house.

Even buying a brand-new condominium has its pitfalls.  For instance, in Bangkok there are many blocks of condominiums which went up at the height of the building boom which are standing three-quarters empty, and the owners are now fearful that the lifts, security and maintenance services will be cut off because there is not enough income being generated from management fees to cover the operating costs.  How are they going to sell or even rent their condos then?

 

Fortunately, the situation is not that bad in Pattaya  although there are always plenty of condos, houses, commercial shophouses, bars and restaurants for sale to lucky buyers with cash to spend  just look at this week's Mail Market section...  Or perhaps it's the sellers who are really the lucky ones?

 

Part 3


 

In the past couple of weeks I have offered my opinion on buying property in Pattaya, first with regard to protecting your interests, and secondly from the economics standpoint of cost-effectiveness of renting versus buying.

Coincidentally in the interim, there have been a couple of articles in the national press about fraudulent practices that even I was unaware of.  


I have also received several enquiries from potential real-estate buyers, who are concerned not only about shady practices that might affect them, but also about the taxes they might be burdened with.  

Let's look first at just one of the shady practices that has apparently been going on  at least around Bangkok.
 

Earth moving developments 


It has been reported that, in more than one instance, a piece of prime real-estate in a good location was shown to a prospective buyer, and a price agreed.  When the land registration deed for the newly-acquired property was subsequently examined, however, the location of the land on the deed turned out to be in quite another area from what the buyer thought he was buying. 

Typically, that land was nowhere near the land shown, nor anywhere near its value.


Let me hasten to add that I am not suggesting that this practice has been followed by any Pattaya real-estate firm or property developer, nor any individual seller.

But it is curious that one enquiry I�ve received recently was from a couple (a farang married to a perfectly respectable and charming Thai lady  an exception to the typical relationship in Pattaya which I was warning against in the first of this series of articles) who were in the process of buying part of a local housing development, but were experiencing great difficulty getting straight answers from the Thai developer to quite reasonable and straightforward questions.  

One of these questions was why the developer was selling a piece of land which happened to have a house situated on it, but there would be no paperwork or deeds pertaining to the house itself.  

There may be a perfectly reasonable explanation for this apparently anomalous transaction. But not being in the real-estate business I have not as yet been able to discover the answer (which I suspect has to do with paying taxes  or rather not paying them.)  I'm sure the Editor will receive a flurry of letters from local real-estate firms regarding this practice, and I look forward to their explanations.

The development in question may indeed be perfectly legitimate, and the Thai developer merely a very shrewd businessman (or rather businesswoman in this case) who was looking to maximise her return from her investment. Or avoid taxes.  
 
However, why she would be unwilling or unable to show the clients a copy of the land title deed (which is a public document available from the Land Registry) is certainly cause for concern in light of the published case mentioned earlier.
 

Taxing issues

As I pointed out in the first of this series of articles, under the current land ownership laws foreigners cannot own land or houses in their own names.  (This may change if a proposed bill is ever passed into law  but how long that may take is anyone's guess; the last time property laws changed here it took seven years�)

Hence many foreigners by-pass the protectionist law by purchasing a house through a company.  (I gather the Thai authorities are making noises about passing legislation to close this loophole also; but that may also take a long time  although when it comes to self-protection, laws seem to be passed here with greater alacrity than when granting concessions.  But that's yet another example of TIT  "This is Thailand," to borrow Mr Trink�s favourite phrase.)

What many buyers (especially foreigners) fail to take into account are the taxes that become due upon transfer of a property title,however the property is purchased, and no matter whether through a company or in their girl- or boy-friend's name.

Three taxes will have to be paid when the property is bought or sold.

But because of the peculiar local system of taxing property on a rather arbitrary assessed value rather than true market value, these could amount to as much as 30% of the purchase price. 

When a tax bill arrives  often some two or three months after the sale is completed  this could come as a nasty shock to a buyer, since the seller often neglects to mention this liability during the negotiations... (And after all, why should they tell you if you don't already know or ask?  As in all business transactions here or indeed anywhere, caveat emptor is the rule: Let the buyer beware.)


In addition, if the house is purchased through a company, one has to bear in mind that corporate tax is higher than personal tax, and the cost of setting up the company has to be considered as part of the initial investment outlay, even if this is a relatively modest additional cost  perhaps around $1,000 all told.
 

An investment or a millstone?


Buying a property to live in is one thing; buying it as an investment is another, whether in Thailand or indeed anywhere.  

In the depressed property market currently prevailing in Thailand, homeowners could suffer a considerable capital loss if they sell their properties for what many would regard as true market value.  Naturally enough, they are reluctant to do so.  This is one reason why property prices have not come down as much as was anticipated after the currency crisis of 1997.


If the homeowner bought the property on a mortgage or financing rrangement, the loss will be compounded by the interest he or she will have paid in the meantime, which until very recently was inordinately high  not to mention the taxes that may have to be paid on the property, either by the seller or the buyer.

Thus if you are looking at property purely from an investment perspective, it could take many years for the overall costs to be recovered.  Even in developed markets, property values over the long term just about match inflation.  

In the meantime, there are all sorts of "charges" on the investment to be considered: local taxes; insurance; maintenance & repair  which could be a major expense should the tenants run amok and trash the place, as recently happened to some friends of mine right here in Pattaya!  

I know of other cases where a property was bought as a long-term investment, and has become a millstone round the owner�s neck.  The property is sitting idle with no prospective buyers in sight, no rental income, but still incurring a tax liability each year.  It is therefore a depreciating capital asset which is a drain on resources, rather than an income-generating investment.  

At the end of the day, it is entirely up to you whether you buy or rent your home, and this is often an emotive rather than rational decision.  

But after taking into consideration the significant capital outlay, bureaucratic complications, peripheral costs, taxes and inflexibility, my advice would have to be "Rent don�t buy." 

Posted by Phasuk at 5:11 PM
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