Investment case study developer financing revisited

Feb. 6, 2025

In this installment we will talk once more about buying a property with developer financing.

First, let’s note that we are not talking about bank financing . Developer financing, in this context, is when developer offers the buyer to start using their property after paying a part of the price, and then continue repaying the remaining portion for an agreed period of time. Basically it means you get the keys and can start living in your property or renting it out, while repaying the remainder of the price.

👉SUNWAY says:

Since there is no disbursement of money happening, strictly speaking this is technically a deferred payment plan, not financing, but the term took roots in the Thai real estate discussion already, so we will go with it.

Developer financing is by no means common, it’s offered by a handful of developers in Thailand and normally as either a limited-time promo, or an off-market offer. The most prominent developer that offers deferred payment plans is Banyan Tree Group, who’d been offering it for all their projects for decades. We’d already touched upon the topic in our previous installment about buying a condo in their Angsana Ocean View development before. Now, to cover more sides of the story, we’d like to touch on some other offers currently on the market.

The deferred plan offer

One of Phuket’s most prominent villa developers - Botanica Luxury Villas - is currently offering a special promo for their projects.

This offers 50% on deferred payments for 1-3 years. The interest rates are up to 6% (the longer the plan duration the higher the rates).

Let’s take a look at what that means using one of their projects as an example. Since we recommended Botanica Pru Jampa as our choice of an investment villa on Phuket in our last issue, that would be a natural choice.

Botanica Pru Jampa with developer financing

Botanica Pru Jampa is the latest pool villa project by Botanica, located in new Pru Jampa hotspot. The project is built with investment buyers and rentals in mind. All villas are using the standard 3-bedroom layout, however the plots can vary. We will use one of their special promo villas as an example - those are sold at 16.9M THB, which alone would make a very nice promo, especially these days when it’s difficult to find any villa on Phuket under 20M. Let’s take a look at what it means with the deferred payment plan option. Let’s assume that the buyer goes for 3 years repayment period under 3% interest (the rates are negotiable, but for the sake of this exercise let’s assume that the agent had done their job and got the initial 6% offer cut in half).

Under the promo you will be paying 8,450,000 THB during construction and then the other 8,450,000 THB over 3 years after receiving the key to your unit (while you can live in your unit or rent it out). The monthly payment starts at 255,847.22 THB and goes down to 241,763.89 THB on the final year.

For context, 3-bedroom villas in other similar projects by the same developer are renting out from 200k THB/month for yearly contract - and much more on short-term basis. Even accounting for a smaller size of Pru Jampa (the project is designed with investment use in mind, cutting down on plot and room sizes in favor of functional, easy maintained spaces and materials) the villa of this size/quality will easily rent out for 150k THB/month, making at least 5,400,000 THB back during the payment plan’s 3 years if you choose to rent it out.

Final thoughts

While the above is not a true bank financing, the offers like this one offer a much more relaxed payment plan, with an opportunity to make up some of the price either with rental income or with savings on your own rent. Unfortunately, outside of maybe 1 or 2 developers, they are rare and often off-market. If you are on lookout for one - don’t hesitate to contact us to stay on top of the market.