REAL ESTATE WIKI Interest Absorption Schemes Unplugged

Posted: 07 Aug 2010 | 6:00 am

For those of you mystified by overseas real estate advertising featuring Interest Absorption Schemes (IAS) these are somewhat of a phenomenon in bull market trading conditions.

In a nutshell these are offered to purchasers on off plan units which lowers down payments until the property is complete. Except for a down payment often 10-20% of the value, the loan is deferred to the time of handover.

While a loan is arranged at the time of transaction, interest is absorbed by the real estate developer.

Used as a market initiative to boost 'emotional purchases' or speculators looking to buy at launch to obtain the lowest pricing.

In Singapore the Monetary Authority stopped the practice in late 2009, though Malaysia is now seeing a number of quasi - official IAS offerings in its burgeoning residential market.

One has to wonder if the IAS schemes will make their way to Thailand in the broader domestic Bangkok market in the near future?

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