Where Is The Condominium Market In Thailand Going?

[pkrv]

I can only speak from my perspective - High End CBD is going up

[ray08]

If you are asking " Where is the NEW condo market going in Thailand ? i agree in general asking prices are up

But the overall market i believe is going nowhere , not up and not down , example in Bangkok post

for over a year now they have been trying to sell 2 untis in le Raffine soi 24 , i think one on the 6th floor and 1 a bit higher

the prices asked are around thb 33m and thb 36m , these prices have been the same or even a bit lower from memory

This is just one example but i have seen many , which makes me believe ,first ,the Thai market does not follow western markets because a property

is on the market for such a long time price should drop not stay the same or increase.

Second Thais will hold out on a price and leave property sit there for who knows how long

Can a westerner who says decided to leave thailand after living here for 10years do that ?

A long term home owner like yourself is covered ,but if you are going in as speculator , very dangerous

So New projects up , existing projects or second hand market , will find it tougther as appetite is for new projects ,

[london]

My view is similar to Ray08 in that the new condo developments are priced at whatever level the developer decides he can get away with.....be it 80,000 baht psm or 200,000 baht psm.

However, my overall opinion is that the market is actually consolidating (bingobongo: this does NOT mean collapsing) and that many areas once considered as a 2nd choice are either moving to Tier 1 areas or at worst remaining where they are.

PKRV is correct that the 5 star developments are certainly holding and increasing in value....and there are now more 5 star developments in Thailand than ever before.

Why?

Simply because the buying demographic has and is currently changing. Ten years ago to around 2 years ago, the main buyers were expats working in Thailand, however, there has been a new buyer appearing on the horizon: the retiree, cashed up from either selling his home/holiday home in the south of France, or Spain etc who is looking for lifestyle and doesn't mind paying for it.

Now, some posters will say "who would want to retire to Thailand?" and then list 5 or 6 reasons why it is the most undesirable location in Asia (not my opinion)....but, with a warm climate, moderate costs, good medical care (and affordable), improving infrastructure, a good, modern major hub airport....to name just a few advantages....it looks good.

Add to that an improving economy(albeit slowly), fabulous food and some amazing destinations within 2 hours flying time, well...the attraction is obvious. And lets not forget the Thai people either !

I feel that this trend will only continue to increase the upward pressure on rents of 4 and 5 star properties and also lead to further 5 star developments.

IMHO, this is a healthy state of affairs.

[pkrv]

From a personal perspective I have been trying to come to grips with views across multiple threads on where we are going in terms of market direction in terms of price but also including the 49% rule on foreign ownership on condominiums, the condominium acts and rental vs ownership debates. IMO there have been some outstanding responses and research done, and I unashamedly quote them:

A land sale on Sukhumvit Soi 6 has set a record at one million baht per square wah, according to the property agency CB Richard Ellis Thailand (CBRE).

http://www.bangkokpost.com/Business/10Jun2008_biz30.php

well it sure looks gloomy...

My personal perspective is these guys are looking 5-10 years in the future. I don't think the old British Embassy grounds have 'broken ground yet', but IMO that is not the point the potential has been seen. Land is being bought up left right an center!

A superb response from IMO one of Thaivisas most valued contributors

It is a mix. As a whole the market is softening, although some market sectors are doing better than others.

The projects that are still selling well, are the ones that cater to both local and international tastes. The markets which the locals prefer have also been the most resilient i.e. Bangkok, Hua Hin, Cha am, Rayong, and Sri Racha.

The latter of which is interesting because this is where Thais are buying to rent to the largest expatriate population in Thailand. The Japanese who have > 8x as many expats as say, the Brits who have the largest Western presence here (10,000). Of course the Brits are buying less right now and have been more subdued over the last year, and are hardly what one could call a growth market.

However with all that being said, I personally think that the landlord and tenant mix is the most important factor in the condo market today.

The biggest player in this market is the Thais. fair portion of this group is new money, made from SET gains made 2001-2006, but there are quite a few Western players too. But it is the leveraged group that may have to face up to tough choices in the times to come and potentially be the ones that will be hardest hit by the coming yield crunch (from pressure from both interest rates and a shift towards a tenant's market).

Some may be over exposed and may be forced to cut their losses, but this is a relatively new concept for Thai players in the residential market. Selling for less than you paid, is an alien concept and coming to terms with this will be a very difficult learning process for them. Think of the loss of 'face'!

So many of these new investors will face more pain than they expect. But eventually some will come to the realisation that cutting losses will be better than holding on to a mortgage that will become gradually more expensive as time draws on.

However some will be able to carry that burden though, and it is important that we do not underestimate the wealth that is here. Many can wait before for interest rates drop again even if that could be a long time coming, as oil and food shortages continue.

So yes I think we will see true condo values drop over the coming 24 months, however, this will not be across the board and I guess will not be as severe as some expect, because only those buyers that are heavily leveraged to invest will be forced into that position.

So the severity of the down turn here will be dependent on the number of new expats coming to Thailand (i.e. the tenant pool) and the amount of leveraged buy-to-let stock.

The number of work permits issued in Thailand rose last year, will it be enough? Only time will tell.

Again the market IMO is confusing. It is IMO deeply segmented. When launching products in my old company (Reuters) I came across an odd term, "It is a sales hurdle". Effectivly the complexity of the product can cause a confusion. Things like the 49% rule and rent vs buy all add to this.

But his main point is that it makes perfect sense to question "what is better" for what is probably the largest percentage of potential buyers for all the reasons he states - it's not just lifestyle - it's what is a better choice for that group of people (inc me). If money is no object, or at least not a major factor, only then is it a "lifestyle" choice.

Correct.

I don't have a crystal ball but IMO Thailand is no longer rock bottom price for the region (IMO it does not have to be), and IMO it is a country that is accelerating - If it has a short term blip up or down in the property market, I don't actually think it will matter. However look at our language 'if you are sailing close too close to the wind', 'not prepared for the long haul', 'sailing on empty (or whatever)' the list goes on you could be in serious trouble say 20 years down the line if you rent, I don't know. BUT yes you do need an income this is the flip side of the coin. Your situation your choice, but I think the rental option could be extended by looking elsewhere in the region, don't know.

However I am at a loss to say what other destination I would choose to 'reduce purchase costs'.

For a place like Thailand, including BKK, it seems odd to focus on the possibility of escalating rents as a long-term threat for the resources of a retiree. There seems to be a large and growing supply of rental housing readily available and no building restrictions. I certainly don't read constant complaints from expats on Thaivisa that they have been priced out of their flat when lease renewal time came around and they wish they had bought when they had the chance. No one here ever complains about rents as far as I can tell. They complain about inflation, but not about rents.

While it's true that inflation, in general, is the enemy of the retiree with fixed resources, the principal capacity he has to cope with inflation is flexibility, the ability to adjust his standard of living. And his ability to relocate is the most important flexibility he has, a big benefit of no longer having to remain in one area for a career/job. That's true for those of us still in the US, but even more so for expats. When you own property, particularly where the secondary market is poorly developed as in Thailand, you give up the ability to relocate quickly in response to adverse changes in legal climate, exchange rates, family situation, health, etc. Owning has always seemed to me to be a long-term commitment to an area that you no longer have to make when you are retired. You have to be willing to ride out a property cycle or else face the risk of having to sell in a down market.

The option of tying up a large part of net worth in a residence wouldn't be appealing to me unless owning were substantially cheaper than renting, which does not appear currently to be the case in Thailand. Thais have shown a preference for owning property beyond what the economic advantage indicates. We know this because we hear so often that they don't sell when the market drops and they don't rent at all if they can't get their price. Well, the way to take advantage of the Thai mispricing of property is to rent.

Your argument about Thailand property values possibly moving up in the future is an argument for speculation. In my opinion, retirees with limited resources have no business engaging in speculation since they risk unacceptable losses if the future turns out other than forecast. Renters do not risk unacceptable losses since they can always move.

I think this is a superb reply and directly fits one of the intested group. I particularly liked "the ability to adjust his standard of living. And his ability to relocate is the most important flexibility he has"

I believe that essentially the strategy could/would be used to spread out remaining wealth over a lifetime, which could be critical to some people.

Correct on its all just speculation, but you would have to keep a constant eye on the situation, and be prepared to shift countries before things get tough and diminish reserves.

IMO leaving something for future generations requires a different approach, but may not be possible for all.

I think the diversity of thoughts on Buy/Rent is also reflected in the two arguments?

IMO It is not what is right or wrong with the above debate - it is that the debate is taking place that is of interest.

[shochu]

i beg to differ.

yes some wealthy people are buying here but only to park some money for a while and glean some profit. and yes maybe some wealthy people are coming here - but - I would say - LOS is not on the radars of most of the well heeled for many reasons and I have yet to meet any well heeled person who was not on their last legs, or opportunities in coming to LOS - Sorry boys!

I still get the - Why do you keep going there questions.

something very common is to create hype by moving sales back and forth from one account to another to promote a particular place and this is just one gimmick. there are too many to list.

the higher end places can not - and I repeat can not - compete on a global scale for what is being offered elsewhere and those with money know it!

LOS is what it is - lets not fool anyone here - I like it here - but we are not the consensus on the well heeled!

the high end market here only has the support of dreams.

keep dreaming!

[donx]

... I have yet to meet any well heeled person who was not on their last legs, or opportunities in coming to LOS - Sorry boys!

Can you explain what you mean by "on their last legs"? Do you mean that they are close to dying? Or do you mean that they are running out of money?

If you mean the second, then let me introduce you to some of the posters on this forum.

[highdiver]

i beg to differ.

yes some wealthy people are buying here but only to park some money for a while and glean some profit. and yes maybe some wealthy people are coming here - but - I would say - LOS is not on the radars of most of the well heeled for many reasons and I have yet to meet any well heeled person who was not on their last legs, or opportunities in coming to LOS - Sorry boys!

I still get the - Why do you keep going there questions.

something very common is to create hype by moving sales back and forth from one account to another to promote a particular place and this is just one gimmick. there are too many to list.

the higher end places can not - and I repeat can not - compete on a global scale for what is being offered elsewhere and those with money know it!

LOS is what it is - lets not fool anyone here - I like it here - but we are not the consensus on the well heeled!

the high end market here only has the support of dreams.

keep dreaming!

beg to differ your conclusions. but hey... everyone is entitled to be wrong

As long as Thailand offers the same product for a fraction of what it costs in the west in will be good Value for money and as you said people with money or even those who are less fortunate know this.

the high end projects in bangkok offer size,quality, service level and luxury that you can only dream to get for the same price in the west.

Add to that the low cost of living and its better value for money then anywhere in the west.

so if you are rich but not rich enough to live in a crummy apartment in Moscow for 1,000,000 usd or not rich enough to afford shitty little rundown house in London for 800,000 GBP or if the cost of 1.5 million euro is not enough to buy an overused apartment in Paris then BKK is the place were your dreams come true.

[shochu]

what i wrote was quite self explanatory.

i never said there were no wealthy people here. there are many rich thais and some rich foreigners as well. i am sure there are various reasons why wealthy foreigners choose to come here - probably not tooo difficult to figure out.

do people with oodles of money care about value? i'm not talking about people with a few million (dollars/euros) here.

but it is not a place where wealthy people want to be BECAUSE contrary to what was written above, things like good services, environs, clean air, beautiful scenery mean much more - as well as being around their own kind.

on their last legs - should be self explanatory!

[ray08]

beg to differ your conclusions. but hey... everyone is entitled to be wrong

As long as Thailand offers the same product for a fraction of what it costs in the west in will be good Value for money and as you said people with money or even those who are less fortunate know this.

the high end projects in bangkok offer size,quality, service level and luxury that you can only dream to get for the same price in the west.

Add to that the low cost of living and its better value for money then anywhere in the west.

so if you are rich but not rich enough to live in a crummy apartment in Moscow for 1,000,000 usd or not rich enough to afford shitty little rundown house in London for 800,000 GBP or if the cost of 1.5 million euro is not enough to buy an overused apartment in Paris then BKK is the place were your dreams come true.

I think one cannot say "Thailand offers the same product for a fraction of the cost in the west " as when we talk about Real Estate it comes down to location ,location,location .

In regards to cost maybe a a fraction if you compare to London , Moscow ,but take Sydney for $ Aud 1 million you can buy a good apartment in the city with a view , these days at thb 150K a meter and say 200sqm price is almost the same ,no great bargain.

Also again apples for apples ,i find the build quality here very low compared to the west ,i can pretty much say a fact ,from what i have seen ,the tradesmen just do not have the same ability a western trademen

IMO Thailand offers an alternative product to the west ,but for sure not the same , cannot compare Bangkok to London , Zurich ,Sydney ,Monte Carlo, New York , Paris etc etc

[palm]

beg to differ your conclusions. but hey... everyone is entitled to be wrong

As long as Thailand offers the same product for a fraction of what it costs in the west in will be good Value for money and as you said people with money or even those who are less fortunate know this.

the high end projects in bangkok offer size,quality, service level and luxury that you can only dream to get for the same price in the west.

Add to that the low cost of living and its better value for money then anywhere in the west.

so if you are rich but not rich enough to live in a crummy apartment in Moscow for 1,000,000 usd or not rich enough to afford shitty little rundown house in London for 800,000 GBP or if the cost of 1.5 million euro is not enough to buy an overused apartment in Paris then BKK is the place were your dreams come true.

You are absolutely right. I was able to buy some nice properties here with a small portion of my disposable income without needing to sell any of my property or land in the 'west'.

[donx]

what i wrote was quite self explanatory.

i never said there were no wealthy people here. there are many rich thais and some rich foreigners as well. i am sure there are various reasons why wealthy foreigners choose to come here - probably not tooo difficult to figure out.

do people with oodles of money care about value? i'm not talking about people with a few million (dollars/euros) here.

but it is not a place where wealthy people want to be BECAUSE contrary to what was written above, things like good services, environs, clean air, beautiful scenery mean much more - as well as being around their own kind.

on their last legs - should be self explanatory!

I don't think it is self explanatory. Do you mean physically or financially "on their last legs"?

[tangoll]

I have lived in Manhattan, suburbs of New York City, Tokyo, and several places around Hong Kong. Here are the reasons why I find Bangkok a great place to live. I have purchased two condo units near BTS Ratchethewi station:

1. Both condo buildings are brand new just constructed and the construction materials and equipment rival, not the top tier buildings in Hong Kong but the next level down. Elevators are Otis, toilet fixtures are Cotto, and the lobby is all marble, has wi-fi for free, an ATM machine, a distilled water dispenser at nominal cost, 24 hour front desk and security staff. There must be close to 50 management office, security, front desk, and cleaning staff for this project of 580 units. If anything is a problem in your unit, some engineering/technical will be there no more than one hour after you call the management office and the problem, unless very major, will fixed within a few hours. Try getting that kind of service in NYC, Tokyo, or Hong Kong now. I am not in Bangkok all the time, so the manager of the management office (called juristic person) takes care of paying my electricity bill when it comes. Can you imagine the reaction you would get if you asked a New Yorker building staff to do that for you?

2. My unit is 81 sq metres, and inside, including the balcony, if you measure it, you will get 81 sq metres. In Hong Kong, you will pay 4 - 5 times the price of Bangkok, and if you buy an 81 sq metre unit, inside your unit is only about 60 metres. The other 21 metres is your computed portion of the lobby, elevators, swimming pool, fitness and what not.

3. I had a very bad cough/sore throat/colds problem, and the best doctors in Hong Kong and New York City (Columbia Presbyterian Hospital) couldn't figure out why I had this hacking cough which just wouldn't go away. I went to Bumrungrad, saw their ENT and respiratory doctors (Drs. Khemchart and Wuthichai) and within one year, I have been completely cured of the cough, take some medicines to keep an asthma problem at bay, and everyone says they have never seen a person my age so healthy and fit looking.

4. I am a member of one of the best clubs in Hong Kong, which if you are lucky to find an eligible person to nominate you, your cost of joining is US$35,000 with monthly fee of US$200. In Bangkok, I joined a smaller club on a non-resident basis for under US$1,000 with monthly fee of US$20, and this club has 4 tennis courts, 2 restaurants, big pool, fitness, etc -- everything one needs in a club, but on a smaller basis.

5. I cannot remember ever making a reservation to go out to eat a restaurant in Bangkok, even some of the best restaurants. Try doing that in NYC -- just showing up any restaurant and expecting to get a table.

I guess these are some of the reasons why I find Bangkok such an appealing place to live.

[pkrv]

Perhaps an anecdote may help shed some light on what is happening? FYI - I am UK based

In about 2001 I was in a bar off of Moorgate, after a meeting with Chase and was with a colleague who was ex-city. My colleague recognised someone and we got chatting. Eventually the conversation eventually got around to investments. Times were poor no one was making any money (and indeed losing it hand over fist). As I always do I tested my own internal logic. The conversation went along the lines of:

Him “I cannot get a return”

Me “OK I will sell you a product and I guarantee you will take it” (that got his defences on high alert!). “I’ll give you 8% absolutely guaranteed; nothing on hel_l or earth can stop it!”

Interest sparked…

Me “Ok that 8% was a lie because it is tax free, I assume you are on 40% tax to get that 8% elsewhere you would need a return of…”

His response “12%”

Me “Is that better? I will give you this product with any institution you care to name, and I will give you a pay rise from your existing employer, though I recommend an internet solution. I will take no commission, and the product is totally legal”.

I have gone through sales training (professional sales skills 3 or something like that) It was considered a necessary when it came to launching new products, pushing out the envelope that type of stuff. So I drew on the course and re-clarified/ everything I had said. “Are you ready to hear about the product?”

Him “Yes”

Me “Pay off your mortgage mate”.

There was a look of shock as he digested what I had just said to him. Oddly before he left I said “How about a couple of drinks for the advice”. He was a hard hitter and considered then said “Yes”.

It was a fascinating conversation and I have cut it down quite a lot but every conversation I have had with people who own their own home sort of comes to the same conclusion. Yes we live in a world of debt, but not everyone does.

None the less living in the UK is hard. In the past the middle classes owned the houses in Hampstead. Now I can afford the top floor, that is it (about 800k GBP). Even then it was only possible because I bought at the depths of the recession (1994). I do not believe for one moment no one else came to the same conclusions. So two bedrooms one bathroom in Hampstead vs 1.5% more space 3 toilets two bathrooms walk in wardrobes in Bangkok and a city where my rapidly evaporating pension (I haven’t even got it yet!) will go further? There is sort of no contest.

I admit I am a forward thinker and I note that in the past London has mentioned that Australian prices and ‘The River development’ are fairly comparable (how is it going BTW?). So has Bangkok now begun to overtake OZ?

[pkrv]

Thanks for the assitance in locating this post Khun Jean - IMO again the diversity of experience and requirements shows the levels of sophistication within the market!

3K 2 bedroom, kitchen, balcony, 2 bath 120sqm close to sukhumvit soi 24.

WOW, 3K for 120sqm!

Yep. It took a while to find it. (2 years) but now i rent it for 10 years and pay yearly. Rent increases with 5% each year. I am not there right now (back in the Netherlands for a while) but good to keep available.

A good friend (Thai) of me and my wife rented it before. If you look around sukhumvit you will see many shophouses, a lot of them have unused space. Most of them only use the ground floor and leave the other floors empty. Almost everyone we asked were not interested in renting that space out. But if you not ask you never know.

We use it when we are in Bangkok, i prefer the beach but for this price i could not let it pass. Beats staying with the wifes parents or a hotel.

Edited June 12, 2008 by pkrv

[Burgernev]

Interesting thread folks.

I've just read the excellent "All Major Projects Ploenchit/langsuan/chidlom/wireless/ruam Rudi Areas" thread pkrv started, great information.

I live in Hua Hin but am looking to buy a condo probably in the Sukhumvit area, not high end say 12-15M and it is intended as a long-term investment ie: 20 years+

What I'd like to get an idea of is what the general growth trend has been like in the past over a long period, maybe the last 10 years ? and what happens to the value of a new/nearly new unit today when it's 25 years old then ?

Appreciate any advice,

Cheers.

Edited June 12, 2008 by Burgernev

[pkrv]

Interesting thread folks.

I've just read the excellent "All Major Projects Ploenchit/langsuan/chidlom/wireless/ruam Rudi Areas" thread pkrv started, great information.

I live in Hua Hin but am looking to buy a condo probably in the Sukhumvit area, not high end say 12-15M and it is intended as a long-term investment ie: 20 years+

What I'd like to get an idea of is what the general growth trend has been like in the past over a long period, maybe the last 10 years ? and what happens to the value of a new/nearly new unit today when it's 25 years old then ?

Appreciate any advice,

Cheers.

Thank you for the compliment - humbled - there is tons of stuff here on Thaivisa - You have the capacity to research. Personally I would recommend going back through cmsally and irene posts. They sort of come at it from a different angle. It sort of helps! I am 'in' Bangkok what is happening in Hua Hin?

Edited June 12, 2008 by pkrv

[Burgernev]

Took your advice pkrv and read through a lot of the old threads (head hurts now), lots of sound advice particlarly from Irene, Quicksilva and the like.

The only nagging doubt that remains is about the condition and value of the asset in 25-30 years time, it is a long term investment and me and missus will hopefully only be interested in the rental income. But we'd like it to be of worth to leave to our son.

Hua Hin market is quiet now compared to the insane boom of recent years, but it's steady and I haven't seen any drop in prices, they're still rising infact for the mid to high quality properties. Houses are the bigger share of the market here, obviously due to land availability and the relatively inexpensive, but ever-rising land prices.

What was consistent reading through the years of old threads was Mr Bing Bong saying the bubble will burst any minute now.

Although to be fair his 1,568th graphic, the inverted cumulative progress 's' curve overlaid on that green and pink gantt chart, had me a tad concerned

Cheers,

Burgernev

Edited June 12, 2008 by Burgernev

[pkrv]

Took your advice pkrv and read through a lot of the old threads (head hurts now), lots of sound advice particlarly from Irene, Quicksilva and the like.

The only nagging doubt that remains is about the condition and value of the asset in 25-30 years time, it is a long term investment and me and missus will hopefully only be interested in the rental income. But we'd like it to be of worth to leave to our son.

Hua Hin market is quiet now compared to the insane boom of recent years, but it's steady and I haven't seen any drop in prices, they're still rising infact for the mid to high quality properties. Houses are the bigger share of the market here, obviously due to land availability and the relatively inexpensive, but ever-rising land prices.

What was consistent reading through the years of old threads was Mr Bing Bong saying the bubble will burst any minute now.

To be fair his 1,568th graphic, the one of the declining cumulative progress 's' curve overlaid on that gantt chart had me a tad concerned

Cheers,

Burgernev

These are very early days in this market. There are however new building regulations and as a freehold you do own a %of all assets including the land. If push came to shove in 25 years, what would the land be worth? I don't have a clue - But 25 years of bringing up my child in a place I own, pricless (but there will be lots of poo, and it can go everywhere!)

[quiksilva]

Took your advice pkrv and read through a lot of the old threads (head hurts now), lots of sound advice particlarly from Irene, Quicksilva and the like.

The only nagging doubt that remains is about the condition and value of the asset in 25-30 years time, it is a long term investment and me and missus will hopefully only be interested in the rental income. But we'd like it to be of worth to leave to our son.

Hua Hin market is quiet now compared to the insane boom of recent years, but it's steady and I haven't seen any drop in prices, they're still rising infact for the mid to high quality properties. Houses are the bigger share of the market here, obviously due to land availability and the relatively inexpensive, but ever-rising land prices.

What was consistent reading through the years of old threads was Mr Bing Bong saying the bubble will burst any minute now.

To be fair his 1,568th graphic, the one of the declining cumulative progress 's' curve overlaid on that gantt chart had me a tad concerned

Cheers,

Burgernev

The value can be derived from evidence of what comparable property will be selling for at that time.

Typically property is depreciated over 30 years, however that does not mean that once it is 30 years old it is worth zero. (IF that was the case Buckingham Palace would be worth nothing, which i think you'll agree is inaccurate). What happens at that time is the value is derived based on its effective life. Judgements are made by professionals on the condition of the property.

[think_too_mut]

What I'd like to get an idea of is what the general growth trend has been like in the past over a long period, maybe the last 10 years ? and what happens to the value of a new/nearly new unit today when it's 25 years old then ?

Look what 25 years old properties are selling for today. Selling, not asking or dreaming.

Probably near zero transactions as hardly anyone would even look at them while new developments are popping up.

One I went to see was asking 6 mil for a 160sqm "bare shell". For 23 years nobody has set foot into it, slim chance it will ever happen. My guess - it was bought for about 2 mil and the owner is dreaming to recoup (deemed) interest on the initial money he had shreaded back in 1985.

In 10 years he may adjust that and ask for even more - say, 10 mil while the property is worth what someone would pay for it. In this situation it's not zero - it's even worse: the unsellable property still draws maintenance and other levies.

2 years since i saw it on the net, it was still there last month.

[Burgernev]

Following on from quicksilva and think_too_mut comments, my concern is the worse case scenario that your buidling is not well maintained, partial occuption, hard to sell, developer moves in and you don't get any real value back. I've only ever been involved with property in London which while somemay be old 1930's buildings, they're generally not unoccupied and demolished for re-development.

Because you've had 30 years income from it I don't see a problem that it's value relative to the newer units will be a lot lower, but taking the worse case scenario that the building is percevied to have a limited life span and remaining residents may decide to sell up to a developer, does that make it near impossible to sell and near worthless ?

It's not to live in only an investment, but as we've just had a son we want it to be of value for him in 30 years time.

Is the answer to upgrade every say 10, 15 years or when you see the signs, this should protect your rental yield too!? I know I'm taking the pesimistic view here, but it's got to be considered.

Thanks,

Burgernev

Edited June 14, 2008 by Burgernev

[BEENTHEREDONETHAT]

Following on from quicksilva and think_too_mut comments, my concern is the worse case scenario that your buidling is not well maintained, partial occuption, hard to sell, developer moves in and you don't get any real value back. I've only ever been involved with property in London which while somemay be old 1930's buildings, they're generally not unoccupied and demolished for re-development.

Because you've had 30 years income from it I don't see a problem that it's value relative to the newer units will be a lot lower, but taking the worse case scenario that the building is percevied to have a limited life span and remaining residents may decide to sell up to a developer, does that make it near impossible to sell and near worthless ?

It's not to live in only an investment, but as we've just had a son we want it to be of value for him in 30 years time.

Is the answer to upgrade every say 10, 15 years or when you see the signs, this should protect your rental yield too!? I know I'm taking the pesimistic view here, but it's got to be considered.

Thanks,

Burgernev

I think if you select a condo with good management and is controlled by the owners you can be fine in it for a long time. I live in one ten years old and they do a reasonable good job of maintaining it. Last week one of the elevators dropped down several feet when it started. We told the manager and the next day they were shut down for 3 hours and maint. performed. Work fine now.

I don't think you can lump all the condos into the same group. You have obviously got, the good, the bad, and the ugly. The trick is to do your homework and select one where things are being taken care of. And not being ripped off by management. It is not easy but it is satisfying if you select a good one........Good Luck

[ray08]

Took your advice pkrv and read through a lot of the old threads (head hurts now), lots of sound advice particlarly from Irene, Quicksilva and the like.

The only nagging doubt that remains is about the condition and value of the asset in 25-30 years time, it is a long term investment and me and missus will hopefully only be interested in the rental income. But we'd like it to be of worth to leave to our son.

Hua Hin market is quiet now compared to the insane boom of recent years, but it's steady and I haven't seen any drop in prices, they're still rising infact for the mid to high quality properties. Houses are the bigger share of the market here, obviously due to land availability and the relatively inexpensive, but ever-rising land prices.

What was consistent reading through the years of old threads was Mr Bing Bong saying the bubble will burst any minute now.

To be fair his 1,568th graphic, the one of the declining cumulative progress 's' curve overlaid on that gantt chart had me a tad concerned

Cheers,

Burgernev

The value can be derived from evidence of what comparable property will be selling for at that time.

Typically property is depreciated over 30 years, however that does not mean that once it is 30 years old it is worth zero. (IF that was the case Buckingham Palace would be worth nothing, which i think you'll agree is inaccurate). What happens at that time is the value is derived based on its effective life. Judgements are made by professionals on the condition of the property.

To compare western properties to Thailand is not practical , forgetting Buckinham Palace ,we all know 2 things.

a ) The west has a very strong secondhand market , eg London

b ) Thailand residential has a very weak secondhand market ,Thais try to avoid , so left to a few westerners to buy

To buy a property here and expect to an asset in 30 years time to leave to next of kin is a big call , without even talking about proper maintenance

the property might not be worth Zero but i think compared to the general market in 30 years you might be leaving a very undesirable

property.

Compare this to a central london property in kensington, where i think your next of kin would be very happy in 30 years if left a property.

I would be very supprised if someone would recomend a long term 25-30 residential property here as good investement to leave to the next generation.

Edited June 14, 2008 by ray08

[tangoll]

To Crash999, I got your PM, but my reply was not able to send to Crash999 which the forum said was not in their database of names.

You can email me direct at pcmar at netvigator dot com or call me in HK on 90939911.

tangoll

[Burgernev]

ray08, thanks for your comments, I'm sort of coming to that conclusion. Even if a building is being properly maintained after 7 years, it may not be after 17 years. Maybe I should stick to houses where I have full control on it's maintenance.

If it were for us to live in and not want to leave to child then I wouldn't be concerned

Apologies OP, pkrv, if I've gone off-topic a bit.

Cheers,

Burgernev

[quiksilva]

Took your advice pkrv and read through a lot of the old threads (head hurts now), lots of sound advice particlarly from Irene, Quicksilva and the like.

The only nagging doubt that remains is about the condition and value of the asset in 25-30 years time, it is a long term investment and me and missus will hopefully only be interested in the rental income. But we'd like it to be of worth to leave to our son.

Hua Hin market is quiet now compared to the insane boom of recent years, but it's steady and I haven't seen any drop in prices, they're still rising infact for the mid to high quality properties. Houses are the bigger share of the market here, obviously due to land availability and the relatively inexpensive, but ever-rising land prices.

What was consistent reading through the years of old threads was Mr Bing Bong saying the bubble will burst any minute now.

To be fair his 1,568th graphic, the one of the declining cumulative progress 's' curve overlaid on that gantt chart had me a tad concerned

Cheers,

Burgernev

The value can be derived from evidence of what comparable property will be selling for at that time.

Typically property is depreciated over 30 years, however that does not mean that once it is 30 years old it is worth zero. (IF that was the case Buckingham Palace would be worth nothing, which i think you'll agree is inaccurate). What happens at that time is the value is derived based on its effective life. Judgements are made by professionals on the condition of the property.

To compare western properties to Thailand is not practical , forgetting Buckinham Palace ,we all know 2 things.

a ) The west has a very strong secondhand market , eg London

b ) Thailand residential has a very weak secondhand market ,Thais try to avoid , so left to a few westerners to buy

To buy a property here and expect to an asset in 30 years time to leave to next of kin is a big call , without even talking about proper maintenance

the property might not be worth Zero but i think compared to the general market in 30 years you might be leaving a very undesirable

property.

Compare this to a central london property in kensington, where i think your next of kin would be very happy in 30 years if left a property.

I would be very supprised if someone would recomend a long term 25-30 residential property here as good investement to leave to the next generation.

Actually its very practical and works very well indeed. It is used here all the time. In fact we have sold properties in Bangkok that were over 30 years old but have been maintained superbly and thus was able to successfully command a very respectable price (several million US$) in the open market.

On the other hand we have another substantial property on our books, which used to belong to ... ehem.. very senior people in Thai society... it can only be adequately described as a mansion / palace. Sadly it has been neglected and the property is on the market, with the owner's blessing, at land value only, despite that fact that it has both considerable historic and architectural value.

Edit to keep this on topic: So as I said it depends on the condition of the property, which of course is dependant upon a good standard of pro active maintenance throughout its life. The same applies to all properties, however the larger they are the harder they are to maintain (M&E systems are more complex) and the more that has to be spent on their upkeep.

Edited June 14, 2008 by quiksilva

[quiksilva]

Following on from quicksilva and think_too_mut comments, my concern is the worse case scenario that your buidling is not well maintained, partial occuption, hard to sell, developer moves in and you don't get any real value back. I've only ever been involved with property in London which while somemay be old 1930's buildings, they're generally not unoccupied and demolished for re-development.

Because you've had 30 years income from it I don't see a problem that it's value relative to the newer units will be a lot lower, but taking the worse case scenario that the building is percevied to have a limited life span and remaining residents may decide to sell up to a developer, does that make it near impossible to sell and near worthless ?

It's not to live in only an investment, but as we've just had a son we want it to be of value for him in 30 years time.

Is the answer to upgrade every say 10, 15 years or when you see the signs, this should protect your rental yield too!? I know I'm taking the pesimistic view here, but it's got to be considered.

Thanks,

Burgernev

The answer is to make do pro-active maintenance, all the time. Checking and testing systems and structural items, roof cover rings, painting etc all the time. In a condo this is what you managers should be doing, themselves and via outsourcing to P&M engineers (some of which probably sit on site). This is the stuff that happens behind the scenes that residents rarely get to see, but its what maintains the minimum value of the property.

If you are curious ask for a meeting with the building manager, and ask to see the control room and the P&M pro active maintenance schedule, most buildings have them. Its just about SOP these days for high rises.

However, every 10-15 years one would hope to see sinking funds used (and later replaced with new contributions) to refurbish common parts and keep them looking at their best (lobbies, lift cars, etc). This helps to maintain rental value of the properties and helps to preserve investment value too.

The problem is good building managers are hard to find.

[BEENTHEREDONETHAT]

I didn't really buy our condo as an investment looking for a big return. Don't get me wrong it would be nice but I bought it for the lifestyle it affords me. Everything considered it would cost me many times more to try to come close to duplicating our condo in the State or Australia.

Not only that but the maintenance fee and taxes I would have to pay there would come close to covering my cost of living here. They are doing a reasonable job of maintaining the condo and surroundings. They also have a very nice size sinking fund.

Don't anticipate that it will be worth all that much in 20-30 years, compared to a new one, but the enjoyment we will have gotten from living in it is worth a lot to us.

There is a lot of talk of prices dropping. I don't think so as inflation is making the cost of new ones climb rapidly. People may not like to buy used but then they may not like the size etc. of what they can afford new and would rather buy used than wait until they can afford new..

To sum it up. We are happy we bought when and where we did. We did not anticipate the world economy turning turtle but it will have less effect here than in most places.

[think_too_mut]

a few months ago I posted some stats from The Economist, asked real estate pros on this forum to comment.

It was like:

93 % of properties in the US have seen more than 1 owner

87 % in the UK

13 % in Japan

Nobody came with any data or even a guess about Thai. Even if it is not 13% like in Japan (where houses and buildings are intended to last 30 years due to earthquakes) , must be far less than in the west.

Asians simply hate second-hand real estate, don't know to what extent in Thai but condos sitting for years or decades on the market point to the same pattern. Tens of thousands of them at any given time.

[shochu]

quicksilva,

i wonder if you are talking about that beautiful old building just across the river from siam center, not far down the street from the rachathewi BTS towards the indonesian embassy?

Bergenev,

you should not think of the newer higher end condos as the same as the older stuff in the city. if these new buildings are using modern building techniques and newer construction methods (steel structure as opposed to the concrete post and beam) then your chances of these buildings lasting longer - thus maintaining value over a longer period of time will be much better. the higher a building, the better (hopefully if done properly) your chances of it lasting longer just because of the extra load work (particluarly wind load) that it will have to withstand - therefore the building (and i say this again) should be better built and thus also withstand the elements better. and i will assume - perhaps quicksilva or someone in the biz can comment here - these higher end projects probably have major construction (international) firms with a good track record, and i would like to assume/think that they are using much better building technology/material these days.

and one would hope/assume that these projects will be maintained better.

your worst case scenario are 1) they ask for a large sum from each owner to do a major repair down the line - most likely, or if the location is desireable 2) they build an even higher building to replace it ( to cover the building cost and profit margin) giving each of you a new unit (possibly with a cost) - this is only feasible if the building height restrictions allow for enough new floors to make it feasible - less likely in bangkok unless the land prices go ballistic, and 3) what has already been discussed - a developer buys it outright and then you will get much less than you want - falling in between the other two possiblities. These are based on my experience elsewhere - not in LOS - so maybe someone can comment on this.

if you are so concerned, why not just buy an investment property back home that you can also rent out which can also be banked and used for upkeep/taxes until you give it to your child. if you look and do your research well, there are some great buys in secondary markets - meaning not major cities but still sizeable cities.

by the way - houses - if you have ever owned one you would know - depending on the climate - require an awful lot of maintenance. maybe not in australia, but with extreme climates of seasons - here in LOS from the scorching heat to the monsoon rains etc. will take their toll. add up all the costs over the years and see where you stand. look at most of the larger older homes in the city - they look run down even though they have staff taking of them. perhaps it is a thai thing in not spending too much money maintaining them.

Edited June 14, 2008 by shochu