Irene

I have read of a case of a common law wife claiming for part of the property of the deceased in Thai court quite often and therefore presume that it could be the same as in UK.

i just can't see myself spending 7 million baht for a 65m2 shoebox. Isn't this a third world country? i guess many of you are willing to do just that or the prices would be lower.

Is it over-priced? I hate to say it; that depends. It depends on the location. There are deals made on shoeboxes along sukhumvit soi 5 to 63 at the highest level of Baht 140,000 per square meter giving a net yield of rental income of 5% if it is near to the BTS stations. Third country or not, the working of the market is such that there is not enough supply to meet the demand of expatriates for quality accommodation in the right area. If yours is outside this area and not much potentials like near to a supermarket, then I would say it is over-priced.

you be the judge.......where BMR stands for Bangkok Metroplitan Region

Thank you for the graphic which is most interesting. However, there is a distortion due to the boom on high-prices houses of more than 50 million baht per unit a few years ago. Hence, there was a big jump then and now one hardly see development of high-priced units of more than one rai. The Association should have excluded these units to ascertain the trend. For example, restrict the compilation on not more than 100 sq wah houses. Anyhow it is still interesting because it shows a slow rise in each unit pre boom time on quality houses.

Irene,

Given the lack of liquidity in Thai markets, do you take a hedge (say an OTM put) for the long futures position you hold? I do it sometimes, even in markets with infinitely more liquidity.

lannarebirth,

I never thought of it. That is why I like this Thaivisa forum, one always learns something. Many thanks.

You are right the market does not seem to price in that much with gain on the long term contracts. The answer is simple. The punters do not think much of the future and/or the market has yet to become sophisticated to understand this. The trick is to accumulate the 6m, 9m and 12m contracts if you think there is an upside then. Your gain can be substantial when that day arrives. This assumption is correct only if there is an uptrend in 2008. With the talks of recession in the US etc., do you think there is still an uptrend or the past uptrend in 2007 may not repeat itself in 2008. If there is a downtrend, then the loss could be quite hefty as well.

Can you elaborate on the first part of the foregoing in bold ? Futures prices should not be influenced by expectations of price rises as far as I know......

Common sense tells me that if we expect the future trend to be rising, the future prices of 6m 9m and 12m should be higher than the current price just like oil, interest rate and commodities as noted on the US market. The Thai market prefers the short term trading. Anything over one week is regarded as too long. Hence the pricing of 6M, 9M or 12M in Thailand is not a good guidance to the current price unlike a matured market in the west. However, this quaintness turns out to be an opportunity to long now on 6M or 9M if you think once the elected government is in their places and hopeful of a big-name economist in the Finance Ministry. The market force on those future issues do not recognise that trend. With no fancy calculations but just based on my understanding of the behaviours of Thai investors and my pleasure and pain of previous hits and misses, I accumulated a lot in early December 07 on the March 08 issues and realised a large gain in early January 08. Why the gain? Because I got my bargains earlier on in December. Why should I realise that in Jan. 08? Because I did not like the immediate outlook of uncertainty in the US.

My theory may be heretic under Finance 101, but my past experiences tell me to use my senses on economics far more than the other technical analysis. I used to do a lot of technical calculations a few years ago and got excited about them. I made a mess of my investment choices. I still keep those investments with book losses of 30% to 50% just to remind myself of my then lapse of senses.

The reason why the term structure of futures on commodities is almost always upward sloping is twofold: First, the increased carrying costs compared to financial futures. Carrying costs of the underlying financial futures (stock index futures as an example) are usually limited to funding costs, but commodities may often have storage and transport costs associated with them. The second reason is that they do not pay a dividend. Since carrying costs increase fair value and dividends decrease it, the net effect is a more positive term structure.

If stock index futures really "predicted" a higher index price, then arbitrageurs would simply buy the cash index and sell the futures contract for a near risk-free profit. To the extent that funding costs can change and future dividends are uncertain, there is a small element of risk. In some markets where it is difficult to borrow stock, futures can trade at a discount to fair value.

Wow! I think I will stick to my theory for Thailand futures and index options.

You are right the market does not seem to price in that much with gain on the long term contracts. The answer is simple. The punters do not think much of the future and/or the market has yet to become sophisticated to understand this. The trick is to accumulate the 6m, 9m and 12m contracts if you think there is an upside then. Your gain can be substantial when that day arrives. This assumption is correct only if there is an uptrend in 2008. With the talks of recession in the US etc., do you think there is still an uptrend or the past uptrend in 2007 may not repeat itself in 2008. If there is a downtrend, then the loss could be quite hefty as well.

Can you elaborate on the first part of the foregoing in bold ? Futures prices should not be influenced by expectations of price rises as far as I know......

Common sense tells me that if we expect the future trend to be rising, the future prices of 6m 9m and 12m should be higher than the current price just like oil, interest rate and commodities as noted on the US market. The Thai market prefers the short term trading. Anything over one week is regarded as too long. Hence the pricing of 6M, 9M or 12M in Thailand is not a good guidance to the current price unlike a matured market in the west. However, this quaintness turns out to be an opportunity to long now on 6M or 9M if you think once the elected government is in their places and hopeful of a big-name economist in the Finance Ministry. The market force on those future issues do not recognise that trend. With no fancy calculations but just based on my understanding of the behaviours of Thai investors and my pleasure and pain of previous hits and misses, I accumulated a lot in early December 07 on the March 08 issues and realised a large gain in early January 08. Why the gain? Because I got my bargains earlier on in December. Why should I realise that in Jan. 08? Because I did not like the immediate outlook of uncertainty in the US.

My theory may be heretic under Finance 101, but my past experiences tell me to use my senses on economics far more than the other technical analysis. I used to do a lot of technical calculations a few years ago and got excited about them. I made a mess of my investment choices. I still keep those investments with book losses of 30% to 50% just to remind myself of my then lapse of senses.

You are right the market does not seem to price in that much with gain on the long term contracts. The answer is simple. The punters do not think much of the future and/or the market has yet to become sophisticated to understand this. The trick is to accumulate the 6m, 9m and 12m contracts if you think there is an upside then. Your gain can be substantial when that day arrives. This assumption is correct only if there is an uptrend in 2008. With the talks of recession in the US etc., do you think there is still an uptrend or the past uptrend in 2007 may not repeat itself in 2008. If there is a downtrend, then the loss could be quite hefty as well.

On what basis do they look cheap ? There shouldn't be much, if any, discount on the front month vs fair value, and any discount further out might be a reflection of uncertain dividends (which might affect the front month too).

There can be a difference between the market quote and the benchmark of SET50. It can be higher or lower by more than 10 points. During the beginning of subprime crisis, it was lower than the SET50 index by more than 20 points. The gap is dependent on the view in future of the punters. So it can be very cheap if you dare to go against the tide. It can also be too expensive if there is a euphoric mood. Investment is like golfing. Sometimes, you thought that you were Tiger Wood and sometimes you want to cry on your swing. That is why the game is challenging, it is never constant.

fletchsmile,

My replies are in blue:

Who do you do your futures with in Thailand? It's something I've been looking at. Tho' to be honest I've looked more at options for hedging exposures I have in Thai mutual funds. My broker is Phillips,http://www.poems.in.th/home/th/index.htm Its online trading is the best on futures and options but lousy on stock tradings. You could have hedged on the election through futures or index options on SET50.

BTW I cheked out the futures prices at lunch today. Not sure on your view, but to me SET50 Index futures looked cheap. March and June both below 600. Even Sep not much above. Any thoughts? It can be cheap at one point (temporary) and could hit 670 very fast. Rarely does it come down below 600. So my motto is to long (buy) when below 600 like the past few days but tend to short when above 600 depending on the Dow Jones the night before. (Don't ever say anything cheap in this market, you could regret easily especially on the future market. At the beginning of the subprime crisis, it hit the bottom at 510. I lost a hefty sum using that motto).

BTW2 I've never done well on Japan. Last year lost 12%. Each year I hear things might go well. These days I hold a small amount for diversification, and curiousity/just in case, but me and Japan don't seem to mix! I was good at the Japan market through investment in ETF fund called EWJ. I started with EWJ three years ago at 11 and sold at 14 a few months ago. I am now waiting for the right moment to buy when it is below 13 unless the Japanese scene has gone worse than present.

My 2008 strategy is to pick up stocks in Thailand when people are irrationally disposing their stocks at any price. I am accumulating PTT when under 350 and prepared to wait for a few years with that holdings. TDEX is another slow but safe stocks. I stay away from small and medium-sized companies. I go into the future market using the same technique but quick to close my position because of the fear of it volatility in which no one can predict. So far so good.

In the international market, I try to hold cash and ready to buy when the financials become ridiculously low e.g. Merrill Lynch and AIG. But I slowly pick up EEM, MSCI Emerging Market, and EWZ, (Brazil stocks). I am a bit scared of Chinese, India and Japan. Today I start to pick up gold through TMB Fif fund.

2007 was a bad year for me on stocks but good year on Thailand future market. I hope I am wiser this year.

Thank you for asking the question. Now I know many places that I myself could also enjoy.l

Did you have to pay the 2% Transfer fee?

Yes, on every transfer, i.e. change of name of beneficiary, 2% transfer fee shall apply. Not only that, 3.3% on land value shall also apply if the seller's period of ownership is less than 5 years. In addition, personal income tax calculated on a formula is also applicable. The land department can calculate for you prior to the "sale".

I put my house in Pattaya in my daughter's name when she was 11 years old.

I have never heard of a minimum age being applied, but there may be one.

There is no minimum age rule on property acquisition. I may be wrong, if I remember correctly there is one disadvantage, that is, if the young one (i.e. you) wishes to sell the land, then you cannot do so until he or she has reached the maturity age of 20.

Normally, it should not. The 'pay half' is restricted to the transfer fee of 2% only and not personal income tax and specific business tax of the seller. Sometimes this happens if there is no definite agreement at the beginning of what taxes involved. Arguments and disputes happen often at the land department on a seller's personal taxes passing on to a buyer.

Also the 20,000 baht does not make sense for the cost of not having the actual owner there. It should not be the concern of a buyer.

Good idea to pay in advance but I don't think it is possible for the district office to receive tax payment in advance. It is just too confusing for the system.

'Chai' mean side. "Chai Haad" means seaside.

Officially, Thai New Year is only good for celebration. In Thai laws, international calendar year is the basis. For the year 2007, you are supposed to file by April 2008. (I am now sure it is in April as currently advertised in many Thai newspapers).

Paul,

Very good point! Keep quiet about Thailand visit. It is difficult to convince those who have already pre-judged Thailand. Not worth being sincere about it with resultant bad light on your personality.

I intend to do the opposite of spending more time on the forum. In the past year, mostly ten minutes daily. It has changed my personality and thinking. I have become more tolerant to others and gained knowledge of things I could ever imagine I would ever understand before.

PaulUSA302,

Thank you, Paul. This is the best thread I have ever read. With a tinkle of sadness to know of the shame one could have for visiting Thailand, I cannot offer any right answer but express great surprise of the predominance of such an image.

I got the feeling that the company is trying to portray itself as having high ethics in order to get a right rating for a regulatory body like Stock Exchange. Having an employee to sign as having high ethics is one of the items in the do-gooder checklist. If the wordings in the letter put it in a way that you are supposed to uphold the ethics, then it is your ethics that is involved not the company. But if the letter covers the area of knowing of unethical conducts of the company and required to blow-whistle, then you would have a problem (But I don't think it falls under this category if the company is engaging in whatever you know of already. It is unlikely for the company to encourage you to open a can of worms).

Mine was the easy way to be understood and remember at the same time, Wilko is correct in his wording however many find this dificult to pronounce. Irene sorry way off mark

chanman,

You are right, yours is easier to remember and commonly used. I just thought of making life easier for you guys, phonetically. But I can see my hopeless attempt.

When is the tax due? At the beginning or end of the year? Is it based on the Thai or Western calendar? Does it depend upon the date the property was purchased? What about land that isn't registered at the land office but has a Sor Tor Gor land title (written as ศ. ฅ. ก.)?

The tax is based on a calendar year and due for filing in April(?, not sure whether it is April or May) thereafter.

I have no knowledge on the position of Sor Tor Gor.

Just to help on the pronunciation:(in blue), slow pronouncement would help:

Beach road Chai Hard (chai haad)

2 road Sai Song (sai sawng)

South pattaya road Pattaya Tai (put-tar-yar tai)

Central pattaya road Pattaya Klang (put-tar-yar klarng)

Those pronunciations don't help at all. There's no English sound for "aa" (except the bleating of a sheep in baa) and I've never heard Pattaya Klang pronounced klarng. Chanman's were better.

edwardandtubs,

I just wanted to improve the ways non-Thais pronouncing some Thai words. Nothing wrong with Chanman's helpful comments.

Your understanding is correct that the right pronunciation cannot be made in English sound and the sound of the bleating of a sheep in baa is quite correct. All you need is to put the 'h' at the beginning of 'aa' instead of 'b' and put the 'd' after 'aa'. Then you have the sound of "h-aa-d", just like "Haad Yai", the southern town of Thailand.

As for "Klarng", that again is the right pronunciation made by all the Thais. An abrupt 'klang' is not as clear as a long-drawn 'klarng'.

tropo,

I've never heard Pattaya pronounced Put-tar-yar. How often do you hear Thais pronouncing the 'r'?

tropo,

Thais pronounce the 'r' everyday. Non-Thais tend to pronounce Thai words in their throat especially when it come to the vowel "are" that causes a lot of Thais having to cringe their faces or smile of the sound. When it comes to this vowel, one has to express out the sound just like the sound of Mr. edwardandtubs's understanding of "the bleating of a sheep".

Hi All,

Just bought a second hand condo for 3.4 million. The owner is responsible for all taxes and transfer fees. When she went to the land department they told her the value is 3.7 million and that may even go up with the new valuations becoming effective soon.

How common is this? And does it mean that, at least at first sight, it is a good buy?

It is unusual for the valuation of the land department pre-2008 to be higher than the concluded value. It happened to me only once out of many transfers I did. It turned out to be a good buy. It is even so when the latest value for 2008 is higher by 50%. However, this is not proof of the pudding. As one writer said it is the actual buyer paying that price that counts. But it has an indirect influence on your higher value to sell in future.

The official value is set up only to preclude a collusion of a buyer and a seller to declare too low the price of land in order to reduce the transfer fees.