robert10

i had considered buying earlier in the project and am now very glad i didnt.

Why is that?

I have been cruising around here in Phuket lately. There are some projects that are being built, but I am surprised at how many are just sitting. No work being done. Even saw one yesterday that says under new management and doing a relaunch. Obviously, something went wrong...

Anyone know about that HUGE one at the northern end of Bang Tao beach that is just sitting? It looks like it was going to be giant.

craigt3365 may help explain your comments .........................

Real estate in Phuket : the market in disarray… wants to believe

Published 19 June 2009 Economy , Real Estate 13 Comments

This article is not really interesting, even quite boring. Because it's repetitive, it tells us something we already know, since a long time (game over for the real estate market, vanished the famous "foreign buyers", vaporized the financings, in the toilets the so called "luxury" market in dumps like Pattaya, Phuket, blablabla.).

No… instead what I found fascinating is the pure and perfect human psyche at work.

First, the depressing reality, difficult to handle on a day to day basis :

More than 10 residential projects with a combined market value of nearly Bt10 billion remain "on hold" in Phuket, because demand from both domestic and foreign buyers – especially for luxury homes – has fallen to less than half of last year's level. [...]

"Some Thai investors are interested in buying our residential projects, but the banks reject their loan applications. This is the main problem for local investors," he said. (Nation)

http://thaicrisis.wordpress.com/category/e...estate-economy/

My friend Midas, master of the cut n paste The banks reject and have done so correctly so as to avoid another sub prime crisis. You want to buy? then you got have a good down payment and A1 rating for now. I agree Midas this may cause a stagnation in property demand for the short term however 1-2years out landlords will be smiling. Just curious and you don't have to answer, but do you rent, or own? condo or house and what area? , I'm assuming you live here right?

I am reading many alernative news and opinions ( other than MSM ) daily and you would be surprised

how many Americans who post comments after the article are still expecting a total meltdown in USA

If USA suffers - we all suffer. Thats all

Yes I live in Thailand.

Agreed... US housing recovery/stabilisation is crucial to the rest of the world. Some of these alternative views are saying that 2007/2008 was about subprime meltdown, and 2009/2010/2011 will be about prime/alt-A/commercial mortgages etc The US govt & Fed hasn't really solved the fundamental causes of the crisis and are just kicking the can-of-worms down the road with their mortgage mods, foreclosure moratoria, bailouts, money printing etc And they recently created the US treasury bubble too

I am also amazed at the number of new developments. Quite a few were shown to us yesterday....I am guessing not as many as a few years ago, but still quite a large number. Lots of inventory out there, and most being discounted heavily...and still not selling...

What sort of % discount are we talking about here (in Phuket?) and for what type of properties (condo/house?) ? Are they off plan or completed?

by then they'll have a good idea weather or not the project is shit and opt to quit and simply not borrow money from the bank.

That's assuming that they intend to take possession in the first place. Because of the low upfront deposit (5-10%), local speculators hope to flip the condo before transfer is due and make a tidy profit. I know of a Grade A condo which started transferring in Nov 08, and until now, about 50-60% are still not transferred. Buyers only paid 10% deposit and no progress payments. Some units have been repossessed by developer as buyer is not able to pay up. . I wonder how many recently completed or soon to complete projects are like this as well

So much for talk about Thai property being not highly leveraged

Before I came here I was working nearly ALL of the time , then I thought thats it , ive had enough and im giving it all up.

Came here and I do NOTHING , its wonderful . No I never get bored , I do get tired but I have just become like the rest of the Thais , they laze about doing nothing , why cant I .

Exercise is my problem , I dont do any and I know with all the smoking and drinking and eating , Im going to die but at least I will be happy doing i t.

How long have you been retired?

my point exactly .. investment activity has stagnated means developers stopped launching new projects and means that there is less supply coming on line which is healthy as existing inventory needs to clear. the speculator who bought condos off plan are now feeling bit more confident now that his portfolio has risen (i am one of them!), which means that he has more options and less likely to dump his 30% deposit. if you are a buyer and still waiting for prices to crash, that likelihood is less likely. but who knows, we can have another airport closure and everything can still go to the dogs.

I dont expect things to " crash ".............but then I dont expect a general trend of price increases either............

The point is until the recession is truly over ( i.e. there are no longer any

deflationary forces evident around the world as there are now ) any potential

buyer can wait and see without " missing out "

Those who waited in Singapore seems to be losing out as condo prices has climbed quite rapidly since March, so much so that the government has expressed some concern .... recession not withstanding

There's a lot of easy money floating around in the world today literally looking for a home... thanks to all the central bankers cranking the printing machines full throttle

We will all see in perhaps 1-3 years' time how all this is going to turn out

You are trying to compare the market dynamics of a tiny little island state where there is a physical shortage of land to Bangkok?

Loose monetary policies tend to reflate asset prices, and when its the Fed, it blows asset bubbles round the world. We see that easy money flowing into the equity markets right now. Under Greenspan's loose polices, property prices began climbing in major Asian cities like HK and Singapore starting in late 2004/2005. Later, that easy money flowed to second tier asian cities like Bangkok and K.L. I remember property players touting BKK properties as laggard and undervalued compared to Singapore and HK then. Of course, as history showed, BKK prices played catch up very quickly The same thing may happen now, with SG and HK leading the way.

But am I betting on that? On the one hand, we've seen unprecedented global wealth destruction with the financial crisis. On the other hand, we've unprecedented public policy responses, with lots of money (ie tax-payer $$$ ) thrown at the problem. How will all this end? Like I said, things should be clearer in 1-3 years time Right now, my baht stays with me. That view may change if there's no significant pullback in equity markets by early next year

my point exactly .. investment activity has stagnated means developers stopped launching new projects and means that there is less supply coming on line which is healthy as existing inventory needs to clear. the speculator who bought condos off plan are now feeling bit more confident now that his portfolio has risen (i am one of them!), which means that he has more options and less likely to dump his 30% deposit. if you are a buyer and still waiting for prices to crash, that likelihood is less likely. but who knows, we can have another airport closure and everything can still go to the dogs.

I dont expect things to " crash ".............but then I dont expect a general trend of price increases either............

The point is until the recession is truly over ( i.e. there are no longer any

deflationary forces evident around the world as there are now ) any potential

buyer can wait and see without " missing out "

Those who waited in Singapore seems to be losing out as condo prices has climbed quite rapidly since March, so much so that the government has expressed some concern .... recession not withstanding

There's a lot of easy money floating around in the world today literally looking for a home... thanks to all the central bankers cranking the printing machines full throttle

We will all see in perhaps 1-3 years' time how all this is going to turn out

The idea of money coming to you every month does not seem to register a note with Thai women.

Friend of mine asked a girl what she preferred, every month 15,000 baht for 5 years or 100,000 baht now and nothing more.

She took the 100,000!

What I have now is mine, tomorrow I could be dead

Or: What I have now is mine, tomorrow he could be gone

This is the last quarter to buy, and a slow upswing will begin near end of this year.

How in the world do you know " there will be an upswing will begin near end of this year " ?

That may well be the case if there's no significant pullback in the equity markets by Q1 next year

I believe we have not seen the bottom yet. I estimate it wont hit rock bottom before 2012-2013.

But I am already buying - there are plenty of really great deals out there which yields great rental returns. I just bought one at 16.2% ROI which is the best condo investment I made in Thailand yet.

Care to tell us more, like which condo/location and how you got such a good deal. I'm sure there's a lot of interest here

I've a weekday flight which means I've to catch a cab at about 6pm. Wonder if I will beat the traffic jams in central BKK by catching a cab from around BTS On Nut instead. Assuming there are cabs there

Instead of ?

Instead of lower Sukhumvit... or is it same same

I've a weekday flight which means I've to catch a cab at about 6pm. Wonder if I will beat the traffic jams in central BKK by catching a cab from around BTS On Nut instead. Assuming there are cabs there

Is this promotion just for flights departing from Thailand? How about Singapore departures?

Sorry the title should read I want a CONDO not codo!

I think you're missing a "0" somewhere too

On that basis the average BKK property should be over Bt2m and the average outside of bangkok Bt1m while I suspect prices are actually fat lower.

The one reason to think that property might actually be undervalued is the incredibly low level of mortgage debt which is only 18% of GDP compared to around 100% in the UK and US.

At average price of BT2m, then the avg psm price is about 25k-33k psm (assuming avg size of 60-80sq m). Current prices are easily a few times that.

There is never a bad time to buy property - IF you can afford to do it!

Or for sellers IF you can afford to lose it,.....dont beleive me?, come to pattaya, houses that were 4-5mill 4 years ago are making/struggling to make 3.5.,great investment,.

That's quite a big drop! How about condo prices there... have they dropped that much too? Any recommendation for good condos there selling at relatively cheaper prices for those willing to take the price risk?

Depends when you buy as to ROI ( return on investment) example I paid 1.17 million for studios when the baht was at 72 to the £ the cost was £16250 that was 3 years ago ( bought 1 more since at 1.35 mil and that took 6 months of haggling) but to buy today it would cost me about 1.5million for the same unit and the £ is at 52 baht thats £28846 I get minimum of 13500baht (some are at 14000 baht) for each unit, service charge and utilities are on top of that. That makes my roi 11.5% to 12% gross. Should get my money back in just over 6 years of which 3 have already gone + I still have the condos value after that. Got 5 units. I wouldnt be buying now using my "home" currency, £'s

I bought at the right time.

Are these condos in Bangkok? If they are, they look like low cost condos. I've been told that Thais hardly rent condos and rental demand is driven by foreigners. However, I feel some low cost condos can be rented out fairly cheaply (less than say 15K for 1br unit) and wouldn't there be some local demand for these? So who're renting your units if you can share?

Well, I'm amazed that your nett rental yiels are 7-8% ! I've been looking at new projects and at current asking price, the gross yields are 5+% only. Taking into account maintenance fees, taxes and vacant period (the sale agents were good enough to say that it will take say 3mths to rent under current market conditions), the nett yields are 3% plus. That makes me feel that current asking prices are too high. Comments welcome.

I think net yields of 7-8% are vaguely justified if you consider buying second hand and if you pencil in some 3% maintenance costs. Thai condos with the heat etc are pretty high to maintain (far more expensive than a girl). And really, it is so true, as a previous poster pointed out, that buying second hand is so much cheaper than buying new. This is especially true if you want to renovate in any case. (So to some extent I wouldnt argue with you over the net yields (after everything) being only 3%.)

I would guess that with a second hand unit you wouldnt go too far wrong, no more than is justified in owning a place as opposed to renting.

I think it is more expensive to upkeep a new condo project selling at Bt100-120k/m2 in order to maintain an asking rent of bt70-75k for a 120m2 unit.

But one underlying reason I invested in an over 20 year old building is that it is the lowest condo building along this soi - 12 floors with units starting on the 3rd floor. There are only 80 units on 2 rai of land. Wait out another 2 property cycles (16-18 years), and it is ripe for redevelopment. Like you have said, "all the real capital gain accrues to land".

From your market knowledge, what's the %price differential between old condos and newly completed condos in the same area?

I agree Midas, but your supposed to buy BEFORE the recovery, not when we are told 'We have now recovered"

Every man and his dog knows recovery wont be until at least mid 2010 which puts us around the bottom in March this year. Thats why the smart money is hitting property and the Markets around 6 mths ago just look at the gains in the DOW . I bought more property and Stock HEAVILY in NOV You should know as we have had this conversation in the past. Modesty prevents me from reveling the gains made. If you want to make money in property buy now. Sitting on the sidelines never made anyone rich

I bought my 5 condo units between Aug 2008 and Jan 2009.

You must have got them for a good price. Please share with us the discount off the peak price and the price range (in thb psm) for these condos. I'm looking to buy condo too but my impression is that Thai condo prices haven't corrected in the past year and sellers are still asking for peak prices for 07/08.

All my condo units are not in new projects, but are old condos completed 13 to 20+ years. So the difference between peak prices and my purchase prices are not much - 10-15%. The largest unit 163m2 was secured from an auction of seized properties, and the smallest (45m2) was sold by a Taiwanese who was in a hurry to liquidate because his stock portfolio is on margin call.

I based my decisions on the total investment I have to make, including cost for refurbishing the units, to the ease of renting the unit and the rental income - giving me net rental yield (after deducting maintenance fees and taxes) of 7-8% per annum.

Here is the before and after photos of a 121m2 unit:

Well, I'm amazed that your nett rental yiels are 7-8% ! I've been looking at new projects and at current asking price, the gross yields are 5+% only. Taking into account maintenance fees, taxes and vacant period (the sale agents were good enough to say that it will take say 3mths to rent under current market conditions), the nett yields are 3% plus. That makes me feel that current asking prices are too high. Comments welcome.

I agree Midas, but your supposed to buy BEFORE the recovery, not when we are told 'We have now recovered"

Every man and his dog knows recovery wont be until at least mid 2010 which puts us around the bottom in March this year. Thats why the smart money is hitting property and the Markets around 6 mths ago just look at the gains in the DOW . I bought more property and Stock HEAVILY in NOV You should know as we have had this conversation in the past. Modesty prevents me from reveling the gains made. If you want to make money in property buy now. Sitting on the sidelines never made anyone rich

I bought my 5 condo units between Aug 2008 and Jan 2009.

You must have got them for a good price. Please share with us the discount off the peak price and the price range (in thb psm) for these condos. I'm looking to buy condo too but my impression is that Thai condo prices haven't corrected in the past year and sellers are still asking for peak prices for 07/08.

Condos in Sukhumvit area are asking 110-140 Kpsm easily. Are these sustainable price levels? They seem rather ridiculously expensive to me.

[ Have you tried Qantas? I find them much better

1.Jetstar promotes itself on Cheap flights. What did you expect for something that sells for around 2600 baht roundtrip?

Well, I've travelled on other low cost airlines like Air Asia and Tiger Air, and they are generally reliable. When my first flight was delayed, I was kinda pissed off but brushed it off as one-off bad luck. The delay in return flight just 5 days later can only suggest operational issues with Jetstar. The only other time I've delays of 3+ hours was more 20years ago with a Quantas flight... i refused to fly with them after that too

I was unfortunate enough to be flying JetStar between Singapore to BKK recently.

My flight departing from SG was delayed by close to 4 hours. At the check-in counter or the in-flight announcements, no apology was offererd for such a unusually long delay. Well, guess what? My return fllight from BKK to Singapore 5 days later was delayed by close to 4 hours, arriving in Singapore just before 4 am in the morning. I only slept an hour before having to get up to go to work.

That will be the last time I'll travel by Jetstar. Has anybody experienced similiar kinds of delays with Jetstar?

Below article from Nation quotes Colliers as saying that (Sukhumvit) occupancies at end of last year was above 90% in Bangkok. What's your view on occupancies going forward? How low might it go?

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Bangkok facing glut of apartments

Published on June 25, 2009

Supply builds as ongoing recession begins dragging tenancies down

Thailand's residential-leasing market is suffering from oversupply following the downsizing or closure of local operations by multinational firms in the face of the economic downturn, says real-estate services firm Colliers International Thailand.

As a result, most property developers who are building apartments and serviced apartments have slowed their construction to delay the completion of their projects until next year, managing director Patima Jeerapaet said yesterday.

Arnuj Rittichaiseri, associate director of Colliers' Residential Department, said many expats had been asked to lower their accommodation costs, and this had placed downward pressure on the upscale market. However, more affordable apartments in the middle market could benefit in the short term.

Many multinational companies are downsizing or closing local operations, or are planning to do so, in both the manufacturing and services sectors. The key Japanese market could be particularly badly affected by these developments, with a strong impact on the core Sukhumvit apartment market, she said.

The increasing number of new serviced apartments coming on to a market already hit by economic conditions will increase competition in the Sukhumvit area.

In the first quarter, 1,496 new expats arrived in Bangkok. However, the number of new work permits is expected to decline this year, and apartment occupancy rates in the first quarter fell to 73.1 per cent, 17.07 per cent below the peak in 2005, according to the company's head of research and advisory, Risinee Sarikaputra.

Slowing demand has pushed the average rental rate for grade-A serviced apartments down 4 per cent, from Bt1,256 per square metre per month to Bt1,210.

Average rental for grade-B serviced apartments fell 2 per cent in the first quarter, from Bt898 per square metre to Bt881.

Throughout this year, average rental per square metre is expected to fall 10 per cent for grade-B serviced apartments and 15 per cent for grade A.

Arnuj said the Bangkok apartment market appeared to be faring reasonably well towards the end of last year but that the first signs of a downturn were becoming evident then.

Despite the prospect of mounting job losses, it is reassuring that the Bangkok apartment market remains buoyant despite the move by some expats to cheaper accommodation. The present world economy - especially the weakness of the pound and several other currencies - is having an impact on accommodation budgets, and the turnover of people moving to lower their rent is noticeable, she said.

However, overall occupancy of apartments is high, with an average of 90.89 per cent at the end of last year. Grade-A occupancy was then 90.89 per cent and grade B 90.88 per cent.

Contrary to what might be expected, landlords were generally not giving deep discounts at the end of last year, because they were not yet feeling the pinch; the number of people moving out had not risen significantly. The average rental rate in the Bangkok expat-apartment market was Bt349 per square metre per month. The average rate for grade-A apartments was Bt457 per square metre per month and for grade B, Bt303, Risinee said.

New-apartment supply grew 5.6 per cent per year between 2003 and last year, whereas growth in the supply of serviced apartments this year is expected to be 23.4 per cent, a very sharp increase which will make this year a particularly challenging one for the industry, she said.

Colliers said Bangkok's apartment market [as distinct from serviced apartments] now had a total supply of 10,643 units. Of these 3,536 units, or 33 per cent, were grade-A apartments, and the remaining 67 per cent, or 7,107 units, were grade B.

New apartments expected to be completed next year will add 1,166 units.

Agency research showed the occupancy rate of grade-A apartments in the Sukhumvit Road area stood at 91.42 per cent at the end of last year, while 91.25 per cent of grade-B apartments in the same area were occupied.

Rental of grade-A apartments in the Sukhumvit area averaged Bt442 per square metre per month. This price saw the area ranked third after the Lumpini area and the central business district, including Phloenchit, Rama IV and Wireless roads. Average grade-A apartment rentals in these areas were Bt509 and Bt469 per square metre per month, respectively.

Despite high occupancy at the end of last year, prospects for this year appear less bright as local units of multinational firms face possible downsizing or closure, with the high-end and Japanese markets expected to show the first signs of weakness, the research said.

The agency's research found Bangkok's serviced-apartment market offered 12,722 units in 89 buildings at the end of last year, up 15 per cent from 2007. Nearly half of the supply at the end of last year, or 6,345 units, was located in the Sukhumvit area. Of these, 1,729 units were grade-A serviced apartments and the rest grade B.

New supply of serviced apartments, reaching the market between the start of this year and 2011, is expected to total 5,923 units. Most of these - 3,401 units - will be added to the market this year, the research said.

The percentage of customers staying long term (more than one month) stood at about 47 per cent of total demand last year. The main source of demand (53 per cent) came from the short-stay tourist and business markets, renting on a daily or weekly basis.

Colliers pointed out serviced apartments were increasingly competing head to head with the hotel sector.

Occupancy rates last year fell in both grade-A and -B serviced apartments, to 78.38 per cent and 77.35 per cent, respectively.

The average rental rate remained stable for grade A last year, at Bt1,256 per square metre per month, while the average rate for grade-B serviced apartments rose slightly, to Bt898 per square metre per month.

The research said serviced apartments recorded a drop in both occupancy and average rental rates in the first half of the year as the world economy continued to decline.

Some forecasts envisage first-half tourist arrivals in Bangkok falling 20-30 per cent, especially leisure groups, it said.

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What's the going rate (bht/sq m) for condos in that project or area?