Thailands Real Estate May Drop 20% In 2007

[Gary A]

One can buy a home in beautiful Florida or Hawaii for less than in Krabi! With infrastructure! Garbage service, clean water, city planning, etc. The prices here are super inflated, pay a loy for little.

Florida ?? My friend has a beautiful home in Dade county Florida. He pays pretty dear for that infrastructure. His home insurance and taxes are $3,800 per year. No thanks.

[Heng]

Was going to say the same about property taxes. 100 properties in Thailand vs. 100 properties in the US.... the latter has the potential to put a serious hole in your pocket tax wise... it depends if you think if this is worth the upside of better infrastructure, etc..

Still, depending on one's situation, if you plan on having your children study abroad (whether it's kindergarten to 12th grade or undergrad + grad school), it might be convenient for you to maintain a few properties and a home or two 'back home.'

[johnnyk]

One can buy a home in beautiful Florida or Hawaii for less than in Krabi! With infrastructure! Garbage service, clean water, city planning, etc. The prices here are super inflated, pay a loy for little.

Florida ?? My friend has a beautiful home in Dade county Florida. He pays pretty dear for that infrastructure. His home insurance and taxes are $3,800 per year. No thanks.

Amen to that.

My house on west coast Canada costs per year:

$3600 property taxes

$2500 heat

$ 500 water

$2000 electricity

$8600 a year to put the key in the door (about US$7500/260K baht)

Good infrastructure though

Edited January 9, 2007 by johnnyk

[Kf6vci]

Since the perpetrators weren't caught, how can the PM exclude insurgents?!?

[Slingblade333]

Great thread and I just wanted to fuel the fire.

I’d have to say in all the years of coming to thaivisa, this is far and away the best thread I’ve read (any other memorable, informative you can think of, I’d love to know)

The is no intelligent way to factor risk versus reward in Thailand, not saying there is in the west but the quality of speculation is better.

I’d say it’s a good idea to take the word “investment’ out of this equation, at least as a financial idea.

I agree with what Kurt has to say, until the part of the blatant endorsement of Sunbelt Asia. I wonder who the share holders are, just kidding.

Still, you must remember where you are posting. Most people come to this sanctuary to translate eastern reality into understandable western truths.

I feel it only fair that everyone is given a fair chance to flame me. My investments are mostly based on the US Bond market, options and futures.

I would love to buy real estate here but there is no chance I will do this.

It is easier to rent at this time. Even if the market only drops 10%, the psychology for the buyer and seller will change more dramatically. There is a direct relationship between how much prices drop and the amount of psychological damage done, it will take quiet a bit of time for both parties to recover from this. There is a window of years for buyers to find great deals, in my opinion.

Of course every deal is speculative, depending on many factors.

As with any market, the biggest factor in whether you flourish or flounder depends mostly on you and your strategy and your ability to access your own situation and how it will work in the current and future market, this very complicated strategy can often depend on basic factors suck as guessing or just gut instinct but because you’ve spent more time in the west listening to your gut instinct, the chances are, it will work better for you there than here.

I spent years looking for ways to make money, I was always looking for something that would make me money but I was wrong minded. My questions were “I wonder if I can make money in real estate”, “I wonder if I can make money exporting”, “I wonder if I can make money in the tourist industry”.

What I’ve come to realize is that you can make money in anything, the difference is in the quality of the work you do, the knowledge of your business and it’s market and services, the network you develop, the trust you build with business partners and clients, these are some of the important things that make things work and you will often find in short supply in Thailand.

Don’t get me wrong, there are good and honest business people here. Sometimes you will get ripped off not because these people were doing anything devious or malicious. The chances are they are better at conducting business in this country than you as they know the culture, language, know how to read between the lines and decipher what is important and what is not. And having done this, they have a better chance of getting it right.

I only lament all of this because of the way farangs approach this country. It seems most people want the easy, lazy solution, me included, but it just doesn’t work.

I’ve watched too many friends do business here as a way to be surrounded by cute girls and live out their fantasy. For most it has been an exercise in frustration and a slow and often fast way to lose money.

I do know a few guys who have made a successful recipe of doing it this way but they are at the mercy of Thailand, its whimsical government and a controlling Thai girlfriend. Little did they know that their success was going to feed a Thai family! Not all bad if this is what you set out to do:)

The chances are; the west is a better place for investment, for you.

Unless you have a lot of money (a different scale and set of problems).

Just as the odds are against you, they are more in your favor where you come from (not the same as favorable). Leave your retirement at home and invest in a system you’re familiar with.

I feel a disclaimer is in order and I feel all the clichés apply. Thailand is a great place and it can remain that way based on your ability to navigate it, with all the “Western Wisdom’ you can muster.

Hope I’m not too much off topic.

[RedQualia]

Great thread and I just wanted to fuel the fire.

I'd have to say in all the years of coming to thaivisa, this is far and away the best thread I've read (any other memorable, informative you can think of, I'd love to know)

The is no intelligent way to factor risk versus reward in Thailand, not saying there is in the west but the quality of speculation is better.

I'd say it's a good idea to take the word "investment' out of this equation, at least as a financial idea.

I agree with what Kurt has to say, until the part of the blatant endorsement of Sunbelt Asia. I wonder who the share holders are, just kidding.

Still, you must remember where you are posting. Most people come to this sanctuary to translate eastern reality into understandable western truths.

I feel it only fair that everyone is given a fair chance to flame me. My investments are mostly based on the US Bond market, options and futures.

I would love to buy real estate here but there is no chance I will do this.

It is easier to rent at this time. Even if the market only drops 10%, the psychology for the buyer and seller will change more dramatically. There is a direct relationship between how much prices drop and the amount of psychological damage done, it will take quiet a bit of time for both parties to recover from this. There is a window of years for buyers to find great deals, in my opinion.

Of course every deal is speculative, depending on many factors.

As with any market, the biggest factor in whether you flourish or flounder depends mostly on you and your strategy and your ability to access your own situation and how it will work in the current and future market, this very complicated strategy can often depend on basic factors suck as guessing or just gut instinct but because you've spent more time in the west listening to your gut instinct, the chances are, it will work better for you there than here.

I spent years looking for ways to make money, I was always looking for something that would make me money but I was wrong minded. My questions were "I wonder if I can make money in real estate", "I wonder if I can make money exporting", "I wonder if I can make money in the tourist industry".

What I've come to realize is that you can make money in anything, the difference is in the quality of the work you do, the knowledge of your business and it's market and services, the network you develop, the trust you build with business partners and clients, these are some of the important things that make things work and you will often find in short supply in Thailand.

Don't get me wrong, there are good and honest business people here. Sometimes you will get ripped off not because these people were doing anything devious or malicious. The chances are they are better at conducting business in this country than you as they know the culture, language, know how to read between the lines and decipher what is important and what is not. And having done this, they have a better chance of getting it right.

I only lament all of this because of the way farangs approach this country. It seems most people want the easy, lazy solution, me included, but it just doesn't work.

I've watched too many friends do business here as a way to be surrounded by cute girls and live out their fantasy. For most it has been an exercise in frustration and a slow and often fast way to lose money.

I do know a few guys who have made a successful recipe of doing it this way but they are at the mercy of Thailand, its whimsical government and a controlling Thai girlfriend. Little did they know that their success was going to feed a Thai family! Not all bad if this is what you set out to do:)

The chances are; the west is a better place for investment, for you.

Unless you have a lot of money (a different scale and set of problems).

Just as the odds are against you, they are more in your favor where you come from (not the same as favorable). Leave your retirement at home and invest in a system you're familiar with.

I feel a disclaimer is in order and I feel all the clichés apply. Thailand is a great place and it can remain that way based on your ability to navigate it, with all the "Western Wisdom' you can muster.

Hope I'm not too much off topic.

Can't say that I can endorse investment in the USA at the present time. It's late, and I've no time to for finessing the reply. The essential problem is that

- the PNAC'ers have created much too much debt in the USA;

- the savings rate for individuals in the USA is actually negative at this point;

- there is an increasing recognition of and even call for devaluation of the dollar and how to deal with it (http://yaleglobal.yale.edu/display.article?id=7610, http://yaleglobal.yale.edu/display.article?id=5237);

- googling for "collapse of the dollar" results in 1.2 million web hits (today), and 1,700+ news hits (today);

- the majority of US economists now state that a big hit on the dollar/USA economy is long overdue;

- the dollar is purely "funny money," depending on foreign banks to determine its value;

- there is substantial pressure to trade oil in Euros;

- if oil is traded in Euros, central banks need fewer dollars;

- dollars have begun to be sold off.

A quick trip back in history: Germany was badly in debt as a result of the Versaille Treaty after WW I. No way they could pay it. Except that the German government figured out a way: they could devalue the Deutsche Mark. And so they did. It went from 4-5 DM per dollar, to a thousand DM per dollar, to 100,000 DM per dollar, to a million DM per dollar. I'm not going to pull out a book just now, but I believe it even went to more than a billion DM per dollar. Whereupon Germany and the industrialists paid the bill. In the process, the life savings of all of the German workers got whacked.

Makes one wonder about the value of a lifetime of large contributions to 401K funds, doesn't it?

I still have a couple of 401Ks in the USA. And I have a standard pension, and "good old" Social Security, of course. Not sure how much these will be worth if the exchange rate should hit, say, $10 per baht.

And so I also have a house in Thailand, and am building a second house there as well (30/30 leases). I paid cash for these houses, and the first one remains rented. I've money in a Thai bank, and add to it every chance I get. Is it safe? Who the hel_l knows? I can hope and pray. In the meantime, I've at least tried to diversify outside the USA. If the dollar does, in fact, tank, the baht I have and get should be worth something, hopefully.

Hey -- I just want to be able to eat the =good= cat food when I'm old.

Not sure what would show up if you googled www.google.co.th for "collapse of the dollar." Try www.google.com.

[Bruce1]

The euro or the Aussie $ look better bets than the US$ at this time, to my uneducated eye.

The euro because the place is simply so rich and is expanding into more countries.

The Aussie $ because whatever region of the world is going well will always need natural resources and Australia has a two century history of picking the winners and jumping on their coattails.

[accesscitrix]

You only get a 1 year guarantee on newly built properties in Thailand so good luck if anything happens to it. A lot of Thailand especially just outside of bangkok used to be marsh land and is prone to movement, some friends bought a house there 2 years ago and already cracks are showing on the property and the ground around it has moved out about 1 inch. It will be your responsibility for any property repairs after 1 year, whereas here in the UK a new property gets 10 years insurance against defects and structure. Also we have insurance for building structure and contents damage, good luck getting anything like that in Thailand or actually getting them to Pay out! if anything goes wrong. You will also not know who you will be living next to, a lot of Thai's enjoy drinking and stayin up late at night, so don't be surprised if you get disturbed by loud music in the early hours of the morning, again good luck trying to get this sorted out as no one will take responsibility for noise polution in thailand so you'll be on your own there to sort any problems out with neighbours. If you want to buy a property in Thailand in a nice location away from Thai people who generally do not keep their properties clean and tidy in the 3-5 million baht bracket, i'd say you need at least 10 million baht to spend on a decent property.

Edited January 9, 2007 by accesscitrix

[RedQualia]

You only get a 1 year guarantee on newly built properties in Thailand so good luck if anything happens to it. A lot of Thailand especially just outside of bangkok used to be marsh land and is prone to movement, some friends bought a house there 2 years ago and already cracks are showing on the property and the ground around it has moved out about 1 inch. It will be your responsibility for any property repairs after 1 year, whereas here in the UK a new property gets 10 years insurance against defects and structure. Also we have insurance for building structure and contents damage, good luck getting anything like that in Thailand or actually getting them to Pay out! if anything goes wrong. You will also not know who you will be living next to, a lot of Thai's enjoy drinking and stayin up late at night, so don't be surprised if you get disturbed by loud music in the early hours of the morning, again good luck trying to get this sorted out as no one will take responsibility for noise polution in thailand so you'll be on your own there to sort any problems out with neighbours. If you want to buy a property in Thailand in a nice location away from Thai people who generally do not keep their properties clean and tidy in the 3-5 million baht bracket, i'd say you need at least 10 million baht to spend on a decent property.

Think the thread is about dead, but a quick follow up.

First, you're lucky to get a 10 year warranty on a house in the UK. No such luck in the USA. The warranty on my house in California is no better than what was offered on houses in Thailand.

Secondly, there are clearly places to buy in Thailand, and places not to buy. I'm not a big fan of buying on the coast. Too many tourists, too close to bad weather, too close to sealevel quite often (I'm a believer in global warming). Too, much of Bangkok is only 15 feet above sealevel, and I've read reports that it loses elevation each year. Sounds like trouble to me. Besides, Bangkok is an ok place to visit now and again, but I choke at the idea of actually living there. Better, in my opinion, is the north. Chiang Mai, Chiang Rai, Kohn Kaen, maybe Udon, and perhaps a few other cities I've not been to. The countryside is also quite appealing to me.

Lastly, I suspect you're being overly harsh in your judgment of Thai people. Clearly, there are neighborhoods in which it is ok to live, and other neighborhoods best avoided. Same goes for Los Angeles, San Francisco, London, and countless other cities.

My experience is that Thai people =do= take care of their property when they've got as little as a million baht tied up in it. It also helps if the neighborhood in question is relatively new, and if there is a general feeling of "pride of ownership" in the community. Many of the Thai houses in the neighborhoods where my houses are located are frankly beautiful, with landscaping that's nothing short of dazzling.

My renters-from North America-have also turned out to be quite good. Seem like very good people indeed. But I suspect that when it comes to listening to music, drinking, etc., the neighboring Thais might actually be quieter.

All of which is to say that Thailand is probably little different from anywhere else in the world. Some folks are great, and others are less so. Some folks are cheats, and others will do their very best to give you an honest shake. There are criminals and theives in Thailand, just as there are in LA, SF, and London. The majority of Thai people are, however, just like the majority of farang. They put their pants on one leg at a time, go to a job they either love or can't stand, may or may not love their spouses, and try to raise their children as best they can.

It doesn't take 10 million baht to have a decent house in Thailand, except, perhaps, in Bangkok, Pattaya, Koh Samui, or Phuket. Just takes a bit of common sense in chosing city, neighborhood, neighbors and builders.

[gmac]

If we would have listed it for the approx. 375000 Baht we have into it right now (300 000 Baht plus transfer fees, building the wall, fence, renovations, etc.),...

1. we wouldn't even get any bites, because most foreigners would think it's a dump...

let's be reasonable Kurt. i am sure you are talking about a house for your dog(s) and not a house in which people would like to live.

See, that is exactly the point I am trying to make. List it too cheap and people will think it's garbage.

Kurt

Upcountry I imagine it cost only around 50,000-100,000 Baht to build so even 300,000 is a high price.

Most houses even in resort areas are built for between 750,000 and 2,500,000 Baht. There is a huge element of profiteering going on encouraged by speculators and fueled by purchasers with deep pockets who have no knowledge of the building costs in this country.

This is a Band-wagon that has been jumped on by the numerous foreign owned Estate Agencies in pursuit of quick buck and a fall in prices, no matter what the reason, cannot come too soon.

[Slingblade333]

Can't say that I can endorse investment in the USA at the present time. It's late, and I've no time to for finessing the reply. The essential problem is that

- the PNAC'ers have created much too much debt in the USA;

- the savings rate for individuals in the USA is actually negative at this point;

- there is an increasing recognition of and even call for devaluation of the dollar and how to deal with it (http://yaleglobal.yale.edu/display.article?id=7610, http://yaleglobal.yale.edu/display.article?id=5237);

- googling for "collapse of the dollar" results in 1.2 million web hits (today), and 1,700+ news hits (today);

- the majority of US economists now state that a big hit on the dollar/USA economy is long overdue;

- the dollar is purely "funny money," depending on foreign banks to determine its value;

- there is substantial pressure to trade oil in Euros;

- if oil is traded in Euros, central banks need fewer dollars;

- dollars have begun to be sold off.

A quick trip back in history: Germany was badly in debt as a result of the Versaille Treaty after WW I. No way they could pay it. Except that the German government figured out a way: they could devalue the Deutsche Mark. And so they did. It went from 4-5 DM per dollar, to a thousand DM per dollar, to 100,000 DM per dollar, to a million DM per dollar. I'm not going to pull out a book just now, but I believe it even went to more than a billion DM per dollar. Whereupon Germany and the industrialists paid the bill. In the process, the life savings of all of the German workers got whacked.

Makes one wonder about the value of a lifetime of large contributions to 401K funds, doesn't it?

I still have a couple of 401Ks in the USA. And I have a standard pension, and "good old" Social Security, of course. Not sure how much these will be worth if the exchange rate should hit, say, $10 per baht.

And so I also have a house in Thailand, and am building a second house there as well (30/30 leases). I paid cash for these houses, and the first one remains rented. I've money in a Thai bank, and add to it every chance I get. Is it safe? Who the hel_l knows? I can hope and pray. In the meantime, I've at least tried to diversify outside the USA. If the dollar does, in fact, tank, the baht I have and get should be worth something, hopefully.

Hey -- I just want to be able to eat the =good= cat food when I'm old.

Not sure what would show up if you googled www.google.co.th for "collapse of the dollar." Try www.google.com.

I agree with everything you say. My point is, you have a better chance to do well in an enviroment/market you have more experience with. Most farangs here have spent most of their life in the west. I suppose I didn't clarify my position. I never mentioned I am currently positioned on the short side of US investment. Some of my reasoning is based on what you are saying. I feel quiet comfortable with this position based on my knowledge of the US market.

The US defecit will have to be balanced to some degree, the dollar will have to fall, exports will increase, real estate will keep going sideways and probably down, inflation will have to remain in check, gas prices will probably fall (not entirely convinced as it's a little more outside the control of direct US market) and the federal goverment will do their version of what they think it the best for controlling interest rates. Of course, these are all just my opinions and are what I place my speculative (bets) on.

Capital will keep flowing away from the dollar, only a fool would think otherwise. I don't think any of this is disaster, I think it will be a slow contracted slide based on economic conditions.

It is wise to remember that the US bond is still one of the major foundations of valuations for the worlds economies. It will take more than the US national dept and an expensive war to change this but neither are doing the US any favors. I believe this will change in time and I've no doubt the Renmbi and Euro will share and possibly surpass this distinction.

I actually believe in Thailand, I think all the typical things, its a great place, great weather, people are great etc (needless to mention that there is no shortage of A**holes but isn't that everywhere).

What I like most is the "real" sense of freedom you can get here (Asia in general). What I mean is, you have a better feeling of personal liberty, there is less people and goverment telling you what to smoke, what to wear, eat etc. The laws are stacked against us here but there is much more room to move if your are dexterous and patient, and spend the time figuring how things "really" work.

I am hoping that real estate keeps dropping here and only because it will give me time to learn the innuendoes, risks and rewards of buying here. I'd like to think 2 or 3 years from now, I'll be ready to buy.

I'm eating the good cat food now, in case I can't afford or enjoy it when I'm old!

[BlackJack]

all i can say is diversify

or dont put your eggs all in one basket

[RedQualia]

Can't say that I can endorse investment in the USA at the present time. It's late, and I've no time to for finessing the reply. The essential problem is that

. . .

I agree with everything you say. My point is, you have a better chance to do well in an enviroment/market you have more experience with. Most farangs here have spent most of their life in the west. I suppose I didn't clarify my position. I never mentioned I am currently positioned on the short side of US investment. Some of my reasoning is based on what you are saying. I feel quiet comfortable with this position based on my knowledge of the US market.

The US defecit will have to be balanced to some degree, the dollar will have to fall, exports will increase, real estate will keep going sideways and probably down, inflation will have to remain in check, gas prices will probably fall (not entirely convinced as it's a little more outside the control of direct US market) and the federal goverment will do their version of what they think it the best for controlling interest rates. Of course, these are all just my opinions and are what I place my speculative (bets) on.

. . .

At work now, and heading out on vacation for a few weeks this evening. So I've no time for a proper reply.

I did want to suggest that anyone/everyone considering the baskets in which to put their eggs read all of the essay to be found at http://www.smirkingchimp.com/node/4574. Lots and lots of doomsday economic talk therein, concerning the US of A. But with lots of quotes and references to NY Times, Morgan Stanley, et al. Also breif mention of the flight of capital out of the USA and into Asia and Europe.

Sorry, Slingblade, but I want to invest in something better than US bonds (or US anything), and almost anything seems to fit in that category for the next few years.

[Slingblade333]

Can't say that I can endorse investment in the USA at the present time. It's late, and I've no time to for finessing the reply. The essential problem is that

. . .

I agree with everything you say. My point is, you have a better chance to do well in an enviroment/market you have more experience with. Most farangs here have spent most of their life in the west. I suppose I didn't clarify my position. I never mentioned I am currently positioned on the short side of US investment. Some of my reasoning is based on what you are saying. I feel quiet comfortable with this position based on my knowledge of the US market.

The US defecit will have to be balanced to some degree, the dollar will have to fall, exports will increase, real estate will keep going sideways and probably down, inflation will have to remain in check, gas prices will probably fall (not entirely convinced as it's a little more outside the control of direct US market) and the federal goverment will do their version of what they think it the best for controlling interest rates. Of course, these are all just my opinions and are what I place my speculative (bets) on.

. . .

At work now, and heading out on vacation for a few weeks this evening. So I've no time for a proper reply.

I did want to suggest that anyone/everyone considering the baskets in which to put their eggs read all of the essay to be found at http://www.smirkingchimp.com/node/4574. Lots and lots of doomsday economic talk therein, concerning the US of A. But with lots of quotes and references to NY Times, Morgan Stanley, et al. Also breif mention of the flight of capital out of the USA and into Asia and Europe.

Sorry, Slingblade, but I want to invest in something better than US bonds (or US anything), and almost anything seems to fit in that category for the next few years.

I was going to mention numbers but I feel it will be construed as a boast. I have done well, very well in the bond market in the last 12 years, using options and putts, both long and short depending on bull or bear indicators. I should make the distinction that I am not so much investing, I suppose my pattern is closer to trader.

Would I recommend the US bond market as an investment, at this time, I'd have to say, no.

Once again, I am only advocating this market because i am familar with it. I am still speculating and I don't always get it right but the risk factors versus the leverage of options and putts has worked very well. I don't think you could find such a good ratio in any other market in the world, bonds, commodities or stocks. I'm not american, I am only partial to this market as an investment instrument, it works very well for my strategy.

Forgive me for steering off course, I've rambled a long way from the original posting. Any further comments I will reply individually.

[makavelithedon]

there are hundreds of farang run real estate sites, many of which advertise on TV who list absurdly inflated prices. Someone should do something about these con artists.

Yeh, problem is Sean the amount of tourists who come once or twice and reach for their wallets is endless so they'll pay the stupid inflated prices and self perpetuate the problem. A lot of the comments here from long served members who offer sound advice and experiences I listen too for sure, but much of it I feel is only relevant to Bangkok.

In coastal provinces the madness appears to be continuing and what do you do if you want a nice condo and you see the prices 3 years ago at 2 million now at 4 and in 2 years they maybe at 6????

Edited January 19, 2007 by makavelithedon

[Nawtilus]

Upcountry I imagine it cost only around 50,000-100,000 Baht to build so even 300,000 is a high price.

Most houses even in resort areas are built for between 750,000 and 2,500,000 Baht. There is a huge element of profiteering going on encouraged by speculators and fueled by purchasers with deep pockets who have no knowledge of the building costs in this country.

This is a Band-wagon that has been jumped on by the numerous foreign owned Estate Agencies in pursuit of quick buck and a fall in prices, no matter what the reason, cannot come too soon.

I think you are the one with no knowledge on building costs.

[Bruce1]

Yes, why would you spend more than 2.5 million baht or so on a new house when you can buy an existing one, probably larger, for similar or less money?