Chinese continue to soak up Thailand’s condo glut

[Bang Bang]

2 hours ago, Rod the Sod said:

Hi Bang Bang, let's use your unlikely 7% scenario (which you probably wont get in truth, and is that before or after tax?) and compare to my real live experience in BKK. Let's take a 5 year investment timeline and assume we both have £200k.

 

For you, without counting inflation over 5 years you will pay TB1.2million in rent which is around £28.5k at today's rate. You do however get this 7% growth and without deducting the rent each year to make it easy you get £14k per year over 5 years = £70k. Your net position at the end of 5 years is £241.5k. Well done....

 

I converted my £200k in TB and bought a condo when the rate was around 50 to £1. I therefore spent all my £200k on my condo which cost TB10.5m and is the same size as yours, 200m from Nana BTS in a quiet Soi with one old pub 175m away (so no noise at all at home from the outside world). I have to pay £1k per annum for Management Fees which you do not, so we will deduct £5k at the end. I sell in May 2019 at a current SqMtr price for less attractive units in less attractive areas of Lower Suk and get TB12.825mio (so in truth may get another £1m). I now repatriate this in sterling at todays rate and send home £305,400. Let's not forget the $5k so for sake of ease let's call it £300k. I have no tax to pay on any gain.

 

I outdid you by £58.5k or even a lot more if you pay tax. That should buy me a new Range Rover Evoke or some other nice fat car, thank you very much.

 

Slightly more respectfully, it worked for me, and you are dead right that your calculation doesn't allow for appreciation/FX etc and there are associated risks when assessing property as an investment. I agree that there is risk in both property price, attractiveness in the market and FX. If you have only one chance to buy I probably, almost certainly wouldn't take these risks. If you invest in property and have a balanced portfolio, you simply would be mad not to consider this type of investment, offsetting the risk against "safer" property investments elsewhere.

 

Problem here is that too many people with little or no experience state most categorically that you would be mad to invest in Thailand, which only exposes their own lack of knowledge in property investment (not aimed at you BB and I respect your choice).

 

I just want to give another view. Different decisions depending if this is your "Forever Home" or "Only Property Investment", or part of an investment strategy/portfolio.

 

RtS

You're calculating wrong. Let's both start with 10mil b. in whatever currency but let's do the numbers in b.

Me after 5 years of 10mil b. in an index performing according to the historical average: 10mil b x 1.07^5 (yes, 7% is compounded) = 14.025mil.

That's plus 4.025 mil.

Minus rent of 20k x 60 = 1.2mil.

My net > 2.8mil.

 

Your condo of 10.5mil sold for 12.825mil after 5 years, netting you 2.325 mil. (assuming you paid zero rent/condo fees for 5 years which is unlikely).

 

So I am ahead by approx. 500k b. even according to your numbers.

 

Good for you that Fx rate changes boosted your profit significantly. But it's stupid to put them into an equation. They are even more unpredictable in the long term than condo prices.

 

Bottom line I would still rent here.

 

I did buy a condo in the US because

(a) rents are high there compared to owning (e.g, the place I used to rent for $550/mth would have been worth about $70k, which implies 10% of value to rent vs. typically 4% here).

(b) mortgage tax benefit which is significant in the US and does not exist here.

[nausea]

It will end in tears, as property gluts always do.

[WinnieTheKhwai]

On 5/3/2019 at 12:30 PM, zydeco said:

Just think, Chinese living above you, below you, and beside you. And you are stuck there because you own it.

Could be worse, could be n.. Africans.  But thank you saying what so few others dare to say, that condominium ownership should be restricted to white people.

 

 

[Destiny1990]

10 hours ago, Rod the Sod said:

Hi Bang Bang, let's use your unlikely 7% scenario (which you probably wont get in truth, and is that before or after tax?) and compare to my real live experience in BKK. Let's take a 5 year investment timeline and assume we both have £200k.

 

For you, without counting inflation over 5 years you will pay TB1.2million in rent which is around £28.5k at today's rate. You do however get this 7% growth and without deducting the rent each year to make it easy you get £14k per year over 5 years = £70k. Your net position at the end of 5 years is £241.5k. Well done....

 

I converted my £200k in TB and bought a condo when the rate was around 50 to £1. I therefore spent all my £200k on my condo which cost TB10.5m and is the same size as yours, 200m from Nana BTS in a quiet Soi with one old pub 175m away (so no noise at all at home from the outside world). I have to pay £1k per annum for Management Fees which you do not, so we will deduct £5k at the end. I sell in May 2019 at a current SqMtr price for less attractive units in less attractive areas of Lower Suk and get TB12.825mio (so in truth may get another £1m). I now repatriate this in sterling at todays rate and send home £305,400. Let's not forget the $5k so for sake of ease let's call it £300k. I have no tax to pay on any gain.

 

I outdid you by £58.5k or even a lot more if you pay tax. That should buy me a new Range Rover Evoke or some other nice fat car, thank you very much.

 

Slightly more respectfully, it worked for me, and you are dead right that your calculation doesn't allow for appreciation/FX etc and there are associated risks when assessing property as an investment. I agree that there is risk in both property price, attractiveness in the market and FX. If you have only one chance to buy I probably, almost certainly wouldn't take these risks. If you invest in property and have a balanced portfolio, you simply would be mad not to consider this type of investment, offsetting the risk against "safer" property investments elsewhere.

 

Problem here is that too many people with little or no experience state most categorically that you would be mad to invest in Thailand, which only exposes their own lack of knowledge in property investment (not aimed at you BB and I respect your choice).

 

I just want to give another view. Different decisions depending if this is your "Forever Home" or "Only Property Investment", or part of an investment strategy/portfolio.

 

RtS

In 5 years time u will sell ur 10 M Baht condo to whom? That part i don’t understand.

[madmen]

12 hours ago, wreckingcountry said:

And many of these Chinese owners have no legal visa status in Thailand! Just tourist ! Many don’t have Thai bank accounts ! Many are scammers who cheat anyone stupid to rent from them ! Remember many of these Chinese are always searching various ways to get around Chinese Gov Exchange controls so they can buy in Thailand! And Thailand doesn’t give a rats ass about where the money comes from when all this yuan changed into Baht buys up the Condos no one else wants to, or don’t have the money to buy

 

 

Sent from my iPhone using Thaivisa Connect

 

 

"Many don’t have Thai bank accounts"  How do you buy a condo without a bank account?

[Prairieboy]

The same thing happened and is happening in Vancouver, Canada.  Laundering ill gotten money by paying premium prices for real estate!  Prices have been driven so high that the average working couple cannot ever hope to own a home. 

[tominbkk]

Great weather?

[Peterw42]

Why is it that Chinese buy a condo it must be money laundering, why isnt everyone else considered to be laundering money.

 

I love all the obvious contradictions these threads bring up. 

All Chinese are on package tours but they are all independently staying in airBnB rentals.

They dont spend any money but are bringing suitcases full of illegal money.

 

Money laundering is usually hiding or converting money with no paper trail. Buying a condo in Thailand is the exact opposite, you declare the foreign funds when you send it, into a bank account in your name, prove to the Thai government the funds came from outside Thailand, end up with your name on a title deed.

[Rod the Sod]

1 hour ago, Destiny1990 said:

In 5 years time u will sell ur 10 M Baht condo to whom? That part i don’t understand.

Well, I wont as it happens because this is my BKK home and when I push up the daisies my wife will enjoy it. She could rent it out as it is in a location that will rent out immediately, and then she can supplement her income.

 

Win:Win

 

Now that has to be better than the lost money that is "renting".

[Rod the Sod]

9 hours ago, Bang Bang said:

You're calculating wrong. Let's both start with 10mil b. in whatever currency but let's do the numbers in b.

Me after 5 years of 10mil b. in an index performing according to the historical average: 10mil b x 1.07^5 (yes, 7% is compounded) = 14.025mil.

That's plus 4.025 mil.

Minus rent of 20k x 60 = 1.2mil.

My net > 2.8mil.

 

Your condo of 10.5mil sold for 12.825mil after 5 years, netting you 2.325 mil. (assuming you paid zero rent/condo fees for 5 years which is unlikely).

 

So I am ahead by approx. 500k b. even according to your numbers.

 

Good for you that Fx rate changes boosted your profit significantly. But it's stupid to put them into an equation. They are even more unpredictable in the long term than condo prices.

 

Bottom line I would still rent here.

 

I did buy a condo in the US because

(a) rents are high there compared to owning (e.g, the place I used to rent for $550/mth would have been worth about $70k, which implies 10% of value to rent vs. typically 4% here).

(b) mortgage tax benefit which is significant in the US and does not exist here.

So your argument is that I am right, but it isn't fair because the balance in my favour was because of FX. Yup - spot on and that is all part of an investment strategy. Some you win, some you lose.

 

I think you forgot the tax calculation (assuming you are honest and declare it all). I included it in my calculation, as I did the management fees.

 

Don't get me wrong. I am not disagreeing with you. I am just illustrating the other side of the coin that supports, for some, buying is a good way to go.

 

p.s. As I do not need to repatriate the money, if TB lost value significantly, I would keep in in TB for now.

 

 

[candide]

45 minutes ago, Peterw42 said:

Why is it that Chinese buy a condo it must be money laundering, why isnt everyone else considered to be laundering money.

 

I love all the obvious contradictions these threads bring up. 

All Chinese are on package tours but they are all independently staying in airBnB rentals.

They dont spend any money but are bringing suitcases full of illegal money.

 

Money laundering is usually hiding or converting money with no paper trail. Buying a condo in Thailand is the exact opposite, you declare the foreign funds when you send it, into a bank account in your name, prove to the Thai government the funds came from outside Thailand, end up with your name on a title deed.

I don't know how they do it here. In my country, they show fake certificates from the Chinese administration stating that they have inherited a large sum of money, in order to prove the origin of the money. They just bribe someone from a local Chinese administration to write the certificate.

[kinyara]

In my own scenario I won’t even have to go through the cost inducing repatriation of cash when I sell my condo. I will use that money to fund my later years, effectively brought over at 70 baht to the pound rather than having to bring over cash at the current historically low rate of 40’s.

 

Unless your earning your income locally I can’t really understand the logic of people who rule out currency gains/losses as somehow invalid in any investment, property or otherwise. As it’s proving to be for many expats here at the moment currency exposure and how you protect yourself against is one of the most important financial considerations when relocating abroad.

[thaitero]

4 hours ago, madmen said:

"Many don’t have Thai bank accounts"  How do you buy a condo without a bank account?

Off plan condo and send monthly installment payments to developer from outside of Thailand is one option to buy without thai account..

 

[madmen]

26 minutes ago, thaitero said:

Off plan condo and send monthly installment payments to developer from outside of Thailand is one option to buy without thai account..

 

According to this thread you must transfer to a thai bank for proof the money came from OS . You wont have that proof with direct to developer. There will be problems when you sell and try to take money back to china as the bank check will need to be cashed into a thai bank account plus proof it was sent from OS pre purchase

 

 

[utalkin2me]

Good thread, I appreciate all replies.

 

I believe though the reason there is such a big difference of opinions, you can see it right in the thread actually, is people are comparing condos in places like Pattaya with condos in coveted areas in Bangkok. There is such a huge difference in the dynamic there. Personally, I can see a lot of things going south much faster in a Pattaya building than a well located building in Bangkok. 

[Sticky Wicket]

3 minutes ago, utalkin2me said:

Good thread, I appreciate all replies.

 

I believe though the reason there is such a big difference of opinions, you can see it right in the thread actually, is people are comparing condos in places like Pattaya with condos in coveted areas in Bangkok. There is such a huge difference in the dynamic there. Personally, I can see a lot of things going south much faster in a Pattaya building than a well located building in Bangkok. 

Yeh it's like comparing Chelsea with Grimsby

[ThomasThBKK]

3 hours ago, Rod the Sod said:

So your argument is that I am right, but it isn't fair because the balance in my favour was because of FX. Yup - spot on and that is all part of an investment strategy. Some you win, some you lose.

 

I think you forgot the tax calculation (assuming you are honest and declare it all). I included it in my calculation, as I did the management fees.

 

Don't get me wrong. I am not disagreeing with you. I am just illustrating the other side of the coin that supports, for some, buying is a good way to go.

 

p.s. As I do not need to repatriate the money, if TB lost value significantly, I would keep in in TB for now.

 

 

 

 

Why would he pay taxes if he makes his money outside of Thailand? 

 

S&P500 is up 39%  the last 5 years and he's always liquid, he can exit his investment within a minute and move money around as he pleases.

 

Liquidity and stability is far more important than you make it sound ????

[madmen]

9 minutes ago, ThomasThBKK said:

 

 

Why would he pay taxes if he makes his money outside of Thailand? 

 

S&P500 is up 39%  the last 5 years and he's always liquid, he can exit his investment within a minute and move money around as he pleases.

 

Liquidity and stability is far more important than you make it sound ????

Not always liquid your forgetting 2008 when markets imploded at such a rate that they were outside of stop loss parameters . Millions of investors were completely wiped out. Interestingly the USA real estate sector was totally trashed (sub prime) and many parts of the country have never recovered even today. I remember reading posts prior to 2008 saying invest in US RE and NEVER buy in Thailand. Pretty funny actually because thai RE was completely unaffected.  

[Peterw42]

54 minutes ago, madmen said:

According to this thread you must transfer to a thai bank for proof the money came from OS . You wont have that proof with direct to developer. There will be problems when you sell and try to take money back to china as the bank check will need to be cashed into a thai bank account plus proof it was sent from OS pre purchase

 

 

Developers have the ability to generate the FET from their account. The land office wants an FET that shows buyer as either the receiver or the sender of the foreign funds.

[madmen]

8 minutes ago, Peterw42 said:

Developers have the ability to generate the FET from their account. The land office wants an FET that shows buyer as either the receiver or the sender of the foreign funds.

But china will still need a Thai bank when he sells. Its going to be via bank cheque from a thai bank .

[Peterw42]

1 minute ago, madmen said:

But china will still need a Thai bank when he sells. Its going to be via bank cheque from a thai bank . Nobody is going to transfer 10-20 million baht from their private account to somewhere in China. 

Couldn't you just bank the cheque into an account in China ? 

Bank Cheque is usually the preferred option but people do cash and bank transfers.

At the end of the day they could just open a Thai account when they sell and bank the cheque. So long as you have sale documentation from the land office, original FET etc, you can export the money.

[baansgr]

The Baht is already sliding and when the same happens to Renmibi as did with Ruble properties in BKK wont be worth tuppence, id feel safer investing in bitcoin rather than BKK condos...

[ThomasThBKK]

43 minutes ago, madmen said:

Not always liquid your forgetting 2008 when markets imploded at such a rate that they were outside of stop loss parameters . Millions of investors were completely wiped out. Interestingly the USA real estate sector was totally trashed (sub prime) and many parts of the country have never recovered even today. I remember reading posts prior to 2008 saying invest in US RE and NEVER buy in Thailand. Pretty funny actually because thai RE was completely unaffected.  

 

Let's not forget the Asia financial crisis that wiped out Thailand or the Japanse housing crisis, which till today never recovered.

 

But i agree, Thai RE is not necessarily a bad investment, diversification is key to any investment in bad times- i would include, gold, cash, bitcoin, re, stocks,bonds in a healthy portfolio. RE is all about location, location, location - there's only 2 good types of locations, one is Beach or otherwise stunning nature locations that are rare and limited and the other ones is decent locations in metropolitan areas. Non of these 2 locations will ever be "worthless" imo and longterm they are most likely good investments.

[Bang Bang]

45 minutes ago, ThomasThBKK said:

S&P500 is up 39%  the last 5 years and he's always liquid, he can exit his investment within a minute and move money around as he pleases.

 

Liquidity and stability is far more important than you make it sound

 

36 minutes ago, madmen said:

Not always liquid your forgetting 2008 when markets imploded at such a rate that they were outside of stop loss parameters . Millions of investors were completely wiped out.

 

Thomas is exactly right. In fact, the chart I'm looking at indicates 55% gain over the last 5 years for the S&P.

 

Madmen: 2008 subprime crash? 2002 internet bubble burst? I am talking long-term. If you held your money through the crashes, the market always came roaring back. And more. As said before long term the market gets you 7% compounded per annum. Heck, I've become an HNWI from never having been a top earner but on the back of saving assiduously into an index.

 

And, as Thomas says, you can cash out of the market (and go buy a condo) in a day. You tell me a condo investment in Thailand that (a) has guaranteed appreciation of that order and (b) is so desirable it can be sold in short order.

[Peterw42]

15 minutes ago, Bang Bang said:

 

 

Thomas is exactly right. In fact, the chart I'm looking at indicates 55% gain over the last 5 years for the S&P.

 

Madmen: 2008 subprime crash? 2002 internet bubble burst? I am talking long-term. If you held your money through the crashes, the market always came roaring back. And more. As said before long term the market gets you 7% compounded per annum. Heck, I've become an HNWI from never having been a top earner but on the back of saving assiduously into an index.

 

And, as Thomas says, you can cash out of the market (and go buy a condo) in a day. You tell me a condo investment in Thailand that (a) has guaranteed appreciation of that order and (b) is so desirable it can be sold in short order.

Thats all capitial gain that you can only realise by selling, what has been the corresponding yield from dividends over that same period ? In the right realestate market you are getting a yield (rental return) that goes up with the inflation.

I have a couple of properties that give me 8% yield, in a couple of years it will be a 10% yield, thats money to live off without ever needing to sell.

[ThaiBunny]

2 minutes ago, Peterw42 said:

Thats all capitial gain that you can only realise by selling, what has been the corresponding yield from dividends over that same period ? In the right realestate market you are getting a yield (rental return) that goes up with the inflation.

I have a couple of properties that give me 8% yield, in a couple of years it will be a 10% yield, thats money to live off without ever needing to sell.

In the very well managed and maintained building where I've lived for a number of years the rents have only fallen since the building went up.  A friend in another building on Sathorn/Rama 4 has paid the same rent for the past five years and none of the other similar apartments in the same building have seen a rent increase in that period

[Pravda]

6 minutes ago, ThaiBunny said:

In the very well managed and maintained building where I've lived for a number of years the rents have only fallen since the building went up.  A friend in another building on Sathorn/Rama 4 has paid the same rent for the past five years and none of the other similar apartments in the same building have seen a rent increase in that period

 

I would love to own a condo in Bangkok actually, but this stuff is absolutely correct. The rents have not risen at all. I am renting out a condo back home and in the past 5 years I upped my rent 30% way above the inflation. It seems to me that the only way to get a decent return on your rental in Bangkok and Pattaya is to rent it on Airbnb.

 

And I might do just that.

 

Does anyone know an agent that is well connected? I'm aiming for 20k a month on a 3mil condo.

[Peterw42]

10 minutes ago, ThaiBunny said:

In the very well managed and maintained building where I've lived for a number of years the rents have only fallen since the building went up.  A friend in another building on Sathorn/Rama 4 has paid the same rent for the past five years and none of the other similar apartments in the same building have seen a rent increase in that period

As I said above, "in the right rental market", the areas you mention have an oversupply. Wife has a property just west of BKK and is never without a tenant, puts the rent up between tenants etc

[SuperTed]

My ultra rich mate spent Q1 making bids on buildings in Thong Lor. He is sure TH will recover as an exporting nation and BKK property prices will explode. In the thirty years I have known him, he has made very few bad calls.

[marcusarelus]

1 minute ago, SuperTed said:

My ultra rich mate spent Q1 making bids on buildings in Thong Lor. He is sure TH will recover as an exporting nation and BKK property prices will explode. In the thirty years I have known him, he has made very few bad calls.

When did Thailand stop being an exporting nation?