Bangkok Rental Market Collapse?

[wordchild]

On 5/4/2019 at 12:03 PM, AtoZ said:

I know one high end condo on Sukhumvit 15 that has unsold units 6 years after completion.

You got me with that one. I know this soi well, I honestly cannot think of a single “high end” condo along the whole soi.

[madmen]

On 5/7/2019 at 8:07 PM, Pravda said:

 

I own a condo in one of the Top 10 cities on the planet.

 

Yes, Chinese are buying in Bangkok, but these are poor Chinese "investors", nothing like in UK, US, Australia or Canada where there are actually numerous advantages for Chinese investors to actually be buying, such as.....

 

1. Land ownership

2. Permanent residency and citizenship

3. Access to great healthcare in which 3 out of 4 countries mentioned above is absolutely free

4. Access to some of the best schools on the planet

5. Clean air

6. Quality construction - security and pride of ownership.

 

 

Thailand can't even dream to compete with any of that. 

 

I don't think there will be a crash in Thailand or Bangkok unless there is a major worldwide recession, but boy oh boy do you love to dream. You must be really invested here and it's hitting a nerve a bit, eh?

 

Dream? snap out of it the Chinese are all over expensive real estate in BKK . try reading the news !!

Who do you think is driving the EXPLOSION in condo prices. Poor Chinese? ????????

 

cant make this stuff up. Do yourself a favor and do some due diligence..

Edited May 8, 2019 by madmen

[wordchild]

I don’t know if the OP,s condo  is along “condo Alley” ie soi 24, but I believe that soi has some issues and is suffering from classic overbuilding. A landlord I know has 7 units along that soi, only used to rent to Japanese, never had a problem getting tenants in the past but has had to drop prices this last year and still has a couple of units empty.

His regular agent told him that they have so many 2 bed units for rent along 24 and it’s just not a popular location anymore. Thong Lor ( and the sois off)  is where the Japanese want to be, and because of corporate relocation and SE Asian reassignments there are just less of them around. I can really understand this I find soi 24 completely soulless no character at all. The other side of Suk has a better feel and loads more character.

Edited May 8, 2019 by wordchild

[Nyezhov]

38 minutes ago, wordchild said:

I don’t know if the OP,s condo  is along “condo Alley” ie soi 24, but I believe that soi has some issues and is suffering from classic overbuilding. A landlord I know has 7 units along that soi, only used to rent to Japanese, never had a problem getting tenants in the past but has had to drop prices this last year and still has a couple of units empty.

His regular agent told him that they have so many 2 bed units for rent along 24 and it’s just not a popular location anymore. Thong Lor ( and the sois off)  is where the Japanese want to be, and because of corporate relocation and SE Asian reassignments there are just less of them around. I can really understand this I find soi 24 completely soulless no character at all. The other side of Suk has a better feel and loads more character.

If you want to get a feel for whats for rent, walk into some buildings, hit the buletin board and see the real asking prices for condo units. 

[huawei]

On 5/8/2019 at 5:47 PM, AtoZ said:

Would you want to live in 20 years old condo here? I wouldn't

 

100 years old houses in Europe looks like palaces, here most condos look like trash after 10 years

 

EDIT: "100 years old houses in Europe looks like palaces" I left over the important word EUROPE ????

My condo is over 20 years old. Well maintain, well run in a very affluent area.  You couldn’t afford it..

 

i have lived there 20 plus years.

 

[AtoZ]

3 hours ago, huawei said:

My condo is over 20 years old. Well maintain, well run in a very affluent area.  You couldn’t afford it..

 

i have lived there 20 plus years.

 

I see... but we are talking about Thailand.

[Lazy Sod]

OP here, back on topic, with some more detail and a few opinions.

 

As several contributors were wondering, my condo is at “The Address Sukhumvit 28”. It is 52m2 and 1 bedroom.

 

I paid THB 7.3M for it back in 2012 (THB139K/m2). Same units are now for sale on various websites for around 11-12M, but I’m not stupid, I know that asking prices are crazy here, but I guess I could still sell it for a significant profit, especially considering the THB2M rental income received to date.

 

I rented it out for 4 years for between 40K to 42K per month, mostly to Japanese guys.

 

Actually I don’t want to sell it and I didn’t originally buy it to rent out, I bought it because I happened to walk in the building as it was being completed and fell in love with it, it seemed like everything I’d been waiting for, the lobby and common areas are like a 4 star hotel, the swimming pool on the roof with spectacular views, and the location is about 3 minute walk to BTS Prom Phong. I’d always wanted a small place in town for when I retire, but after a while I realized I rarely used it and so I decided to rent it out.

The building maintenance is still great (on site technicians you can call anytime) and I can recommend the building if anybody on TV is looking to buy to live around there, you can probably get some good deals at the moment, obviously the rental market isn’t great now but it’s a good place to live.

 

Personally I think the rental “downturn” I’m seeing is due to a combination of factors, particularly;

 

1.     The newer 1 bedroom units in central Bangkok are much smaller, typically around 35-40m2, and are renting for 28-32K, whereas in my building the 1 beds are 45-52m2 and renting for 40k-45K. I think Japanese are migrating to the smaller size units to save some money, especially as Japanese people are used to the small apartments in Tokyo, etc., and I guess it's difficult to justify to their head office why they want to live in a bigger 1 bedroom when it's an extra 10K a month.

2.     A lot of these much smaller 1 bedroom units have been added to the market in the last 2-3 years along Sukhumvit, obviously creating more competition at lower prices.

3.     There are serviced apartments as well.

 

I’m content to leave it empty as I’ve always been a bit uncomfortable being a landlord, it’s not really me, and I eventually want to use it when I retire. There's always this fear that someone might trash it, but I've been very lucky with the tenants to date, no damage.

 

Overall I’m still very happy with the purchase of this condo, and it confirms that if you are fortunate with the timing and careful about the location you can still do financially OK with a condo here in Bangkok, obviously there are exceptions, especially if you buy just before a crash, but the same is true everywhere. But I wouldn’t put my life savings into a condo in Bangkok unless I planned to live in it a long time.

[ThomasThBKK]

Quote

I rented it out for 4 years for between 40K to 42K per month, mostly to Japanese guys.

 

per sqm price is quite hefty, i pay double that for 200+ SQM next to emquartier...

[huawei]

On 5/9/2019 at 10:30 PM, AtoZ said:

I see... but we are talking about Thailand.

It’s in bangkok

[rodknock]

immigration chasing people out of country with new stupid rules.

now they want to make medical insurance mandatory.

ever price a med. policy for a 71yr. male??

lived in same condo renting for 6yrs, on-nut area.

now they keep changing and adding policies, just chasing people out of Thailand!!

[moe666]

400,000 or more empty units per the Bangkok Post Business section a while back

[AtoZ]

23 hours ago, Lazy Sod said:

OP here, back on topic, with some more detail and a few opinions.

 

As several contributors were wondering, my condo is at “The Address Sukhumvit 28”. It is 52m2 and 1 bedroom.

 

I paid THB 7.3M for it back in 2012 (THB139K/m2). Same units are now for sale on various websites for around 11-12M, but I’m not stupid, I know that asking prices are crazy here, but I guess I could still sell it for a significant profit, especially considering the THB2M rental income received to date.

 

I rented it out for 4 years for between 40K to 42K per month, mostly to Japanese guys.

 

7.3M invested in S&P 500 in 2012 would give you 17.9M today

 

fully liquid, able to sell all or small part within minutes

[Lazy Sod]

I can't argue with that, but I was given similar advice in 2000 when I was considering buying an apartment in Central London vs investing in the Nasdaq. Since then London house prices have tripled, but the Nasdaq has gone from 5,000 to 7,800 in 19 years. I chose the wrong option because I was worried about the illiquidity.

Yes it's true that property is relatively illiquid, but it's real and something you can touch. I'm not against stocks BTW, but I think it's wise to have a balanced portfolio of assets (stocks, bonds, property, gold, cash)

Edited May 18, 2019 by Lazy Sod

[madmen]

7.3M invested in S&P 500 in 2012 would give you 17.9M today
 
fully liquid, able to sell all or small part within minutes

Got you 700k in 2008. Dropped so fast could not even trigger stop losses. When will the next crash be?

Sent from my star using Tapatalk

[AtoZ]

26 minutes ago, Lazy Sod said:

I can't argue with that, but I was given similar advice in 2000 when I was considering buying an apartment in Central London vs investing in the Nasdaq. Since then London house prices have tripled, but the Nasdaq has gone from 5,000 to 7,800 in 19 years. I chose the wrong option because I was worried about the illiquidity.

Yes it's true that property is relatively illiquid, but it's real and something you can touch. I'm not against stocks BTW, but I think it's wise to have a balanced portfolio of assets (stocks, bonds, property, gold, cash)

https://www.investing.com/indices/nasdaq-composite

 

you conveniently selected the top of the bubble as your benchmark

 

that's what bubbles do - ask Bitcoin $20,000 buyers or Aussie property buyers from 2017, and UK, Canada real estate is going down as a rock now as well

[Lazy Sod]

22 minutes ago, AtoZ said:

https://www.investing.com/indices/nasdaq-composite

 

you conveniently selected the top of the bubble as your benchmark

 

that's what bubbles do - ask Bitcoin $20,000 buyers or Aussie property buyers from 2017, and UK, Canada real estate is going down as a rock now as well

I actually like stocks, my point was that none of us have a crystal ball, let's not turn this into a stocks vs property debate

[AtoZ]

3 minutes ago, Lazy Sod said:

I actually like stocks, my point was that none of us have a crystal ball, let's not turn this into a stocks vs property debate

correct, we don't have crystal balls and timing is difficult / impossible

 

so what's better - buy x million property at once and possibly at the worst time, or DCA (dollar cost average) over time into stocks

 

if you leave your property empty you still have to pay common fees which would be probably about 4000 THB a month for 50sq metre in modern high rise

[Lazy Sod]

10 minutes ago, AtoZ said:

correct, we don't have crystal balls and timing is difficult / impossible

 

so what's better - buy x million property at once and possibly at the worst time, or DCA (dollar cost average) over time into stocks

 

if you leave your property empty you still have to pay common fees which would be probably about 4000 THB a month for 50sq metre in modern high rise

Totally get your point, I'd probably give the same advice to a friend and have DCA stock funds myself for many years, but sometimes we also want a hard asset that we can touch. My personal feeling is that there is a bubble in almost everything today caused by low interest rates and QE, there are few places to hide, so best to diversify if you can. From what you say I guess you would sell the condo and DCA the proceeds into an S&P tracker, I can't argue with that, but my gut is telling me to keep it, and I still love it every time I go there, the location, everything, feels right. I think the Em district will be even more amazing in about 5 years, luxury hotels are springing up all around there. I love that area and like having a place there. Each to his own.

[blackcab]

Off topic posts have been removed.

[iBike]

On 5/4/2019 at 9:43 AM, Peterw42 said:

What are you basing your opinion on, there isn't much data out there unless you work in the land office. Often the only 2 people who know about a sale are the buyer and the seller. Developers dont usually disclose how much they sell or dont sell.

My wife does some work for a couple of girls that sell real estate and they are doing just fine at the moment, they sell 2-3 properties a month, the sellers are at least getting their money back or sometimes turning a profit. Lots of condo blocks where the foreign quota is full.

 

 

 

I've been looking to buy recently. it's pretty easy to tell. You ask the building management how many of the buildings rooms for rental are owned and managed by the developer or building owner, and how many are co-owned by landlords.

 

There is a f'ing shitload of condo's that are 20-25% unsold, even in 10-15 year old buildings around central Bangkok.

 

Shows how much profit is made on new condo sales when they can afford to not sell 25% of inventory, and then keep many of the rooms empty, without dropping the prices of either sales or monthly rental prices to meet market conditions.

 

 

[Pravda]

I truly believe that price in major cities will always go up long term, even in Bangkok where condos are experiencing poor maintenance. However, there is an unprecedented condo glut in areas that are not 100% tourist areas.

 

I have been looking for a place to live and everyone is offering me a discount. It's pretty incredible what can 10,000 baht get me in a brand new never lived building with gym pool among other things.

 

Look at this pretty much "hiso" development on Sukhumvit 24 also known as Lumpini 24. Nice building, no doubt. Construction up to Western standards. 

 

Does this look normal to you?

 

There really is no demand except for people who are parking money in these developments.

 

 

[Peterw42]

21 minutes ago, iBike said:

I've been looking to buy recently. it's pretty easy to tell. You ask the building management how many of the buildings rooms for rental are owned and managed by the developer or building owner, and how many are co-owned by landlords.

 

There is a f'ing shitload of condo's that are 20-25% unsold, even in 10-15 year old buildings around central Bangkok.

 

Shows how much profit is made on new condo sales when they can afford to not sell 25% of inventory, and then keep many of the rooms empty, without dropping the prices of either sales or monthly rental prices to meet market conditions.

 

 

Condo offices dont do rentals how would they know if I have a condo for rent with an agent up the street. The developer may own and rent condos but still nothing to do with the condo office. Its not like rental condos have a big R painted on the door.

My wife manages 8 rental properties, advertises on websites, signs a lease, gives the tenant a key, all without the condo office knowing anything about it. All the condo office knows is the condo is occupied, it could be the owner, the owners friend or a tenant found on a website.

 

I am sure there are condo blocks with unsold developer condos but unless you work for the developer, you wouldn't have a clue the percentage.

 

 

[Lazy Sod]

Quote

1 hour ago, Pravda said:

I truly believe that price in major cities will always go up long term, even in Bangkok where condos are experiencing poor maintenance. However, there is an unprecedented condo glut in areas that are not 100% tourist areas.

 

I have been looking for a place to live and everyone is offering me a discount. It's pretty incredible what can 10,000 baht get me in a brand new never lived building with gym pool among other things.

 

Look at this pretty much "hiso" development on Sukhumvit 24 also known as Lumpini 24. Nice building, no doubt. Construction up to Western standards. 

 

Does this look normal to you?

 

There really is no demand except for people who are parking money in these developments.

 

 

 

I think that screenshot is from hipflat website. If so, the number of units for rent is the full history for several years, including many reposts of the same units, some agents repost every few days.

I looked at that building, it looks great from the outside but the units are tiny, a 1 bedroom is 26m2 and are still available for 5.6M. Main negative, apart from the small size units, is that it's located at "the wrong end" of soi 24 - it's a hell of a long walk to prom phong bts.

But it does show what I was thinking...that there are a lot of small size 26-32 m2 1 bed units added to the market in the last few years which are cheaper to rent than the slightly older 1 bed units.

[Lazy Sod]

1 hour ago, Peterw42 said:

Condo offices dont do rentals how would they know if I have a condo for rent with an agent up the street. The developer may own and rent condos but still nothing to do with the condo office. Its not like rental condos have a big R painted on the door.

My wife manages 8 rental properties, advertises on websites, signs a lease, gives the tenant a key, all without the condo office knowing anything about it. All the condo office knows is the condo is occupied, it could be the owner, the owners friend or a tenant found on a website.

 

I am sure there are condo blocks with unsold developer condos but unless you work for the developer, you wouldn't have a clue the percentage.

 

 

Not disputing your wife's experience, but inside the juristic office at The Address 28 there is large white board showing each unit number together with a colored sticker denoting if the unit is currently owner-occupied, rented, or left empty (all are sold BTW). I can say with some certainty that they know which units are rented in that particular building.

[Peterw42]

2 minutes ago, Lazy Sod said:

Not disputing your wife's experience, but inside the juristic office at The Address 28 there is large white board showing each unit number together with a colored sticker denoting if the unit is currently owner-occupied, rented, or left empty (all are sold BTW). I can say with some certainty that they know which units are rented in that particular building.

 

2 hours ago, Pravda said:

I truly believe that price in major cities will always go up long term, even in Bangkok where condos are experiencing poor maintenance. However, there is an unprecedented condo glut in areas that are not 100% tourist areas.

 

I have been looking for a place to live and everyone is offering me a discount. It's pretty incredible what can 10,000 baht get me in a brand new never lived building with gym pool among other things.

 

Look at this pretty much "hiso" development on Sukhumvit 24 also known as Lumpini 24. Nice building, no doubt. Construction up to Western standards. 

 

Does this look normal to you?

 

There really is no demand except for people who are parking money in these developments.

 

 

Its "asking price", doesn't mean anything except a nice graph. Condos could be changing hands for half the graph price or double the graph price, or not at all.

[Pravda]

1 minute ago, Peterw42 said:

 

Its "asking price", doesn't mean anything except a nice graph. Condos could be changing hands for half the graph price or double the graph price, or not at all.

 

I don't care about the asking price but the number of units for rent. Yes, I understand there may be duplicate listings, but that just proves no one is interested in renting.

[utalkin2me]

Ironically, I actually agree that asking price means nothing. But, in the Thai environment where there is very little to go on, I think those asking price graphs are actually very important.

 

If we correlated asking price to selling price in say the USA, I think the correlation would be fairly tight. Asking goes up, selling prices are probably going up. 

 

Those graphs on hipflat are not useless. 

[sunnyboy2018]

On 5/3/2019 at 3:50 PM, KhaoYai said:

I'm not 'knowledgeable' regarding the current Bangkok property market but I do have experience of the property market in general. Sorry, I can't give you any good news but I think you are lucky that as you say you, "don't need the income". If what I read elsewhere about the overall Bangkok condo market is correct, then the capital appreciation you are relying on is more 'perceived' than real.  Condos are continuing to be built at quite some rate and if they are not selling (or renting) - eventually that market will collapse.

 

I've seen this before in the UK - 15 years ago the trend in Leeds for example, was to build more and more city centre appartments - all sorts of trendy buildings were going up. All the 'experts' were calling it the new 'renaissance' in city living. I remember thinking at the time that the market was becoming saturated.

 

3 years later they were still 'talking the market up' but in reality sales were just not happening. The market finally began to 'crash' just before the world-wide recession started to take hold and that was the 'experts' said, the reason for the crash. By 2009, appartments that had previously been marketed for £120,000 were being sold at auction for as little as £45,000.

 

The recession certainly had a huge impact on the whole UK property market but it concealed the real reason for the crash in appartment sales across UK cities. Yes, there was a sector of the market that wanted trendy 'loft style' and waterside properties but every market has its limit. Over-supply was the real cause and I believe the appartment sector would have crashed in any case, without the receession. It seems ridiculous to continue building properties when there are simply no customers for them but it often happens.

 

I haven't studied the market in Bangkok for many years but just an overview tells you that condo building continues at a massive rate.  I've seen one or two of the larger developments still having unsold units 2 - 3 years after completion and that can't be a good sign. Over-supply can happen anywhere and I'd suggest its already happening in Bangkok. Yes, some of the 'flagship' developments continue to sell but common sense surely dictates that the current level of development is not sustainable? It would take a much smarter man than me to predict a 'full on' property market crash in Bangkok but I would certainly not wish to invest in condos there at the moment unless I was in for the long term and even then, I'd be cautious.

 

However, its not all 'doom and gloom' - just hang in there. Quite often in a depressed property sales market - bizarrely, the rental market strengthens. The rental sector in the UK began to pick up around a year into the recession and by the end of it, was very healthy indeed.

 

 

Bangkok is not fun anymore. That is one reason why people do not want to live there.  That is why I stopped living there. it back me a depressing dump created by the junta where the wealth gap is horryfying. 

[Peterw42]

Just now, Pravda said:

 

I don't care about the asking price but the number of units for rent. Yes, I understand there may be duplicate listings, but that just proves no one is interested in renting.

There are more than just duplicate listings, properties are listed 3-4 times and never taken down. I can still find a couple of listings for a condo I used to own in Phuket, 4 years ago.

Its frustrating as there is no reliable data.

[ThomasThBKK]

10 minutes ago, Peterw42 said:

There are more than just duplicate listings, properties are listed 3-4 times and never taken down. I can still find a couple of listings for a condo I used to own in Phuket, 4 years ago.

Its frustrating as there is no reliable data.

 

Many of them are also simply fake, you enquire for a condo you actually want and they send u back unrelated ones and annoy the crap out of you...