Fears that the condo bubble is about to burst in Bangkok - especially if foreigners pull out

[RichardColeman]

Can't say much about the condo market, but I know 50% of my previous Thai neighbours have been forced to sell their houses in Pattaya. Those supported by farangs haven't - yet !

[Suradit69]

4 hours ago, RotBenz8888 said:

A replay of 1997 crash. All those overpriced shoe boxes turn out to be completely worthless, who would have thought......

The 97 financial mess began in Thailand when the baht had to be allowed to float because net  foreign currency reserves were essentially nonexistent .  The baht fell dramatically and the financial crisis spread throughout Asia and impacted western countries as well.

 

while property values fell, that was a consequence , not a direct cause. At that time the quality of condos wasn't as bad as it has since become.

 

i was able to buy a reasonably priced condo in 1999 in a building that was fairly well built and maintained in a good location made cheap by the high baht to dollar exchange rate, not so much because of panic selling in baht. Sold that condo almost 20 years later for more in baht terms and even more in dollar terms because of the baht strength.

 

Thai property owners are less likely to cut prices dramatically in a hysterical reaction like over extended Americans did 2007-2008.

 

Certainly not an auspicious time to buy a condo now in Thailand, but it's never a good time to buy a poorly constructed condo in a largely empty building in an unappealing location.

 

 

[Seth1a2a]

5 hours ago, Mikisteel said:

Who was about in 97?

 

Ever heard of the term "Fire Sale"

The cause was not from the glut of condos though. There was a financial adjustment that caused overall prices for just about everything to fall. The Baht was devalued to stimulate the economy and speculators tried their best to bet against the Banks. I honestly saw a guy with a briefcase full of cash at a money exchange on Sukhumvit .    

http://www.columbia.edu/cu/thai/html/financial97_98.html

https://www.nytimes.com/1997/07/03/business/the-thai-gamble-devaluing-currency-to-revive-economy.html

Personally I did not buy a condo at that time but the purchases I made in other goods sometimes approached 40% to 50% in discounts compared to previous prices.

 

[Isaan sailor]

3 hours ago, marcusarelus said:

Probably read up on the 1997 Asian financial crash.  Now Thailand has among the largest cash reserves in the world.

And how did Thailand get the large cash reserve?  Buy jacking interest rates, and sucking in hot money.  Very corrupt.  Meanwhile, tourism and exports will rot away with an overpriced Baht.  And we don't want to hear about Baht stability with gold.  Baht is overpriced compared to all other SE Asian currencies.

[PingRoundTheWorld]

1 hour ago, kkith said:

I'm pretty sure he was refering to the Thai Elite Visa.  More so when in the context of "money". 

The word "smart" was also mentioned. Smart people use their money for investments or pleasure, not buying a severely overpriced tourist visa. Especially not with the current political climate and uncertainty. Who knows what will happen in 2 years, let alone 5.

[geoffbezoz]

1 hour ago, hansnl said:

You seem to forget in your misguided rant against the current government that it all started to build up in around 2000, and got not much to do with the current government but mostly with a group in Thailand hellbent on money only and gambling heavily.

Well apart from your nonsense post,  where did you buy those rose tinted glasses I asked about in the post you were replying to ? ????

[Seth1a2a]

And just a week ago someone was trying to goad investors into believing that condo purchases at this time are a great potential for steady income or profit.

............Which was mostly met with the practical logic that it's not a good idea

considering  the glut of vacancies that already exist. 

[PingRoundTheWorld]

55 minutes ago, MartinBKK said:

Not allowing someone to enter who has the METV is pretty inexcusable imo. Are there any reports of this?

Sadly, yes. For example:

 

[hobz]

4 hours ago, geoffbezoz said:

Well the "experts " on this forum have been denying it for ages, mainly I suspect because they invested heavily and don't want to admit they will lose money. Also many of these self same "experts" have been predicting that the Thai economy is sound under the current regime and won't falter.

 

Well let's see once the Thai economy goes into free-fall due to the policies of the current puppet government including spending on military hardware yet wanting a 2020 fiscal budget with higher deficit forecasts,  exports suffering due to the policies of the last few years artificially ensuring that the baht is too strong, let's see how the many experts fair then.

 

It would appear that several voices within Thailand are now becoming realistic as to the Thai economy's weaknesses and the reliance upon foreign buyers, notably the Chinese, to artificially increase demand, thus pushing up condo prices, so all I would ask is ;  Where are the shops selling those rose tinted glasses that once worn eradicates all common sense and economic pointers ? Perhaps those so called "experts" on this forum could advise where they bought their own from ????

 

 

Realying in Chinese investment... This is the most interesting part. What is your prediction? Will the Chinese economy continue to grow or will it crash?

[wolf81]

4 hours ago, Metapod said:

Hoping for a crash so that I can buy-in

I fear most property would be of substandard quality. Personally I would be very careful buying here. 

[wolf81]

2 hours ago, Fairynuff said:

I love this forum where everyone is an expert and everyone’s facts are really just their opinions 

Well, you know what they say about opinions ...

 

Opinions are like @ssh0les. Everybody has one and most of them stink.

[bbbbooboo]

Hmm... this wouldn’t be a surprise(except to Thais it would appear. TIT)

[marcusarelus]

1 hour ago, Suradit69 said:

The 97 financial mess began in Thailand when the baht had to be allowed to float because net  foreign currency reserves were essentially nonexistent .  The baht fell dramatically and the financial crisis spread throughout Asia and impacted western countries as well.

 

while property values fell, that was a consequence , not a direct cause. At that time the quality of condos wasn't as bad as it has since become.

 

i was able to buy a reasonably priced condo in 1999 in a building that was fairly well built and maintained in a good location made cheap by the high baht to dollar exchange rate, not so much because of panic selling in baht. Sold that condo almost 20 years later for more in baht terms and even more in dollar terms because of the baht strength.

 

Thai property owners are less likely to cut prices dramatically in a hysterical reaction like over extended Americans did 2007-2008.

 

Certainly not an auspicious time to buy a condo now in Thailand, but it's never a good time to buy a poorly constructed condo in a largely empty building in an unappealing location.

The 1997 financial crisis started because the baht was pegged to the dollar and buy floating the baht they got out of the crisis.  Exactly the opposite as you have imagined.  International loan companies came to Thailands aid after the baht was floated.  Who told you it was the reverse? 

[Chrisswe]

Than check Pattaya even worse !!!!!

This trend started c:a 5 years ago and worse it will bee !!!!!!!

[FritsSikkink]

2 hours ago, PingRoundTheWorld said:

Doesn't matter if you have money if you're under 50. I have money, on METV, and I'm worried every time I enter the country whether they're going to let me in or not. I'm in Philippines right now about to fly to BKK soon - I booked a ticket through Singapore, in the morning, just so I don't have to spend time in the detention center and can fly right back to Singapore same-day if they deny me. It's quite ridiculous that I have to plan my flights based on the possibility some rogue immigration officer may or may not have a bad day. Getting so tired of this shit I'm actually considering moving countries.

If you have money, you get an investment visa or elite visa. 

You are considering moving countries, so you live here. Do you work here?

[marcusarelus]

47 minutes ago, Isaan sailor said:

And how did Thailand get the large cash reserve?  Buy jacking interest rates, and sucking in hot money.  Very corrupt.  Meanwhile, tourism and exports will rot away with an overpriced Baht.  And we don't want to hear about Baht stability with gold.  Baht is overpriced compared to all other SE Asian currencies.

Thailand got the large cash reserve because of tourism and the fact that it exports more than it imports.  Not really rocket science except in Issan.  Thailand does not determine the price of the baht relative to the pound or dollar.  The pound and dollar determine the value of the baht.  If there is another Brexit vote the baht will go down.  As will every other currency relative the pound.  

[Maejo Man]

3 hours ago, marcusarelus said:

All of the homes I've bought in Thailand were for cash.  Nobody asked where it came from. 

Well if you are a foreigner, which I presume you are, then the lands and titles office will certainly want to know, and ask to see  proof from your bank that the funds came in from overseas. Unless you are a Thai national you are spouting rubbish!

[metisdead]

Off topic trolling posts and replies have been removed. 

[Somtamnication]

How easy they forget 1997. These people are something else!

[marcusarelus]

9 minutes ago, Somtamnication said:

How easy they forget 1997. These people are something else!

It is the year they floated the baht and started to stockpile foreign reserves so a run like 1997 could not happen again.  What did they forget?

[geoffbezoz]

1 hour ago, hobz said:

Realying in Chinese investment... This is the most interesting part. What is your prediction? Will the Chinese economy continue to grow or will it crash?

Frankly as the pre eminent economy in the world, sure it will slow as the global economy slows but when the upswing comes China will roar away. Why do I say that ? well putting  cheap labour to one side it's their work ethics compared with other nations in my view that makes them efficient at most things they do. But the Chinese buying into Thailand is no different to how they have bought in to other countries. Canary wharf in London is 34% owned by mainland Chinese and Hong Kong investors. That massive investment started in the mid 1990s so they just move around to  get the best returns or easiest way to launder money !! or both.

[kjun12]

5 hours ago, marcusarelus said:

The Chinese are doing and have been doing it for a couple of years to get their money out of China.  The Farang don't matter much in this market anymore.

Of course your many economics degrees allowed you to reach this conclusion.

[spidermike007]

Found a rather fascinating essay on the reasons behind the financial crisis of 1997. Fundamentals appear to be alot different now.

 

An excerpt: 

Jim Glassman looked at the crisis in a different way. He wrote that the main cause of the crisis was the decline of profitability of manufacturing caused by global export competition and over-capacity. He showed that manufacturing profit rates continually declined since 1990.

 

https://pdfs.semanticscholar.org/5ab1/73978125823231e6dc6b171feaf05ea44af6.pdf

 

 

[metisdead]

Some more off topic posts and replies have been removed. 

[ThePioneer]

5 hours ago, marcusarelus said:

All of the homes I've bought in Thailand were for cash.  Nobody asked where it came from. 

Ooops

 

 

 

[SatoshiNakamoto]

5 hours ago, ThomasThBKK said:

 

Most expensive Condos are non-chinese owned, same as in NYC and co.

Chinese mostly buy lower class condos, they can't get enough money out of china for penthouses and co.

They can't get loans either, they have to buy with savings/cash.

Most of these penthouses and expensive condos in BKK are Western, Japanse, Korean and Thai owned.

 

There's a huge flood tho of chickenboxes that they won't be able to sell, that doesn't mean the higher end condo market is unhealthy - tho.

After all higher end condos are the better value for money with better prices per sqm.

 

Chinese buy there stuff unseen online on webportals, without even getting a proper chanote in many cases, circumventing most real estate laws here like having a proper FET form.

It's only a matter of time till the chinese government cracks down on this practice. Or some Thai Hiso wants to own their condos in stead.

They are the definition of dumb money, and dumb money always ends up in a marketcrash.

 

 

https://www.thaiexaminer.com/thai-news-foreigners/2019/03/09/young-chinese-millennials-driving-bangkoks-condo-sales-with-online-buying-as-they-flee-chinese-market/

 

 

 

Everyone who thinks this is healthy and will go on forever is nuts.

 

In fact it's even illegal for them to do this: https://www.ft.com/content/5dca923a-1895-11e8-9c33-02f893d608c2

 

and It's already plummeting since years: https://www.scmp.com/business/companies/article/2187482/chinese-overseas-property-buying-plummets-63-cent-2018-hitting

 

 

 

Greed skrews your brain, every thai real estate developer who laid all their eggs in the china basket will have a nightmare sooner or later.

 

 

 

This is wrong,  its oppsite that all the expensive houses / apartments are either owned by chinese or russian.

 

[TTL2]

It is not about who or which race that bought the property. Every country's is pegged with USD and if United States economic crashed the countries which have market economics growth will sink with it. Only 3rd world country's property market will be less affected because their paper money is worthless and there is no or almost zero economic growth drive and people in the 3rd world country are fear of lack of food and basic medical need.

Unlike modern country and modern cities, people are worried that their income is cut-off that would have caused them to liquidate.

Of course when the global economic crisis happened. Prime area property will not just dive down <50% to <70%. The most is only about <30%. Yes, the most the price will dropped about <30%. If a property is valued at US$100,000,000 it probably cost about US$750,000 then. For those who bought a property to stay, they won't even bulged a little as it is their only place to dwell in.

[newnative]

6 hours ago, Matzzon said:

That a property crasch and the economic bubble will burst, that is as certain as all the dumbnuts still walking the Earth.

However, that it would be out of the reason that the Chinese pull out is as far from the truth as humanly possible.

Have no fear. The Chinese invasion has only started. With already close to 1,5 billion people in their own country, the spaces to fit in more in the ever blooming baby-boom circus is starting to be very limited. They just need to continue steal more pieces of Thailand, the country they put their sights on.

   My last 4 condo sales were to Chinese buyers.  The most recent, in June, was my Bangkok getaway condo.  First buyer that looked at it snapped it up.  No view to speak of, only 24sqm, but a good location near MRT and Airport Link, a nice condo project by good builder, and a jazzy renovation.  That was enough.  The Chinese market is just developing.

[CNXexpat]

7 hours ago, webfact said:

Some 20% of condo units are being bought by foreigners.

Question from a non-native English speaker: what means "Some 20%"? 40, 60, 80%? Or something in the 20%, 21, 22, 23%...?

[CNXexpat]

There are 200,000 Expats in Thailand, as the latest report said. 50,000 are working for foreign companies. So there are 150,000 left, they live all over the country. If they ALL leave, it will not kill the market. No idea how many Expats are living in Bangkok.