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

[ThomasThBKK]

Thailand has its faults for sure but when it comes to money laundering there are a few other countries who have perfected it yet hides it under the cloak of "financial services" sectors. I think the "Panama papers" and "Wikileaks" have identified the issues in many instances.  For sure property investment is a good tool to launder money, perhaps just easier in Thailand owing to it's still love of cash money and when you have billions in cash from say drug dealing then it is so easy to buy a condo in Thailand.

Well most of the money laundering happens in the US and UK. UKs sole purpose seems to be money laundering... Don't think thailands real estate market has any big market share there...

 

 

It think it has largely been fueled by too damn easy loans for thais and dumb and desperate china money lastly.

 

Just as an example, condo next to us:

- penthouse (250sqm) costs like 6 mio usd - for the same price i can get 6x 220 sqm apartments used in our condo, it's less than 10 years old. A whopping over 1000 sqm extra?? [emoji848]

 

Location is the same, our old condo building has far better amenities tho and build quality seems great for thailand.

 

How can that be, market doesn't seem efficient at all here.

 

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[Peterw42]

20 minutes ago, geoffbezoz said:

Thailand has its faults for sure but when it comes to money laundering there are a few other countries who have perfected it yet hides it under the cloak of "financial services" sectors. I think the "Panama papers" and "Wikileaks" have identified the issues in many instances.  For sure property investment is a good tool to launder money, perhaps just easier in Thailand owing to it's still love of cash money and when you have billions in cash from say drug dealing then it is so easy to buy a condo in Thailand.

I would have thought Thailand is one of the worst places to launder money into property, To own a foreign title condo you need to put your hand up and declare importing the money in your name, you need to give the Thai government an FET that fully accounts for the money. A company purchase the same, its your name on the company. 

Laundering money is the ability to remain anonymous.

[ExpatOilWorker]

24 minutes ago, geoffbezoz said:

Thailand has its faults for sure but when it comes to money laundering there are a few other countries who have perfected it yet hides it under the cloak of "financial services" sectors. I think the "Panama papers" and "Wikileaks" have identified the issues in many instances.  For sure property investment is a good tool to launder money, perhaps just easier in Thailand owing to it's still love of cash money and when you have billions in cash from say drug dealing then it is so easy to buy a condo in Thailand.

Surely if you have billions of illicit money, you don't go out shopping for the 25-35 m2 shoe boxes they are building in masses now. Dodgy money buys penthouses and fancy villas in Phuket and Samui.

The 1000 of empty condo are mostly bought by Thais as an investment trying to climb the wealth ladder. The problem is that they did so with borrowed money.

[LivinLOS]

15 hours ago, Gumballl said:

I recall my situation. I bought a condo (approx 162 sqm); it fell in value (after I purchased it in 2009), but I decided to keep it. The condo was close to good schools for my daughters, my wife can walk to work, there's a gym nearby, and there's a fantastic "watering hole" within walking distance. Now the property is worth more than what I paid. Oh, and this is in the US.

 

The moral of this anecdote is that Thai condo owners will hold on to their properties with a Kung Foo grip. It does not matter if prices sink tomorrow; they will hold onto the property (which is most likely already paid off). They will continue to believe that 'tomorrow' it will be worth more and will bring good fortune, regardless of the economic environment. Unlike foreigners, the Thai will not cut their losses at the slightest hint of an economic downturn; after all, they cannot just uproot like a foreigner and go elsewhere.

 

Many of the posts in this thread are being made by those who think too much of their importance. The smart foreigner will hold onto their property (-ies), and wait for the economy to stabilize. After all, regardless of economic circumstance, the property will still be there, and will still be usable, whether to live in or to rent out.

This was true in the past when there was less consumer debt and less borrowing for purchases.. While asian banks are much more likely to hold bad debt on the books than western ones I dont think they will be forgiving over the mortgage repayments. 

 

As per the most dangerous words in investing I do believe that 'this time its different'.. That said cycles are normal and healthy, not for those caught up in them over extended, but overall its not the sky is falling. 

[geoffbezoz]

43 minutes ago, Peterw42 said:

I would have thought Thailand is one of the worst places to launder money into property, To own a foreign title condo you need to put your hand up and declare importing the money in your name, you need to give the Thai government an FET that fully accounts for the money. A company purchase the same, its your name on the company. 

Laundering money is the ability to remain anonymous.

Not talking about foreigners owning condos rather Thais.

[geoffbezoz]

50 minutes ago, Peterw42 said:

I would have thought Thailand is one of the worst places to launder money into property, To own a foreign title condo you need to put your hand up and declare importing the money in your name, you need to give the Thai government an FET that fully accounts for the money. A company purchase the same, its your name on the company. 

Laundering money is the ability to remain anonymous.

I was alluding to Thais laundering money in Thailand, not foreigners. But seriously do you even think a foreigner be it a Malaysian. Laos or whatever dealing or distributing drugs in Thailand is actually going to send his illicit gains into Thailand through the Thai banking system ? and or even put a purchased condo in his his or her name ? You must be very naive to think so.

Edited August 4, 2019 by geoffbezoz

[geoffbezoz]

51 minutes ago, ExpatOilWorker said:

Surely if you have billions of illicit money, you don't go out shopping for the 25-35 m2 shoe boxes they are building in masses now. Dodgy money buys penthouses and fancy villas in Phuket and Samui.

The 1000 of empty condo are mostly bought by Thais as an investment trying to climb the wealth ladder. The problem is that they did so with borrowed money.

Err dodgy money certainly does buy fancy villas for sure but many don't want to flag up the obvious and buy/invest in the lower to mid price sectors so as not to raise alarm bells. One 50 million fancy villa compared to 50  one million condos is far more risk.

Edited August 4, 2019 by geoffbezoz

[Henryford]

6 hours ago, Fex Bluse said:

Yes! In my experience, every single building my family has lived in, the Thai owners argue incessantly with the building management trying to avoid maintenance fees. 

 

New buildings quickly fall into disrepair. Management companies are swapped for worse and worse ones. 

 

People here seem to be unable to understand shared responsibilities of building ownership. 

I can't understand how this happens. In my condo arrears of more than 6 months and we cut the water. Arrears of more than a year or so we take them to court to repossess the condo, plus loads of interest charges/penalties.

[Traubert]

7 hours ago, Fex Bluse said:

Many Chinese are happy to for the purposes of getting illicit money out of China.

 

Now the Chinese government is actually trying to strictly control capital from leaving China which means a lot of the Chinese buying will dry up immediately.

Some of it will, for sure. The legal part.

 

There's an awful lot of Chinese money still 'under the mattress' though, and that will keep flowing.

[Number 6]

I think a number of things are going on and they are not necessarily diametrically opposed.

 

US and China. This is going to get serious and contagion will spread to Thailand.

 

Smart, well educated Chinese are getting their money out. It's not all technically black. Selling one overpriced condo in communist China buying two in Thailand where Chinese Communists can't confiscate them. It was California, NY, SF, Orange Country CA, London and Vancouver. Bangkok is for the losers but come they do and buy they will.

 

Wealthy Chinese and corporations are buying blocks, floors maybe neighborhoods. It's the Vancouver effect. Stuff sits and decays. Chinese have nowhere to park the sketchy money and obsession with property not Arab banks.

 

Thai are tapped out. As long as these folks don't lose their jobs they will continue to pay on the silly 28sqm condo they bought. They have cars and cards and mountains of debt. No interest here in selling up and moving on up to the East side. Just treading water.

 

The Thai with money and those washing it which is everyone also big contributors to purchases but even in this corrupt country the money cannot compete with the breakneck pace of condo building.

 

I have a feeling there are huge developer loans out against the strong baht. If bot weakens it will end in years.

 

Westerners know better. They are also done with the immigration games. Property will need to drop 40-60% to real value before real interest is sparked.

 

I see China replacing Japan as loan originator. Belt and road initiative. The Chinese will move to first control Thailand financially then strongarm it's immigration policy. Chinese will become as important as English if not more in the next thirty years. Cambodia will fall first. Lao then Thailand. Vietnam will stand alone and may develop closer ties with US ironically.

 

What will it take for the house of cards to fall? IMO it will be defaulting on debt. It might take international debt bc Thailand banking so sketchy but that's my take. Barring that rapidly declining economy brought on by Chinese US trade war leading to layoffs. Enough layoffs and condo owners will default.

 

The developers are snapping up higher tech building materials and importing them as fast as they can throw up condos. Thb is record highs. The land is horribly overpriced and not worth anything close to it's value but Sino Thai sell offonly bits of it propping up the market. There is land everywhere!!! True even in Bangkok and even close to public transport but the "old families" monopolize the land. They are wealthy beyond need of next 50 generations of their clans. But it's the only game in town so developers pay and it's a race to snap up the land and build - get it all up before the shit really does hit the fan.

 

Currently 150k Chinese legally permitted stay here.

 

 

Meanwhile morons buy 120b Starbucks cold drinks and Nero fiddles...

 

Edited August 4, 2019 by Number 6

[ExpatOilWorker]

3 hours ago, Number 6 said:

I think a number of things are going on and they are not necessarily diametrically opposed.

 

US and China. This is going to get serious and contagion will spread to Thailand.

 

Smart, well educated Chinese are getting their money out. It's not all technically black. Selling one overpriced condo in communist China buying two in Thailand where Chinese Communists can't confiscate them. It was California, NY, SF, Orange Country CA, London and Vancouver. Bangkok is for the losers but come they do and buy they will.

 

Wealthy Chinese and corporations are buying blocks, floors maybe neighborhoods. It's the Vancouver effect. Stuff sits and decays. Chinese have nowhere to park the sketchy money and obsession with property not Arab banks.

 

Thai are tapped out. As long as these folks don't lose their jobs they will continue to pay on the silly 28sqm condo they bought. They have cars and cards and mountains of debt. No interest here in selling up and moving on up to the East side. Just treading water.

 

The Thai with money and those washing it which is everyone also big contributors to purchases but even in this corrupt country the money cannot compete with the breakneck pace of condo building.

 

I have a feeling there are huge developer loans out against the strong baht. If bot weakens it will end in years.

 

Westerners know better. They are also done with the immigration games. Property will need to drop 40-60% to real value before real interest is sparked.

 

I see China replacing Japan as loan originator. Belt and road initiative. The Chinese will move to first control Thailand financially then strongarm it's immigration policy. Chinese will become as important as English if not more in the next thirty years. Cambodia will fall first. Lao then Thailand. Vietnam will stand alone and may develop closer ties with US ironically.

 

What will it take for the house of cards to fall? IMO it will be defaulting on debt. It might take international debt bc Thailand banking so sketchy but that's my take. Barring that rapidly declining economy brought on by Chinese US trade war leading to layoffs. Enough layoffs and condo owners will default.

 

The developers are snapping up higher tech building materials and importing them as fast as they can throw up condos. Thb is record highs. The land is horribly overpriced and not worth anything close to it's value but Sino Thai sell offonly bits of it propping up the market. There is land everywhere!!! True even in Bangkok and even close to public transport but the "old families" monopolize the land. They are wealthy beyond need of next 50 generations of their clans. But it's the only game in town so developers pay and it's a race to snap up the land and build - get it all up before the shit really does hit the fan.

 

Currently 150k Chinese legally permitted stay here.

 

 

Meanwhile morons buy 120b Starbucks cold drinks and Nero fiddles...

 

 

You are probably right and they will expect to read the menu in Chinese and have Chinese signboard at shops, while back home in Beijing.......

 

BEIJING (Reuters) - Authorities in the Chinese capital have ordered halal restaurants and food stalls to remove Arabic script and symbols associated with Islam from their signs, part of an expanding national effort to “Sinicize” its Muslim population.

 

https://www.reuters.com/article/us-china-religion-islam/sign-of-the-times-chinas-capital-orders-arabic-muslim-symbols-taken-down-idUSKCN1UQ0JF

[KC 71]

Than check Pattaya even worse !!!!!
This trend started c:a 5 years ago and worse it will bee !!!!!!!

True this maybe Yoda


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[wreckingcountry]

 
You could get a 100 square meter unit on Sathorn Road for 2,000,000 baht in 1998, a year or so after the crash. Same unit now would be closer to 20,000,000 baht....

The madness


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[UKresonant]

On 8/3/2019 at 2:23 AM, Inn Between said:

From what i remember, this goes back to me mentioning some deserted shop-houses, and what you said reminded me that I think they been foreclosed on, but the banks weren't selling at prices that seemed to reflect an obviously flat market in that area. I guess these buildings were build in expectation that wealth would increase as always and be used by Thais from or servicing a rich BKK market....until the '97 currency crisis.

 

That's my recollection of the situation, and I just remember it striking me odd that the banks were sticking to their guns for their price instead of dropping and dumping, but I suppose the buildings themselves, although 4-stories tall, aren't where the real value is. It's probably the land. 

 

But condos are different, so I guess we'll only see what the Thai owners actually do when or if the "condo bubble" really begins. I think it's inevitable.

 

From what I remember the property market was so bouyant  the people speculated more and more, near the crash people were ordering perhaps 10 houses or condos, in anticipation of selling them on at a profit before having to engage in the mortgage at completion point. Then along comes a speed bump in the economy, and they could not sell them on and could not secure mortgages for that debt ratio. Property affected could not be readily sold on, because of the way the legal entitlement of the property was documented. lots of partially completed developments ( some extra parking on undeveloped house plots ???? )

I think Thailand has defended in depth to avoid a repeat of 1997, there could be a bubble burst but not NEAR to that extent IMO.

[pokerface1]

On 8/1/2019 at 11:57 AM, 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.

 

On 8/1/2019 at 11:57 AM, 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.

Good point. The Chinese especially don't care how much they spend when trying to get their cash out of the country and more so now that the government has started to devalue the Yuan. The talk about a condo bubble is just fake news to slow the price rise demand is going to increase and so will prices. It make me laugh when the government said they would move to lower the value of the Baht a few days ago only to see it jump to new heights. People should also be aware that half the time bubbles slowly deflate to more acceptable levels. 

[bristolgeoff]

Exchange rate low foreigners pulling out.no surprise property will fall and the thai baht will go down alot.playing a dangerous game

[pokerface1]

1 hour ago, bristolgeoff said:

Exchange rate low foreigners pulling out.no surprise property will fall and the thai baht will go down alot.playing a dangerous game

Its dangerous if you don't know how to lock in your unrealized profits and most don't know how it's done. Or they just don't think they need to. Locking in Baht profits is easy however property is a little more complicated but it's doable. 

[Autonuaq]

On 8/1/2019 at 6:53 AM, marcusarelus said:

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

What do you have with cash, if the govertment worries about the Thai household debts. The personal Thai houshold debt rocket to the sky and even that seems not to be the limit. Thai household they are so high. If the news sources are correct.

[ThePioneer]

On 8/1/2019 at 11:53 AM, marcusarelus said:

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

They're not even in the top ten.

 

https://www.investopedia.com/articles/investing/033115/10-countries-biggest-forex-reserves.asp

[mngmn]

On 8/1/2019 at 8:48 PM, marcusarelus said:

My wife bought the homes and nobody wanted to know. I never bought a condo - don't think it's a good investment but do they want to know where the money came from if it is cash?

So the original post should have read 'the last four houses my wife bought' or possibly 'the last four houses I gifted to my wife'.

[inwardglee]

I own a condo, here in TH, in Pattaya, on Wongamat beach, and over time my experience will become a hard fact for any prospective buyer. True, the quality of the building is meagre, and maintenance costs that the condo takes in will not be sufficient to repair or to replace broken things, so over time, the condo gets a gradual downgrade, and that not only by the building, also by the management. A new building will have a fine manager, but as maintenance costs won't be sufficient just in a matter of years to keep the standard, a cheaper manager will be in control, and she/he might in case of any complaint play arrogant, like: what do you farang dare to tell me Thai what I need to do. - And so, in summary, buying a condo here in really strictly only for people who believe they will use the condo for their own living for minimum ten years, and any other interest is vain. 

 

[jpgermain]

The realstate in Thailand will go down more and more in the future becose of many problems that come from corporate corruptions from big companyes like knight Frank UK that oporating in thailand and taking advantage from co owners and over wellming bad mangment and 20%daly over charging the co owner with low quality building by property perfect misleading the consumer ? No one want to come back to Thailand and invest money and terrorise thier life ?

[flyingtlger]

The sooner the better!!!!

 

 

[chainarong]

On ‎8‎/‎1‎/‎2019 at 12:23 PM, Mikisteel said:

Who was about in 97?

 

What kind of bargains we talking about? If that property crash happened in bok does it spread nationwide?

97 was the year of the Thaitantic the economy over heated, at one stage it was running higher than China ever did, anyway it brought the whole of Asia including China undone and it resulted in a Asian depression. 

[sunnyboy2018]

On 8/1/2019 at 5:30 AM, peter14 said:

am already  selling  2 of my  condo !!!  Any buyer  ?as  they  treat me <deleted>  saying am not tourist when i come stay there.  

Why do you want to classified as a tourist?

[sunnyboy2018]

3 hours ago, chainarong said:

97 was the year of the Thaitantic the economy over heated, at one stage it was running higher than China ever did, anyway it brought the whole of Asia including China undone and it resulted in a Asian depression. 

No. It was the time Soros manipulated various Asian currencies that were over valued.  He shorted them and their value went down. The knock on effect was a slowdown in the Thsi economy  and a hiatus in the construction industry 

[sunnyboy2018]

On 8/4/2019 at 2:41 AM, ThomasThBKK said:

Well most of the money laundering happens in the US and UK. UKs sole purpose seems to be money laundering... Don't think thailands real estate market has any big market share there...

 

 

It think it has largely been fueled by too damn easy loans for thais and dumb and desperate china money lastly.

 

Just as an example, condo next to us:

- penthouse (250sqm) costs like 6 mio usd - for the same price i can get 6x 220 sqm apartments used in our condo, it's less than 10 years old. A whopping over 1000 sqm extra??

 

Location is the same, our old condo building has far better amenities tho and build quality seems great for thailand.

 

How can that be, market doesn't seem efficient at all here.

 

Sent from my LYA-L29 using Tapatalk

 

 

 

Yep. The UK is the world centre for financial corruption especially the luxury housing market. 

[sunnyboy2018]

On 8/1/2019 at 5:57 AM, 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.

There are strict currency controls in China

[sunnyboy2018]

On 8/1/2019 at 6:37 AM, watcharacters said:

 

 

Can you post the details.

 

He wont. If he has invested in two condos he is not a tourist. 'If'

[sunnyboy2018]

On 8/4/2019 at 3:42 AM, geoffbezoz said:

Not talking about foreigners owning condos rather Thais.

Wrong. The article is about foreigners.  Read the Headline.