Define "good Investment"

[thai4u]

As I see it with property investments.

The terms of return in real market is 20 years for the property (when u rent it out for people). and its samiliar to house loan..

so..what is ur experience/point of view?

[quiksilva]

BKK residential (condo's / apartments aka flats as backflip likes to say) should be in the region of 7-8% net annual yield, excluding capital appreciation. Yes, some buildings do better, and some fair not so well but 7-8% is considered reasonable.

Good investments in commercial properties are yielding between 6-8% reflecting lower risk profiles of their tenants.

However the best returns to be had are in the industrial sector here, with net yields up to double figures with multinational covenants.

[GuestHouse]

Good Investment = An investment that meets or betters your Investment Needs

The trick is understanding 'Investment Needs', understanding what risks you are able to sensibly take, understanding what the risks are and understanding what your future financial needs are.

Very few people understand 'Risk' and how to determing 'acceptable risk'.

[think_too_mut]

BKK residential (condo's / apartments aka flats as backflip likes to say) should be in the region of 7-8% net annual yield, excluding capital appreciation. Yes, some buildings do better, and some fair not so well but 7-8% is considered reasonable.

Good investments in commercial properties are yielding between 6-8% reflecting lower risk profiles of their tenants.

However the best returns to be had are in the industrial sector here, with net yields up to double figures with multinational covenants.

Is that right? Any rise in (residential) property value, once it has been occupied?

IMO, rather, any property becomes unsellable and good only if you live in it (and like it).

Just if someone could tell how many tens of thousands condos are lingering around.

[johnnyk]

A friend, retired real estate broker from the US and very very sucessful by the age of 40, told me he wouldn't buy a condo because at the going rents in Pattaya his condo would take 37 years to pay off. His rule of thumb was 8-10 years for it to make investment sense.

[bingobongo]

so many pretty colors........except for thailand (not adjusted for inflation as seen in zimbabwe numbers)

regardless, thailand is falling.....

[quiksilva]

BKK residential (condo's / apartments aka flats as backflip likes to say) should be in the region of 7-8% net annual yield, excluding capital appreciation. Yes, some buildings do better, and some fair not so well but 7-8% is considered reasonable.

Good investments in commercial properties are yielding between 6-8% reflecting lower risk profiles of their tenants.

However the best returns to be had are in the industrial sector here, with net yields up to double figures with multinational covenants.

Is that right? Any rise in (residential) property value, once it has been occupied?

IMO, rather, any property becomes unsellable and good only if you live in it (and like it).

Just if someone could tell how many tens of thousands condos are lingering around.

I think you will find that the condos which are occupied and will remain occupied are ones which are priced reasonably, fitted out to a good standard and in a desirable location. These should see some capital appreciation over the medium - long term 5-10 years, but its impossible to forecast how much, forget short-term gains though in grade A CBD condos in Bangkok, as we are seeing a glut of units coming onstream so yields over the next 3 years could fall.

Johhnyk - I'd agree with your friend, if you can identify property yielding 10%+ net annual yield secured by leases from tenants with good covenants, buy it. Finding ones which do however is the trick, and then finding a seller who is willing part with such a gem is another story altogether. Which is why I advise my clients to look for properties with a reasonable cap rate and upside potential from repositioning.

In a country like the states there are many more markets, locations, and the amount of money shifting around to diffferent neighbourhoods means that there are almost always good opportunities to be found if you are willing to go out looking for them.

Thailand on the otherhand is fairly limited, you have next to no investment in areas outside of the capital and seaside resort towns. Spotting opportunities here is more difficult but its not impossible with the help of people who have access to them.

The 'best' opportunities, I think will be in specific projects, in a great location, with repositioning potential (cliche I know but true). Perhaps they have refurbed the lobby or common areas recently or perhaps new infrastructure projects are due to complete shortly whether that be mass transit networks, a new bridge or highway etc. (not announcements though as they take 10 years + to come to fruition so are worth diddly).

All of these factors can help to increase desirability or even open up a market, driving capital appreciation, and yes for the skeptics out there, there are still places where this is happening, today.

For example, consider locations like Thonburi, Wongwian Yai, which will both have BTS access at the end of this year and are not too far from the CBD.

______

Bingbongo what are these figures, exactly? Values, prices, rents, yields? Which sector? Resi, Com, Ind?

Your tables also shows Dubai and Hong Kong markets as falling too, which I find odd seeing as friends of mine who work in the biz there are having a whale of a time.

I'm not disputing that the market here is soft but your figures are just, well, figures...

Edited April 11, 2007 by quiksilva

[Gary A]

The Kingdom offers VERY few good investments. YES, I know some farangs have made a lot of money here but I think those days are pretty well gone. A condo can be a good investment as long as you know what you are buying. I know guys who came here and based their decision to buy on western prices. They paid WAY over the top and now can't figure out why they are not able to sell their property. Enjoy the life Thailand offers but don't expect to get rich. The story on land purchases via bogus Thai companies is still playing out and no one knows how the story will end.

[stevejones123]

The generally quoted figurs for residential real estate in the US is that you should pay 120-150 times the monthly rent for the property. (that is to say you get your money back in 10-12 years, though of course there are many other factors). However in many parts of the States and UK the ratio at present is nearer 300. That is to say people are buying property in the hope it will go up rather than hoping to get the return in rent.

[bingobongo]

BKK residential (condo's / apartments aka flats as backflip likes to say) should be in the region of 7-8% net annual yield, excluding capital appreciation. Yes, some buildings do better, and some fair not so well but 7-8% is considered reasonable.

Good investments in commercial properties are yielding between 6-8% reflecting lower risk profiles of their tenants.

However the best returns to be had are in the industrial sector here, with net yields up to double figures with multinational covenants.

Is that right? Any rise in (residential) property value, once it has been occupied?

IMO, rather, any property becomes unsellable and good only if you live in it (and like it).

Just if someone could tell how many tens of thousands condos are lingering around.

I think you will find that the condos which are occupied and will remain occupied are ones which are priced reasonably, fitted out to a good standard and in a desirable location. These should see some capital appreciation over the medium - long term 5-10 years, but its impossible to forecast how much, forget short-term gains though in grade A CBD condos in Bangkok, as we are seeing a glut of units coming onstream so yields over the next 3 years could fall.

Johhnyk - I'd agree with your friend, if you can identify property yielding 10%+ net annual yield secured by leases from tenants with good covenants, buy it. Finding ones which do however is the trick, and then finding a seller who is willing part with such a gem is another story altogether. Which is why I advise my clients to look for properties with a reasonable cap rate and upside potential from repositioning.

In a country like the states there are many more markets, locations, and the amount of money shifting around to diffferent neighbourhoods means that there are almost always good opportunities to be found if you are willing to go out looking for them.

Thailand on the otherhand is fairly limited, you have next to no investment in areas outside of the capital and seaside resort towns. Spotting opportunities here is more difficult but its not impossible with the help of people who have access to them.

The 'best' opportunities, I think will be in specific projects, in a great location, with repositioning potential (cliche I know but true). Perhaps they have refurbed the lobby or common areas recently or perhaps new infrastructure projects are due to complete shortly whether that be mass transit networks, a new bridge or highway etc. (not announcements though as they take 10 years + to come to fruition so are worth diddly).

All of these factors can help to increase desirability or even open up a market, driving capital appreciation, and yes for the skeptics out there, there are still places where this is happening, today.

For example, consider locations like Thonburi, Wongwian Yai, which will both have BTS access at the end of this year and are not too far from the CBD.

______

Bingbongo what are these figures, exactly? Values, prices, rents, yields? Which sector? Resi, Com, Ind?

Your tables also shows Dubai and Hong Kong markets as falling too, which I find odd seeing as friends of mine who work in the biz there are having a whale of a time.

I'm not disputing that the market here is soft but your figures are just, well, figures...

Edited April 11, 2007 by bingobongo

[Irene]

Hi,

First choice is property fund in the stock exchange at the moment. The ones with liquidity are SPF (Samui airport), and CPNRF (central rama 2 & 3 property). No hassles and yield of 10% and 8% respectively with potential capital gain. Lower interest rate is likely for the rest of 2007. So income from bank interest is unlikely to exceed 4%.

If you have to pick condos and not wishing to liquidate in two or three years, pick the one near to the mass transit stations, supermarket and public park plus GOOD MANAGEMENT. You may have to pay a premium price now but chance of recovery is good since supply in this ideal area is now limited. While waiting for capital gain, rental yield could amount to 5%.

For me, there is no hard and fast rule. Gut-feeling is the best in testing one's judgement. Starting with a small sum until gaining better confidence.

[sukanyacondo]

Great exactly what I have done bought some 1.2 million baht units rented them close to BTs and 2 big supermarkets but also they are not heavily overlooked as many condos I looked at were and unless they divert a large river never will be. Jury is still out on whether LPN has good management or not???????? Looking to sell them in about 5 years time, return from rent is more than 13% and so far 12 months down the line occupation has been 100% just empty for four days whilst the wife cleans them. Im based in the Uk and just pop over now and again to see all is ok. 2 will be empty from July onwards but have re -let one of those for 12 months and received the deposit for this now, the second Im sure will go quite quickly. Why are we managing to do this?? I suspect because we actually keep them immaculate, replace anything that breaks quickly, and if a tenant has ANY problem the wife is there within 45 minutes usually. Recenly a new tenant wanted to know the best way to the airport about 14 km away so the wife took them on a sunday to show them and this is the sort of customer service we try to offer.

[torrenova]

So you're saying your income is 1,200,000 * 0.13 = 156,000pa = Bt13,000 per month or higher. Nice income if you can get it. Who are you letting to ? Using an agent ? Thais or westerners ?

[sukanyacondo]

Hi my target market is westerners but I have had two thai professionals one earns more than 100000 baht per month, I actually charge 14000 baht per month so its more than 13% but its the re sale value that concerns me the most and am looking at selling in 5 years if I can , I don t use an agent I have found them to be no good my wife runs everything and has long since given up her day job all I do is the website and answer English e mails as I am in the Uk for most of the time,I think its down to location and customer service, we are always looking for new ideas you cannot just sit back and hope things will be ok. I usually re paint once per year or as required ie if we have a tenant who puts dirty marks on the walls it gets painted.

I am in the construction industry in the UK and have dealt with property rental world for many years.

[sukanyacondo]

I would tend to agree with Irene I looked at many projects and bought after they were completed, I also think that the location is unique with the river at the rear and far from the road making it not only near the Bts but not overlooked and also for Bangkok very quiet which many customers seem to like. Opening your window onto someone else's is not a farangs idea of a nice condo. The place is sold out with I think the developer having a just a 2 bed left but this was more then 12 months ago. I chose studios as calculated a 1 or 2 bed was not so viable for return of income as regards capital out lay and also as the price was lower for studios increase my re sale chances to Thais at a later date. The only real problem now will be future values and the maintenance issue. So far they seem good replaced a few broken tiles in the main entrance instead of letting them stay there indefinately and they publish in the lifts those who owe money on their electric and other bills to shame then.