Here Is Proof The Bangkok Condo Market Is Still Booming

[Fletcher]

Fletcher, unless you're winding us up that is a staggering comment from a professional realtor.

Can't believe there haven't been a dozen replies already.

I agree a staggering post from a newbie, new posters generally try to find their feet first - Err the Manhattan

http://www.skyscrapercity.com/showthread.php?t=177314

Is a minimum of 4 years off - it is not off the ground yet but appears to have the required number of sales to proceed. Someone is predicting a 1M THB loss in 4 years time I dread to think what energy and commodity costs will be by then, 1M THB may well then buy a second hand 50cc moped.

Thanks for the comp, and yes the realtor quote is very real. The point here is that if you call any of the big agents, as a 'buyer' for a newly launched project that they are promoting, and they will tell you the market is still going up. Call them as a 'seller', and the market turned down, towards the end of 2006.

Please understand the Manhatten bit though. No one could predict a THB1M loss in 4 years time, but to get out of the market now will cost him THB1M.

If you need a place to live, and are looking for the long term, do your research, don't be in a hurry and look for the bargains, they are there. However, if its for speculation on prices, or for rental income - I would wait and see what happens.

[obsession]

Maybe a bit off topic, but one of the reasons I think the thai market is overpriced is that you can get a studio in the uk for 3 million baht. There should be a huge price differential between the 2 countries.

[Livinginexile]

Fletcher, unless you're winding us up that is a staggering comment from a professional realtor.

Can't believe there haven't been a dozen replies already.

I agree a staggering post from a newbie, new posters generally try to find their feet first - Err the Manhattan

http://www.skyscrapercity.com/showthread.php?t=177314

Is a minimum of 4 years off - it is not off the ground yet but appears to have the required number of sales to proceed. Someone is predicting a 1M THB loss in 4 years time I dread to think what energy and commodity costs will be by then, 1M THB may well then buy a second hand 50cc moped.

Thanks for the comp, and yes the realtor quote is very real. The point here is that if you call any of the big agents, as a 'buyer' for a newly launched project that they are promoting, and they will tell you the market is still going up. Call them as a 'seller', and the market turned down, towards the end of 2006.

Please understand the Manhatten bit though. No one could predict a THB1M loss in 4 years time, but to get out of the market now will cost him THB1M.

If you need a place to live, and are looking for the long term, do your research, don't be in a hurry and look for the bargains, they are there. However, if its for speculation on prices, or for rental income - I would wait and see what happens.

Hi fletcher

You are correct that one must do their reseach before buying property ANYWHERE.

But no matter where in the world, you are not going to make a profit by "day trading" property.

Property is a long term investment. You are trying to sell your condo before it is even finished and you expect to make a profit?

The great Warren Buffet said....

"Buy in gloom and sell in boom".

Buy in now in a prime location and reap the rewards down the track. THIS IS FACT.

You are correct that there are some great bargains out there.

You should keep your condo.

Good luck

[pkrv]

livinginexile - agreed developers need a stable client base when building off the plan. They will protect themselves by contract. Sorry my post will have been confusing The Manhattan link was correct but I was thinking of The Address at the time (sorry ). The Manhattan is maybe six months to a year off? I have seen no completion dates proposed.

One of the reasons that The Park was so appealing was that you were contracted to complete and on completion pay 3 years maintenance up front. Heavy stuff agreed - but does provide for full project stability over the long term. People who did not like the conditions obviously didn't buy for whatever reason.

[merlion]

Fletcher, unless you're winding us up that is a staggering comment from a professional realtor.

Can't believe there haven't been a dozen replies already.

I agree a staggering post from a newbie, new posters generally try to find their feet first - Err the Manhattan

http://www.skyscrapercity.com/showthread.php?t=177314

Is a minimum of 4 years off - it is not off the ground yet but appears to have the required number of sales to proceed. Someone is predicting a 1M THB loss in 4 years time I dread to think what energy and commodity costs will be by then, 1M THB may well then buy a second hand 50cc moped.

Dear PKRV, may I know what do you mean by a 4 year off date? Are you referring to the completion date of the Manhattan? And what about the 1m baht loss? I am confused.

[pkrv]

Sorry merlion - Thaivisa was responding very, very, very, sluggishly this morning (UK time) I trust I have already made apology for my error (see previous post to yours)- again sorry - I hope we can all make mistakes

[merlion]

Sorry merlion - Thaivisa was responding very, very, very, sluggishly this morning (UK time) I trust I have already made apology for my error (see previous post to yours)- again sorry - I hope we can all make mistakes

OIC, tks.

[Fletcher]

@Livinginexile:

Well if the developer had completed on schedule it would have been ready over 18 months ago, and yes I would have made a decent profit as the bubble was still ballooning. The bubble as stated in my earlier post looks to be well and truly over, and there is a strong chance that it will burst according to the realtors that I have been dealing with.

Additionally, rental yields are also in decline especially in the up-market section, and are also likely to decline furthur [already below 7%].

Anyway back to the point of the thread, that there is proof that the market is still booming, well I have to disagree 100% with that one, and I hope my posts will make a few people think before they jump in.

You're correct with the Warren Buffet quote, and I think the market is already in slight decline and likely to take a serious slide. So with my money out and safe, I will wait for the 'gloom' and have another go

DO NOT forget the lessons of the last Asian crisis - it left many with properties well below purchase price for several years, and with what you hear about the volume of Hedge Funds in Thailand, who knows what the effect of a mass exodus of HF money might do to the exchange rate and the property market as well.

On the flip side a lot of people made a lot of money off property by moving their funds into thailand straight after the crash. Will it happen again, who knows? but that's where my money is right now !

Edited June 28, 2007 by Fletcher

[bingobongo]

anatomy of a bubble........so lets start with a graph that is more in line with stock market, but can also be applied to housing........

now, lets apply a calendar to the housing market given the oversupply, lower bank loans, poor economy, and higher debt burden of the populous.....enjoy

• Media Attention: 2001-2002

• Enthusiasm: 2003

• Greed: 2004-2005

• Delusion: 2006

• Denial: 2007 -------> Thailand real estate is here

• Fear: 2008

• Capitulation: 2009-2010

• Despair: 2011-2013

• Return to the Mean: 2014

[backflip]

I guess that means you won't buy your partner a home until 2014.

[Huw]

What a proof! To me looks more as a sign of deep panic.

It's easier to them to put up a sign than argue on the Internet boards and in the press where someone may actually reply or ridicule them.

And why is it only in English - we know 51% of condos must be in Thai names?

Looks like they know who may be unaware or overcautious and targeting them, hoping it would reflect on other project they might be developing.

Actually they may have taken the deposits for the units (not sold them yet), that's been like that for years...but if they wanted to say "it's booming" that's what I don't believe.

"What proof" ??

The project is fully sold out at only 30% completion, that is the proof.

So you think they are turning away people like myself with lots of cash because they want to make a point?

Think too mut....you don't think enough

The general feeling among real estate agents here is that the market has collapsed. Expecting a boom year next year though, by all accounts.

The professionals dont seem to agree with you at the moment though...

H

[thaigene2]

I think the bubble has probably burst already - though I suppose it depends on your defintion of 'burst'.

As a purely anecdotal observation, I see more and more of these new hi and low rise condo buildings in the main central corridors (suk and pahoyothin) with a lot of emtpy windows (e.g. empty apartments) - but apparently fully sold-out.

So if these places are all owned by rich thais a few rich farangs who bought them as pied de terre (digs for when they are in Bangkok - or maybe a furture potential Mia Noi pad), then everything remains static.

But if those places were bought by speculators waiting to rent them out then that's probably another story about a collapsing market (if the narket was reliant on speculators).

One other possible indicator is a drop in rents as others have pointed out (at the higher end anyway). There is a one bedroom condo for rent in the recently completed Nobel Lite building in the Soi Aree area. The price: only 15,000 baht per month.

I don't know how you positively define a 'burst bubble' but I se it deflating from my perch..the rest of you, take a ride along the Skytrain route and look at all the empty windows in the new condo buildings...

Whatever, anyone buying now should check very carefully the audited accounts of the building they are buying into. Get you lawyer AND accountant to check these..

Edited June 29, 2007 by thaigene2

[Abrak]

Maybe a bit off topic, but one of the reasons I think the thai market is overpriced is that you can get a studio in the uk for 3 million baht. There should be a huge price differential between the 2 countries.

You can get a studio in London for 40k UK pounds - I dont think so. I am sure you can get a studio in Milton Keynes for 40k UK pounds but that is a whole different matter. Still there is a MASSIVE price difference - I am selling newly developed studios (28sqm) for less than Bt1m in Bangkok - that is less than 15k UK pounds. (Admittedly located out by the old airport). Broadly speaking, I would reckon that London prices are roughly 7x times higher than Bangkok.

[quiksilva]

@Livinginexile:

DO NOT forget the lessons of the last Asian crisis - it left many with properties well below purchase price for several years, and with what you hear about the volume of Hedge Funds in Thailand, who knows what the effect of a mass exodus of HF money might do to the exchange rate and the property market as well.

On the flip side a lot of people made a lot of money off property by moving their funds into Thailand straight after the crash. Will it happen again, who knows? but that's where my money is right now !

I remember the last crisis all too well, I came to work here in the real estate industry October 1st 1997, and what happened to the residential market at that time? Did it crash? Did it he_ll. A lot of projects stopped construction, but those that completed enjoyed INCREASED occupancies because those on US$ housing packages could actually afford to upgrade to the luxury sector. The building I managed at the time (President Park) was enjoying occupancy rates of 85 - 95%, at the same rental rate, and its capital values stayed firm.

It was a totally different story in the commercial sector though where there was HUGE oversupply 43% vacancies at its worse in 1999, but the same can not be said of the residential market.

The fundamentals of the market today are very different to 1997. That's not to say its booming, its not. But its certainly not dead either. Check out the Banyan Tree Villas and see how well they sold, just recently.

i'd call a vested interest somebody who has money invested in something and wants to increase the value of that investment. dont really understand the rest of what you are talking about.

prices don't always go up, get yourself tuned into the us market .

read about what's happening in spain.

or maybe you could just follow the sheep and get yourself a cool 7million baht house in ireland

Of course prices don't always rise, they don't always fall either. Values fluctuate, but the general trend is upwards. [if this wasn't true we'd still be buying property at the same prices our parents paid]

Living in exile has the right approach. Property is a long term play, look at the Thai Chinese and Thai Indians here. They acquire huge land banks and hold on to them for 10-20 years, selling with massive gains.

If you want short term plays, the SET or a RSBC on Sundays maybe more suitable.

If you must remember anything remember to look for

Quality,

Location, location, location

and

Slowly, slowly, catchy monkey

Edited June 29, 2007 by quiksilva

[highdiver]

anatomy of a bubble........so lets start with a graph that is more in line with stock market, but can also be applied to housing........

now, lets apply a calendar to the housing market given the oversupply, lower bank loans, poor economy, and higher debt burden of the populous.....

I beg to differ on you time line and it need be corrected.

Take of- 2001-2003

first sell of (bear trap) -------> bingo sold his condo here. loosing all the rise in value.

• Media Attention: 2007-2008

• Enthusiasm: 2008

• Greed: 2008-2009

• Delusion: 2010

• Denial: 2011

• Fear: 2012

• Capitulation: 2012-2014

• Despair: 2014-2015

• Return to the Mean: 2016[/color]-------> Bingo you can come back to the market.

[pkrv]

Noting the exact same number of posts to each thread – are they converging?

From the BBC web site average house ownership – people who invest (in their future) in Thailand – who will not be average - is;

Overview

Average Cost: £210,578

Detached: £323,332

Semi-detached: £189,617

Terraced: £168,134

Flat: £196,505

Change in last quarter:

+0.2%

Change in last year: +9.25%

Sales: 266,966

http://www.thaivisa.com/forum/index.php?showtopic=117237

http://www.thaivisa.com/forum/index.php?showtopic=90203

Edited June 29, 2007 by pkrv

[craigt3365]

With regard to those of you quoting the 100% sold signs, consider the following (and apologies to those who have made these prescient points before):

1. A condo is only sold once Title Deeds are tranferred, as 70-80% of the price is given to the developer at that time.

2. Large numbers of these condos were purchased in a rising market, purely for speculative returns. Many of these purchasers will not complete in a falling market.

3. Many of the 51% thai reserved condos, were never sold in many of the more recently launched developments.

4. Many developments were launched on the back-of-the-boom, with inferior locations, design etc and these will be hit hardest.

5. Only relatively few of all the projects launched in this business cycle have completed so far. There is still a lot of supply yet to reach the market.

Fletcher: Great comments. I think you hit the nail right on the head!

I have been looking at various places around Thailand for the past month. Hua Hin, Samui, Pattaya, and now Bangkok. In new developments, I have seen rampant speculation. Especially in condos, but also in housing developments. One buyer with 3, 4, 5 or more units...all for sale...and mostly all unoccupied...and mostly owned by Thais, not farangs.

From what I can gather, people who got in a few years ago, and resold rather quickly, did OK. Those who got in a little later, appear to be having problems selling now. Just no buyers. But, what amazed me, was how the developments are either sold out, or close to being sold out...and are still months away from being available. Like you, I think this is not good for the future. If there is a crash, this will help push it along.

Many of the units I saw for resale have no mortgages. In typical Thai Style, they could just hold on to them for years until they get the price they want. In America, since they are all mortgaged, they end up in bankruptcy. I spend a fair amount of time in Vegas and the number of foreclosures is way up over a few years ago....the speculators are getting killed...

The Bangkok Post has had numerous articles from fairly well known folks. All have said it is not a good time to buy...for many reasons. But they have also said it is not terribly bad...developments are selling (especially if they are quality and in good location and well priced) I am just looking right now...with the plan to buy early next year (maybe). I am heavily invested in real estate in the US, and still enjoying good returns (12%+). So not quite ready to try here yet...

Great thread!

Craig

[pkrv]

Just no buyers. But, what amazed me, was how the developments are either sold out, or close to being sold out...and are still months away from being available. Like you, I think this is not good for the future. If there is a crash, this will help push it along.

craigt3365 - I understood most of your thoughts but this comment confused the hel_l out of me - all sold out (some are in 4 years time) how is that bad for the market ???????????

[Fletcher]

Just no buyers. But, what amazed me, was how the developments are either sold out, or close to being sold out...and are still months away from being available. Like you, I think this is not good for the future. If there is a crash, this will help push it along.

craigt3365 - I understood most of your thoughts but this comment confused the hel_l out of me - all sold out (some are in 4 years time) how is that bad for the market ???????????

Because, despite deposits being paid in 'boom' time [20-30% of unit value], many sales will never complete as buyers walk away rather than commit to putting more funds in.

So the unit is returned to the developer who does not receive the remaining 70-80% of the sale price. Which puts the developers financial position with the bank under some pressure as his loans are now due.

The developer then has to offer discounts to get rid of his excess stock of 'un-sold' units in a market that is in the middle of a downturn, when many other developers are having to do the same. Buyers have disappeared because prices are still dropping and supply is still increasing, and the market crashes, probably in 2008.

[pkrv]

Fletcher - this has already been discussed on this thread. You are talking about Flipping - Fine I understand - but there are only just so many estate agents who can handle this, this is utterly transparent, I am not an advert but Hamptons and CBRE are often quoted.

Number of Flippers at The Park = 0

Look I am not going to research every project those who wish to prove the point of Flipping do so. Flippers if they existed at The Park 2m THB tops over 2-3 years - not the point

If I were to say "yes, property can go down and it does not matter if that is the case – which of course makes it interesting in itself, I do not invest my future in just any old place" is that not a better answer – long term and if more people agree what would be the consequences?

Edited June 29, 2007 by pkrv

[thaigene2]

Fletcher: Great comments. I think you hit the nail right on the head!

I have been looking at various places around Thailand for the past month. Hua Hin, Samui, Pattaya, and now Bangkok. In new developments, I have seen rampant speculation. Especially in condos, but also in housing developments. One buyer with 3, 4, 5 or more units...all for sale...and mostly all unoccupied...and mostly owned by Thais, not farangs.

From what I can gather, people who got in a few years ago, and resold rather quickly, did OK. Those who got in a little later, appear to be having problems selling now. Just no buyers. But, what amazed me, was how the developments are either sold out, or close to being sold out...and are still months away from being available. Like you, I think this is not good for the future. If there is a crash, this will help push it along.

Many of the units I saw for resale have no mortgages. In typical Thai Style, they could just hold on to them for years until they get the price they want. In America, since they are all mortgaged, they end up in bankruptcy. I spend a fair amount of time in Vegas and the number of foreclosures is way up over a few years ago....the speculators are getting killed...

The Bangkok Post has had numerous articles from fairly well known folks. All have said it is not a good time to buy...for many reasons. But they have also said it is not terribly bad...developments are selling (especially if they are quality and in good location and well priced) I am just looking right now...with the plan to buy early next year (maybe). I am heavily invested in real estate in the US, and still enjoying good returns (12%+). So not quite ready to try here yet...

Great thread!

Craig

Thanks Craig - this is what 'some' of us who live here and are watching closely have also reported here. But your very educated and informed outside view adds weight to ours.

The others on this thread keep evading the question about the easy speculation here - what happens if averyone is waiting to 'flip or rent' but there are no buyers - then what???? (pay no attention to the building is 'sold out' routine) what you may not realize is that many of these speculators ARE MORTGAGED but you are not aware in the way you would be in Nevada.

TIT. The shit is about to hit the fan here, and it's already starting as far as I can tell.

[thaigene2]

PKRV

I used to think you were an original optimistic buyer - and I wished you well (and still do). But are you indeed a shill??

[thaigene2]

Again - while PKRV and a few others at the high end may see their condos coming to fruition..

Have a ride on the Skytrain - great for seeing the skyline from a real perspective - and wonder to yourself why so many of the windows in these "completed" places are empty...(thanks for that tip some time ago Backflip - you're right- that's the way to do it!)

If that were you paying your deposits and monthly payments, wouldn't you be just GAGGING to complete and GET IN THERE? So who's hanging back??

No??

Edited June 29, 2007 by thaigene2

[pkrv]

PKRV

I used to think you were an original optimistic buyer - and I wished you well (and still do). But are you indeed a shill??

I had to look that one up, whilst I have the capacity to use other terms, I find myself in a position where I cannot even say that was uncalled for - why post -this is way off topic.

[craigt3365]

Just no buyers. But, what amazed me, was how the developments are either sold out, or close to being sold out...and are still months away from being available. Like you, I think this is not good for the future. If there is a crash, this will help push it along.

craigt3365 - I understood most of your thoughts but this comment confused the hel_l out of me - all sold out (some are in 4 years time) how is that bad for the market ???????????

pkrv: Fletcher detailed my thoughts pretty well. These developments are totally subscribed, but the subscribers are speculators. Little money down and hoping to resell before they have to pay the big last payment...or, hoping to resell very quickly after making the last big payment. Again, this is what helped kill the US real estate market recently. I know for a fact speculators were going into developments in Vegas and buying 5, 10, even 15 houses at a time. All on margin. When the market crashed, they helped propel it downwards...big time.

There are two markets here. One is in brand new developments, the other is resale. The brand new developments seem to be selling out fairly quickly. Especially ones in good locations and well priced. The resales don't appear to be doing as well. Bigger profits are to be made in the new developments (use to?). And unless you can get the resale owner to cut his price, your future upside in terms of capital appreciation is going to be lower...and we know Thais hate to lower prices...especially the ones who do not have a mortgage. Make sense? This is what I have been gathering from my 1 month of poking around. I ain't no expert!

Craig

[pkrv]

I think that we agree that the market differs substantially from the west, it has correctly been said the secondary market is very, very, slow in Bangkok, this in itself does not make sense and may well be because the market is still in its infancy.

Would I buy for short term profit? - No. Would I buy for long-term security, and that encompasses a lot of concepts including I would like to see my assets increase (because that is a good thing for any society) - yes.

I must apologise if I have posted in a way that offends, I am coming to the end of a very long process (and still two months off) so am probably a little on edge and also itching as well, and can you blame me? – I can only hope I have been honest and open.

[Abrak]

I own quite a lot of property in Thailand - two villas in Phuket and a house in sukhumvit. My view of the market is fairly neutral - prices are cheap in Thailand compared to internationally and you get a lot of house for your buck. If you build a decent house you will make a reasonable return - not the sort of London property price return but a decent return.

The key point about the Thai housing market is that it is illiquid. If you go and buy some fancy off plan condo brand new you will almost certainly lose money. Buy in the secondary market or build for yourself and you wont go too far wrong.

It is nice to own your own property - much better than renting even if it isnt the greatest of investments that you will ever make.

[dog412]

I own quite a lot of property in Thailand - two villas in Phuket and a house in sukhumvit. My view of the market is fairly neutral - prices are cheap in Thailand compared to internationally and you get a lot of house for your buck. If you build a decent house you will make a reasonable return - not the sort of London property price return but a decent return.

The key point about the Thai housing market is that it is illiquid. If you go and buy some fancy off plan condo brand new you will almost certainly lose money. Buy in the secondary market or build for yourself and you wont go too far wrong.

It is nice to own your own property - much better than renting even if it isnt the greatest of investments that you will ever make.

liked your stance. for me, i'm a renter in one of the "exclusive" zones of sukhumvit, paying less than 9000b a month for a studio, 30 sq. meters, all included, yes internet also. as all say, location location location. i just don't need more than this. i certainly understand those that do. so, at 60,000 baht a sq. meter, my location is worth 1,800,000 baht. i have no desire to own in BKK, as i'm not so sure this city will evolve into that which i seek. best of luck to all, and may we all make the right decisions.

[thaigene2]

PKRV

I used to think you were an original optimistic buyer - and I wished you well (and still do). But are you indeed a shill??

I had to look that one up, whilst I have the capacity to use other terms, I find myself in a position where I cannot even say that was uncalled for - why post -this is way off topic.

Hi Pkrv

Well, do let me apologize if I have insulted you.

So can I assume then that you are not selling condos or working on behalf of a company that profits from the sale of property? And you are therefore only a self-buyer of a single residential property for your own occupancy?

That was basically the question - sorry if 'shill' is a strange word (it sounds pretty grubby - I must admit. however here is the Oxford definition: "person employed to decoy or entice others" (which I doubt is you - since you bought yourself for yourself right?).

-TG2

[thaigene2]

Just no buyers. But, what amazed me, was how the developments are either sold out, or close to being sold out...and are still months away from being available. Like you, I think this is not good for the future. If there is a crash, this will help push it along.

craigt3365 - I understood most of your thoughts but this comment confused the hel_l out of me - all sold out (some are in 4 years time) how is that bad for the market ???????????

pkrv: Fletcher detailed my thoughts pretty well. These developments are totally subscribed, but the subscribers are speculators. Little money down and hoping to resell before they have to pay the big last payment...or, hoping to resell very quickly after making the last big payment. Again, this is what helped kill the US real estate market recently. I know for a fact speculators were going into developments in Vegas and buying 5, 10, even 15 houses at a time. All on margin. When the market crashed, they helped propel it downwards...big time.

There are two markets here. One is in brand new developments, the other is resale. The brand new developments seem to be selling out fairly quickly. Especially ones in good locations and well priced. The resales don't appear to be doing as well. Bigger profits are to be made in the new developments (use to?). And unless you can get the resale owner to cut his price, your future upside in terms of capital appreciation is going to be lower...and we know Thais hate to lower prices...especially the ones who do not have a mortgage. Make sense? This is what I have been gathering from my 1 month of poking around. I ain't no expert!

Craig

Yes both you and fletcher have hit the nail -- right into the coffin. Everyone knows this - but the 'opitimists/shills' won't even respond here (except PKRV - who again I think is an opitmistic buyer himself). They certainly know what's going on. And they hope posts from guys like you appear very SELDOM.

So who are all those Thais going to sell to or rent to?? Well OK they can rent to me - if the price is right, he, he..