Baht Strengthens- Real Estate Suffers

[bingobongo]

flame away.....reality is what it is, nothing more, and nothing less.....i am sure the oversupply will help....not

Baht strengthens- real estate suffers

However, we expect the impact of the strong Baht to be more negative than positive on the real estate sector."

Manufacturing is not the only sector to suffer due to the stronger Thai baht- the residential and resort real estate secotr in Thailand, looks set to experience a downfall.

http://www.property-report.com/aprarchives...amp;date=230707

[solo siam]

Great, I look forward to picking up some cheap properties....

Although TBH I've heard that the real estate market has been just about to crash for over 5 years now, with mortgage rates being lowered all the time I dont see it happening.

[geoffphuket]

The Baht seems to be slipping back a little. The GBP is now 69.01 (TT) against 67.4 a few days ago.

Bangkok bank: http://www.bangkokbank.com/Bangkok+Bank/Pe...tes/default.htm

[bkkandrew]

The Baht seems to be slipping back a little. The GBP is now 69.01 (TT) against 67.4 a few days ago.

Bangkok bank: http://www.bangkokbank.com/Bangkok+Bank/Pe...tes/default.htm

Well this means that the differential between Onshore and Offshore rate has now widened to an improbable 13.9%, as the xe.com mid-market quote is currently 60.5996 THB = 1 GBP...

I might start to investigate Dr Naam's theory of the bank that does Baht transfers using the offshore rate out of Thailand

[eljeque]

I read that the difference between onshore and offshore rates was a 10% tax. Fine, the numbers pretty much matched up.... until several days ago.

Now, the difference seems to be getting much larger than that 10%.

Has the tax been increased?

Bloomberg:

Onshore 33.8

Offshore 29.8

Another good link for offshore: http://www.forexdirectory.net/thb.html

Last night, the offshore baht bottomed out at 29.050 before returning to 29.665

[pkrv]

I would suspect that as every man and his dog become aware they will milk this for all it's worth. It is why transparency in the FX market is paramount.

[bingobongo]

so much living in denial, so little acceptance of reality......

Home-builders feel the pinch amid uncertainty

The Nation: 24 July 2007

Home-builders expect to post a slight drop of 6.25 per cent in sales this year, due to concerns of prospective home-buyers about their future income in the wake of political turmoil and the economic downturn.em

http://thailand-property-guide.com/?p=news...&NewsID=479

[jasreeve17]

so much living in denial, so little acceptance of reality......

Home-builders feel the pinch amid uncertainty

The Nation: 24 July 2007

Home-builders expect to post a slight drop of 6.25 per cent in sales this year, due to concerns of prospective home-buyers about their future income in the wake of political turmoil and the economic downturn.em

http://thailand-property-guide.com/?p=news...&NewsID=479

I agree.

On a couple of other threads I've put some bank repossion websites (cause I've just been through the process of buying) and they are rampacked with properties that unfortunate Thai families were unable to keep. Bad news.

[bingobongo]

so let me TRY and understand as I am just a simpleton it seems.......the economy is faltering, there is already oversupply......so the geniuses decide to build more? wow, i guess the laws of economics do not apply in LOS

New Asian Property projects

The Nation: 24 July 2007

The company will start five new projects in the second half of this year worth Bt3.5 billion combined. These will include condominium projects on Sukhumvit and Ratchadaphisek Roads worth a total of Bt2.4 billion and two town-house projects worth about Bt810 million. Earlier, it launched a Bt340-million condominium project on Phaholyothin Road

http://thailand-property-guide.com/?p=news...&NewsID=480

Edited July 24, 2007 by bingobongo

[samran]

so let me TRY and understand as I am just a simpleton it seems.......the economy is faltering, there is already oversupply......so the geniuses decide to build more? wow, i guess the laws of economics do not apply in LOS

Sounds like a story about a company building 60sqm dog boxes. More affordable to middle income thai's. Strikes me that most new builds are like that these days...exactly what the market is looking for. Combine that with easy terms from banks for a mortgages for new build condo's, then there could very well be a demand...especially in the the locals mentioned.

Anyway, they are putting their money (and some others) where their mouths are. Surely this is what you need to get an economy going? Or do we just continue basking in the misery of others?

[jasreeve17]

so let me TRY and understand as I am just a simpleton it seems.......the economy is faltering, there is already oversupply......so the geniuses decide to build more? wow, i guess the laws of economics do not apply in LOS

Sounds like a story about a company building 60sqm dog boxes. More affordable to middle income thai's. Strikes me that most new builds are like that these days...exactly what the market is looking for. Combine that with easy terms from banks for a mortgages for new build condo's, then there could very well be a demand...especially in the the locals mentioned.

Anyway, they are putting their money (and some others) where their mouths are. Surely this is what you need to get an economy going? Or do we just continue basking in the misery of others?

I thought that this was a supply and demand issue. Many, many, many 22sqm boxes out there for sale to the middle income Thais (20 - 60K per month?)

These new properties all seem to be 2m baht and rising. I can't see them getting built when half completed blocks are struggling to pay the workers wages, or plainly can't and building is stopping.

I don't think that they are / can kick start(ing) the economy by producing in an over stocked area.

[samran]

I thought that this was a supply and demand issue. Many, many, many 22sqm boxes out there for sale to the middle income Thais (20 - 60K per month?)

These new properties all seem to be 2m baht and rising. I can't see them getting built when half completed blocks are struggling to pay the workers wages, or plainly can't and building is stopping.

I don't think that they are / can kick start(ing) the economy by producing in an over stocked area.

Supply and demand is only part of the picture though and other factors are distorting the market - in favour of new builds. Banks can get away with lending up to 95% for new builds, and SCB will even finance an extra 5% of value for furniture.

Meanwhile, the same bank doesn't want to go within 10 feet of older places, unless you have a hefty deposit.

With these two factors in mind, if you were a not-so liquid middle income earner, and you had the choice of a no-brainer loan with a new build near a BTS /MRT or the choice between scrounging together a 500K deposit on your 40K/month salary for a second hand place...what are you going to go for???

[LaoPo]

so let me TRY and understand as I am just a simpleton it seems.......the economy is faltering, there is already oversupply......so the geniuses decide to build more? wow, i guess the laws of economics do not apply in LOS

Sounds like a story about a company building 60sqm dog boxes. More affordable to middle income thai's. Strikes me that most new builds are like that these days...exactly what the market is looking for. Combine that with easy terms from banks for a mortgages for new build condo's, then there could very well be a demand...especially in the the locals mentioned.

Anyway, they are putting their money (and some others) where their mouths are. Surely this is what you need to get an economy going? Or do we just continue basking in the misery of others?

Don't know Samran, but said article seems to be a kind of promotional article painting a rosy picture. Companies like that need to do so in order to try and keep the company rolling.

Apart from that I was under the impression that Thai banks are extremely tough now with their mortgages; instead 'easy terms'.

The article says further:

"Company officials travel to Hong Kong today to stage a two-day road show with Phatra Securities in a bid to attract foreign investors."

I wonder, if they're doing so well, WHY they would need foreign investors...

LaoPo

[samran]

so let me TRY and understand as I am just a simpleton it seems.......the economy is faltering, there is already oversupply......so the geniuses decide to build more? wow, i guess the laws of economics do not apply in LOS

Sounds like a story about a company building 60sqm dog boxes. More affordable to middle income thai's. Strikes me that most new builds are like that these days...exactly what the market is looking for. Combine that with easy terms from banks for a mortgages for new build condo's, then there could very well be a demand...especially in the the locals mentioned.

Anyway, they are putting their money (and some others) where their mouths are. Surely this is what you need to get an economy going? Or do we just continue basking in the misery of others?

Don't know Samran, but said article seems to be a kind of promotional article painting a rosy picture. Companies like that need to do so in order to try and keep the company rolling.

Apart from that I was under the impression that Thai banks are extremely tough now with their mortgages; instead 'easy terms'.

The article says further:

"Company officials travel to Hong Kong today to stage a two-day road show with Phatra Securities in a bid to attract foreign investors."

I wonder, if they're doing so well, WHY they would need foreign investors...

LaoPo

look you have a huge point about this article being promotional pap. All I'm trying to point out is that ultimately, the cards are always stacked in the favour of new builds. The other point is "who cares?". If what they are doing makes economic sense to them, I'm not going to stop them!

[jasreeve17]

Samran - I agree in some ways, even many ways.

There is a real problem here with the second hand market. Of course, you can't just keep building new properties (or can you?)...

I looked at a second hand place recently where the old dear had unfortunately died. A normal thing. But, the Thais, and I mean no Thai... would buy it. Ghosts.

I believe that your numbers are inflated a bit. Maybe the Thais need to scrape together 100,000 for the deposit on an old half million baht box, which is the norm. They can do that well enough.

Though, paying 12,000 baht per month for 2 years while your property is being built, then getting a loan for the difference once you move in, seems to be the way that Thais like to go nowadays. On these deals you still need to put down 10 - 20 % initially and because they are at least double the price of the older places it's at least 100k. So, actually the deal is worse, but the Thais do seem to like it.

It just seems to be an awful cycle for the market to get into.

I agree that all housing markets are complex, with many factors, more than just supply and demand, but potentially that just adds to the problems down the line. The housing market could be the key area to drag the economy spiraling down. The heavy investment in the area and the direct link to people (earnings, jobs, repayments etc), could make it key. Though foreign investment in the area.. la la la.

The heavy rate of repossesion get me thinking though. It can't be positive, and it's directly indicative of peoples ability to buy / pay.

[samran]

Samran - I agree in some ways, even many ways.

There is a real problem here with the second hand market. Of course, you can't just keep building new properties (or can you?)...

I looked at a second hand place recently where the old dear had unfortunately died. A normal thing. But, the Thais, and I mean no Thai... would buy it. Ghosts.

Looks like a job for me and you as ghost busters!

[jasreeve17]

Samran - I agree in some ways, even many ways.

There is a real problem here with the second hand market. Of course, you can't just keep building new properties (or can you?)...

I looked at a second hand place recently where the old dear had unfortunately died. A normal thing. But, the Thais, and I mean no Thai... would buy it. Ghosts.

Looks like a job for me and you as ghost busters!

Who gets Signoury Weaver?

(I've got to go now, I've been ordered to bed...)

[bingobongo]

[bingobongo]

nothing to see here......move along

so if the locals are not primary buyers (since they cannot afford them) and farangs get less for their money due to baht, who will absorb the steady flow of oversupply? i guess more NPLs coming

Industrial developers 'hardest hit'

Developers of industrial land will be the hardest hit in the property sector by the baht's upward movement, because operators could be discouraged from expanding their investment, says Jones Lang LaSalle.

In addition to manufacturing, the stronger baht has diminished the attractiveness of Thai residential and resort real estate, the company said.

Many of these properties are targeted at foreigners for either holiday homes or living in Thailand in a second or retirement residence. The more the baht has strengthened, the less these buyers have received for their money.

http://www.nationmultimedia.com/2007/07/24...ss_30042104.php

Edited July 25, 2007 by bingobongo

[bingobongo]

thats it.....keep building so speculators can buy.........empty condos provide no income/cash flow, just debt

one more time.......when supply is greater than demand.....prices go

Bangkok's easing property market

"Many observers are calling an oversupply in the condominium market. While our findings show the market has continued to enjoy strong demand, based on anecdotal evidence, a large proportion of condominium purchases in central Bangkok are made by investors buying and intending to put units up for rent. With competition in the leasing market further intensifying as more units are completed and offered for rent, demand from investors could wane in the near future," says Mrs. Suphin.

As a result, condominium rents in central Bangkok have seen a remarkable drop compared to 2006. For example, a two bedroom type that was previously offered for rent at an average rate of Bt75,000 per month, is now achieving lower rents ranging between Bt55,000 and Bt65,000 per month, while the average monthly rent for smaller units of 70-80 sqm fell from Bt55,000 in 2006 to a range between Bt40,000 and Bt45,000.

http://www.property-report.com/aprarchives...amp;date=260707

Edited July 26, 2007 by bingobongo

[shochu]

Bingo-matic,

I find myself agreeing with you here.

I am holding off on buying more condos - not because I am worried about the long term outlook - but because as you have so nicely pointed out - the baht is affecting my entry point. I don't want to pay an extra xx% on something I will hold long term. I am not worried about renting it out as that is not the main concern as opposed to putting cash to use. Rental income would be a bonus. Besides it's a phsychological thing. If I buy more property - I have less discretionary funds - so it is a forced savings on my part.

As I type this - the markets are crashing - how fitting!

[bingobongo]

thats it, keep building....flood the market as credit quality erodes......

Launches slowing, average prices down

The independent property consulting firm said yesterday that it expected new launches to grow only 2% while it anticipates the Sukhumvit and Rama III areas to be affected by oversupply of condominiums.

Managing director Sopon Pornchokchai forecast 67,630 new units for all of 2007 based on the number launched in the first half of the year.

http://thailand-property-guide.com/?p=news...&NewsID=484

[samran]

I wonder how many people are really going into debt buying these things. Love to see the stats, but if we are bandishing about 'annecdotal' evidence here, many Thai investors like to buy in cash. Especially Thai chinese.

Where is Heng when you need him????

[pkrv]

Bingo-matic,

I find myself agreeing with you here.

I am holding off on buying more condos - not because I am worried about the long term outlook - but because as you have so nicely pointed out - the baht is affecting my entry point. I don't want to pay an extra xx% on something I will hold long term. I am not worried about renting it out as that is not the main concern as opposed to putting cash to use. Rental income would be a bonus. Besides it's a phsychological thing. If I buy more property - I have less discretionary funds - so it is a forced savings on my part.

As I type this - the markets are crashing - how fitting!

You can bypass this mess on onshore offshore rates. As those of us who are nearing completion (and have to pay) we are discussing this here:

http://www.skyscrapercity.com/showthread.p...008&page=28

[Naam]

You can bypass this mess on onshore offshore rates. As those of us who are nearing completion (and have to pay) we are discussing this here:

there is no mess as far as the difference in rates is concerned. since months the topic was discussed and dozens of times proper advice given:

do NOT transfer Baht, transfer (any) FOREX.

as simple as that, nothing left for useless academic discussions.

period!

[pkrv]

do NOT transfer Baht, transfer (any) FOREX.

period!

Agreed - But this (non transparent) market is tricky to say the least. My next task is to ensure that with the Krung Thai bank can work with me on this issue. There is 1m THB at stake here, you can see why I am cautious?

[cmsally]

I haven't had any problems. Make sure you transfer fax or online - you will have written proof that transfer should be US$ or whatever currency you use. Notify your bank here that you have an incoming transfer and that it will arrive in foreign currency and be changed to Baht onshore. I deal with SCB and they will telephone me and notify me as soon as the transfer arrives, amount etc. If by any chance your overseas bank messed up you would find out at that point and be able to contact your overseas bank with written proof that it should have been foreign currency.

[shochu]

thanks for the input,

But unfortunately - the currency I am transfering has to be done offshore as LOS can not do it onshore - so this onshore/offshore does not apply to me.

My primary concerns are two-fold: 1) I want a reasonably constant rate for the next few years, and 2) I expect my currency to strengthen in the coming months against the baht.

So, it is a waiting game which I don't mind because as lessons learned - it is better to not be the one who really wants something. I like the condo I looked at - and - without touching my other investments - I can easily pay it off in a few years from my earnings so it is just a form of savings for me to work towards. There is no way I would go for the 20 year payment schedule which works out to paying close to double for the unit after the initial deposit. At the same time - I don't want to lose 10% or more if I don't have to.

Samran,

The agent said that everyone who had bought this condo with prices ranging from about 6 - 15 mil. were financing with all the buyers thai except for two units. Half the units have been sold in this mid-rise condo. And surpringly a yound mid 20's girl came in to buy one for herself - she is from the provinces, but obviously from a well to do family as she was off to grad school overseas and the condo would be ready when she got back. The agent also said that most of the buyers already had homes in the burbs and were buying because they work in the city. A part time home during the week and also using it as an investment/bank much like myself.

[Naam]

do NOT transfer Baht, transfer (any) FOREX.

period!

Agreed - But this (non transparent) market is tricky to say the least. My next task is to ensure that with the Krung Thai bank can work with me on this issue. There is 1m THB at stake here, you can see why I am cautious?

i can't see anything tricky and the market is quite transparent (whether offshore or onshore rate is concerned). moreover i don't see any need to "work with" any thai bank. all what is required that you instruct your bank NOT to transfer THB but the currency you own presently.

of course i assume that you are not planning to transfer some exotic currency like Zimbabwe Dollars or Nigerian Naira.

[bingobongo]

delusion and denial are not reality........see graph for some numerical comparisons globally.....

oversupply - check

economy going nowhere - check

junta - check

business AND consumer confidence down - check

Thailand, after suffering from political crises, have not yet recouped the confidence of investors. This resulted in a drop of 5.09% y-o-y to Q1 2007 in Thailand's house prices, down from an 8.03% y-o-y increase to Q1 2006.

Edited July 27, 2007 by bingobongo