Bangkok Condo Price Trends

[fletchsmile]

It's possible that the guys who "defend" the high prices are either correct or wrong (I don't know or care, I'm not buying nor selling now anyway), but it's funny how some of them seem to rush into a "fit of panic" to try defend the high prices/values anytime a poster states or even merely suggests that prices are dropping.

Not necessarily saying it happened on this particular thread yet though... maybe it has, maybe it hasn't; you judge for yourself!

Think if you read the threads it's the doom and gloom merchants who seem desperate to prove their point, i.e their claims of you'd be a fool to buy, don't do it under any circumstances. The higher price end buyers posts just correct the outlandish doom and gloom claims.

My position: I think the mid-higher end will hold up OK. We're buying a condo with large loan to value % at a rate of 4.79% interest to live in and hold long term. Better than paying rent, will have our own home, and don't really care if there is a short term drop or not - tho' I do think claims of a drop have been frequently exaggerated throughout the last 5 years or so people have been saying don't buy ...

[FarangNoi21]

Furthermore, if you are bringing your money from the US, you have the additional handicap that the US value is dropping by around 20% every year, so if you wait a year (unless you store your money in a foreign bank account), you may pay less for the property, but your money can be worth up to 15%-20% less, nullifying any 'savings'... and you'll still be competing with more buyers for the same property.

you think the usd is going to drop 20% every year? if this is the case, why not just invest in currency fund leveraged inversely against the dollar at 2:1 and make 40% profit yearly?

these threads are painful because people are clueless about money, math and economics.

[Casuarina]

these threads are painful because people are clueless about money, math and economics.

Well! There is no right and wrong in this world.

The rich are the one who took risks in an investment. Those laggards who always needed to justify all the theories usually miss out on golden opportunity.

[pkrv]

I quite like this thread it focuses on Bangkok Condos and presumably the 49% rule. Because this is all pretty bloody tricky stuff!

Ferang with Thai partner?

Ferang with Ferang?

Investor?

Just looking to live and breathe?

Area of interest in Bangkok?

Rent?

Buy?

Drive?

Don't drive?

Budget?

Lease?

Freehold?

Thai bank account?

No Thai bank account?

Working locally?

Working in another/home country?

Retired?

Country of origin?

Local?

FX situation?

Pension?

Income?

Adgenda?

I have probably missed out tons - Best advise I could give - do what you think best for your situation.

Edited October 13, 2007 by pkrv

[AmericanGuy1066]

...

these threads are painful because people are clueless about money, math and economics.

FN21

Why does someone who is all knowing like you read them then.

OP

You should also list all the other fatcors needed for your supply > demand hypothesis to work, and consider to what extent they appy in Thailand eg some products have a low PED and don't respond to your generalizations.

[DaffyDuck]

you think the usd is going to drop 20% every year? if this is the case, why not just invest in currency fund leveraged inversely against the dollar at 2:1 and make 40% profit yearly?

these threads are painful because people are clueless about money, math and economics.

Well, why don't you teach us, then, oh master of economics, math, and money?

So far, it has, and what I presented were additional considerations and variables one should consider - clearly, you disagree, and clearly you believe that taking absolutely no variables into consideration is smarter -- well, all considered, I think we can pretty much figure out where you are coming from...

[thaigene2]

Buying cheaper tomorrow will only apply to those less popular property (due to whatsoever reason) of which we may not even be interested. Unless there is an economy collapse.

OK - well let's wait and see then. You know it's been said (quite often recently) that any Western person born after 1970 has never lived (as an adult) through anything OTHER THAN economic growth. Food for thought. (I have no idea about your age Casuarina - and I don't direct that at you..).

I had an intersting conversation recently with a colleague - who holds an Economics MSc (around the age of 36) who said there was absolutely no indication that the consumer society/economy was headed for trouble - that growth was exponential.

Again, I guess we'll see.

[bingobongo]

i like this picture, you read it like a clock (clockwise that is).......notice where the pretty red dot is located.......... it has struck midnight (how appropriate wouldn't you say), emotions are best left out of financial decisions

as always, i enjoy the pretty colors......

Edited October 13, 2007 by bingobongo

[pkrv]

i like this picture, you read it like a clock (clockwise that is).......notice where the pretty red dot is located.......... it has struck midnight (how appropriate wouldn't you say), emotions are best left out of financial decisions

as always, i enjoy the pretty colors......

bingobongo - rent? - what is this strange concept? do I have to do this? or can it be ignored?

[Casuarina]

It is difficult to judge a property market in general. In fact, every individual need a home. There will always be demand for Low End Rental Property (Below THB 3500) backed by huge low income group. I strongly believe that this segment will hold firm.

Mid End Rental Property could be less stable due to huge supply (AP, Aspace, LPN, Supalai). There were news article that a huge number of the condo were purchased by speculators and investors who wished to rent it out (Target will be working professional and of course the foreigners). If the demand dries up or can't match the supply, you could be seeing a lot of them under auction. There are a lot of people selling their booking on Thai Website.

As for High End Rental Property, as long as expatriates still stay in Bangkok and company pays for their rental. The demand can be maintained unless they decided to move to Mid End Rental Property.

Nobody can predict the future. How many times did the economist make a correct decision? There are not too many Alan Greenspan in this world.

Historically, property price is always on an uptrend for long term. If you are buying for own stay, it is a gamble to wait for Short Term fluctuation. Unless, you really have better use of your cash.

FYI: Rental in Singapore gone double this year. Many who hesitated to purchase now finds themselves unable to afford the property once were in their range.

[fletchsmile]

Some good common sense from pkrv and Casuarina. I think we've realised it's best to take it in turns to respond to these end of the world posts. Totally agree on the need to split out market segments as well as geographies.

Bingo

If one day you will give us a recommendation of where to invest money, we'll take the sells more seriously. Only bankrupts are short everything

BTW Perhaps check your clock. Maybe the battery has stopped. You've been saying it's midnight and about to fall for months...or is that years...

Edited October 14, 2007 by fletchthai68

[thai_narak]

is it really cheaper now? what about baht's appreciation?

[pkrv]

is it really cheaper now? what about baht's appreciation?

IMO the Thai Baht has not really appreciated that much and indeed has depreciated against most currrencies (long term values) - it is now somewhere between 65 and 75 (about 68/69/70 ish) for Sterling (above long term average 65 but below max 75 ish). The only currency that is failing is the USD - Whist Thailand invest in USD reserves other currencies will appreciate against THB - I guess the US takes most of Thailand's exports? or oil/energy, priced in USD, is causing a problem?

Edited October 14, 2007 by pkrv

[peechap]

The good example for good price 30 years leasehold brand new condo.

The rajdamri price about 70,000 - 80,000 baht/sq.Meter

50 meter from BTS (sky train) ratchadamri.

The building instruction was finish. Ready to move in on Oct 2008.

Nearby leasehold such as Bann Rajprasong is about 90,000 - 100,000 baht/sq.Meter

[bingobongo]

thats it keep building..........i never understood how anyone can be emotionally attached to 4 walls

and given new supply is greater than normal.....the pricing will continue to go down......oh well c'est la vie

New condos built on shaky ground

Huge supply coming up this year and next adds places pressure on a red-hot market

http://www.bangkokpost.com/Business/15Oct2007_biz60.php

Edited October 15, 2007 by bingobongo

[pkrv]

thats it keep building..........i never understood how anyone can be emotionally attached to 4 walls

and given new supply is greater than normal.....the pricing will continue to go down......oh well c'est la vie

New condos built on shaky ground

Huge supply coming up this year and next adds places pressure on a red-hot market

http://www.bangkokpost.com/Business/15Oct2007_biz60.php

To hazard a guess in certain instances you may have to, in some way pay for the 4 walls? how you do it is down to you.

[PadThaiGuy]

Too soon to say if the market will come down.

There are several big condo projects that have come to a sudden halt lately.

Not a good sign for the people that bought off plan.

I'd be suprised if prices are higher a year or two from now.

[Casuarina]

Despite all those negative news, quite a number of Good Location Condo sold out within weeks. i.e. Noble Reflex beside Aree BTS, AP LIFE in Sathorn, AP LIFE in Sukhumvit, Pulse beside Major Ratchayolthin and etc.

Technically speaking, these condo were booked 100% as buyer paid only 10% downpayment or more for brand name developer like Noble.

Unless you are in the market, it is difficult to imagine the feeling of "missing out" an opportunity to own a condo. Some projects were sold out even before it is launched. To buy from the speculators, you will easily need to pay an addition THB 100,000 more as there is a penalty of tranferring booking +profit for speculators.

Everything is about Location, Location and Location.

I am sure there are still a lot of unsold units for Condo around less primed area like Srinakarin and Sukhumvit 77 which developer still struggle to sell it. For example, Four Wings (THB 3 million up), Supalai Bangna, Prima, Aspace Onnuj, Iris and many more small projects.

[quiksilva]

i like this picture, you read it like a clock (clockwise that is).......notice where the pretty red dot is located.......... it has struck midnight (how appropriate wouldn't you say), emotions are best left out of financial decisions

as always, i enjoy the pretty colors......

Your clock seems a bit off, according to my latest research the office market is actually closer to noon, so (to keep this post on topic) I hate to think how accurate the rest of that clock is.

But hey what do I know, my survey only track rents and occupancies on a monthly basis for every major office building in Bangkok with a net lettable area greater than 5000 sqm and forecasts trends based on all known planned new supply in both the private and public sector...

[bingobongo]

[pkrv]

Bingobong thankfully you do have a good sense of humour - but I'm afraid I can see exactly which side of the fence you are on

[cclub75]

Despite all those negative news, quite a number of Good Location Condo sold out within weeks. i.e. Noble Reflex beside Aree BTS, AP LIFE in Sathorn, AP LIFE in Sukhumvit, Pulse beside Major Ratchayolthin and etc.

Technically speaking, these condo were booked 100% as buyer paid only 10% downpayment or more for brand name developer like Noble.

Unless you are in the market, it is difficult to imagine the feeling of "missing out" an opportunity to own a condo. Some projects were sold out even before it is launched. To buy from the speculators, you will easily need to pay an addition THB 100,000 more as there is a penalty of tranferring booking +profit for speculators.

Everything is about Location, Location and Location.

What does it mean ? Could you stop for a while repeating "mantras" like a headless chicken ?

And let's try to think for a minute.

First, yes you're right... all the project you name were sold out... in a few days. In Noble Reflex, it was in one 1 day, with a demand x2 the offer...

Now, that's impressive. Newspapers are impressed. Gogos are impressed.

Now, I will tell you the reality...

Noble Lite, same developper, very nice, 300 meters from Noble Reflex (soi aree), finished in november 2006. Empty.

Centric Scene, beautifull nice trendy condo, Phayotin soi 9... Finished in may 2007... Totally empty. And I mean totally empty...

Theses projects were also "sold out" in a matter of days.

So to repeat "location location" doesn't mean nothing. In order to assess the market, you have to go a bit deeper.

All thoses beautifull units were "bought" by "investors"/speculators. It's obvious.

Now, you have to explain to me the odds for the rent market to absorb all thoses new units. Average buying price, 3 millions THB, rent like 25 000 THB. Who can rent all those new units ?

Foreigners ? Sure. Thais ? At thoses prices, they buy for themselves. To live inside.

Or to rent at 10 000, and in this case the financial sense of such an operation remains to be explained...

Second solution : flip and resale

Again, wishfull thinking. Or to other "investors"/speculators , worsening the situation in a vicious cycle.

Therefore : the market is a bubble. Nothing less, nothing more.

The market is going to be litteraly over flooded in the coming 1 or 2 years with thoses new trendy projects (look on Phaonyotin, it's amazing, even difficult to count).

With absolutly no "real" and "healthy" demand in front.

You can CRB-Ellis whatever you want : an empty building, even in mysterious Asia, is nothing but the sign of healty market.

Edited October 19, 2007 by cclub75

[pkrv]

I don't think it is that easy to explain. Don't forget if the building is built and finished it has been paid for. I have 30 days a year holiday that’s it and I know some people have bought at The Park just to escape the summer heat of the deserts. My apartment will appear empty.

I realise that the costs are significant to some but quite frankly are insignificant to others - Cars can cost more.

[Abrak]

Evidence of the near desperate state of the mid high end of the condo market is in the stock prices of the major players. Raimon Land's share price has lost 40% of its value since the beginning of this year (while the SET is up well over 25%). It is currently trading near all time lows since it came back from suspension from the last economic crisis. A similar story at Noble - it has lost about 80% of its value over the last 4 years while the underlying stockmarket has doubled - it is trading near its low for the year.

It is difficult to say that the underlying market is inherently healthy when some of the major players are struggling. Note that the developers selling to the Thais at the high end (Land & Houses) or the low end (LPN) continue to flourish.

[cjwong]

In the view point of property developer, as long as the unit is sold. It is not their problem if it is occupied or not.

Seems like a lot rich people bought Condos to keep their future mistress...........hummm....maybe that's the trend now.

If you want to talk about Property Developer's business, their margins are ridiculously high. Building cost per sqm is from THB 8,000 to 10,000. Not including the land cost. Most condo are selling from THB 60,000 per sqm. Noble Reflex probably sit on 1 rai land. The land cost is about THB 50,000,000.

I think most expert here can do the calculation.

Are you in the right business?

[Casuarina]

Dear CClub75,

Well! Some condos looks empty during the weekend as the occupant only stayed there during working days. They will go back to their landed property to stay during weekend.

Some bought it as holiday home as PKRV mentioned.

Some bought it as spare guest room to accommodate their family members who will visit Bangkok occasionally.

Some bought it for their children who will be attending University in Bangkok.

Some would have bought it to try to rent it out without success as you mentioned. (Nobody knows what is the percentage of these people?)

To some, it is really their spare cash. How often do you see University Students driving Mercedes Benz, BMW and etc? If you have some spare time, go visit ABAC and many other Private Universities. Foreigners are not the only ones with purchasing power. There are a lot of RICH locals too. They do not need to justify to us why they invest into a Condo near BTS.

Sometimes, I find it difficult to believe too. At the end of the day, if they can pay the downpayment (quite substantial for some developer) and able to secure a bank loan, it means they have purchasing power. I am sure Local Bank has some guideline before they approve loan to an individual after 1997. Some of them probably paid in cash too.

If they are not in the market to sell, do they care if the market is overheated.

If I am to ask you a question, what is your definition of "empty"?

Edited October 19, 2007 by Casuarina

[cclub75]

If I am to ask you a question, what is your definition of "empty"?

Empty... like Centric Scene in the night. I'm looking at it from my balcony... At various times... Since may. Empty like... less than 10 units with light in a building that, I quote, " is a luxury condominium near Aree BTS station located just the opposite of Shinawatra Tower 2 on 1 ? rai land piece, 24-storey high, 206 units, sized 45-114 square meters and selling price range between BHT 2.97 million and BHT 4 million." (source here).

The project was launched in 2005.

But, I might agree, with you : maybe an army of students will eventually arrive to occupy the units bought by their sweet parents.

All your comments (holiday room, spare room, children rooms etc.) are covering part of the reality.

But a very small one in my opinion.

My observations are linked to Phaonyotin (where I live) and Lad Prao. It would be interesting to have the feelings and comments of people living in other areas. I go sometimes on Sukhum... the situation looks much worse, with even more units to come.

But again, from my perspective, this market is not healthy. It can't be.

Edited October 19, 2007 by cclub75

[cclub75]

In the view point of property developer, as long as the unit is sold. It is not their problem if it is occupied or not.

Are you in the right business?

I never said that property developer was not a good business.

On the contrary, their financial results are very good. Good enough to impress gogos.

And indeed : they couldn't care less. A unit sold is a unit sold.

But, by saying that you are covering only half of the issue.

If the market has no real buyers anymore... the developpers will go down, like they did in 97.

Therefore, you can't separate them.

[Casuarina]

If I am to ask you a question, what is your definition of "empty"?

Empty... like Centric Scene in the night. I'm looking at it from my balcony... At various times... Since may. Empty like... less than 10 units with light in a building that, I quote, " is a luxury condominium near Aree BTS station located just the opposite of Shinawatra Tower 2 on 1 ? rai land piece, 24-storey high, 206 units, sized 45-114 square meters and selling price range between BHT 2.97 million and BHT 4 million." (source here).

The project was launched in 2005.

But, I might agree, with you : maybe an army of students will eventually arrive to occupy the units bought by their sweet parents.

All your comments (holiday room, spare room, children rooms etc.) are covering part of the reality.

But a very small one in my opinion.

My observations are linked to Phaonyotin (where I live) and Lad Prao. It would be interesting to have the feelings and comments of people living in other areas. I go sometimes on Sukhum... the situation looks much worse, with even more units to come.

But again, from my perspective, this market is not healthy. It can't be.

You should be happy if you owned the property where you are staying in right now. It must be worth a lot of money to sell it now.

[think_too_mut]

In the view point of property developer, as long as the unit is sold. It is not their problem if it is occupied or not.

Why is it leading property developers in the US and Australia to cut their operations 30-60% now?

Property developer - that's probably the worst business to be in. In downturns, they are first go. In booms they are last to return.

While it last, they pump it up as much as they can. That is what was happening in Thailand, pretty much as anywhere.

At Thai labor cost and half (or still cheaper) than western prices many made good money selling to retiring baby boomers to whom it all looked a bargain, lifting the prices for everyone else.

Edited October 20, 2007 by think_too_mut