Bangkok Condo Price Trends

[think_too_mut]

Just read it in The Economist about (almost non-existent) Japanese secondary property market.

One interesting fact is about properties that have had more than 1 owner:

UK 89%

US 76%.

France 66%.

Japan - only 13%.

Would anyone have any idea what that figure might be in Thailand? I would guess, flipping of brand new condos by speculators would be considered as 1 owner.

The reasons for Japan are earthquakes, use of cheap building materials for 30 years life cycle of a property and sanitation obsessed Japanese who hate to settle into a previously occupied condo.

[ray08]

Just read it in The Economist about (almost non-existent) Japanese secondary property market.

One interesting fact is about properties that have had more than 1 owner:

UK 89%

US 76%.

France 66%.

Japan - only 13%.

Would anyone have any idea what that figure might be in Thailand? I would guess, flipping of brand new condos by speculators would be considered as 1 owner.

The reasons for Japan are earthquakes, use of cheap building materials for 30 years life cycle of a property and sanitation obsessed Japanese who hate to settle into a previously occupied condo.

Flipping a unit by a speculator really should come under new unit, except for a bit of paper changing hands it is unlived in and brand new , so we if take that out of the equation and look at the appetite for new developments people have here in Thailand , I would be supprised if it hit double digits , it is one of the major downsides of property here , Maybe some real estate agent might have some real figures somewhere , would very interested.

[think_too_mut]

it is one of the major downsides of property here

If you live in the condo, the price and resale are immaterial.

But for those who have hopes and goals (or luring others to try) to profit after a year or whatever, just imagine: somebody had paid, say, 6 mil baht for a condo, cash, and 1 year later went to a bank to ask for nothing more than 1 million baht "equity loan" - would he get a satang?

More likelly, he will be laughed at out of the bank. That tells you a bit about resale value of second hand condos in Bangkok. The bank would know there is no realistic chance to recover the money as the second hand condos are next to unsellable.

Before somebody says "we are farang, not Thai", google "equity loan in australia" and then "equity loan in thailand".

In Thai, 2-3 and looks more like commercail than residential thing. As early as 3rd googled line already talks about "student loan".

Equity loan is hardly known in Thailand, abundant in Australia and elsewhere. Transplanting western market rules to Thailand has never worked. It was good with subprimes but otherwise no.

Edited January 12, 2008 by think_too_mut

[howtoescape]

it is one of the major downsides of property here

If you live in the condo, the price and resale are immaterial.

But for those who have hopes and goals (or luring others to try) to profit after a year or whatever, just imagine: somebody had paid, say, 6 mil baht for a condo, cash, and 1 year later went to a bank to ask for nothing more than 1 million baht "equity loan" - would he get a satang?

More likelly, he will be laughed at out of the bank. That tells you a bit about resale value of second hand condos in Bangkok. The bank would know there is no realistic chance to recover the money as the second hand condos are next to unsellable.

Excellent point for buying anywhere, if the banks dont offer a decent chunk of the properties alleged value as a mortgage in reality it isnt worth what you think it to be.

[thaigene2]

Well I'm still waiting to see how many of those thousands of condos for sale that we're bought off plan by Thais (where they need only pay a fraction of the price prior to completion) will rely on a bank loan to actually complete the big 80% hit if they can't flip prior to that.

I wonder if this might be Thailand's own "sub-prime" crisis in the making..what happens if 50% of the "buyers" don;t buy in the end? Does the building get finished? Does it ever receive an occupancy licence if the developer can't get eough money from the bank to finish the building?

[backflip]

"Does the building get finished?"

Of course it does. When a condo building doesn't sell as planned, it becomes a "service apartment" building. Surely you've noticed the numerous "Fraser Suites" developments around Bangkok. However, to judge the conversion as a financial failure would be foolhardy on your part. In the long term, the developer gets a substantially greater return for an apartment. Recently, a developer announced that only 10 units, out of 77, had sold. The ten buyers were offered a choice: the return of all of the monies they had paid, or a condo unit in another of the developer's projects. The 77-unit building has been redefined as a serviced apartment.

[bingobongo]

hi there backdoor, er i mean backflip

oversupply, sham elections, and a slowing economy will get you every time....................

New condo launches likely to fall 25%

New condominium launches this year are likely to drop by 25% from 2007 due to higher competition in the market and rising construction costs, says Mayta Chanchamcharat, chief executive officer of the developer Plus Property Co. New condo units would total less than 30,000, down about 25% from last year.

http://www.bangkokpost.com/Business/16Jan2008_biz44.php

[backflip]

bingobongo,

You will always find an excuse to not invest in Thailand real estate, and that's OK with me. What I find interesting is your negative spin on every piece of news that relates to Thai real estate. When new projects are announced, you crow that it will add to the oversupply, and it's a sure sign that the Thai economy is in shambles. When new projects aren't announced, you crow that is an indication that the Thai economy is in shambles.

Even with the falling dollar, the troubling Thai political landscape, and your constant braying, the value of my Thai real estate investment has almost doubled in four years. I'm not sure, but I bet that's a lot better than your Nationwide Flex account.

[buddhafly]

i don't mind if they build 25% or whatever % less new condos...

it's just regulating the supply, dictated by market demand,

and it means those who have bought will have a better chance of renting out or selling.

[trajan]

bingo...a large drop in condo launches is a good thing if supply is overdone.....thanks for the good news (even though you iintended it to be a negative slam on Thailand)

[ray08]

bingo...a large drop in condo launches is a good thing if supply is overdone.....thanks for the good news (even though you iintended it to be a negative slam on Thailand)

I am not an Real estate Agent , or even keen on buying in Thailand but a 25% drop in new condos can be made out as

A ) New supply down 25%, better buy what is on market because there will be an undersupply

B ) New supply down 25% , never a better time to buy as there is an oversupply and prices are down on real levels

[quiksilva]

The 'good' thing about this from my perspective is that it shows that developers are now taking note of demand. This may not sound like much to some but for Thailand this signifies that the market is maturing.

One of the reasons that there was soo much over supply last time was because developers refused to read the writing on the wall and adopted the 'field of dreams' development strategy: "Build it and they will come" - but they didn't. Most of this supply was driven by egotism.

Even if their egos did need to erect some huge property on nothing more than a whim, it is much harder to get financial backing without demonstrating that you have a very solid business plan. Obviously there are those who are wealthy and do not need financial support to develop the edifice of their choice, and very often these end up being the properties that eventually fail.

Edited January 21, 2008 by quiksilva

[Raptor7]

yes, I agree...the developers are being more realistic in terms of the market and the lenders are being more conservative and realistic...

although Thailand is far from a developed economy yet (with fine-tuned market forces and regulation), it's a step in the right direction (and hopefully will avoid another 1997 scenario at least for awhile)...

[ray08]

yes, I agree...the developers are being more realistic in terms of the market and the lenders are being more conservative and realistic...

although Thailand is far from a developed economy yet (with fine-tuned market forces and regulation), it's a step in the right direction (and hopefully will avoid another 1997 scenario at least for awhile)...

But up to now i don,t beleive the developers are being realistic in the asking prices , pushing prices up but with no increase in demand defies logic , Some will say " but thats Thailand" but somewhere along the line fundamentals must be there to ensure a stable market and not a Dot Com style bubble , If there can be some fundamentals and prices based on a REAL SUPPLY AND DEMAND , the market would be much more solid and i think in the long term can have good growth in real terms ,

[thaigene2]

hi there backdoor, er i mean backflip

oversupply, sham elections, and a slowing economy will get you every time....................

New condo launches likely to fall 25%

New condominium launches this year are likely to drop by 25% from 2007 due to higher competition in the market and rising construction costs, says Mayta Chanchamcharat, chief executive officer of the developer Plus Property Co. New condo units would total less than 30,000, down about 25% from last year.

http://www.bangkokpost.com/Business/16Jan2008_biz44.php

I think all of you above are ,issing the main point (ignoring the 800 pound elephant in the room or whatever).

It's not about egotistical big-money families building edifices and defying logic of supply-v-demand (well maybe partly that - I grant you - cause they're getting egged on by the low-IQ grandkid they sent to Harvard Biz School - Tim Nice But Dim and his 'bright' ideas),

Most oof these places are built by companies - many publicly traded - and they are doing same thing as the US Banks and brokerage houses were doing - building it ANYWAY and extending credit to people who can't afford to buy-to-let, and who's grandfather arrived in the silk poo-yai shirt to countersign the loan.

Now the sub-prime thing has spooked them. They are withdrawing their horns - that's all. So there will be fewer stupid Thai speculators to sell to, as they won;t meet new borrowing standards to be set by the banks.

Remember, at present you can buy a place off plan WITHOUT showing whether you have the cash to pay 100% of the costs, OR a bank willing to lend the rest.

Anyone willng to bet that ISN'T about to change in near future? The developers are playing clever that's all..There wasn;t a market before (e.g. last year) and there isn't one now.

Edited January 21, 2008 by thaigene2

[bingobongo]

nice sales pitch........by the way, adding more inventory in an already oversaturated market is NOT a good thing......

i wonder if the "value" comes from 1) oversupply, 2) economy skidding 3) baht too strong 4) insert reason here

Bangkok Real Estate Offers Great Value

In 2007, there were nearly 20,000 condominium units under construction at some point during the year. In 2008, there should be even more property available, according to Dr Sopon Pornchikchai, president of the property consultant Agency for Real Estate Affairs (AREA), as reported in the Bangkok Post.

http://www.homesgofast.com/view_news/615/

[pkrv]

Bingo- I think someone has stolen your login and is now posting only positive articles: (the above in full)

The Bangkok real estate market is one of the best for international investors who are interested in the Asian market. Research shows that the property market there is much more affordable than other south Asian cities such as Hong Kong and Singapore. Bangkok has a good climate year round and is also close to many recreational activities, such as beaches and tropical resorts. Because of low labour costs and relatively inexpensive housing, many multinational corporations have made Bangkok one of their overseas homes. This has, in turn, drawn a lot of international businessmen and expatriates to the city looking for high quality housing at reasonable prices. There continues to be a healthy demand for property, meaning that investments should continue to rise in value for the foreseeable future. The city is one of contrasts, with its fast growing urban skyline and many old temples and historical sights. It is also growing increasingly cosmopolitan with high end shopping, entertainment and fine dining. Because of Thailand’s strict foreign ownership laws, apartments and condominiums are the option of choice for most international property seekers in Bangkok. In 2007, there were nearly 20,000 condominium units under construction at some point during the year. In 2008, there should be even more property available, according to Dr Sopon Pornchikchai, president of the property consultant Agency for Real Estate Affairs (AREA), as reported in the Bangkok Post. This means a great selection for those interested in getting a condo or apartment in this bustling city. It also means that those who are looking for off-plan property have a wide range of choices available. The top five locations for all new developments in and around the city were Sukhumvit-Rama IV, Phahon Yothin, Klong San, Bang Na-Trat and Pattanakarn. Residential property company Sansiri Plc (SIRI) expects the property market to grow this year from 8 – 12%. Many of the new units in Bangkok are in the middle and upper-middle income and price ranges and are located within Sukhumvit and Rama III areas. These properties are typically one and two bedroom units ranging in size between 45 square meters to 80 square meters. Moving up towards the high-end market, new additions were seen in the Sathorn, Silom and Sukhumvit areas, with the majority of condo units offered being two and three bedrooms from 90 square meters to 190 square meters. Bangkok recently opened a new airport, Suvarnabhumi Airport (BKK), often called New Bangkok International Airport, that is 25 kilometers east of downtown. This facility has flights from all over the world on most major airlines. The old international airport, Don Muang (DMK), is open for limited domestic flights. Property in ThailandSee what we have on offer in ThailandProperty For Sale ThailandInvestment property Thailand

[think_too_mut]

Bingo- I think someone has stolen your login and is now posting only positive articles: (the above in full)

How cruel and well thought....Bingo intentionally made a link to this utter rubbish comprised of destilled lies.

Never seen such junk in one place. It just made a caricature of itself.

Clever man this Bingo.

[pkrv]

Ahh hhhaaa we come to the final conclusion here - the intellectual battle in the film "The Princess Bride" (a film where the word inconceivable is re-written/and defined). Which cup do you drink from?

[bingobongo]

always remember pkrv, a fool and his money are soon parted......and do not get emotionally attached to four walls

well at least it is not "too much" of a bubble LOL.........thats it, keep building, add to that supply

AREA survey points to high supply

“If we look into the details, the current amount of projects waiting to be launched is a slight increase, which is not too much to be a bubble. Of course, if there are more new launch projects in the near future, they will create fierce competition in the market. But we may have to be aware of some effects due to supply over demand,” added Sopon.

http://www.property-report.com/aprarchives...amp;date=240108

[xyborg]

<br />Doh! How many times do I have to repeat that values are not the same as prices.<br /><br />The average price of BMR Housing units launched has come down, big deal. <br /><br />It is <u><b>NOT</b></u> the same thing as <u>Values</u> collapsing. <br /><br />What Area's graphs show is that developers today are targeting lower income market segments, nothing more than that. <br /><br />Oh and these projects are selling rather well too. <br /><br /><br /><br />

<br /><br /><br />

Having bought two cheap new condos 18 months ago and renting them out instantly I bought a 3rd and just a fourth which is rented before i even have paid for it. 1st two cost 1. 1million third cost 1.25 million fourth 1.41 million and i got a good deal as most are now going for 1.6-1.8 million. Have not had any of them empty for more than a few days and return on them is more than 11% . Depends what you buy and where and in this case I laugh my head off at the doom and gloomers!!

[localangmo]

Suggest you go back and take a look at Centric Scene.. Yes, may have been relatively emtpy in Oct.. We could only move in around July. I moved in with in only a couple of weeks of being allowed to..

Now the place is nearly full.. Take a look how many windows have curtains.. Hard to find one that doesn't.. Also, there are tenants here that work overseas or keep the place for when they come back to visit Thailand.. Met a Dutch guy and his wife working in Jordan as well as a Thai couple that live in London doing exactly that.. There are a few university kids here too.. My neighbours are rarely here.. guess they live up country.

Anyway.. Seems some people have nothing better than to sit around and think doom and gloom..

Ah yes.. last one.. I can see Noble Lite from my floor very clearly.. Lots of lights on.. Also before buying this place last year I took a look.. Only a couple of places listed for sale in May 2007.. Not exactly a flood of emty units people can't sell.. By the way.. the units for sale had terrible views looking at Sat dishes etc.. so wouldn't expect them to sell easy..

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.