Is There A Condo Bubble In Bangkok?

[craigt3365]

PKRV: I hear ya. But I could have easily bought a condo the same size as mine for exactly what you purchased yours for in London. As you know, prices have a fairly large range, even in the same neighborhood. 3 blocks from my old apartment is where all the hi-so live. Including where that famous Brit, John Lennon, use to live. Those units are now well into the 1.5 to 2.0 million USD, and way up from that (and yes, much larger). Same as in Bangkok, and everywhere else, prices range from low to high. But you are absolutely correct, the dollars dive has made everything much more expensive on a global basis for us in the US. At least 20% more in Thailand in the past 4-5 years.

So, yes. Compared to London or Manhattan, Bangkok is way cheaper. But you can't compare Bangkok to either Manhattan or London. Apples to oranges. What amazes me is how fast the prices have run up. We saw that in Tokyo and now in China. Recently in the US. Tokyo and the US crashed. I think China will also. And that won't be good for Thailand. There are booms and busts in real estate and economies. History repeats itself.

I am from the US, but not US based. I am only in the US a few months a year to visit my ailing parents. Most of the time cruising around Thailand, and quite a bit of time in other places around the world. Heading to Panama and Costa Rica for a few months shortly and just got back from 2 months in China and a month in Russia/Siberia. You think there is a bubble in Thailand, check out China. Unreal....

[pkrv]

Hi craigt3365 - It is impossible to work out isn't - You have to understand the nationality of the overseas buyer and what property has done in the past (e.g. I bought in the UK at 11.55m THB (today’s prices) 13.5 years ago, now worth 56m THB).

There are old adages in 'The City', 'The money has to go somewhere', and 'Follow The Money'. It may be that Bangkok is now becoming more ‘mainstream’ and that nowadays you have to think of other countries to invest in?

China - No

KL/Malaysia - NO

HK - Too expensive

Singapore - Too expensive

others have mentioned the Philippines and Vietnam - don't know.

I still think there are bargains to be had in Thailand, perhaps just not in core areas anymore.

Edited November 12, 2007 by pkrv

[TonyLeung]

looks like it is about to hit the fan in the USA.

[pkrv]

looks like it is about to hit the fan in the USA.

It is difficult to see - All we know is that the USD has devalued against most currencies, so US citizens will perceive Thai prices to be higher than they are used to, almost everyone else don't. In fact the rate has improved over the long term average.

I don't actually pay much attention to the property market in the US it is of absolutely no interest to me. I know there are some issues - but impact on Thailand don't think so.

I noted george just posted regarding a property developer

http://www.thaivisa.com/forum/index.php?showtopic=153252

And this mentioned India as a potential opportunity. I did actually consider this some time ago. But much like Malaysia and the US, laws are based on Religion not Human Rights/Secular Ideals (I believe in 'spiritual consent’, not 'spiritual rape').

Though Thailand is not a shining example in Human rights/Secular ideal IMO it is infinitely better on this subject, and this is IMO an important part in any nation’s development.

So a Bangkok Condominium bubble (if it exists) could IMO become a Condominium shortage in the very near future. I have yet to see an affordable alternative in the region

[craigt3365]

PKRV: Right on. I hear ya. I don't really care about property in the US either, just happen to be here and see what is going on right now. It could hit the fan...or the fed could help ease things a little. Not sure what will happen yet. But if it does hit the fan, it will be a global issue. I heard of a UK bank yesterday reporting big problems with subprime loans...

I spent a month this past summer looking at property from Rayong to Krabi. Really focusing on Hua Hin. It was educational to say the least. I was especially surprised at the number of condos in Hua Hin that were vacant and either up for rent or sale. Owned by Thais from Bangkok. Lots of speculation going on...which could be a problem...and maybe not. Only time will tell. That speculation is what is hurting the US right now...at least in the hot spots like Vegas, Florida and S. California. The same thing happened in the early 90's.

Great posts here. Love reading them!!!!!

Craig

[thaigene2]

PKRV - despite all I and others have posted here and elsewhere, personally, I don't think you have anything to worry about in your retirement pad. It seems nearly finished and as long as you meet the retirement visa specs then you'll be fine.

Enjoy it. Seems like a great locale just down from Central Chit Lom (chai mai?)

We're talking about living here with families, spouses, speculators and other long-term issues - these probably don't affect you..so relax mate! What's the worst that could happen? Another coup? Shouting down foreigners? So what..then you go to Hua Hin for a couple of months..(with your new girlfriend)

TG2

[donx]

And this mentioned India as a potential opportunity. I did actually consider this some time ago. But much like Malaysia and the US, laws are based on Religion not Human Rights/Secular Ideals (I believe in 'spiritual consent’, not 'spiritual rape').

Though Thailand is not a shining example in Human rights/Secular ideal IMO it is infinitely better on this subject, and this is IMO an important part in any nation’s development.

So a Bangkok Condominium bubble (if it exists) could IMO become a Condominium shortage in the very near future. I have yet to see an affordable alternative in the region

Your views make me laugh. You have property in the UK where you have the "Church of England". I've never heard of any "Church of America" or "Church of the United States". And if you really are looking for a Secular government in the region why not invest in Myanmar? Look at how they treat their religious leaders. Besides, they have had fewer military coups than Thailand over the last 50 years.

For me I'm interested in US property because I live there and work there. I don't see the laws here to be much different than they are in the UK or most of Europe (which I travel to on a regular basis). As for my interest in Thailand real estate, I'm married to a Thai lady. If I wasn't married to a Thai, I doubt I would even be considering investing in Thailand or anywhere else in the region.

[pkrv]

PKRV - despite all I and others have posted here and elsewhere, personally, I don't think you have anything to worry about in your retirement pad. It seems nearly finished and as long as you meet the retirement visa specs then you'll be fine.

Enjoy it. Seems like a great locale just down from Central Chit Lom (chai mai?)

We're talking about living here with families, spouses, speculators and other long-term issues - these probably don't affect you..so relax mate! What's the worst that could happen? Another coup? Shouting down foreigners? So what..then you go to Hua Hin for a couple of months..(with your new girlfriend)

TG2

Well I guess thanks, if you think we are not all in the same boat you are mistaken.

[pkrv]

And this mentioned India as a potential opportunity. I did actually consider this some time ago. But much like Malaysia and the US, laws are based on Religion not Human Rights/Secular Ideals (I believe in 'spiritual consent', not 'spiritual rape').

Though Thailand is not a shining example in Human rights/Secular ideal IMO it is infinitely better on this subject, and this is IMO an important part in any nation's development.

So a Bangkok Condominium bubble (if it exists) could IMO become a Condominium shortage in the very near future. I have yet to see an affordable alternative in the region

Your views make me laugh. You have property in the UK where you have the "Church of England". I've never heard of any "Church of America" or "Church of the United States". And if you really are looking for a Secular government in the region why not invest in Myanmar? Look at how they treat their religious leaders. Besides, they have had fewer military coups than Thailand over the last 50 years.

For me I'm interested in US property because I live there and work there. I don't see the laws here to be much different than they are in the UK or most of Europe (which I travel to on a regular basis). As for my interest in Thailand real estate, I'm married to a Thai lady. If I wasn't married to a Thai, I doubt I would even be considering investing in Thailand or anywhere else in the region.

donx - ?????? Sorry a secular society would protect a religious leader and a child against all odds. Is it not that Thailand is actually tolerant that makes it a great bet, well it is certainly IMO.

Edited November 13, 2007 by pkrv

[donx]

donx - ?????? Sorry a secular society would protect a religious leader and a child against all odds. Is it not that Thailand is actually tolerant that makes it a great bet, well it is certainly IMO.

pkrv: Go look up the word secular in your Oxford English Dictionary. I just did. "not religious, sacred, or spiritual". You are confusing the term 'secular' with the term 'humanitarian'. Sadam Hussein's Iraqi government, by definition, was secular but was by no means humanitarian. Please don't confuse the two. They are not synonomous.

[pkrv]

I understand what you are saying - and true you could say dictators do rule under a secular concept (but I have been combing this with Human Rights as well) and I believe that Thailand has sufficient backbone not to go down that route so again a good bet IMO, and indeed one of my reasons for investing.

However you could also say generally under dictators there is room only for one god, and that is themselves (eg Hitler) unless of course religion is too ingrained and then they have to be a bit more cunning in the ‘deification process’.

[ray08]

Cant give exact sales facts about property market because truth hard to find , but as i have been looking at market very closely over the past 18 months ,here are a few points i have noticed ,as

I have dealt in property in various markets , but not here.

A) Monitoring most major estate agent websites ,which advertise on Bangkok post , Nation , I found a very very large number of properties sitting there for over a year , some even increasing selling price , even though cannot sell at lower price [

b ) A lot of TALK about high end condo price now Thb 120-150K per square meter on resell sales prices on , an increase of over 30 % on purchase price a year a go of the plan , Now i know you can even ask thb200k per square meter , but the reality is this the only real price of property is what someone is willing to pay today , and i cant find a lot of people paying a speculator a 30% above the purchase price on a unfinished property which they purchased a year ago off the plan , what is happening is ,there is no high resales ,only high resale asking prices with no takers

C ) This is a factual experience , I looked at a 2 1/2 year old fully sold out Grade A building that is now reselling at Thb 100 k psm ,but the developer can still sell some units unsold in the building for thb 75 k psm , original off the paln was thb 65 k psm So in my opinion there is no real bubble , just speculators trying to get a good return on investment prices , Eventually as these returns will not eventuate I suspect many will just hold on and keep the asset without dropping asking price which has happened in the past ,question is will these people continue to buy new property when they cannot sell old one ??

[craigt3365]

ray08: You saw exactly what I have seen also. Both in person and viewing websites for the past year or two. I check these websites out from time to time and have seen several properties still there....after more than a year.

Like I said before, I spent a fair amount of time in Hua Hin looking at properties. Sure, the new developments were selling fairly quickly. But many times I heard that somebody had bought 2,3,4 even 6-8 units. Pure speculation. These units were still empty a year after they were purchased, with inflated prices. If the economy starts to really slow down, things will change quickly.

One problem they started talking about in Las Vegas (where I am now visiting my ailing father) about 2 years ago was how housing was becoming unaffordable for the average person. Well, guess what...prices have dropped big time. After rising big time for 3-4 years. Speculators who purchased 10+ homes at a time are now stuck and can't sell what they have...even at reduced prices...and they can't even rent them. Just too many properties on the market. And here in the US, they will drop prices to sell...not like in Thailand!

[pkrv]

ray08: You saw exactly what I have seen also. Both in person and viewing websites for the past year or two. I check these websites out from time to time and have seen several properties still there....after more than a year.

Like I said before, I spent a fair amount of time in Hua Hin looking at properties. Sure, the new developments were selling fairly quickly. But many times I heard that somebody had bought 2,3,4 even 6-8 units. Pure speculation. These units were still empty a year after they were purchased, with inflated prices. If the economy starts to really slow down, things will change quickly.

One problem they started talking about in Las Vegas (where I am now visiting my ailing father) about 2 years ago was how housing was becoming unaffordable for the average person. Well, guess what...prices have dropped big time. After rising big time for 3-4 years. Speculators who purchased 10+ homes at a time are now stuck and can't sell what they have...even at reduced prices...and they can't even rent them. Just too many properties on the market. And here in the US, they will drop prices to sell...not like in Thailand!

Hi craigt3365 - take care ray08 - 1 post - yet actually does understand the market we are seeing this a lot lately your posts are of more value.

[quiksilva]

Cant give exact sales facts about property market because truth hard to find , but as i have been looking at market very closely over the past 18 months ,here are a few points i have noticed ,as

I have dealt in property in various markets , but not here.

A) Monitoring most major estate agent websites ,which advertise on Bangkok post , Nation , I found a very very large number of properties sitting there for over a year , some even increasing selling price , even though cannot sell at lower price [

b ) A lot of TALK about high end condo price now Thb 120-150K per square meter on resell sales prices on , an increase of over 30 % on purchase price a year a go of the plan , Now i know you can even ask thb200k per square meter , but the reality is this the only real price of property is what someone is willing to pay today , and i cant find a lot of people paying a speculator a 30% above the purchase price on a unfinished property which they purchased a year ago off the plan , what is happening is ,there is no high resales ,only high resale asking prices with no takers

C ) This is a factual experience , I looked at a 2 1/2 year old fully sold out Grade A building that is now reselling at Thb 100 k psm ,but the developer can still sell some units unsold in the building for thb 75 k psm , original off the paln was thb 65 k psm So in my opinion there is no real bubble , just speculators trying to get a good return on investment prices , Eventually as these returns will not eventuate I suspect many will just hold on and keep the asset without dropping asking price which has happened in the past ,question is will these people continue to buy new property when they cannot sell old one ??

Great first post Ray, welcome.

A) Sure there will always be some dogs that cant be shifted, and there will always be some corporate clients who must be catered to despite unrealistic expectations. Ads are good to appease such people.

True for the most part,

C) True again, and I can answer you that they are not buying any more. Many are trying to sell, in fact just recently a landlord asked me to help him to sell 12 units that he acquired as an investment in a single project (I shall not name names) and predict that I will be getting many more such calls going forward.

(BTW I declined because we don't undertake resales, and anyway I'm in corporate real estate).

[Hampstead]

Well said Hampy!

Thankyou , hope you living that great rock n roll life

[xyborg]

<br />I like the questions but unfortunately I have no statistics. I love to see the answers to all the question because recently I have been buying/committing on those condos in a walking distance to sky train stations along Sukhumvit. The average price is Baht130,000 per sqm (two years ago, 80,000 baht range)<br /><br />The bubble is when prices are lifted up by speculators to the level that eventually no true long term investors would buy at that high price range as happened in Hong Kong and Singapore many years ago but never in Thailand. For Thailand, it was the bubble created by the builders who could not even find a speculator in bad time in 1997 and having to leave many see-through buildings unfinished. Their debts formed part of many non-performing loans. It is odd that through Thai history so far, price range of a condo has never come down. The risk for a retail investor is in paying a deposit and instalments in total of 30% range with the developers and the developers run short of money to complete. There is not much legal protection for the buyers. Another risk is when completed and due for 70% payments for final transfer, there is a prevalent default of the buyers, then the price could drop substantially. From my experience todate, I have never been aware of any project falling under this category.<br /><br />Thanks for the questions and am looking forward to other inputs.<br />

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

Blimey dont know where your'e buying I am paying 40-45000 baht per m2. 5-10 mins walk to BTS

[Hampstead]

Hi Hampstead - Rental v.s. Ownership well horses for courses here there will be no answer.

It sounds like you have a fab pad However if you can find out how much the condo cost when it was built 12 years ago and how much it is worth today that would definitely shed some light onto the matter - you may be in a position to provide some good hard figures. Could you help on this one? - PKRV

yes horses for courses

so few facts about the second hand condo market for property over 10 years old in bkk

it seems the estate agents are also confused

looking at the many adverts it seems that say asoke towers has agents asking for 45ksqm, then other agents asking 60ksqm

the same goes for president park, some ask 42k others 45,51 and 61k

and please before anyone starts selling the idea of some units should be priced differently, yes i agree every unit will have a different price but a 30-50% difference shows a lack of understanding by the many estate agents in bkk on how to value units in the older buildings.

so take President park in soi 24, some agents are asking for 42k a sqm then on the same soi the new projects are asking 120k a sqm, now in any mature property market in the ist world, president park will be very attractive to many buyers, is this so in the emerging property market in bkk dictated more by new project speculation? of course not, president park owners are finding it a pain to shift their units.

Property investments in bkk in my mind are short term investments, people look to sell when the demand for their project is at its highest point, once the demand withers away thats the warning sign to head for the exits, the seller doesnt want to be left in 2017 trying to shift a unit which was once a proud darling of the bkk skyline and is now just another old building competing for buyers who seem only interested in the new projects of the day even if the new projects are 3 times the price of the older building

As for the place i stay, it is only for rental, no sales of the units as i understand

[Hampstead]

Hi Hampstead - Rental v.s. Ownership well horses for courses here there will be no answer.

It sounds like you have a fab pad However if you can find out how much the condo cost when it was built 12 years ago and how much it is worth today that would definitely shed some light onto the matter - you may be in a position to provide some good hard figures. Could you help on this one? - PKRV

Let me try to give a partial answer to that based on two low-rise condos now selling off-plan with similar completin dates around 18-20 months from now. One is called "Seed" on Pahonyothin Soi 14 (40 metres in from pahonyothin) and the other is called "Prom" on Pahonyothin Soi 2 (but actually quite far up - around Soi 6 the way it works out). Both are very near the BTS and both a short walk (5-10 mins) to the trendy Soi Aree shopping/restaurants.

Prom is asking 80,000 M2, while Seed is asking 43,000 M2. While Prom has a pool and fitness room and Seed does not, and using Hampstead's theory above, as scarcity becomes a thing of the past, and as all those Thais who bought to rent out and shift assets for tax purposes (using Donx's thesis), the same conslusion can be reached.

Ten years from now, the guy who paid 8 million bought for an average size 2-bdrm is asking probably twice as much for rent as the guy who paid 4.3 million. That would be correct, right?

You really think he will get twice as much ten years from now than the guy who paid nearly half as much in vurtually the same location? I don't. Hampstead's theory, to my mind, is more likely the one that will stand the test of time on whether buying all these little joints at realtively high prices makes sense ten years from now - in a palce where he rightly points out is already a good-deal for rentals - and they are dropping too!

yes i agree, the aree area in my mind is a very fickle area, one small soi's difference and the prices drop by half the value as you say

Edited November 19, 2007 by Hampstead

[Irene]

My comments are in bold type:

Like I said before, I spent a fair amount of time in Hua Hin looking at properties. Sure, the new developments were selling fairly quickly. But many times I heard that somebody had bought 2,3,4 even 6-8 units. Pure speculation. These units were still empty a year after they were purchased, with inflated prices. If the economy starts to really slow down, things will change quickly. I can consider myself as a type of investors (not speculator) you referred to and like to share my experience with others. I buy condos as an alternative to stocks. Only 10% of all my condo units are currently vacant and my net return from my condo investment is in the range of 10%.

One problem they started talking about in Las Vegas (where I am now visiting my ailing father) about 2 years ago was how housing was becoming unaffordable for the average person. Well, guess what...prices have dropped big time. After rising big time for 3-4 years. Speculators who purchased 10+ homes at a time are now stuck and can't sell what they have...even at reduced prices...and they can't even rent them. Just too many properties on the market. And here in the US, they will drop prices to sell...not like in Thailand! I also wonder why there has not been a drop in prices in Thailand even with an empty condos for years. This may be due to the slow process of foreclosure or people are so rich that they still can wait for good time.