Housing Bubble To Hit Los

[siddv]

Boy the USA is taking it up the behind right now and decoupling looks to be wishful thinking. Might it finally be a very good time to be patient and see condo and real estate prices take a major dump before buying in Bangkok. Might it finally be a time soon for bargain hunting.

[Pushit]

Boy the USA is taking it up the behind right now and decoupling looks to be wishful thinking. Might it finally be a very good time to be patient and see condo and real estate prices take a major dump before buying in Bangkok. Might it finally be a time soon for bargain hunting.

Sid:That's the feeling I have too, what happens in the US goes around.

[Rimmer]

Regardless of the US problem Thailand property has to take a dive, supply and demand factor. Over supply of condo's and not enough buyers.

[Irene]

Boy the USA is taking it up the behind right now and decoupling looks to be wishful thinking. Might it finally be a very good time to be patient and see condo and real estate prices take a major dump before buying in Bangkok. Might it finally be a time soon for bargain hunting.

From my experience as an investor in Thailand for three decades, I have yet to see the price level of condo property tumbling down. I do see unsalable property, plenty of them in which the owners are not willing to sell or not in a position to sell. I like to see my belief corrected.

[ray08]

In theory that should happen , but in reality ,i would not hold my breath for bargain hunters , the Thai investors will dig in, you might find a few foreign investors caught in a bit a trouble selling cheaper , but in general i do not beleive we will see a crash here in Thailand , at best will be a slowdown in the way prices have been creeping up

[Irene]

Boy the USA is taking it up the behind right now and decoupling looks to be wishful thinking. Might it finally be a very good time to be patient and see condo and real estate prices take a major dump before buying in Bangkok. Might it finally be a time soon for bargain hunting.

From my experience as an investor in Thailand for three decades, I have yet to see the price level of condo property tumbling down. I do see unsalable property, plenty of them in which the owners are not willing to sell at a fire sale price or not in a position to sell. I like to see my belief corrected.

[Mobi]

Boy the USA is taking it up the behind right now and decoupling looks to be wishful thinking. Might it finally be a very good time to be patient and see condo and real estate prices take a major dump before buying in Bangkok. Might it finally be a time soon for bargain hunting.

Excuse me for being dim, but why do you think the Thai market will follow the dramas of the US market? What is the connection ?

The Thai housing market has always been a law unto itself and largely unpredictable. That's not to say there will not be a downward movement, but I doubt it will be severe, and it will only react to local influences - political, economic, oversupply etc, and will have little to do with what's happening in the USA.

Correct me if I'm wrong

[cmsally]

In my experience when debts really do start to bite, then the bargains don't hit the open market as such.

You won't see the real bargains advertised, they will be sold within private circles.

[PhilHarries]

As far as I see it the only connection between the US economics and the Thai markets is, in the event of a crash of the US economy, there would be less dollars to be invested in Thailand. I wouldn't expect this to have a major impact on the Thai economy unless that crash brought down several other western economies and even then the effect on Thailand would not be so great as I'm sure Arab, Indian and Chinese money will plug the gap.

Of course if a US economic crash precipitated a world recession that may be a different story but I don't see that happening.

My guess is that Mobi is right and Thailand will continue it's own sweet way defying logic and predictions.

ps I'm no economist so if I'm talking bolleaux just ignore me.

<edit to add the ps>

Edited March 18, 2008 by PhilHarries

[quiksilva]

I have worked in the industry here since 1997 and I have to agree with Irene. In fact, in the 'bad old days' I saw occupancies increase in condo's during the 1997-1999 period as expat housing allowances gained value and many new Expats came to the country, mostly in the legal and finance industries to help with the restructuring effort.

Even so, despite the huge amount of bargain hunters that were scouring the market trying to "buy when there is blood on the streets", the co-owners that did get into financial trouble did not sell, they simply held on and rode out the trough and sold when the market came back. The banks could do very little about this.

Today capital markets are much more globalised but property markets are by and large primarily influenced by local conditions.

Thai banks fortunately did not have a large exposure to the US based securitized sub prime debts. The Americans also do not have a very large influence in the property market in Thailand, they are not even in the top 5 largest residential investors here. So I expect that we will see very little, if any, fallout from their hardships.

Will there be lots of empty condos in the coming days? Sure, I think most peole acknowledge that many condos are being brought to let. There was lots of empty condos last time too, but prices and rents held firm, even when market values 'fell' (although even this is arguable as there were so few transactions there were no market value benchmarks to be found). This time we do not have such a large influx of expats nor do we have appreciating housing allowances, so there will be pressure on high end rents, in some locales, to drop as buy-to-let investors compete for tenants.

Although I think the best buildings in the best locations should be fairly stable.

Today also note there are also plenty of transactions, people continue to buy and the prices that are being achieved are higher than levels achieved last year, and as long as people are prepared to keep buying developers will continue to supply.

Edited March 18, 2008 by quiksilva

[Naam]

Boy the USA is taking it up the behind right now and decoupling looks to be wishful thinking. Might it finally be a very good time to be patient and see condo and real estate prices take a major dump before buying in Bangkok. Might it finally be a time soon for bargain hunting.

From my experience as an investor in Thailand for three decades, I have yet to see the price level of condo property tumbling down. I do see unsalable property, plenty of them in which the owners are not willing to sell or not in a position to sell. I like to see my belief corrected.

where were you in 1998-99?

[Irene]

Boy the USA is taking it up the behind right now and decoupling looks to be wishful thinking. Might it finally be a very good time to be patient and see condo and real estate prices take a major dump before buying in Bangkok. Might it finally be a time soon for bargain hunting.

From my experience as an investor in Thailand for three decades, I have yet to see the price level of condo property tumbling down. I do see unsalable property, plenty of them in which the owners are not willing to sell or not in a position to sell. I like to see my belief corrected.

where were you in 1998-99?

I was here in 1998-99 and was cash rich. I was a very active seeker for cheap property. Not much success resulted therefrom. I succeeded in buying only three condos in Jomtien and that was accidental when I lost my way and ended in that condo. Nothing much was on the classified ads. I even went to see all the bankers to look for lists of their foreclosed property and they were too punched drunk on the losses to know how to dispose of those collaterised properties. There was no selling prices published and the executives had no interest in disposing them. They were just too concerned of their livelihood and finding ways to avoid jail sentences for their poor lending to their cronies. They looked up to IMF for instructions while IMF was not interested on the details.

[lannarebirth]

I wonder if all those people who were going to retire to Boca with their $2,000,000 nestegg will instead decide to move to Thailand with their somewhat smaller savings. Property may look cheap to them, where it looks expensive to you. Just thinking out loud...

[malcolminthemiddle]

Boy the USA is taking it up the behind right now and decoupling looks to be wishful thinking. Might it finally be a very good time to be patient and see condo and real estate prices take a major dump before buying in Bangkok. Might it finally be a time soon for bargain hunting.

From my experience as an investor in Thailand for three decades, I have yet to see the price level of condo property tumbling down. I do see unsalable property, plenty of them in which the owners are not willing to sell or not in a position to sell. I like to see my belief corrected.

where were you in 1998-99?

I was here in 1998-99 and was cash rich. I was a very active seeker for cheap property. Not much success resulted therefrom. I succeeded in buying only three condos in Jomtien and that was accidental when I lost my way and ended in that condo. Nothing much was on the classified ads. I even went to see all the bankers to look for lists of their foreclosed property and they were too punched drunk on the losses to know how to dispose of those collaterised properties. There was no selling prices published and the executives had no interest in disposing them. They were just too concerned of their livelihood and finding ways to avoid jail sentences for their poor lending to their cronies. They looked up to IMF for instructions while IMF was not interested on the details.

I bought a brand new shell condo on Asoke in 2000, 30,000 per m2. No idea whether that was a reduced price at that time?

[MrPaddy]

Funny I remember driving around and seeing a condo shell, all the concrete structure was complete, even a little cladding on the outside, but nothing else and would have been 20+ levels.

Around the 10th level, someone had screened in his condo shell that he had obviously bought, somewhat furnished it and was living in it. Nobody else in the building.

You cannot tell me deals were not to be had.

Many shells were sold much cheaper than they were going for the year prior to the crash.

LPN the largest budget condo developer built its fortune on taking over these collapsed deals and making a packet. They did not do that by buying properties with little to no deflated value.

A real estate agent I know that managed to sit through the whole process, told me he was renting out properties in Sukhumvit for prices next to nothing, some of these big houses with pools for astonishing prices.

If it happens again I am getting ready with a 10 year lease for a big house somewhere.

[jonniebkk]

Wasn't a Bangkok real estate agent (tireless promoters of real estate as a good investment) quoted in today's Post as saying prices for units in some non-CBD districts being down 10% already from highs about a year or so ago?

[Irene]

Funny I remember driving around and seeing a condo shell, all the concrete structure was complete, even a little cladding on the outside, but nothing else and would have been 20+ levels.

Around the 10th level, someone had screened in his condo shell that he had obviously bought, somewhat furnished it and was living in it. Nobody else in the building.

You cannot tell me deals were not to be had.

Many shells were sold much cheaper than they were going for the year prior to the crash.

LPN the largest budget condo developer built its fortune on taking over these collapsed deals and making a packet. They did not do that by buying properties with little to no deflated value.

A real estate agent I know that managed to sit through the whole process, told me he was renting out properties in Sukhumvit for prices next to nothing, some of these big houses with pools for astonishing prices.

If it happens again I am getting ready with a 10 year lease for a big house somewhere.

In 1998 and 1999, it was really dead until an agency called Financial Restructuring Agency was set up through parliament in 2000 and wholesale disposal of the unfinished condos began with money from Lehman who bought all the projects for cheap and resold them at huge profits but left with many buildings still standing in which I call them see-through buildings. No, it is the big guys who got them cheap and not the retail investors like you and me. Hence, the unit prices never come down because those who got them cheap sold them when the economy starts to recover. Take the Lake building as an example. It was meant as an office condo and one devloper led by one Englishman developed them via funds from a mutual funds and sold them per unit a few years ago at Baht 60,000 M2. That was not cheap but those who bought them at this expensive level made a 100% profit.

[Irene]

Wasn't a Bangkok real estate agent (tireless promoters of real estate as a good investment) quoted in today's Post as saying prices for units in some non-CBD districts being down 10% already from highs about a year or so ago?

I would never touch a non-CBD condo with a ten-foot pole. Their highs can never be sustainable by demand since Thais still prefer houses in those districts and foreigners would feel lonesome there. CBD is the best location especially when near to MRT and the Malls. Always remember Bob Hope's words, God does not make land in the CBD area anymore, hence the scarcity. There are scouting teams of all the leading developers searching for a vacant land or dilapidated buildings near any MRT or BTS station to build a condo. 30% profit is assured irrespective of what is happening in the States with their ridiculous oversupplies of houses tumbling down like a hose of cards. That has no relevancy to Thailand property market. On the contrary, because of their misdeeds, interest has to come down in the States that will pressure Thailand to do the same. With low interest rate, the Thailand property will benefit therefrom.

[realmadrid25]

Boy the USA is taking it up the behind right now and decoupling looks to be wishful thinking. Might it finally be a very good time to be patient and see condo and real estate prices take a major dump before buying in Bangkok. Might it finally be a time soon for bargain hunting.

I strongly agree. I also think that the baht will get stronger which will hurt the condo market even furthor. The reason why the Thai real estate markets have been doing great is because the global economies have been doing great. A recession in the USA means a recession everywhere, people who claim otherwise probably have a George Bush/America Vendetta and are incorrect.

[realmadrid25]

I wonder if all those people who were going to retire to Boca with their $2,000,000 nestegg will instead decide to move to Thailand with their somewhat smaller savings. Property may look cheap to them, where it looks expensive to you. Just thinking out loud...

People who think Boca is lovely will probably think Thailand is a dump. Plus, the USD is getting killed and will probably continue getting killed.

[jonniebkk]

A recession in the USA means a recession everywhere, people who claim otherwise probably have a George Bush/America Vendetta and are incorrect.

Have to agree...while the US certainly has a big problem on it's hand, which will take a few years to clean-up, all this talk about Asian economies being "decoupled' from the American economy and unlikely to suffer much from a US slowdown is a bunch of hooey! The US slowdown has barely began and Asian stock markets are down 20-30% over the past few months already...so much for that hot-air about decoupling

Domestic Asian demand, while growing, still is nothing compared to what might be lost from a slight slowdown in US purchases. Like the last run-up a decade ago...prices likely to stagnate and fall for those who are patient (if you're a buyer).

Edited March 18, 2008 by jonniebkk

[Irene]

Boy the USA is taking it up the behind right now and decoupling looks to be wishful thinking. Might it finally be a very good time to be patient and see condo and real estate prices take a major dump before buying in Bangkok. Might it finally be a time soon for bargain hunting.

QUOTE (realmadrid25 @ 2008-03-18 15:11:54) A recession in the USA means a recession everywhere, people who claim otherwise probably have a George Bush/America Vendetta and are incorrect.

Have to agree...while the US certainly has a big problem on it's hand, which will take a few years to clean-up, all this talk about Asian economies being "decoupled' from the American economy and unlikely to suffer much from a US slowdown is a bunch of hooey! The US slowdown has barely began and Asian stock markets are down 20-30% over the past few months already...so much for that hot-air about decoupling

Domestic Asian demand, while growing, still is nothing compared to what might be lost from a slight slowdown in US purchases. Like the last run-up a decade ago...prices likely to stagnate and fall for those who are patient (if you're a buyer).

This post has been edited by jonniebkk: Today, 2008-03-18 21:23:12

I can almost hear the Star-Spangled Banner roaring on these threads and yet from all the responses no one has denied that the US recession has no effects on Asian economy. But the contentious point is whether the property price in Thailand will go down. From past history of the US recessions, property price in Thailand has never gone down and not even when Thailand was the cause of the worldwide recessions in 1997 and 1998, the Thailand property did not go down. (Anyhow for your information, the latest news is that President Bush is still maintaining that there is no recession in the States and the economy is still resilient (Hank Paulson's favourite word)). I truly like this President who has so many times caused us to smile. It is difficult for anyone to have any vendatta against Bush and America since both are so likable in the world scene.

[roamer]

So many assumptions here based on whats happened before, as one of the most respected London city gurus pointed out on the BBC this morning,

"We haven't been here before"

There is no comparable situation. The world has moved on. The lessons you can learn from previous crisis's have little relevance here.

I know this, if shares in a leading US investment bank, working under one of the tightest regulatory systems in the world, can be worth $100 last week and less than $2 this week, that you can not blindly believe that Thai banks and financial institutions are immune to such problems.

To state that they had little exposure to sub-prime instruments is still unproven and there are many who would believe that Thailand has a massive sub prime problem within their own markets.

The truth matters less than what people believe to be the truth. A few rumors and a run on a bank is highly probable, try to put that one back inside the box when it happens.

I'm off to try something easier than predict whats going to happen.....my daughter has asked me if I can help her tattoo a soap bubble.

[PadThaiGuy]

I see the real estate agents/developers are all in agreement. Everythings just fine.

[Irene]

I see the real estate agents/developers are all in agreement. Everythings just fine.

I am neither an estate agent nor a developer. I am an investor in stocks and property and love to preserve my money as much as the others. I can hear some of the points of view especially a warning in not relying on past history and grateful for the constructive comments and warnings. Tatooing on a bubble stays in my mind.

[Irene]

I bought a brand new shell condo on Asoke in 2000, 30,000 per m2. No idea whether that was a reduced price at that time?

In 2000, I bought 30 year leased condo at Rajprasong at Baht 55,000/M2, another leased condo of 30 years at Baht41,406/M2 per public bidding and bought at Jomtien Baht 18,181/M2. Yours seem to be at lower than market price but likely to be the cost price to the seller who must have bought off-plan in 1998, if it is the condo at the corner of Asoke/Sukhumvit.

[steveromagnino]

LPN the largest budget condo developer built its fortune on taking over these collapsed deals and making a packet. They did not do that by buying properties with little to no deflated value.

I work for a company connected to LPN....I don't think that is how they remember the crash!

[quiksilva]

^^ Well said, LPN suffered badly.

30,000 psm sounds about right for the Asoke area in the post crisis times, it was difficult to achieve sales during that time so it is of little surprise to hear that they let it go for this level. For benchmarking you may consider that President Park on Suk 24 was fetching 55,000 Baht per sqm during the same time.

As for the remarks that seem to be directed at my previous post, I must state that I am most certainly not anti-American. I like America, although I will not dispute being anti-Bush, but that has nothing to do with this thread.

Will Thailand feel the slow down of the US? You bet they will! It will hurt exports, but not by as much you might like to believe. Thailand, nor indeed the world's financial well being is solely dependent upon a healthy US of A anymore.

The world is a big place now and yes we are all interlinked but Asia's growing consumption will almost certainly help cushion the blow of a slow down in the US.

If a strong Baht vs the USD will mean that some Americans will postpone their decisions to buy a condo, so be it, but it will not have a significant impact on the Thai property market and will certainly not influence values.

The reason is because as a nation, Americans make up only a small % of demand in Thailand. The Thai developers know this, and understand where the demand stems from and thus they are focussed on markets like the UK, Germany, Sweden, Russia, Hong Kong, Singapore, Taiwan, and Australia.

Please do not take this as an anti-American rant, there is no malice in this post, all I have stated are simple facts.

Edited March 19, 2008 by quiksilva

[teej]

For benchmarking you may consider that President Park on Suk 24 was fetching 55,000 Baht per sqm during the same time.

What prices are President Park apts going at now on the 2nd hand market? I swear I've seen ads per sqm in the 50's. Am I mistaken?

[chiang mai]

I read for the first time today in The Nation that a new law is due to be signed by the king that requires all real estate sales/purchase monies to be deposited in an escrow account that will be overseen by the BOT. This will mean that for the first time in Thailand there will be virtually no risk to the buyer when buying real estate. But what it will also mean is that companies will no longer be able to use customer sales to finance construction off plan. Will the real estate market change in Thailand? Yes, if for no other reason than the foregoing.