Gloomy Days Ahead For Asia's Housing Markets

[backflip]

"Unfortunately, investors from other countries are well known to be the very last participants to arrive at the scene of a financial bubble. They are the last to hear about all the riches to be made, the last to buy in, and the last to realize that the party is over. This is known as 'dumb money'."

Recently, you told us that we should invest in the real estate market in Vietnam. Now you tell us that the Vietnam real estate market is in shambles, and that if we followed your former advice, we are dumb. I've always thought following your advice was dumb.

[lardy]

are you ready...................

Most economists predict rate rises in a handful of countries, including Taiwan and Thailand.

as the days pass you get more and more boring Bongo when was the last time you had sex?

Is this a new sideline you are offering Dr.Naam????

[backflip]

I'm not much of a fan of the new PM. With his puffy eyes, bad posture, pear-shaped body, and clumsy gait, he reminds me of the former Soviet circus performer, Boris the dancing bear. The only thing that's missing from this scenario is Boris' fez-wearing simian sidekick, Koko the monkey.

[highdiver]

A land sale on Sukhumvit Soi 6 has set a record at one million baht per square wah, according to the property agency CB Richard Ellis Thailand (CBRE).

http://www.bangkokpost.com/Business/10Jun2008_biz30.php

well it sure looks gloomy...

[bingobongo]

highdiver et al, i understand that denial is an implement in your toolbox of delusion...........interest rates are on the rise, are you ready?

courtesy of thai crisis

Edited June 10, 2008 by bingobongo

[quiksilva]

Who isn't? I personally expect rates to increase by no more than 1% by year's end.

If we were in the UK or the USA right now I'd be seriously concerned about the current down turn, but lets get real here, just for a moment. Doom n gloom merchants think that everything must be like it is back home.

The fact is the UK & USA will suffer more pain and for longer than their Asian counterparts, which are far more insulated against the current crisis.

Asian markets will be affected for sure but they will rebound quicker, they have always been more volatile. The UK and USA are slow moving juggernauts, when they go down it takes a while before they can build momentum again, what is their average economic growth of 2 ish %? What is it over here? Double or triple that, even more sometimes!

What happened to Asia during the last major Western recessions? (i.e. 1989 early '90s)?

[kanderson]

Not when the amount required to purchase the property returns 3x the rental cost for the same property !!

In my case I made 10x the rental cost with the same amount of capital tied up, each year I rented I made 10 years rent as a ROI.

It is commonly known that unless your business is selling or renting houses or condos - that your house or condo shouldn't be looked at as an investment - it's your home. I bought a condo a few years ago at baht way low. I'm glad I can retire there anytime. I won't sell my house in Hawaii or my condo in Thailand. I leave that to my wife and kids.

[midas]

Who isn't? I personally expect rates to increase by no more than 1% by year's end.

If we were in the UK or the USA right now I'd be seriously concerned about the current down turn, but lets get real here, just for a moment. Doom n gloom merchants think that everything must be like it is back home.

The fact is the UK & USA will suffer more pain and for longer than their Asian counterparts, which are far more insulated against the current crisis.

Asian markets will be affected for sure but they will rebound quicker, they have always been more volatile. The UK and USA are slow moving juggernauts, when they go down it takes a while before they can build momentum again, what is their average economic growth of 2 ish %? What is it over here? Double or triple that, even more sometimes!

What happened to Asia during the last major Western recessions? (i.e. 1989 early '90s)?

quiksilva surely you cannot be serious ? You cannot possibly compare the last Western recessions

to what is happening gobally right now ? And how do you know to what extent " Asian counterparts " are going to

be affected before all this is over ? Your attempt to to a positive spin on things is to be admired but sooner or later

you have start joining the dots. The only reason the Thaland property market appears so strong is that it lacks the

transparency of the other markets that we now see plummeting. But lets see how long they can hold their fingers in the dyke

this time arouns

[shochu]

yes,

there does seem to be a lot of doom and gloom AND there does also seem to be a lot of pumping the spin as well.

one thing such as higher fuel prices will have a LARGE adverse effect on all things here and elsewhere. ADD to that the MANY other problems bubbling to the surface with no end in sight...

one property sale with a new high means absolutley nothing in the greater scheme of things as we do not know the rational or motive behind this. and it is really a small price for a piece of land in a major urban center.

one thing has been clear for some time now - many people are suffering and things are not getting any better. all it takes is a walk in any urban center anywhere. foget the mainstream news - just go for a walk anywhere and you can see the difference from one year ago. you would have to be living in a dream world to not see the difference. LOS is not immune as others have stated - BUT I will say contrary to what some may think - the east will suffer quite a bit as well. it is already evident. travel around the region and you will see it. commodity producing nations omitted here - but not manufacturing nations (soon to be getting worse)

back to property - yes - gloomy days on the horizon.

BUT rest assured - given enough time things will eventually pick up - but - it is only a guess as to when - as some places have learned and waiting still a long time for things to get better. there is always a precedence - SO - it would be prudent to not be so overly confident that after a short blip things will get better. we are in new territory here and it is just beginning.

[Crushdepth]

Because, bingobongo told us about him. Here's the funny part: on the Global House Price Crash website, bingobongo uses the screen name "kokothemonkey", and he has changed his personna. Koko is married, and has bought a home. Later, according to koko's postings, he sold the home at a loss, and that's why he's so emotional about the "Thailand real estate crisis".

Misery loves company eh bingo? Other people are doing very well, get over it. I'll pass your regards to the bar girls, since it seems you are a bit stuck for a ticket over :-)

[backflip]

Samak's simian sidekick, Koko, spends his day turing the crank on his little organ, and out comes a familiar tune: plink, plink, plink, plink. It's the same old tune.

[quiksilva]

Who isn't? I personally expect rates to increase by no more than 1% by year's end.

If we were in the UK or the USA right now I'd be seriously concerned about the current down turn, but lets get real here, just for a moment. Doom n gloom merchants think that everything must be like it is back home.

The fact is the UK & USA will suffer more pain and for longer than their Asian counterparts, which are far more insulated against the current crisis.

Asian markets will be affected for sure but they will rebound quicker, they have always been more volatile. The UK and USA are slow moving juggernauts, when they go down it takes a while before they can build momentum again, what is their average economic growth of 2 ish %? What is it over here? Double or triple that, even more sometimes!

What happened to Asia during the last major Western recessions? (i.e. 1989 early '90s)?

quiksilva surely you cannot be serious ? You cannot possibly compare the last Western recessions

to what is happening gobally right now ?

Yes things are different today, every crisis is new, but its interesting to look back and compare if only for arguments sake. History can teach us important lessons, and might help us to prepare for what's to come.

The last major real estate market collapse which caused a massive recession (in the UK) was Lawson's mess. This started with the stock market crash in 1987, and was further fueled by policies that encouraged irresponsible lending to people who could not really afford it (sound familiar?). Yuppies jumped out of the buildings with giant phones and dodgy red braces and the slump lasted until the mid 1990's.

But what happened to the Asian economies during the same period? They were propped up by a flight of capital seeking refuge from that mess, and the tigers roared.

Ok perhaps the world is a closer place today than it once was, its different now, so let's look at something more recent, what was the effect of the 2001 dotcom bubble pop, on the Thai economy? Thailand got stronger, not by much but it went from strength to strength thereafter.

But when we say things are different, we must also remind ourselves that the USA & UK are no longer the sole drivers for growth in Thailand. The export markets in Asia, Europe, and the Middle East are all growing, and it is exports that are most important to Thailand's economy, far more so than anything else.

Granted there doesn't seem to be a direct correlation, I could not possibly state as much there is no data to support it but it is an interesting coincidence that seems to keep recurring.

I'm sure there are plenty of smarter, better paid people than I, who can easily poke holes in my view of global economics (I would not go so far as to call it a theory, its only what I see). That's fine I welcome constructive criticism, I like to learn too.

Edited June 12, 2008 by quiksilva

[midas]

Yes things are different today, every crisis is new, but its interesting to look back and compare if only for arguments sake. History can teach us important lessons, and might help us to prepare for what's to come.

The last major real estate market collapse which caused a massive recession (in the UK) was Lawson's mess. This started with the stock market crash in 1987, and was further fueled by policies that encouraged irresponsible lending to people who could not really afford it (sound familiar?). Yuppies jumped out of the buildings with giant phones and dodgy red braces and the slump lasted until the mid 1990's.

But what happened to the Asian economies during the same period? They were propped up by a flight of capital seeking refuge from that mess, and the tigers roared.

Ok perhaps the world is a closer place today than it once was, its different now, so let's look at something more recent, what was the effect of the 2001 dotcom bubble pop, on the Thai economy? Thailand got stronger, not by much but it went from strength to strength thereafter.

But when we say things are different, we must also remind ourselves that the USA & UK are no longer the sole drivers for growth in Thailand. The expor markets in Asia, Europe, and the Middle East are all growing, and it is exports that are most important to Thailand's economy, far more so than anything else.

Granted there doesn't seem to be a direct correlation, I could not possibly state as much there is no data to support it but it is an interesting coincidence that seems to keep recurring.

I'm sure there are plenty of smarter, better paid people than I, who can easily poke holes in my view of global economics (I would not go so far as to call it a theory, its only what I see). That's fine I welcome constructive criticism, I like to learn too.

Yes but the dotocom bubble was largely restricted to companies in the USA ?

Lawson's mess as you put it was also a very localised problem.

This time Asia is also being directly affected by these global problems -

What about OIL prices and peak supply - that will affect everyone? This time it doesnt look like Asia will escape

this particular problem. Yesterday 70,000 truckers on strike here in LOS ? And where is the light at the end of the tunnel

regarding that problem ?

And that is just one thing. What about these deep political divisions in this country

which one former Thai Prime Minister said earlier this week were possibly too

deeply rooted to be solved soon. He is talking about a serious rift between two societies within

Thailand.- surely there was nothing like the number of problems in Thailand then compared to what we have

here right now ? Already these things have scared away Japanese tourists

- will it be the investors next

[shochu]

not just LOS but it is happening in many places - huge demos and the possibility of the wheels coming to a stuttering stop. time will tell. getting closer to the point of knowing what will transpire - hopefully sooner than later. and hopefully softer than the numbers tell.

[quiksilva]

Yes things are different today, every crisis is new, but its interesting to look back and compare if only for arguments sake. History can teach us important lessons, and might help us to prepare for what's to come.

The last major real estate market collapse which caused a massive recession (in the UK) was Lawson's mess. This started with the stock market crash in 1987, and was further fueled by policies that encouraged irresponsible lending to people who could not really afford it (sound familiar?). Yuppies jumped out of the buildings with giant phones and dodgy red braces and the slump lasted until the mid 1990's.

But what happened to the Asian economies during the same period? They were propped up by a flight of capital seeking refuge from that mess, and the tigers roared.

Ok perhaps the world is a closer place today than it once was, its different now, so let's look at something more recent, what was the effect of the 2001 dotcom bubble pop, on the Thai economy? Thailand got stronger, not by much but it went from strength to strength thereafter.

But when we say things are different, we must also remind ourselves that the USA & UK are no longer the sole drivers for growth in Thailand. The expor markets in Asia, Europe, and the Middle East are all growing, and it is exports that are most important to Thailand's economy, far more so than anything else.

Granted there doesn't seem to be a direct correlation, I could not possibly state as much there is no data to support it but it is an interesting coincidence that seems to keep recurring.

I'm sure there are plenty of smarter, better paid people than I, who can easily poke holes in my view of global economics (I would not go so far as to call it a theory, its only what I see). That's fine I welcome constructive criticism, I like to learn too.

Yes but the dotocom bubble was largely restricted to companies in the USA ?

Lawson's mess as you put it was also a very localised problem.

This time Asia is also being directly affected by these global problems -

What about OIL prices and peak supply - that will affect everyone? This time it doesnt look like Asia will escape

this particular problem. Yesterday 70,000 truckers on strike here in LOS ? And where is the light at the end of the tunnel

regarding that problem ?

And that is just one thing. What about these deep political divisions in this country

which one former Thai Prime Minister said earlier this week were possibly too

deeply rooted to be solved soon. He is talking about a serious rift between two societies within

Thailand.- surely there was nothing like the number of problems in Thailand then compared to what we have

here right now ? Already these things have scared away Japanese tourists

- will it be the investors next

The only thing anyone can say for sure is that nothing is for certain. Nothing like this has happened before.

Thailand undoubtedly has more problems to deal with today and national cohesion is probably the biggest one it has to resolve. However these political problems were largely expected by most observers.

Even when the election took place, most didn't expect the new government to last a year and now its starting to look like that prediction could come true. Will another round of elections happen in the near future? Will that resolve the situation? I don't know, but I know something has to happen.

As for oil, I personally don't think there is a light at the end of the tunnel for energy costs. High oil prices is something that just about every country in the world will have to learn how to cope with. The days of cheap energy are over (unless you happen to be pumping and refining the stuff). So firms will have to look to other areas to save costs.

How will that affect manufacturing investment in Thailand?

EG Fischer and Paykel (The Kiwi White goods manufacturer) just closed their last factory in NZ to expand on Amata City, to save costs. This story is being repeated all over the world, we hear this from clients in the UK, USA, and Australia and its resulting in more FDI in Thailand.

We are dealing with many of these investors ourselves, and right now we are selling factories and industrial development sites to these guys every month. Industrial estates are selling better than projected too.

One of the most important decisions coming up will be made by Volkswagen. They have been sniffing around Thailand for years, if they go ahead it will mean 26bn in FDI from this project alone. We should know more on this at the end of the month. (There's a story on this in the papers today).

Political upheaval will not help, and I hope that they can get this solved quickly, what happens in the months to come will be critical. But there is still a chance that Thailand could come out of this situation favourably.

I might have to change my motto: Hope for the best, prepare for the worse!

[bingobongo]

one more time, interest rates go up, sales and prices go down......and what do these geniuses do? why keep builiding and adding to the oversupply of course

Firms mull ways to lure buyers amid likely rise in interest rates

This will dampen their interest in property investments in the second half of the year. Keeping this in mind, developers are busy devising ways to stir things up on the sales front.

http://www.nationmultimedia.com/2008/06/12...ss_30075323.php

Edited June 13, 2008 by bingobongo

[ourmanflint]

hardy ha ha ha!!

yup.. I knew it, the "it's different in Thailand" mob are still bleating out the same old cliches. A few months back I warned a few hyper bullish people on here that they were not immune to property dips in the west, and guess what....

I'll be laughing for a very long time on at all the morons that still think "it's different in Thailand"

[bingobongo]

why buy now, interest rates are going up, on another note, how long before the tanks start to roll?

Most analysts expect the MPC to raise its policy interest rate by as much as a half-point to 3.75% this year. Local banks this month already began hiking fixed deposit and loan rates in anticipation of tighter credit conditions.

http://www.bangkokpost.com/News/14Jun2008_news02.php

[thaigene2]

What happened to Asia during the last major Western recessions? (i.e. 1989 early '90s)?

A VERY interesting question - not one the defensive retirees here are likely to answer, mind you. But maybe someone will. Maybe the only one who can be bothered (and pisses off off all the old codgers here) 'bingo' will figure it out.

[backflip]

Since January, 2007, bingobongo has been leading the charge against Thai real estate. He has been wrong time and time again - at least he is consistent.