Bangkok Condo Prices Surging

[henrytuttle]

From my office, I can still see the KTECH sign on it, but haven't seen anyone working on that building in over a year.

Yeah, Lehman have not put any cash into their projects for a year or so, and 'claim' they will start work again late this year, but if their main contractor is K-Tech they might be a bit stuck.

What happened to Ktech ?

In RE-HAB on the stock exchange, shares no longer listed. Not sure why they ran into difficulties but willing to guess it had something to do with A) none payment from developers and or they negotiated to many fixed costs agreements with developers and when the price of construction materials skyrocketed, they were caught out.

Just looked again and I see a SYNTECH sign there as well but not a soul in sight.

Well, this is all very discouraging. It's such a great location. I was hoping that I'd be able to use it.

Thankfully, 25% down is not so bad. Still, it's not the 25% being tied up, it's that I would really love to have an apartment like that (few minutes to skytrain, easy walk to shopping and restaurants, and HUGE swimming pool). It's a great substitute for a hotel room and I was hoping to generate a little income when I wasn't in town in renting the place out for short term rents (my partners own 2 more apartments in the same complex).

I wonder if the developers are waiting for this "condo price surge" to continue the project.

It's actually surprising that prices are as low as they are in Bangkok. I guess it's the law about foreigners purchasing land. If that law were changed, I think there'd be a lot more development in BKK.

[quiksilva]

Im afraid its not as straight forward as just market timing. After taking on the mess at Grande Asset, as Steveromangnino put it, there's quite a lot of internal housekeeping to take care of thats still not completed.

[ray08]

pedro1

Well one thing for sure, the BKK property market has outperformed Australia, USA and UK where property has plummeted by 30% and more so pedro1 where have you seen this happen in BKK or you just flappin your gums? Many properties off the the plan have more than doubled in the last 3 years here

,What a load of Rubbish to say BKK market outperformed Oz ,Usa and UK where property has plummeted by 30% or more , and many off the plan here in Bangkok have doubled , I know the Aus market very well and it is not going too strong at present ,but 30 % would be very extreme cases, same for UK market ,i would buy tommorow a London apartment that was selling for GBP 1 M and now under GBP 700k ,problem is cannot find any .And when talking about BKK market is that including its famous second hand market as well ?

[zorro1]

pedro1

Well one thing for sure, the BKK property market has outperformed Australia, USA and UK where property has plummeted by 30% and more so pedro1 where have you seen this happen in BKK or you just flappin your gums? Many properties off the the plan have more than doubled in the last 3 years here

,What a load of Rubbish to say BKK market outperformed Oz ,Usa and UK where property has plummeted by 30% or more , and many off the plan here in Bangkok have doubled , I know the Aus market very well and it is not going too strong at present ,but 30 % would be very extreme cases, same for UK market ,i would buy tommorow a London apartment that was selling for GBP 1 M and now under GBP 700k ,problem is cannot find any .And when talking about BKK market is that including its famous second hand market as well ?

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article2964278.ece

http://www.whocrashedtheeconomy.com/?cat=3

It really isn't extreme. Bottom line is there is no slump here in Bkk, as much as some people here would love to see that

Edited July 24, 2008 by zorro1

[bkkjames]

"It really isn't extreme. Bottom line is there is no slump here in Bkk, as much as some people here would love to see that"

Yes, guess you are correct, oh btw did u see today's Bangkok Post article on this subject? As most farangs here buy condos, I find the numbers quoted below sure do reflect your sentiment.

Home sales rise as condos sag in first half

KANANA KATHARANGSIPORN

The take-up rate of single houses and townhouses in the first six months almost doubled year-on-year due to government tax incentives and a mass transit kickoff, according to property consultant Agency for Real Estate Affairs (AREA). Managing director Wason Khongchantr said pent-up demand from last year was stimulated by the tax incentives. Most homebuyers shifted to buy low-rise units instead of condominiums as they would get tax benefits before they expire on March 28 of next year.

Single houses sold in the first half of 2008 totalled about 9,000 units, rising from about 5,500 in the same period last year. Townhouse sales were around 10,000 units, up from 5,000.

On the contrary, condominium sales sharply declined from 20,000 units to 14,000 units. However, oil prices would be a positive factor boosting condominium sales in the second half of the year, he said.

Another positive factor boosting condominium sales would be a great shift of money from bank savings to real estate investment as the government changes its policy next month to only guarantee deposits of one million baht each.

''Condominiums are easy to invest in as buyers can rent it out. But new supply is restrained by higher construction costs, environmental regulations and stricter construction permission,'' he said.

During the first half of the year, real estate sales in Greater Bangkok totalled 37,000 units, up 16% from 32,000 units sold in the same period last year. AREA expected around 75,000 units sold in 2008, up from 65,000 in 2006.

''If there's no severe situation in the politics in the second half, the Bangkok property market will recover this year because of increasing demand as buyers will make rush decisions during an upward trend in construction costs and higher inflation rates,'' he said.

Another factor boosting the Bangkok property market would include foreign investment in real estate which should resume this year.

In the first quarter of 2008, foreign investment in the property sector in Bangkok totalled 17 billion baht, according to the Bank of Thailand.

Mr Wason anticipated that foreign investment would bounce back from 30 billion baht last year to 50 billion baht in 2008, the same amount as in 2006.

He said that he government's kickoff early in the year of the development of the purple mass transit line stirred demand in single houses and townhouses in Bang Yai and Bang Bua Thong areas.

There are a total of 1,335 residential projects with units remaining for sale. Those with over 20 units totalled 823 projects with a total of 408,594 units worth around one trillion baht or an average price of 2.626 million baht a unit.

Of the total, 299,420 units or 73% were sold. Residences remaining for sale in Greater Bangkok totalled 109,174 units, with 33,000 single houses, 27,000 townhouses and 35,000 condominium units.

Developers launched a total of 154 residential projects with 37,660 units worth 90.79 billion baht in the first half

[bkkjames]

K Tech's involvement does not have to spell certain doom as projects like Interchange 21 prove, where the owners are paying the subbies directly to get their office building finished.

The most important factor for completion is the capability and financial position of the owner.

Seeing the news below today on SET< it's probably a good thing about the most important factor regarding completion.

Symbol: KTECH

Ref: KTECH/LD/SET/2008/019

25 July 2008

Subject: Notification of Entering Business Rehabilitation Progress

To: President

The Stock Exchange of Thailand

K-Tech Construction Public Company Limited (the "Company") filed to

the Central Bankruptcy Court the application for business rehabilitation on 11

April 2008 and on 23 July 2008 the Court ordered the Company's application for

business rehabilitation be dismissed as the original Petition was incomplete.

The Company's management power is, therefore, returned to the

Company's Board of Directors and a meeting of the Board of Directors will be

convened immediately to discuss the most appropriate action given the

dismissal and the financial difficulties facing the Company.

This is, therefore informed for acknowledgement.

Yours faithfully,

K-Tech Construction Public Company Limited

[Gary A]

The older established condo development owners can thank the insane new construction prices for dragging their value up drastically. As compared to new construction that may NEVER be completed, some second hand condos are still a bargain.

Statements that the condo building business is booming were obviously made by the developers themselves.

[richm7]

Gentlemen,

The only relation between cost and price is how much margin it drives. Price is determined by the market; anyone investing in the manufacture of any product is going to look at his loaded cost versus the MARKET price to determine the likely margin. Market price is driven by demand and supply curves. Construction costs are of no interest to any buyer (because from a buyers point of view, they do not relate to the price he pays; in an extreme market collapse situation, he might well end up paying LESS than the construction cost).

I do wish people who know bugger all would keep their comments to themselves. CBRE may well be marketing themselves but that does not negate the truth of their comment. It is a fact that condo prices have gone up and continue to go up. 150k Baht a square meter is not unusual these days, whereas three years ago it was nearer 100k a square meter. The market is what it is. As with any investment, there is a risk, but the current trend in BKK is UP. That should not be surprising given that for a major capital city BKK is cheap; London runs at about 8 to tens times the price per square meter, perhaps more, in a comparable location. Remember, people are talking lower and middle Sukhumvit, Radjamri, Silom etc, not Suk 101, which would be more like Hackney or Acton in London terms. In the very unlikely event that a guy who bought three years ago sold at the same (baht) price he'd still make 25% on the exchange rate. I'd guess that someone buying four years ago and selling today, with FX taken into consideration, will probably double their money. Property prices are on the rise and I see no slowdown. Just because you are not well off enough or did not take the plunge don't knock those luckier (or smarter) than you. I envy them, I don't resent them. They HAVE made money, it is an undeniable fact and assuming there is no natural disaster or major political upheaval they will continue to do so. Bangkok is catching up and it is inevitable. Regarding the comment about "dark" condo's, just bought for investment, that is absolutely true, but should be seen as a positive rather than a negative. They're being snapped up BECAUSE they are a good investment, just sitting there. Who needs a renter when you can double your money in four years. Don't say it can't happen; it happened to me in California in the 90's when my house doubled in price in ten years, and it has happened in the UK too. In fact, my ex still lives in the house I bought in 1981 for 40K (quid) and it is now worth 400K! Why should BKK be any different.

One last comment on cost. I don't know where these previous numbers come from, but construction costs for a house run about 10k-15k baht a square meter, in BKK or in Nakhon Nowhere (to Western standards). By cost I mean price from the builder, so I'm including his margin, which might be 20%. Thats about 1000 baht a square foot set against about 4000 baht a square foot in the US. None of this includes the land, naturally. So, in this respect, Thailand is cheap. I reiterate, it has only one way to go. UP.

[bkkjames]

Anyone with grade 10 accounting could tell you that prices always go up over time. inflation perhaps.

As far as keeping comments to ourselves, I would suggest that if all those with rose coloured glasses told the whole story (CBREs, Property Developers etc) instead of always saying the market is growing / good, then perhaps we wouldn't need to question it.

But the problem is the media (BK POST, NATION, PROPERTY REPORT ETC) are litterally paid to publish these kind of stories, via ad support so of course they want to make their advertisers happy.

When was the last time CBRE's CEO in her weekly column in Post actually came out and said the housing / office market in Thailand was suffering? I don't even read her column anymore because it's the same boomtime sh*t week after week.

[quiksilva]

I see your point BKKJames, but I can tell you that the office market is not suffering, yet.

Give it a year though and it might be different, but there are some seriously large transactions (and by this I mean in excess of 50,000 square meters per tenant) in the offing that could complete this year.

If they do they could partially alleviate pending oversupply over the next twelve months due to the relocation of various government offices from private sector space to the new government center next year. Okay yes they would be moving from building to another but they would be upgrading their properties from lower spec'd building that could be taken up given their relatively lower market rental values.

But as things stand vacancy rates are still at a healthy level, in the region of 10%. So she's right in saying that the office market is still okay, for now.

[lardy]

What I don't understand is who is buying these ridiculously priced condo's here ?

Many of them are small at less than 40sq metres. Others are crazily priced.

I live in Rajadamri - I can see about 10 condo buildings from where I live. In each building there are no more than 20% of the rooms with lights on at night & it's always the same rooms with lights on.

So - it appears to me that whilst people do seem to be buying these condo's, they are not living in them. I spoke to a real estate agent about this who said "it's an investment". I fail to see how a condo is an investment if it's on 30 year leased land & it's not rented out. Sure, the owner can tell themselves they have 12 million baht worth of property investment but what happens when they try to realise that investment.

Now - let's say that the Thai economy takes a downturn and these 'investors' try to sell their properties because they need cash. What is going to happen ?

Me Ive always been mad so mad I bought 4 and rented them out just a paltry 30m2 each been full for over 2 years, ROI 12%.

[lardy]

errr - seen what happening Zorro ?

I am merely stating that many Bangkok condo's are not being lived in. Real estate agents seem to agree with me on this.

Rents aren't keeping up with the purchase prices, so buy to let is not an intelligent proposition here.

I just wonder how long the property market can be sustained when it's not based on people actually living in the properties.

Oh bugger I wish you had told me earlier I wouldnt have wasted the last two+ years renting out my 4 condos at 12% roi.

Choose your location and market with care and many things ARE possible, oh hang on forget it you'll lose money guaranteed!!

Edited July 25, 2008 by lardy

[bingobongo]

sorry dreamers.......BOT is raising rates and will continue to do so........

there are so many things wrong in this environment, I dont even know where to begin

the stupid deserve to be separated from their dough........

Home sales rise as condos sag in first half

On the contrary, condominium sales sharply declined from 20,000 units to 14,000 units.

http://hdvoice.tmcnet.com/news/2008/07/25/3567606.htm

Edited July 26, 2008 by bingobongo

[cosmont]

Two many projects and too many units on the market at moment

I guess, Real estate business is suffering a lot coz the competition is strong in the city.

SQM price is high and customers are difficult to find for "ready to move" units.

[think_too_mut]

The older established condo development owners can thank the insane new construction prices for dragging their value up drastically. As compared to new construction that may NEVER be completed, some second hand condos are still a bargain.

Statements that the condo building business is booming were obviously made by the developers themselves.

My friend, the owners of old, established, condos can only watch the prices of the new ones going up.

Their condos remain where they were and - unsellable. Try it with 6mil +.

Forget Dunkin Donuts places of 34sqm, that's Mickey Mouse real estate where bar girls rent.

Or Thais buy/rent them to have a pad for mia noi activities. That's not real estate, a reasonable westerner can buy them cash for 2 months salary.

[Gary A]

The older established condo development owners can thank the insane new construction prices for dragging their value up drastically. As compared to new construction that may NEVER be completed, some second hand condos are still a bargain.

Statements that the condo building business is booming were obviously made by the developers themselves.

My friend, the owners of old, established, condos can only watch the prices of the new ones going up.

Their condos remain where they were and - unsellable. Try it with 6mil +.

Forget Dunkin Donuts places of 34sqm, that's Mickey Mouse real estate where bar girls rent.

Or Thais buy/rent them to have a pad for mia noi activities. That's not real estate, a reasonable westerner can buy them cash for 2 months salary.

I don't consider anything smaller than 50 square meters as a place to live. More like a hotel room. I might add that no way would I pay 6 million baht for ANY condominium if I were planning to live in it. BUT, you can feel free to put me in the Dunkin Donuts type as long as it is over the 50 square meters. The type of places that I would be likely to buy have doubled in price over the past five years. More than doubled if you consider the exchange rate,

[PattayaParent]

Anyone with grade 10 accounting could tell you that prices always go up over time. inflation perhaps.

So why is it that I'm hearing from UK and Viet Nam that property prices have FALLEN 40% so far this year.

And why did I (and many others) experience a fall in the market value of my property in the UK in the late 90's.

[Naam]

Anyone with grade 10 accounting could tell you that prices always go up over time. inflation perhaps.

So why is it that I'm hearing from UK and Viet Nam that property prices have FALLEN 40% so far this year.

And why did I (and many others) experience a fall in the market value of my property in the UK in the late 90's.

and why is it that property prices in Germany are virtually at a stand-still or lower than 15 (FIFTEEN!) years ago? could it be that properties in Germany never acquired an accounting grade?

[steveromagnino]

Anyone with grade 10 accounting could tell you that prices always go up over time. inflation perhaps.

So why is it that I'm hearing from UK and Viet Nam that property prices have FALLEN 40% so far this year.

And why did I (and many others) experience a fall in the market value of my property in the UK in the late 90's.

reread 'over time'

If you want to start betting that the long term price of property will NEVER reach the levels earlier this year again in the history of the world....I will take that bet.

Short run vs. long run.

[Livinginexile]

I bought into a condo a couple of years back. A project called the Regent Residences on Sukhumvit Road near Ambassador hotel. I don't know what's happening with it. In theory, another company took it over and it will be completed at the end of 2009 (2 years late). However, it's been about a year since this happened and as far as I know, there's been no further construction.

I bought for about B11,700,000. I paid 25% down payment for it.

If it ever gets built, I'll be satisfied with it. It's a great location. I'm past the point of being concerned now. I just think of it as a bonus if I get my money back or the condo.

Anyone have any advice on what I should do further?

I live in Trendy condos across the soi from Regent, for the last 3 weeks the crane has been working everynight.

They have been stripping everything that is not bolted down.

Trucks have been loaded up with metal door frames, all scafolding on site, metal beams by the truck load, even PVC piping has been carted away.

ALL IN THE DEAD OF NIGHT!! away from preying eyes.

Looks like everything of value has been taken off site.

[zorro1]

Now way are you sure. I also live over the road but and never ever seen a truck loading up at night. I know the night watch man at the the regent as he is also my part time cleaner so will ask him. Off topic, what did you think of the extraordinary co owners meeting at Trendy on Saturday morning? according to them the last of the few remaining condos at trendy will have sold in next few weeks.... I wasted an hour before realising there was not going to be an English translation, extremely unprofessional

[Livinginexile]

Now way are you sure. I also live over the road but and never ever seen a truck loading up at night. I know the night watch man at the the regent as he is also my part time cleaner so will ask him. Off topic, what did you think of the extraordinary co owners meeting at Trendy on Saturday morning? according to them the last of the few remaining condos at trendy will have sold in next few weeks.... I wasted an hour before realising there was not going to be an English translation, extremely unprofessional

Hi Zorro,

I slept in and missed it really? not in English?

I read the letter informing us about the meeting, did u read the bit about G/A still owning 40odd% of the condo's?

More of the same bulldust, on hand over they told me that there was only about 20 left for sale!!

Yes mate, i even got photos that i will post on another thread i have started on the subject, not very clear but shows the trucks been loaded.

[zorro1]

About the 40%. Just before I bought mine an American guy was asking for 4.85 mill for his 70sqm condo bought off the plan and we got to chatting on the net. He told me he already sold it back to grand asset for 4.2m but hadn't signed anything and was trying for a bit more. I arrived back in BKK a week too late to inspect and he told me grand asset actually bought it and were hanging on to anything else in that type of bracket. Cant imagine why he would say that and it was a bizarre meeting. They have been taken over now by Jones Lang

[bingobongo]

only thing surging is inflation (everything from rice, oil, gold and housing oversupply) so dont think condo is the holy grail to wealth as everything is surging

April as of latest data)..........

and the #s are down.......on transactions, registrations, but supply is up.......genius i tell you.......pure GENIUS

and on top of this, BOT is raising interest rates.......oh the humanity

tab06.pdf

[PattayaParent]

Anyone with grade 10 accounting could tell you that prices always go up over time. inflation perhaps.

So why is it that I'm hearing from UK and Viet Nam that property prices have FALLEN 40% so far this year.

And why did I (and many others) experience a fall in the market value of my property in the UK in the late 90's.

reread 'over time'

If you want to start betting that the long term price of property will NEVER reach the levels earlier this year again in the history of the world....I will take that bet.

Short run vs. long run.

Not much consolation to purchasers that bought this year with a mortgage on a property that is now worth a lot less than still have to pay on it, and if they can't afford to keep up the payments and have to sell they don't even receive enough to pay off the debt. It's called negative equity and lot a lot of people in the UK in the 80's and 90's.

And see Naam's post prices in Germany lower than 15 years ago? Not long term enough?

I'll bettya that in 1,000 years the prices of condos in Bangkok will be less than they are now.

Edited July 28, 2008 by PattayaParent

[steveromagnino]

Not much consolation to purchasers that bought this year with a mortgage on a property that is now worth a lot less than still have to pay on it, and if they can't afford to keep up the payments and have to sell they don't even receive enough to pay off the debt. It's called negative equity and lot a lot of people in the UK in the 80's and 90's.

And see Naam's post prices in Germany lower than 15 years ago? Not long term enough?

I'll bettya that in 1,000 years the prices of condos in Bangkok will be less than they are now.

I'll take that bet FOR SURE.

As for negative equity, sure now. BUt great time to buy.

If you really believe that property is never going to go up then why not short sell every property fund you can find forever?

And why won't anyone do that forever? Because the entire western world financing system for the last 500 years is built on the idea of supply and demand.... with a growing developing population and thus growing demand.

[think_too_mut]

As for negative equity, sure now. BUt great time to buy.

If you really believe that property is never going to go up then why not short sell every property fund you can find forever?

And why won't anyone do that forever? Because the entire western world financing system for the last 500 years is built on the idea of supply and demand.... with a growing developing population and thus growing demand.

And that "system" is crashing, still balancing betwen survival of it's own and hoping - the protagonists won't be arrested and jailed.

[lardy]

Forget Dunkin Donuts places of 34sqm, that's Mickey Mouse real estate where bar girls rent.

Or Thais buy/rent them to have a pad for mia noi activities. That's not real estate, a reasonable westerner can buy them cash for 2 months salary.

Really well at 1.4 million each I would love to meet those westerners earning that in a couple of months? Doctors in the Uk maybe on this sort of money at a push.

Bar girls eh sheeeeeeeesh you sure know your stuff dont you!!

[think_too_mut]

Really well at 1.4 million each I would love to meet those westerners earning that in a couple of months? Doctors in the Uk maybe on this sort of money at a push.

Bar girls eh sheeeeeeeesh you sure know your stuff dont you!!

Step 1: there are at least 5 people on this board that earn that kind of money in BKK. OK, maybe 3 months salary, not everyone can make it in 2. And not everyone would trash 1.4 mil baht on 34sqm room.

Step 2: when we are talking real estate in BKK, how many have 34 sqm rooms as their ideal of property?

Not only here, but in real life, in general?

Step 1: learn to quote.

[dotcom]

Not much consolation to purchasers that bought this year with a mortgage on a property that is now worth a lot less than still have to pay on it, and if they can't afford to keep up the payments and have to sell they don't even receive enough to pay off the debt. It's called negative equity and lot a lot of people in the UK in the 80's and 90's.

Also known as being "upside down" on a mortgage. Not fun.

For all you London School of Economics Genuises (is that a word? Genui?) just buy what you can afford to live in & enjoy.

It's not an "investment".

If you can ever grasp that concept you will be a lot happier.

I tend to agree time >>>> like 30 years >>>> will usually wipe out timing mistakes.

My landlady told me she wanted to sell my unit. Make me an offer. I offer 2.3 mil (>70 sqm) She comes back 3 mil. I say "I'll rent". This year she is saying 2.5 mil (fully furnished).