Why Shouldn't I Buy R/e Right Now?

[bkkjames]

"Really? Are you a real estate agent by any chance? "

Nope. I bought a condo 4 years ago, without reading the comments of horror in ThaiVisa. Since then, my condo has appreciated considerably, and I'm very happy with my decision. BingoKoko, and others, have claimed that the weak baht would destroy the Thai real estate market. Then, the oversupply of condos would destoy the Thai real estate market. Then, the strong baht would destroy the Thai real estate market. Then, the coup would destroy the Thai real estate market. Then, the 30% witholding would destroy the Thai real estate market. Then, the US real estate market would destroy the Thai real estate market. Then, the US bank situation would destroy the Thai real estate market. Then the falling bourses around the wrold would destoy the Thai real estate market. Every prediction that bingokoko and others naysayers have been wrong.

Actually, the naysayers have missed the boat, and they are upset that someone might be making money. Regardless, the Thai real estate market will be OK with them, or without them.

Your condo has appreciated considerably? You mean if you were to sell it today?

The only condos that I have seen go up recently are the people who believe the current rise in 'new' build prices has somehow magically given them the justification to raise the perceived value of their 'old' condo.

What,,, you say you purchased yours 4 years ago at 55,000 baht a sqm? And today you say you can sell it for 75,000 baht a sqm? If you can sell now, do it, be the exception and not the rule. The last time I checked, there is very little market for people willing to pay a premium for 2nd hand condos in Bangkok.

[bingobongo]

"I personally see this region suffering a lot more pain before things start to get better and that includes the housing and currency markets. "

This mindset has been the mainstay for the Thai real estate for the past decade, and it is wrong.

glyph, i would call you a genius but i'd be lying, everwhere from Bulgaria to South Africa has experienced an increase in housing prices (so LOS isnt special becasue you want it to be), and its due to rampant inlfation and negative real interest rates, not your inherent brilliance

stick to a savings account glyph, the global supply of easy money is over

[thaigene2]

Actually, the naysayers have missed the boat, and they are upset that someone might be making money.

So you sold and made money then did you? Yes? Well, good on ya.

No?

Well then, have I got a deal for you...It's called "people making money for people". It's a unique scheme really. You bring two friends to our little meeting and we'll show you how by investing just 25,000 USD each we can make you rich. As I said it's people helping people..You just need two more friends..and well..

Some will laugh - others simply won't get this.

Edited August 25, 2008 by thaigene2

[yoshiwara]

All things being equal, rental wins now...however...if one finds something 'special' and satisfies the three laws of location, location, location then go for the purchase

eg apartment with balcony overlooking the river? yes, purchase definitely an option,

eg new build somewhere reasonable at good price but nothing special, no I would not consider a purchase.

[london]

Buy !

[glyph]

"glyph, i would call you a genius but i'd be lying, everwhere from Bulgaria to South Africa has experienced an increase in housing prices (so LOS isnt special becasue you want it to be), and its due to rampant inlfation and negative real interest rates, not your inherent brilliance..."

My brilliance notwithstanding, real estate prices have moved upward, and I've made money. On the other hand, you've not invested in real estate, and you haven't made money. I'm sure you're happy with your savings account interest, and that's peanuts to most of us.

"Your condo has appreciated considerably? You mean if you were to sell it today?"

Or tomorrow, or the next day.

"The only condos that I have seen go up recently are the people who believe the current rise in 'new' build prices has somehow magically given them the justification to raise the perceived value of their 'old' condo. "

Then you haven't looked very closely at the market.

"What,,, you say you purchased yours 4 years ago at 55,000 baht a sqm? And today you say you can sell it for 75,000 baht a sqm? "

I never mentioned price.

[bkkjames]

Glymph

You are correct, I chose to stick my money in oil drilling companies and those little firms that dig for gold, you know the ones, the companies that make a profit and pay dividends. And because of that, my savings account is fine thank-you.

For me, I would rather rent here than invest in another Grande Lost Asset. Tell your rosy story to all those that have put down deposits at the Sails, The Regent etc.

Yes, I know that all those connected to the sales end of the industry here like to point at the low costs of property vis-à-vis SG, HK, LH or NY, but unlike those four fine cities, we don’t have a serious shortage of space in which to build the next greatest thing in condominiums.

So when you go to flip your condo and expect to make a huge profit, just hope that next door there isn’t a new better latest thing for which people to buy.

Take a look at Rajadamri. People can’t give their old condos away because of all the new construction that is not only destroying their views, but makes their condo look and feel like it’s 15 years older than it is.

I would consider buying second hand, but only at deep discounts. Usually there are enough desperate people (usually farangs) willing to let their older units go at very competitive prices. As I am sure you know, the Thais love to buy 2nd hand condos and houses here.

[steveromagnino]

Take a look at Rajadamri. People can’t give their old condos away because of all the new construction that is not only destroying their views, but makes their condo look and feel like it’s 15 years older than it is.

Actually, that's mostly because they are 15 years left on a 30 year lease type developments.

The freehold stuff in Langsuan has shown major appreciation over the last 5 years.

And there is still plenty of stuff selling; as you say, depends at what price.

With regards to second hand.....well now I guess you know why so many real estate 'investors' choose to buy then leave the place sitting empty rather than renting it out.

My ex GF's family did the same thing in NZ; 3 years of no rents of 3 penthouse units. I thought they were mad.....until they sold to some Hong Kong guy who specifiically wanted property where no one had ever lived.

Buying at I think it was 750,000 NZD and selling at double that for each unit.....well they did better than if they'd parked their money in the best performing shares in NZ at the time.

[zorro1]

Glymph

You are correct, I chose to stick my money in oil drilling companies and those little firms that dig for gold, you know the ones, the companies that make a profit and pay dividends. And because of that, my savings account is fine thank-you.

For me, I would rather rent here than invest in another Grande Lost Asset. Tell your rosy story to all those that have put down deposits at the Sails, The Regent etc.

Yes, I know that all those connected to the sales end of the industry here like to point at the low costs of property vis-à-vis SG, HK, LH or NY, but unlike those four fine cities, we don't have a serious shortage of space in which to build the next greatest thing in condominiums.

So when you go to flip your condo and expect to make a huge profit, just hope that next door there isn't a new better latest thing for which people to buy.

Take a look at Rajadamri. People can't give their old condos away because of all the new construction that is not only destroying their views, but makes their condo look and feel like it's 15 years older than it is.

I would consider buying second hand, but only at deep discounts. Usually there are enough desperate people (usually farangs) willing to let their older units go at very competitive prices. As I am sure you know, the Thais love to buy 2nd hand condos and houses here.

James

A`building stalling during construction is nothing new here. You make it sound like it is. Even worse you imply they are lost Assets. I wouldn't be concerned about those 2 places for another 6 mths or so

[steveromagnino]

A`building stalling during construction is nothing new here. You make it sound like it is. Even worse you imply they are lost Assets. I wouldn't be concerned about those 2 places for another 6 mths or so

The Sails and Regent?????!!!

These are like the poster children for crud development; both are stalled out and were supposed to be complete already; neither is within 2 years of completion; sails probably 3 years away assuming the exposed steel isn't rusted away already!

They MIGHT get completed, regent far more likely than the other one with regards to location, but they also have K-Tech tied into it so even if they have cash, they have no contractor to do the work.

These are the very worrying projects.

The rest of the market however, is doing ok.

[think_too_mut]

Some stay as eye sores for decades:

[pkrv]

Some stay as eye sores for decades:

Hmm - think_too_mut - you are a paradox - you have just bought

[pkrv]

Glymph

You are correct, I chose to stick my money in oil drilling companies and those little firms that dig for gold, you know the ones, the companies that make a profit and pay dividends. And because of that, my savings account is fine thank-you.

For me, I would rather rent here than invest in another Grande Lost Asset. Tell your rosy story to all those that have put down deposits at the Sails, The Regent etc.

Yes, I know that all those connected to the sales end of the industry here like to point at the low costs of property vis-à-vis SG, HK, LH or NY, but unlike those four fine cities, we don't have a serious shortage of space in which to build the next greatest thing in condominiums.

So when you go to flip your condo and expect to make a huge profit, just hope that next door there isn't a new better latest thing for which people to buy.

Take a look at Rajadamri. People can't give their old condos away because of all the new construction that is not only destroying their views, but makes their condo look and feel like it's 15 years older than it is.

I would consider buying second hand, but only at deep discounts. Usually there are enough desperate people (usually farangs) willing to let their older units go at very competitive prices. As I am sure you know, the Thais love to buy 2nd hand condos and houses here.

You never replied on your comments regarding the airport express which were utterly incorrect - regarding stations, and indeed stops. Any comment?

[think_too_mut]

Some stay as eye sores for decades:

Hmm - think_too_mut - you are a paradox - you have just bought

When I bought, all condos already had aircons fitted at each balcony. Completion was not in question.

Just got my keys yesterday. People are already moving in.

[xbusman]

These real estate topics always wander off track. The OP asked if this is the right time or not, not if they should buy.

Every investment has its proponents (usually salesmen) and naysayers (usually the broke) and real estate here is no different.

We have to assume that for question, the poster has already decided to invest and has made the decision according to their needs and abilities.

Considering he has made the only legal choice (a condo) we can safely discuss the timing as it is imprudent of anyone to discuss timing or return of any illegal activity inside our host country on a public forum.

So stop, consider and using our experience thoughtfully recommend to him what you feel would be the best timing on his upcoming purchase.

To get this back on track, I am going to recommend that he proceed at his convenience and not delay for hope of better opportunities. The reasons being:

1. We cannot time markets. Particularly when discussing markets that we are not an expert, are very obscure and have no discernible structure.

2. I have generally found in life that the time and effort to find a deal often saved far less money than my time was worth. Despite knowing that, I continue to make this mistake almost daily. A perfect example is the process I am going through to buy a truck. The market has collapsed, there are used trucks everywhere which have been sitting forever. Despite this, in my opinion, the prices are completely unrealistic. Everyone assures me that this is how the market works, that resale is almost what new is. My business sense tells me this is a complete farce and someday the piper will be paid. So for a year, I have been looking everywhere, spending a hour or two every week for "that deal". I might find it, in fact, I expect to find it soon because I dont believe the market can take many more used trucks, the lots are just not big enough. In the end, I might be right but to save 100k baht I will have spent at least 100 hours looking around. When I look at that way, I earned 1000 baht per hour working on buying a truck. Is that worth it? Thats 100 hours of not playing golf, not growing my business, not being productive. AND in the year or so I spend looking, I am still on a motorcycle in the rain. How much sense is that? Yet its so ingrained that we often miss the forest for the trees.

3. Whats it worth for Mom's peace of mind. I know a lot of moms and they like to worry, its their job and hard wired into them, they are good at it. Regards a real estate purchase, how much savings is worth having your mom worry and move twice?

As an opinion on what the OP asked, I say get on with it in due form and delay not.

Save the real estate investment discussion for the people who enjoy the controversy regarding questions with no answers.

[JimmyTheMook]

2. I have generally found in life that the time and effort to find a deal often saved far less money than my time was worth. Despite knowing that, I continue to make this mistake almost daily. A perfect example is the process I am going through to buy a truck. The market has collapsed, there are used trucks everywhere which have been sitting forever. Despite this, in my opinion, the prices are completely unrealistic. Everyone assures me that this is how the market works, that resale is almost what new is. My business sense tells me this is a complete farce and someday the piper will be paid. So for a year, I have been looking everywhere, spending a hour or two every week for "that deal". I might find it, in fact, I expect to find it soon because I dont believe the market can take many more used trucks, the lots are just not big enough. In the end, I might be right but to save 100k baht I will have spent at least 100 hours looking around. When I look at that way, I earned 1000 baht per hour working on buying a truck. Is that worth it? Thats 100 hours of not playing golf, not growing my business, not being productive. AND in the year or so I spend looking, I am still on a motorcycle in the rain. How much sense is that? Yet its so ingrained that we often miss the forest for the trees.

With that type of business mindset , plan for another year in the rain.

Look here if you want to find a good deal on a truck - as with condos good deals are often right in front of you.

Link

[zorro1]

I think fear factor can be crippling hence the probably the majority have whatever funds locked into a bank interest account. Probably the worst place to park your money but safe. There is an element of risque particularly off plan but its very minor one. Posters such as Bingo Bongo who appear to have waited for years for "The Crash" have missed out on prices that are no longer available. The 50 to 60 bht per metre in central BKK have long gone. I bought already (2nd condo) as it felt right and was in my price range and I got a free camera HA!

[imaneggspurt]

Id say its a great time to buy !,. all these properties on the market and zero buyers, so, go out and find something you like and bid real low,.if you dont get it keep looking, a friend of mine did just that, bid 3 mill on one that was up at 5 ! ,farang owner desperate to leave thailand took the bid,.., and i bet hes not the only one, turn a negative into a positive i say,.

[glyph]

You are exactly right. Too many TVers forget that real estate is a long-term investment, and base their decisions on day-to-day news.

[zorro1]

Some stay as eye sores for decades:

Hmm - think_too_mut - you are a paradox - you have just bought

Had to laugh now that TMT has been outed. All along he has been in the closet but apparently he's purchase is different, no doubt in the perfect location, perfect price, with a BTS`passing through and the subway directly underneath, perhaps the top floor with sweeping river views Anyway at least we now know to check for an A/c unit before putting down the big bucks

I must say though this has been a very upbeat thread compared to the usual, although Bingo Bongo hasn't made an appearance and I suspect maybe he been dipping into his savings whilst waiting for the crash, maybe TOT disconnect?

[think_too_mut]

Some stay as eye sores for decades:

Hmm - think_too_mut - you are a paradox - you have just bought

Had to laugh now that TMT has been outed. All along he has been in the closet but apparently he's purchase is different, no doubt in the perfect location, perfect price, with a BTS`passing through and the subway directly underneath, perhaps the top floor with sweeping river views Anyway at least we now know to check for an A/c unit before putting down the big bucks

I must say though this has been a very upbeat thread compared to the usual, although Bingo Bongo hasn't made an appearance and I suspect maybe he been dipping into his savings whilst waiting for the crash, maybe TOT disconnect?

Nothing like that. Some convenience, possibly.

Bang Na, close to Seacon Square, right side of the airport, no 1 hour navigation to reach the highway to eastern seaboard. Sky Train - I don't need it, absolutelly no reason to set my foot into BKK city again.

What I don't expect is - the condo to gain in value, even to be sellable at all. That money is trashed, good if it serves over next decade for 2 months use a year.

That is where I differ from those saddled with expensive properties in a featureless city that simply has no good location other than shopping malls.

Someone posted about death of his father and a property left behind. That story will become more and more common - poor Isaan girls, married to oldies who inevitably pass away, left in 12 mil baht condos at Thong Lor where the levies could run 10K baht per month.

They will sell it for a song or just abandon and destroy any trace they have ever had anything to do with it and run away.

So, the original question, should I buy now or wait - many know the answer: If it is for your use, just buy what u like and can afford.

And to my zorro friend, property games, delays and rush, are worth something in places where property market exists. My properties in Sydney are healthy, rent like crazy. From 288K in 1997. they went up to 800K now. Being in good location and excellent views, they are always sellable.

Try that in BKK and see what happens.

[zorro1]

Agreed totally. I wouldn't borrow to invest here and if you buy to live and decide to leave and get your money back and a bit more then that's a bonus although believe it or not there are many many who have made a killing in the last 7 years here also. I don't agree with the bar girl scenario that's a bit over the top to suggest it may in some way affect the market. I sold my property at the peak in Sydney around 4 years ago and very very glad I did considering the current slump there although as you say the rents have gone through the roof!. But then again we are talking Thailand and not offshore. Every ones different and personally I love BKk central and all the madness and wont have any problems renting should I abscond for whatever reason.

[Pushit]

Cost of construction materials, that's why buy now.

[think_too_mut]

Cost of construction materials, that's why buy now.

"Buy now" would make sense if you buy something that has been on sale for 2-3-4-5 years at then prices and is now being completed, if still available from the developer.

Say, Nusasiri at corner Sukhumvit/Soi 42 is a good building, "all sold out sir, only 1 left" since 2003.

Now, when those units are about to flood the market, I doubt the speculators would be able to sell so many units at the same time - let alone jack up the prices significantly (and still sell) for the soared costs that did not really affect them.

[zorro1]

Cost of construction materials, that's why buy now.

"Buy now" would make sense if you buy something that has been on sale for 2-3-4-5 years at then prices and is now being completed, if still available from the developer.

Say, Nusasiri at corner Sukhumvit/Soi 42 is a good building, "all sold out sir, only 1 left" since 2003.

Now, when those units are about to flood the market, I doubt the speculators would be able to sell so many units at the same time - let alone jack up the prices significantly (and still sell) for the soared costs that did not really affect them.

Wouldnt this process keep repeating itself and would be valid again when we post back here in 5 years time?

[Gary A]

I bought my condo about five years ago. My friends told me I was paying too much and would never get my money back. I bought the place because that is where I wanted to live and I liked it. I had no intention of selling it and considered the place as my security blanket. I no longer live there and a friend of mine has leased it. I have been offered a VERY nice profit but it is still my security blanket. Whether the value had gone up or down, it makes no difference to me.

[think_too_mut]

Cost of construction materials, that's why buy now.

"Buy now" would make sense if you buy something that has been on sale for 2-3-4-5 years at then prices and is now being completed, if still available from the developer.

Say, Nusasiri at corner Sukhumvit/Soi 42 is a good building, "all sold out sir, only 1 left" since 2003.

Now, when those units are about to flood the market, I doubt the speculators would be able to sell so many units at the same time - let alone jack up the prices significantly (and still sell) for the soared costs that did not really affect them.

Wouldnt this process keep repeating itself and would be valid again when we post back here in 5 years time?

Maybe not? That is for "mature" markets where, in theory, real estate only goes up. Which is not true any longer, even there.

Thai general and labor prices have not changed much for 10 years. Until mid last and this year.

Rising real estate prices in BKK were rather due to the advent of higher quality and more expensive to build developments rather than "normal" real estate forces.

Now, higher cost is eating up developers margins rather than making their properties significantly less affordable for the targeted market segment, even if they passed the cost.

That is what can be captured now - near completion old cost developments, at 4-5 year old prices, when and before new pricing for new developments comes out.

To show bare cost with no markups or commissions, consider this:

As recently as early 2007. my neighbor upcountry, using free family labor, built a 100sqm house for 120K baht (yes, 120 thousand). Those costs may now be ....10-15% more? Still, under same circumstances his house would now be 140K baht to build.

[steveromagnino]

Maybe not? That is for "mature" markets where, in theory, real estate only goes up. Which is not true any longer, even there.

Thai general and labor prices have not changed much for 10 years. Until mid last and this year.

Rising real estate prices in BKK were rather due to the advent of higher quality and more expensive to build developments rather than "normal" real estate forces.

Now, higher cost is eating up developers margins rather than making their properties significantly less affordable for the targeted market segment, even if they passed the cost.

That is what can be captured now - near completion old cost developments, at 4-5 year old prices, when and before new pricing for new developments comes out.

To show bare cost with no markups or commissions, consider this:

As recently as early 2007. my neighbor upcountry, using free family labor, built a 100sqm house for 120K baht (yes, 120 thousand). Those costs may now be ....10-15% more? Still, under same circumstances his house would now be 140K baht to build.

Salaries for office workers and management has gone up somewhere in the realm of 2-10% p.a. consistently since 2000, with the upper end both expanding (more employed) and wages increasing.

To give you an idea, staff that I could easily hire to do marketing and PR at a high standard 5 years ago were easily available with 2-5 years experience for around 30-50k.

Now there is not a single person available basically of the same standard (and yes, I am looking via headhunters and recruitment companies for less than about 45k and the salaries now range up to 80k.

With the economy as it is, we don't see any increase in the total housing supply coming on year on year for 3 years.....but we do see a shift from housing out of the city to units on the sky train routes; and this is a single one off force that has massively increased the number of people wanting to live in the city as opposed to miles away.

Additionally the oil prices are significantly changing the way people think.

You are quite right to think the average price of the average market has not moved by as much as what some may think since the unit prices coming onto the market are tending to be higher/quality higher price.

However this is really only true for probably 3-5 projects I can think of which are a new segment that Thailand never previously hard; true high end. The Park is the first, and probably SukhoThai is the only true grade A other than the Park - most of the rest are trying but not quite there.

THe impact of Ideo etc at the bottom end of the market has probably dragged the average price down per unit, but the unit sizes are smaller and smaller.

LPN is most interesting since you see massive demand, good increases in price (.e.g LPN Rama 3) and they are still able to hold their costs low.

The units being resold (and there are definitely sales going through) at the top end are also showing significant appreciation and there are buyers.

It is the crowded middle where there is most certainly speculation, oversupply and a TON of same same units on the market.

Top and bottom ends of the market....doing just fine.

[think_too_mut]

Steveromagnino,

Rather than replying in detail to your (good) post, this is what I mean:

The units unsold in this particular project are still at about 40% (see them in green in the pic, their own screen at their sales office), available from the developer, at the prices 4 years old.

The developer rushed it in, the condos are finished now instead of February 2009. Obviously, the developer wanted to freeze their losses (or prevent further erosion of their profits). Certainly, they must have done some corner cutting.

Not that this development is anything I would recommend, I just wanted to say - there could be places now, completed or near completion, struggling to sell like this one.

[bingobongo]

rates up, credit market frozen, prices down......

Thailand Raises Rate for 2nd Time to Tame Inflation

http://www.bloomberg.com/apps/news?pid=206...&refer=asia