Lehman Was A Major Bangkok Landlord

[midas]

As Patima said even if they went bust their biggest assets would be readily snapped up so apart from a couple of projects stalling or faltering the effect would be minimal.

Mercury Tower, Pacific Place 1 & 2 are 100% occupied fetching great rents = easy sale = zero impact on the property market except perhaps some happy investors.

Ital Thai Tower doing not so well, will be harder to sell but still definitely possible. Anyway it's not an entire building and represents a slight fraction of the market, again a sale here represents zero impact on the market.

Again, yes it all sounds big and scary but in comparison to total market size its small beer.

Excuse me quiksilva but I will believe this Patima person when I see it ! It is typical real estate agents hype..................where are potential

buyers going to borrow the money in this current investment climate which is getting worse every day( today the Russian stock market stayed closed )

What hype?

The properties are well occupied, fetching good rents, with quality tenants, and are likely to offer investors very reasonable returns (in line with similar properties in the market). Why wouldn't they sell? I personally receive inquiries from international and local funds looking to invest in commercial property every week.

For example: there is an awful lot of money coming out of the Middle East in the form of Sharia based investment funds looking to find a home in commercial property. Plus then you have the usual suspects like the Government Pension Fund and other local families who are keen commercial property players, (just so long as its freehold) and yes they can get funding. There are others of course but I refuse to tell all here for obvious reasons.

It would astound you to learn of the amount of money out there looking for a home in real estate in Thailand. Finding players with the capital required to participate in a 1-2 bn has never been a problem in Bangkok's investment class property market, well for me at least, (in fact most of my clients have a minimum lot size requirement of 10 million US$) rather it has been the lack of investment grade assets for sale, at a reasonable price, that has always been the toughest nut to crack.

Some experts are saying the bottom of the global real estate market will not be reached until around 2014 !

Like I say - i will believe it when i read about it !

There seems an incredible disconnect here between Thailand and the " rest of the world " !! Propery consultants

in other markets I have been reading about are expressing their concern because the markets have slowed down

so much and yet here in sunny Thailand you are saying the investors are lining up Why ? What makes this

market so attractive when there are far better investment opportunities available now in much more transparent

markets - for example 700 branches of Lloyds Bank in the UK are uo for grabs. If it came to a choice of investing

money in Bangkok versus buying prime UK commercial real estate at bargain prices, I don think there is any comparison

[steveromagnino]

.....- for example 700 branches of Lloyds Bank in the UK are uo for grabs. If it came to a choice of investing

money in Bangkok versus buying prime UK commercial real estate at bargain prices, I don think there is any comparison

It is all at what price.

Incidentally, knowing that the UK bank system cannot keep running a branch based network, most property investors would certainly not want to own 700 bank branches of LLoyds unless they went one by one making sure there would be tenants (and banks make lousy premises for most other types of businesses) for each location.

If a fund can buy an office yielding 7% here, or an office in the UK yielding 6%, chances are a Singaporean fund would go for here. Basic numbers.

Right now there has not been a new grade A office built since the crash. So you have a slightly different supply demand arrangement compared to some other places for that category.

No question there is a recession in the offing here and everywhere. But there are other factors at play; so it is always rosy for some players even in a market in trouble. I can think of one residential project launched 2 weeks ago that is selling way beyond expectation to affluent Thais right now.

[midas]

.....- for example 700 branches of Lloyds Bank in the UK are uo for grabs. If it came to a choice of investing

money in Bangkok versus buying prime UK commercial real estate at bargain prices, I don think there is any comparison

It is all at what price.

Incidentally, knowing that the UK bank system cannot keep running a branch based network, most property investors would certainly not want to own 700 bank branches of LLoyds unless they went one by one making sure there would be tenants (and banks make lousy premises for most other types of businesses) for each location.

If a fund can buy an office yielding 7% here, or an office in the UK yielding 6%, chances are a Singaporean fund would go for here. Basic numbers.

Right now there has not been a new grade A office built since the crash. So you have a slightly different supply demand arrangement compared to some other places for that category.

No question there is a recession in the offing here and everywhere. But there are other factors at play; so it is always rosy for some players even in a market in trouble. I can think of one residential project launched 2 weeks ago that is selling way beyond expectation to affluent Thais right now.

Firstly steveromagnino, apparently there are many other potential uses for these " prime High Street locations "

BUT much more relevant is that Patima was talking about there being plenty of potential buyers in the wings

as if this whole credit crisis will over in weeks

Please read this enlightening article kindly posted in another thread by TV member " lannebirth "

http://seekingalpha.com/article/96290-the-...inancial-crisis

This suggests the approaching hurricane is still on the horizon and the eye of the storm will not reach

us for years........................perhaps that is why other analysts are talking about 2014-2022 as being the beginning

of the recovery............

[steveromagnino]

Firstly steveromagnino, apparently there are many other potential uses for these " prime High Street locations "

BUT much more relevant is that Patima was talking about there being plenty of potential buyers in the wings

as if this whole credit crisis will over in weeks

Please read this enlightening article kindly posted in another thread by TV member " lannebirth "

http://seekingalpha.com/article/96290-the-...inancial-crisis

I worked for a branchless internet bank when that was a very new idea, and part of what drove it was the difficulty the parent bank had in selling off these so called 'prime high street locations' due to a variety of reasons many were very difficult to flog:

- bad design to use for anything other than perhaps a restaurant yet without parking/other aspects required even for that

- subscale size to redevelop

- covenants and protected building status on many (as banks tend to be old)

- large numbers of branches in prime locations of tiny cities; the best locations in big cities tended to not be sold

So I can speak with personal experience that yes, selling bank locations is not the walk in the park; different country (NZ) but same principles. in the end, many were sold with a guarantee of the bank leasing for a few years, but after the bank eventually left, well you can still go and see those properties sitting empty around NZ in places or with very low rent tenants - cafes and the like in Havelock North, that sort of thing.

I don't doubt that the average property prices may be a bit soft for years to come. But then again, just like average IQ, average wages, average grades and average health I never thought about myself basing my future on averages, but rather finding the value out there.

And there is definitely value out there, with a firesale from Lehman (which may or may not happen) plus cash rich buyers in the wings (which I can state that we are one) this is a chance to get good value; however sadly we cannot see the blood on the streets price scenario simply because there is a queue for some of the prime stuff, and not a single buyer for some of the worthless stuff. Multiple bidders will stop it from being bargain basement.

There isn't much disconnect between this market and others. The main difference is that the huge rise seen in the west with over borrowing driving it didn't really occur here to the same extent; so unless your name is Bingobongo then chances are you would not expect to see the same slump - a slump perhaps but different extent. Interesting article BTW.

Edited September 22, 2008 by steveromagnino

[fidelio]

There isn't much disconnect between this market and others. The main difference is that the huge rise seen in the west with over borrowing driving it didn't really occur here to the same extent; so unless your name is Bingobongo then chances are you would not expect to see the same slump - a slump perhaps but different extent. Interesting article BTW.

Name another country where prospective sellers raise their price when the market dives ?????

[midas]

There isn't much disconnect between this market and others. The main difference is that the huge rise seen in the west with over borrowing driving it didn't really occur here to the same extent; so unless your name is Bingobongo then chances are you would not expect to see the same slump - a slump perhaps but different extent. Interesting article BTW.

Name another country where prospective sellers raise their price when the market dives ?????

VERY GOOD POINT fidelio Yes I quite forgot about that quite unique characteristic of the Thai property market !!!

And steveromagnino you are the master of understatement " I don't doubt that the average property prices may be a bit soft for years to come " !!

"And there is definitely value out there " ????????? you missed the point of the article you say you read - where is the bottom

of the market - no one will no for a very long time......................

[quiksilva]

We are talking about sophisticated investors and owners here and Im talking investment grade commercial property. This is not high street retail property they are two very different things.

Institutional investors dont buy shops (well not unless its the whole street. You simply can't compare bank branches and office towers. Yes they are "commercial" but they are very different beasts. Both with their own merits, and distinct market dynamics. They would not even be considered by the same investors as they would not meet their selection criteria.

Even comparing like with like has difficulties across markets. Office towers in the UK fetch even lower returns than stevero has mentioned, but are leased by much the same stable of MNC's, and this is the appeal of Thailand's (and other emerging) office property markets. The markets here are more volatile than the UK and this is reflected by the yields and property values.

But to say that there are no investors active anywhere in the world right now is naive. But dont misread that, its not an insult or a put down very few people are active in this sector in Thailand. But also dont take it to mean that all is well with every sector, because that's also plainly not true.

My clients want "Investment Grade" opportunities, they dont look at condo units for instance, its a very different ball game. Residential is not in a strong state. Apartments (serviced and otherwise) are facing downward pressure on rents (although apartments do fair better than condo units in the open market due to perceived better service standards, which has led to the unofficial semi-serviced apartment being thrown around sometimes). Hotel properties are also facing difficulties (crippled demand coupled with a doubling of the market size), but the office sector is still fairly strong.

Ask anyone who leases centrally located office space and whether they got their rent reduced at their last renewal or whether it increased? Most will report that rents increased, and those that have relocated have found few relocation alternatives offering considerable savings for the same quality. Supply and demand are fairly balanced right now. Most new buildings have pre-commitments to lease from major MNC's and those that have completed already are leasing well in the open market. (Demand stemming from ITC, Insurance and Finance sectors).

Yes there are things on the horizon that could change the outlook (the move of public sector offices to the HUGE government center at Chaeng Wattana will be one of them) so yes things could change if demand dried up. But so far we have not seen any signs of this, in fact its been quite the opposite.

As to why people dont want to buy in the UK well thats understandable. The UK market keeps sliding but we have not seen that here, at least in commercial.

[steveromagnino]

And steveromagnino you are the master of understatement " I don't doubt that the average property prices may be a bit soft for years to come " !!

"And there is definitely value out there " ????????? you missed the point of the article you say you read - where is the bottom

of the market - no one will no for a very long time......................

There is no/minimal drop at all for decent real estate.

Same as most crashes.

It is the average that follows the market; that's why I don't watch the SET index; as I don't invest in an index fund. I follow very specific stocks. During some of the slumps in the market, I've made decent cash on stocks like PSL which have no relevance to the SET in that they are driven by other indicators.

Real estate (for me) is the same endeavour. In the crash of 1991-93 in NZ my mother made a fortune. She made minimal amounts in the period 2002-2006 - the so called property boom where she lives (NZ).

Value is what the market will pay. If I can purchase today and believe the price will be higher 2 years from now, and I am able to read the market correctly, then THAT is value. Anything else is just words on the net.

Developers who are cash rich right now are sitting pretty. But many don't believe that the bargains are out there; too much competition from other cash rich developers.

There are definitely some other players out there that are going to go down; perhaps one big name included. But again, a good developer they don't do business 'on average' they play their own game. And as Quiksilva knows, there are projects on the market NOW that are going just fine as in the last 2 weeks just fine (selling 20% within the last 10 days according to sources in Sky scraper city).

[Livinginexile]

I heard on the news today that all of Lehman's Asian assets have been bought by Japan's Mitzubishi bank!

Anyone else heard this?

[ray08]

As to why people dont want to buy in the UK well thats understandable. The UK market keeps sliding but we have not seen that here, at least in commercial.

Quicksilver, on the point above ,and from my way of investing ,the opportunity to make a capital proft will be in such markets as the UK , USA , Australia , where the properties have taken a big hit ,which in turn will have more upside than downside ,granted i would wait another 6 months to jump in but the sliding is slowing down .

In thailand we have seen no such drop ,so in fact a buyer would be coming in at a high point in the market , and with a potential for a correction as has happened worldwide ,not IMO the best choice

[quiksilva]

I agree with you.

On reflection I probably shouldn't have used the term 'people' (I was busy and wanted to write the post run). I was talking about institutional investors who are usually risk averse, especially when it comes to office towers of the likes of Mercury, or Pacific Place 1&2, which are viewed as 'core portfolio' plays. I.e institutional investment grade property, large lot size offering reasonable returns backed by tenants with good covenants, in prime locations.

These properties tend to be out of reach of the vast majority of the players, who are usually opportunistic investors, looking for much higher returns, than this type of property can provide.

As I said I do think there could be some very real opportunities in the West, sure there'd be lots of homework required but at least the market is transparent and info is 'easy' to get. These opportunities though are for those who have the funds, are bold enough and have the flexibility to invest in these times. These investors tend to be smaller firms, or high net worth private individuals.

Most of these will be looking at residential plays or even high street commercial, but not the sort who would drop 10-20 million USD into a single building, some can and do, (eg some Middle East buyers have fund and are bold enough) but they must be counted as the exception rather than the rule.

Living in Exile, yes I also heard about that they were looking at buying the Asian operations, I don't know if it went ahead, if so it could be interesting.

Edited September 24, 2008 by quiksilva

[midas]

As to why people dont want to buy in the UK well thats understandable. The UK market keeps sliding but we have not seen that here, at least in commercial.

Quicksilver, on the point above ,and from my way of investing ,the opportunity to make a capital proft will be in such markets as the UK , USA , Australia , where the properties have taken a big hit ,which in turn will have more upside than downside ,granted i would wait another 6 months to jump in but the sliding is slowing down .

In thailand we have seen no such drop ,so in fact a buyer would be coming in at a high point in the market , and with a potential for a correction as has happened worldwide ,not IMO the best choice

Ray I was thinking the same thing. Those Thai's that think they can just lock up the property again

like they did after 1997 and maybe even increase the asking price and then just sit and wait maybe

in for a shock this time around. So things could go along as " normal " here in LOS for a quite some

time and then when they realise the true extent of the problems I wondered if values could drop like a stone ?

[ourmanflint]

Lehmans asia-pacific assets purchased by Nomura.

bargain

Lehman’s Asian operations are profitable. Net revenue from Asia-Pacific amounted to $1.4 billion in the first half of this year, roughly 20% of the bank’s overall revenues.

[midas]

Lehmans asia-pacific assets purchased by Nomura.

bargain

Lehman’s Asian operations are profitable. Net revenue from Asia-Pacific amounted to $1.4 billion in the first half of this year, roughly 20% of the bank’s overall revenues.

Only time will tell if it was a bargain

[bingobongo]

sorry kids, but nowhere does it mention nomura is buying the MORTGAGE or REAL ESTATE assets or discounted bad debt, they are ONLY buying the equity and I-bank arms, they are not taking the bad real estate debt......oh well , i guess someone had to bring the thread back to reality, and where is the mention of the purchase of Thailand assets specifically? uh.....that would be nowhere

The deal, which sources close to Nomura told The Times was signed earlier today, pips Barclays to the post and will put the Japanese bank in control of Lehman's extensive equity business and investment banking operations.

http://business.timesonline.co.uk/tol/busi...icle4801327.ece

A Nomura spokesman in Tokyo specifies that the Japanese bank will buy "the human resources and IT platforms of the operation in Australia, China, Hong Kong, India, Singapore and South Korea". Significantly, Nomura is not buying either the trading assets or the trading liabilities

http://www.financeasia.com/article.aspx?CI...21&r=hstory

Edited September 26, 2008 by bingobongo

[quiksilva]

Great news for players like ING who have already publicly expressed interest in buying these assets (BKK Post yesterday) as well as for the rest of the players who prefer to keep quiet about such things.

[bingobongo]

please remember that a property in Bangkok is like a bargirl, ages quickly and lacks real substance, that mantra should guide you thru these turbulent times

[fidelio]

please remember that a property in Bangkok is like a bargirl, ages quickly and lacks real substance, that mantra should guide you thru these turbulent times

Yep, a deeply fuc_ked up property market.

[ourmanflint]

Thanks for pointing that out bingo!!

Seems Nomura are on a crazy spending spree. link

[midas]

please remember that a property in Bangkok is like a bargirl, ages quickly and lacks real substance, that mantra should guide you thru these turbulent times

Yes Bingo - " the devil is in the detail "

This was in yesterdays edition of the Sydney Morning Herald newspaper :-

Lehman Australia in administration

Nomura, which on Tuesday said it will buy the Asia-Pacific assets of Lehman Brothers, is still extending offers of employment to the Australian staff.

Today Mr Parbery said Nomura had offered to buy only some assets from Lehman Brothers Australia (LBA), including fixed assets, chattels and computer equipment.

How do we know they havent done the same thing in Thailand ?! Computers and chattels

is hardly a measure of the strength of the property market- they are just cherry picking !

[midas]

And this is in todays " The Times " of London

Nomura misses deadline to buy Lehman division

A deal to buy the Lehman Brothers fixed income division in London has fallen through at the last moment, throwing 600 UK jobs into doubt.

Hopes that Nomura, the Japanese securities house, would snap up the division evaporated yesterday when a 4pm deadline passed with no offer being made to administrators at PricewaterhouseCoopers. Nomura declined to comment but it is thought that despite being able to buy the business for a peppercorn sum, it pulled out because of the considerable capital backing it would have required.

Nomura bought Lehman’s equities and investment banking units in London this week, potentially saving more than 2,000 jobs.

There were conflicting reports last night over whether any other bidder was interested in the fixed income division. Earlier this week PWC said that it was exploring all possible options for it.

Stars in the division were already starting to vote with their feet, with a team of seven in interest rate sales, led by Cedric Pauwels, defecting to Citigroup yesterday.

The division trades bonds and other fixed income securities and helps clients to raise capital by issuing new bonds.

Lehman Brothers filed for Chapter 11 bankruptcy in the United States 13 days ago after the US Government chose not to underwrite a rescue deal. Its European division, Lehman Brothers International, was put into administration.

Nomura has moved quickly to lock in staff in the equities and investment banking arms, promising a $1 billion guaranteed bonus pool regardless of performance in the rest of the year.

Up to 2,000 Lehman jobs in London are not yet secure. PWC is still trying to find buyers for the the fund managment arm Lehman Brothers Asset Management (Europe).

PWC filed a court order this week seeking nearly $8 billion (£4.3 billion) transferred from the Canary Wharf offices to the bank’s US holding company just before the collapse.

Maybe it is starting to unravel .........................? And yhis would not be good for Bangkok Bank apparently ........???

[quiksilva]

Plenty of funds are looking at Lehman's commercial assets here, as I have already reported ING have publicly announced their interest in the BKK Post, and I know with 100% certainty, that other players are in serious discussions to acquire their commercial properties.

[pkrv]

Plenty of funds are looking at Lehman's commercial assets here, as I have already reported ING have publicly announced their interest in the BKK Post, and I know with 100% certainty, that other players are in serious discussions to acquire their commercial properties.

As I understand it they are called vulture funds - and they make a killing just not as the bulls/bears do. They sort of mop up.

[LaoPo]

Plenty of funds are looking at Lehman's commercial assets here, as I have already reported ING have publicly announced their interest in the BKK Post, and I know with 100% certainty, that other players are in serious discussions to acquire their commercial properties.

That was Friday's article I believe.

A LOT happened during the weekend with Central Bankers from 3 countries and the Banker of the European Central Bank, Mr. Trichet, including many other big shots, Finance Ministers and the like working overtime

ING has something much bigger to attent to....the eventual buy-out (from FORTIS) of ABN AMRO Bank - a very large bank- , which was sold for € 70 Billion last year to three different buyers of which FORTIS bought the banking business for just a mere € 24 Billion...

ABN AMRO's worth is now -maybe- € 10 Billion, and ING is fishing for it.... Go figure.

LaoPo

[bingobongo]

well folks, the credit markets are frozen globally and liquidity is the way to go (aka cash is king) if you actually think that some bank is going to buy RE assets in this envt especailly in LOS, i suggest you get out of the sun and stop using yabba

cash is king, pick your spots wisely, becasue the gloabl debt bubble is deflating and unless you have cash, you will pay dearly for credit, so the LOS housing market (as the rest of the world) will feel enormous pain, as the following has GLOBAL implications, and yes even in LOS

builders will go under and there will be more empty large buildings in Bangkok

Treasurys soar, credit pipes frozen

http://money.cnn.com/2008/09/29/markets/bo...sion=2008092916

[quiksilva]

Plenty of funds are looking at Lehman's commercial assets here, as I have already reported ING have publicly announced their interest in the BKK Post, and I know with 100% certainty, that other players are in serious discussions to acquire their commercial properties.

That was Friday's article I believe.

A LOT happened during the weekend with Central Bankers from 3 countries and the Banker of the European Central Bank, Mr. Trichet, including many other big shots, Finance Ministers and the like working overtime

ING has something much bigger to attent to....the eventual buy-out (from FORTIS) of ABN AMRO Bank - a very large bank- , which was sold for € 70 Billion last year to three different buyers of which FORTIS bought the banking business for just a mere € 24 Billion...

ABN AMRO's worth is now -maybe- € 10 Billion, and ING is fishing for it.... Go figure.

LaoPo

Be that as it may it doesn't stop them from looking at buying a few office buildings (they already have 5bn of assets here after all), this all they do at ING Real Estate and ING Funds.

PKRV you mentioned vulture funds, well I suppose you could call some of them by that term, they describe themselves as 'opportunistic funds'. These so called 'vulture funds' usually seek higher yielding opportunities than these properties can generate (i.e. >20% ROI).

I suppose some may look at these assets and will low ball but they will not compete with the institutional players (like ING and some local players) who are seeking to expand their core real estate portfolio, and I can confirm that this bracket of players are definitely looking at Lehman's assets here.

Edited September 30, 2008 by quiksilva

[midas]

Be that as it may it doesn't stop them from looking at buying a few office buildings (they already have 5bn of assets here after all), this all they do at ING Real Estate and ING Funds.

PKRV you mentioned vulture funds, well I suppose you could call some of them by that term, they describe themselves as 'opportunistic funds'. These so called 'vulture funds' usually seek higher yielding opportunities than these properties can generate (i.e. >20% ROI).

I suppose some may look at these assets and will low ball but they will not compete with the institutional players (like ING and some local players) who are seeking to expand their core real estate portfolio, and I can confirm that this bracket of players are definitely looking at Lehman's assets here.

Let me ask you this then quicksilva - at what point in his unfolding global economic crisis

do institutions even like ING stop buying or expanding? What I'm saying is there must surely be

a tipping point where the prospects don't seem so attractive anymore or the risk

becomes unacceptable -particularly when influential people in the USA

have been using the word " depression " with much greater regularity over the past few days ?

[quiksilva]

First you must understand that its a portfolio play. Like all investors they maintain, shrink or expand positions in different sectors based on high level policy decisions.

Commercial property is just one of these areas like say equities, government bonds etc. The institutions rarely want to put all their eggs in one basket and usually maintain positions in each, and on an even higher scale they decide which countries to invest in.

They usually include commercial property as it offers slightly better returns than government bonds, but is less volatile than equities. If the fund managers are doing their job then their capital base should be constantly growing (yes even in the bad times) and it needs to be allocated somewhere, its just a question of where.

They may expand or reduce positions in anyone of the sectors I mentioned (depending on what is practical or permissible by law) which sector and the amount depends on individual market conditions.

For them to be talking to me or the press about such investments shows that they have (a) already decided to invest in Thailand (not news most are already doing so or are looking) and (b ) decided to allocate funds to commercial property in this market.

So with that in mind I will answer your question.

Investors always invest, their goal is to maximise returns. There are always opportunities to secure investment returns even when times are bad. Its just a question of what they invest in and how much they are prepared to accept.

For them not to invest in the Bangkok commercial property sector, it would take the Bangkok office market to be in a position where vacancy rates were climbing, oversupply was looming and rents were falling.

BUT This is not happening right now. Ask anyone who has recently tried to find a new office or renew their lease. Rents have held firm and if anything continue to grow (albeit at a much slower pace than compared with pre-coup times)

I suppose a downturn could feasibly happen if there was a failure of a huge amount of firms in the service industry. Although I don't see any signs of that happening. Quite the opposite, in fact we are talking with a number of firms looking to expand here, no names though, sorry...

Thailand's service sector is almost exclusively built around the domestic economy and much of the growth in this sector is from firms in the ITC sector where Thailand lags behind much of the region (eg extremely low broadband penetration and limited numbers of customer service call centers for local firms). Insurance is also a major growth industry with just 20% of the population with life insurance in Thailand, resulting in large space requirements from these sectors, and downstream support services, to name but a few areas.

Edited September 30, 2008 by quiksilva

[midas]

For them not to invest in the Bangkok commercial property sector, it would take the Bangkok office market to be in a position where vacancy rates were climbing, oversupply was looming and rents were falling.

BUT This is not happening right now. Ask anyone who has recently tried to find a new office or renew their lease. Rents have held firm and if anything continue to grow (albeit at a much slower pace than compared with pre-coup times)

I suppose a downturn could feasibly happen if there was a failure of a huge amount of firms in the service industry. Although I don't see any signs of that happening. Quite the opposite, in fact we are talking with a number of firms looking to expand here, no names though, sorry...

Thailand's service sector is almost exclusively built around the domestic economy and much of the growth in this sector is from firms in the ITC sector where Thailand lags behind much of the region (eg extremely low broadband penetration and limited numbers of customer service call centers for local firms). Insurance is also a major growth industry with just 20% of the population with life insurance in Thailand, resulting in large space requirements from these sectors, and downstream support services, to name but a few areas.

quiksilva thank you for your very informative reply to my question!

But the examples you have given and I have highlighted in this response all relate to characteristics

about the hypothetical property itself whereas I am wondering about external factors such as

the continued ability to generate money to pay the purchase price !

All we keep hearing about is that in the USA particularly after yesterday , that there is virtually no credit

available in the USA. I realise companies like ING are based in Europe so they may not yet be

experiencing any difficulties. But surely there cannot be that much of a " disconnect " between

access to funds in the USA and the rest of the world? Or even if there is a disconnect at the moment,

my question is surely that cannot state of affairs cannot remain forever.

Do you understand my point ? What I was trying to say is if things have ground to a halt

and the assessment for the immediate future in the world's biggest economy is bleak

surely there will become a tipping point when institutions even in other countries impose a moratorium on any

further buying-no matter how attractive the opportunity may be? In particular if

people cut back on saving and perhaps even paying some nonessential insurance premiums.

Edited September 30, 2008 by midas

[quiksilva]

Yeah sure I understand and can see why you would think that. Its just that I haven't seen anything in practice that supports that view 100%

The short answer is: so called global players are much more segmented than might be immediately apparent.

Take AIG for example. Epic fail in the USA, yet in Thailand they have about 90 billion Baht in undistributed profits, (that's some serious money even in the USA) which until recently was pretty much all shored up in government bonds and it all had to stay within the country due to financial regulations here.

But just recently the Office Insurance Commission announced that Insurers can now allocate some funds to property investment, which is why AIA purchased that site on Sathorn Road (opposite Healthland). That was only a week or so before it all went mad. Guess what? They are not trying to sell it now.

Now to your point:

Of course there is a point when individuals could cut back on saving and put all their money under the mattress, instead of in the banks. A run on the global financial systems of the sort of scale you are talking about that will affect these institutions is essentially financial Armageddon, and the last time anything came close to that was not called a Recession but the Great Depression with 25% unemployment, thousands of banks failing etc,

Sure the outlook is bad at the moment, and yes it could get worse but will it be that bad?

I know many are concerned that it could be but I personally think those fears are rather exaggerated and what we'll see as those economies turn sour, is the institutional fund managers moving capital into new or better markets. Sooner or later it will bottom out back home and that money will flow back in and those markets will rise again.

Ps excellent article here http://business.timesonline.co.uk/tol/busi...icle4849789.ece

Edited September 30, 2008 by quiksilva