Property Over The Next Two Years Let Us Forecast.

[pkrv]

OK first time I have tried this but lets give it a go

Edited February 19, 2009 by pkrv

[churchill]

Depends on currencies , Europe , USA Recession or not , So I think probably down , however where do people invest ? perhaps a return to land and house before markets ?

There are people still looking but are being a lot more cautious and expecting a good price reduction .

[thaihome]

Can’t answer because your response dose not reflect how the decisions are actually made.

Will prices go up, down or stay the same:

Prices will go up or stay stable for popular developments, based on individual decisions of quality for price/budget and location

Prices will go down for developments that are poor locations or have poor quality for the price.

Would you buy now if renting.

See above criteria since you have limited this to living in as opposed to investment to rent.

TH

[pkrv]

Sorry guys that just took a few minutes to work out LOTS OF EDITS - I have made the first vote but from it you can see my perspective. The rental section will not work well. Sorry you probably can only answer one question.

Edited February 19, 2009 by pkrv

[eljeque]

OK first time I have tried this but lets give it a go

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The volume of property going up for sale every week,

the problems in the West forcing some owners here to sell at any price to take care of problems back home,

the excess number of units prior to the economic difficulties,

the exchange rate for Brits, Europeans and Russians,

all of these added together make a vey sorry situation for RE here. I am happy to be a renter. And, my landlord is happy to have his property rented out.

[pkrv]

OK first time I have tried this but lets give it a go

V

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The volume of property going up for sale every week,

the problems in the West forcing some owners here to sell at any price to take care of problems back home,

the excess number of units prior to the economic difficulties,

the exchange rate for Brits, Europeans and Russians,

all of these added together make a vey sorry situation for RE here. I am happy to be a renter. And, my landlord is happy to have his property rented out.

Take care eljeque - IMO the best post on this subject is -

That hits the nail on the head. Someone told me several months ago that the most important thing to do was to decide on which is my home currency and most Brits will probably find that very hard to do. The home currency is the one you spend every day, not the one you invest in or think is stronger or better - I think most British expats have probable devised a strategy for Sterling and not for Baht and that has cost them.

Sorry I can be very thick at times why

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And I really mean I can be dense - PKRV

[MJo]

Poll don't work for me. Just get's stuck or gives error messages...

Anyways in general level i believe prices will go down. So does rental rates. Actually it is been happening already for several months in some developments. Like someone said above there is some foreigners leaving and selling at going price and also some normal mid class Thais not able to flip nor transfer their booked units. First indications are there (nation and post) for developers offering feebies and "cash back" as well as from banks concerned on upward trend on NPL's.

Question is how much? Can be anything from next to nothing to total crash and i believe no one knows at the moment. However i do believe Thailand will be better off than US and UK etc but the effects from global dowturn will not spare thailand and have some effect in some point.

I do agree there is individual developments that will continue to do well but these are very few and not necessary the most expensive ones.

[pkrv]

Poll don't work for me. Just get's stuck or gives error messages...

Anyways in general level i believe prices will go down. So does rental rates. Actually it is been happening already for several months in some developments. Like someone said above there is some foreigners leaving and selling at going price and also some normal mid class Thais not able to flip nor transfer their booked units. First indications are there (nation and post) for developers offering feebies and "cash back" as well as from banks concerned on upward trend on NPL's.

Question is how much? Can be anything from next to nothing to total crash and i believe no one knows at the moment. However i do believe Thailand will be better off than US and UK etc but the effects from global dowturn will not spare thailand and have some effect in some point.

I do agree there is individual developments that will continue to do well but these are very few and not necessary the most expensive ones.

Thanks for the update - first time I have ever submitted a poll. Each section must be filled in with (unfortunatly) one entry. One tick in a box, in each section is needed. The N/A's tried to cope with different positions like owning/not owning.

Edited February 19, 2009 by pkrv

[MJo]

Ok, got it now. Thanks.

Not owning any property in Thailand but yes planning to buy sometime in next 5 years. On hold now as have wait and see how things play out work wise for me. But then again i will be buying to live in long term. Not as an investment. So it really doesn't matter for me if i pay bit more or less. If i'm gonna sell some day i need new place to stay so gains and losses will level with the new purchase.

Rents propably going down. So many units empty units and owners fighting over tenants. Changed apartment couple of months ago and found out there was hundreds of units out there and most of them were willing to accept 15 to 25% down from asking price for one year contract with 6 months advance payment. Also just read from nation the other day that serviced apartments occupancy rates are way down, prices decreasing and loads of units coming online this year still.

[londonthai]

prices are now going down. It's a new tendency and I would think would last several years.

as to investing in property - at this time it's better to keep money in the bank than lose big time, if the property market crashes completely

[mommysboy]

OK first time I have tried this but lets give it a go

You won't get an accurate view as there is a hard core that will talk prices up endlessly seeing reality as an unwelcome intruder.

They are going down for sure: 10-50%, it's difficult to judge, but the big storm is now hitting Thailand.

[jcon]

High-end is going to get hit hardest. I'm 100% sure of that.

Next to go is the 4-5 million THB condos... the ones people speculated/thought they could afford, etc. etc... destroyed.

Everybody is getting slapped down a rung or two on the ladder, which means that the low end properties will sustain the least damage IMO. Low end, good location, properties - my guess is that prices remain fairly stable.

Luxury will get/is getting destroyed.

[Chaimai]

Investing in properties is quite lucrative job. But it is not possible for everyone to become successful with the help of real estate. They must learn how to bag a lucrative job into their hands rather than a piece of land.

Get more info at coverlettersthatkill dot com

<deleted> ??

[yabaaaa]

Ok, got it now. Thanks.

Not owning any property in Thailand but yes planning to buy sometime in next 5 years. On hold now as have wait and see how things play out work wise for me. But then again i will be buying to live in long term. Not as an investment. So it really doesn't matter for me if i pay bit more or less. If i'm gonna sell some day i need new place to stay so gains and losses will level with the new purchase.

Rents propably going down. So many units empty units and owners fighting over tenants. Changed apartment couple of months ago and found out there was hundreds of units out there and most of them were willing to accept 15 to 25% down from asking price for one year contract with 6 months advance payment. Also just read from nation the other day that serviced apartments occupancy rates are way down, prices decreasing and loads of units coming online this year still.

Down maybe on some price ranges and way up on others. I just advertised 1 unit I have available in the 14000 baht range and had a good response. People ar e downsizing fortunately all my units are in this range and all are full for this year except the new one but again only advertised 2 days ago. For me things are good and have been for the last almost 3 years.

[yabaaaa]

High-end is going to get hit hardest. I'm 100% sure of that.

Next to go is the 4-5 million THB condos... the ones people speculated/thought they could afford, etc. etc... destroyed.

Everybody is getting slapped down a rung or two on the ladder, which means that the low end properties will sustain the least damage IMO. Low end, good location, properties - my guess is that prices remain fairly stable.

Luxury will get/is getting destroyed.

Well said Jcon this is what I am seeing now just wish I could buy some more at the moment in the 1-2-million range sadly Im all spent out for a while with 5 on the go. Business is still good in the lower end.

People will always need affordable housing, I looked hard before deciding what to buy a few years back and reckoned either 1 expensive condo or 4-5 smaller units, it was a no brainer for me. Studios always sell out first in developments.

Edited February 19, 2009 by yabaaaa

[bingobongo]

this is in fact quite an easy question, but lets start out with this little morsel first...

The Bank of Thailand has said it may continue easing monetary policy at its next meeting on Feb. 25 after cutting its benchark interest rate

to 2 percent in two reductions since early December.

so here are some scenarios:

1) if property is not moving when rates are pratically zero (as they soon will be), then they will most assuredly will not sell or appreciate as interest rates rise in the future

2) if BOT does not raise interest rates or drops rates to zero, then the baht will continue to devalue, so the poor bagholder who bought his debt trap when the baht was say 35 to the dollar will have all his phantom 10% appreciation wiped away when the baht falls to 38 to the dollar

rates go up, prices come down, rates go down and you lose on currency devaluation

so to summarize, property will not rise in value (nominally or inflation adjusted) and the baht will continue to fall, and the homedebtor is in fact getting screwed twice

any questions?

Edited February 20, 2009 by bingobongo

[MJo]

Down maybe on some price ranges and way up on others. I just advertised 1 unit I have available in the 14000 baht range and had a good response. People ar e downsizing fortunately all my units are in this range and all are full for this year except the new one but again only advertised 2 days ago. For me things are good and have been for the last almost 3 years.

Very true, many are looking to save some money in rent and will downsize. Seems you also price your properties correctly and when you do you have no problems finding tenants. Thais often prefer to keep their properties empty half the time just to get the best price not realizing they would be better off renting 12 months a year with bit lower rent. Never understood the logic behind it.

I was looking 20k - 30k range and was able to find 120 m2 2br unit in lower sukhumvit below 30k. Bit older and smaller building but in reasonable condition and quite nice deco with 5 mins walk to BTS. New developments you could get very nice 75m2 2br but i just prefer the space over grade

[Jungian]

Your questions do not apply. I own my home, my wife owns the land. I paid 1.4 Million 4 years ago, the house is now worth 2.1 million according to the reality company trying to get us to sell. I believe the reason for the quick raise in value is because originally the more than 1,000 rai of land behind was intended to be built upon however it is complete jungle and swamp thus to make the land usable they would need to spend millions of ฿ to lay drainage pipe, sand, stone and sewage to drain off the floodplain and the land would need to be raised at least 3 meters. Currently the land in the area is about 10,000฿ per sq. meter to do what I have listed would cause the land to cost somewhere around 80,000฿ per sq meter to recoup the money spent to make the land usable and logically who would spend 80,000฿ on a piece of land that could only be turned around for 10,000฿ per sq meter. Needless to say although I live in a village the view from the back is breathtaking.

I really think it is case by case, for example the village next to us used to be exclusive with guards, fitness center, full services in general however; the home owners stopped paying the monthly fees and no longer have access to any services including trash collection. The guard shacks have been stripped of everything including the windows! Houses that were renting for 15,000฿ plus per month are now renting as low as 5,000฿ per month and at least 25% of the homes are for sale.

[midas]

I really think it is case by case, for example the village next to us used to be exclusive with guards, fitness center, full services in general however; the home owners stopped paying the monthly fees and no longer have access to any services including trash collection. The guard shacks have been stripped of everything including the windows! Houses that were renting for 15,000฿ plus per month are now renting as low as 5,000฿ per month and at least 25% of the homes are for sale.

And why would we not see this trend also in " some " high rise condo buildings ?

[quiksilva]

The problem Midas is that "exclusive" and "15000 THB/month" do not belong in the same sentence. So I draw the conclusion that the home owners were probably not what we could call affluent, hence why they stopped paying.

So yes it seems like a horror story and Im sure many other estates at this level have similar stories, just as they do in low income areas everywhere in the world.

For the record I voted that "prices" will fall, indeed are falling.

See my previous posts on why prices and values are not the same thing.

Edited February 20, 2009 by quiksilva

[midas]

The problem Midas is that "exclusive" and "15000 THB/month" do not belong in the same sentence. So I draw the conclusion that the home owners were probably not what we could call affluent, hence why they stopped paying.

So yes it seems like a horror story and Im sure many other estates at this level have similar stories, just as they do in low income areas everywhere in the world.

For the record I voted that "prices" will fall, indeed are falling.

See my previous posts on why prices and values are not the same thing.

quicksilva I dont think there is any evidence to support a theory that a trend to stop paying monthly fees by some owners has any

geographical or price range boundaries ? Particularly to those owners of higher end properties that may be losing valuable

tenants such as senior Japanese executives and see no other prospective tenants in sight?

And when you say " Im sure many other estates at this level have similar stories, just as they do in low income areas everywhere in the world "

this could be interpreted as implying Jungian lives in a " low income area " because he is referring to the village next to his home?

My assumption was perhaps the initial rental value of 15,000 baht was only low by Bangkok standards - not by Chang Mai standards? Perhaps Jungian can enlighten us further regarding this?

[quiksilva]

Thailand being Thailand, rich people very often live along side impoverished areas. Jungian could therefore be extremely well off, but I fail to see what that has to do with my interpretation of the data presented.

Now you can defend your position all you like, but the fact of the matter is 15,000 Baht a month in rent is a relatively small amount of money (perhaps not to you). If the homes there can only fetch 15,000 Baht a month a rent it follows that values (using an income valuation approach) are not worth all that much. Perhaps on the low side of the of 2-3 million region.

Houses for 2-3 million are not the type of residences that are actively sought out by those with high disposable incomes. Those on lower incomes are more prone to stop paying their bills, especially when times get hard when sadly this bracket feels the most pain. The lower skill, lower paid workers are first to be laid off, and as unemployment rises, so does crime.

As to the relationship to tower block condo's you conveniently choose to ignore the fact that condominiums are mostly purchased in cash transactions. I have said that before and YES there will be those who will be forced to sell in the situations that you have described and that is where you will discounted prices. This includes those who have geared up in order to buy to let and developers.

But are they in the majority? No.

See there are also those cash buyers who will not be under any pressure to sell or even rent, so won't, unless they can get the price/rent that they are asking.

I suspect that those who are forced to sell will increase as the economic climate gets worse, but that pressure is not being felt yet and the second category in the condo sector, lets call them "the haves" still outnumber the "have nots", but the have nots numbers may increase with time.

Some "have's" may even become "have nots", but that's not happening on a wide scale, yet, at least not enough to say that this is a trend.

Edited February 20, 2009 by quiksilva

[popshirt]

High-end is going to get hit hardest. I'm 100% sure of that.

Next to go is the 4-5 million THB condos... the ones people speculated/thought they could afford, etc. etc... destroyed.

Everybody is getting slapped down a rung or two on the ladder, which means that the low end properties will sustain the least damage IMO. Low end, good location, properties - my guess is that prices remain fairly stable.

Luxury will get/is getting destroyed.

As I wrote a few weeks ago, my landlord cut the rent almost 40% for next year when I told him I was thinking of moving. It is a "luxury" high rise but still that is more of a cut than I expected or asked for. When I posted this before, someone wrote that my landlord was an "idiot"; I don't really think so, he is a very shrewd businessperson and owns many properties and works for a large multinational financial firm.

[midas]

Thailand being Thailand, rich people very often live along side impoverished areas. Jungian could therefore be extremely well off, but I fail to see what that has to do with my interpretation of the data presented.

Now you can defend your position all you like, but the fact of the matter is 15,000 Baht a month in rent is a relatively small amount of money (perhaps not to you). If the homes there can only fetch 15,000 Baht a month a rent it follows that values (using an income valuation approach) are not worth all that much. Perhaps on the low side of the of 2-3 million region.

Houses for 2-3 million are not the type of residences that are actively sought out by those with high disposable incomes. Those on lower incomes are more prone to stop paying their bills, especially when times get hard when sadly this bracket feels the most pain. The lower skill, lower paid workers are first to be laid off, and as unemployment rises, so does crime.

As to the relationship to tower block condo's you conveniently choose to ignore the fact that condominiums are mostly purchased in cash transactions. I have said that before and YES there will be those who will be forced to sell in the situations that you have described and that is where you will discounted prices. This includes those who have geared up in order to buy to let and developers.

But are they in the majority? No.

See there are also those cash buyers who will not be under any pressure to sell or even rent, so won't, unless they can get the price/rent that they are asking.

I suspect that those who are forced to sell will increase as the economic climate gets worse, but that pressure is not being felt yet and the second category in the condo sector, lets call them "the haves" still outnumber the "have nots", but the have nots numbers may increase with time.

Some "have's" may even become "have nots", but that's not happening on a wide scale, yet, at least not enough to say that this is a trend.

I don't see the need to speculate about how much the property is worth or whether the purchasers were cash or

otherwise because I don't believe it is relevant to my first post ?

My post was solely confined to the question as to whether we will see a growing trend in the number of owners ( wealthy or otherwise )

who will fail to pay their monthly contributions? I am asking this question because this has even occured in some luxury buildings

during the " good times " , so it would be hardly surprising if it happened more frequently during a severe downturn?

That the risk of some owners failing to pay contributions is somehow confined only to lower-priced properties

could be debated infinitely.

During the 1997 economic crisis I remember many examples that started with recently purchased " shells " even in luxury buildings

around the Sukhumvit Road are being left totally abandoned ( not even being fitted out ) and even by cash purchasers( investors ).

This was because there was hardly any chance of finding a tenant. Not surprisingly these same owners were not paying their contributions

and there was nothing anyone could do to make them pay up

quicksilva, you have been here long enough to know that some Thai investors ( rich or otherwise ) don't always meet

their responsibilities so quickly if they can possibly " postpone them " ? Some owners

even super wealthy ( that is maybe why they are ) still couldn't see the need to paycontributions if they couldn't rent it out

and they thought what could anyone do about it anyway ?

I remember thinking in 1998 ,the unfortunate thing about this quite irresponsible attitude by just a few -especially in a prestigious development

is that neglecting their condo( i.e. leaving for years as a shell ) and failure to pay their contributions can eventually damage

the reputation and image or the entire building ?

[MJo]

If this trend continues for few quarters there will be some "haves" changing their status for sure. Also i would expect quite a number of expats returning back to home base if not laid off straight away.

Whole story Here

[pkrv]

Your questions do not apply. I own my home, my wife owns the land. I paid 1.4 Million 4 years ago, the house is now worth 2.1 million according to the reality company trying to get us to sell. I believe the reason for the quick raise in value is because originally the more than 1,000 rai of land behind was intended to be built upon however it is complete jungle and swamp thus to make the land usable they would need to spend millions of ฿ to lay drainage pipe, sand, stone and sewage to drain off the floodplain and the land would need to be raised at least 3 meters. Currently the land in the area is about 10,000฿ per sq. meter to do what I have listed would cause the land to cost somewhere around 80,000฿ per sq meter to recoup the money spent to make the land usable and logically who would spend 80,000฿ on a piece of land that could only be turned around for 10,000฿ per sq meter. Needless to say although I live in a village the view from the back is breathtaking.

I really think it is case by case, for example the village next to us used to be exclusive with guards, fitness center, full services in general however; the home owners stopped paying the monthly fees and no longer have access to any services including trash collection. The guard shacks have been stripped of everything including the windows! Houses that were renting for 15,000฿ plus per month are now renting as low as 5,000฿ per month and at least 25% of the homes are for sale.

Hi - Jungian, from what you have said you own property in Thailand (look I know the points at stake here, but no longer involve myself in house land issues, they are not relevent to me, I am a Condo guy) so you can fill in the first section. The next section is probably N/A for you and if you are Thai or have a Thai based income the final section would also be N/A - does that help?

Edited February 20, 2009 by pkrv

[pkrv]

High-end is going to get hit hardest. I'm 100% sure of that.

Next to go is the 4-5 million THB condos... the ones people speculated/thought they could afford, etc. etc... destroyed.

Everybody is getting slapped down a rung or two on the ladder, which means that the low end properties will sustain the least damage IMO. Low end, good location, properties - my guess is that prices remain fairly stable.

Luxury will get/is getting destroyed.

Interesting - Perhaps we need to add a new category 'elite' - To qualify for this you must have lots of Hi-so and Hi-sor (I think that is the correct term). These properties appear to be doing very, very well indeed.

[pkrv]

I originally thought I had made a mistake in designing the If you are renting or considering Thailand for property questions (sorry for the spelling, I note I spelt 'think' two different ways, that just me )

However you can only choose one option (my choice was N/A) so you have to prioritise. IMO what is accidently being shown up is the number of interested bystanders.

(sorry for the multiple posts - PKRV)

Edited February 20, 2009 by pkrv

[jcon]

High-end is going to get hit hardest. I'm 100% sure of that.

Next to go is the 4-5 million THB condos... the ones people speculated/thought they could afford, etc. etc... destroyed.

Everybody is getting slapped down a rung or two on the ladder, which means that the low end properties will sustain the least damage IMO. Low end, good location, properties - my guess is that prices remain fairly stable.

Luxury will get/is getting destroyed.

Interesting - Perhaps we need to add a new category 'elite' - To qualify for this you must have lots of Hi-so and Hi-sor (I think that is the correct term). These properties appear to be doing very, very well indeed.

pkrv, do not confuse your pied-a-terre with what the true Elite would own. Real Thai Elite do not own condos (unless they are for gigs, mia nois, second/third/fourth pads, somewhere to park cash, speculation, etc.)... they own Houses. And Land. Lots and lots of land. Surely I'm wrong however, and your condo is 100% sold out with 100% occupancy. And btw, The Park doesn't qualify as Elite anyway. Know your place.

[MJo]

Interesting - Perhaps we need to add a new category 'elite' - To qualify for this you must have lots of Hi-so and Hi-sor (I think that is the correct term). These properties appear to be doing very, very well indeed.

For me they appear to be decreasing in price.

Like the Park. Quick look on Prakard shows that going price is around 100k per sqm if not even lower already.

- One unit seems to be sold in January. Asking price was 115K per sqm.

- Other unit asking 160K on June, reduced to 135 on Dec and still for sale

- Interested buyers report that they have been offered units between 120K to 110K per sqm last December. Some of them farang owners not wanting (can not afford?) to transfer.

Situation has gone much worse since December so i would expect asking prices are now around 100K and actual sales lower than that.

Would be interesting to know how many of the units are still not transferred or transferred but empty.