Empty Condo Units In Bangkok

[trogers]

I have two friends who moved from a 2 bedroom in soi Ruim Rudee to a comparable quality 2 bedroom in Rachada and they saved at least Bt18000 per month. They didn't moved to an old lower rise in Ruim Rudee.

And again, all properties that you discussed are for rental income purpose. Your theory may not apply to the buyers who want to buy and live in the condo. Personally I just won't have the pride of ownership when buying and living in an older low rise building. But that's only me.

That is my point - that refurbishing an old condo for a falling rental market is the correct investment model.

The pride of ownership, and the pride and comfort of the tenant in staying in an old condo, can be largely addressed by refurbishment. It is not easy to find such a refurbished unit in a choice location, and that forces your friends to move to a less desirable location.

Here are photos of my over 20 years old condo unit:

http://www.thaivisa.com/forum/2-bedroom-2-...um-t245532.html

Edited April 23, 2009 by trogers

[cclub75]

What this means is that new condo units cannot bring down rents sufficiently in a falling rental market, and thus face higher vacancies. The correct investment model is now acquiring old condo units, refurbish them, and rent them out easily with 6-8% return.

-you are inferring a "correct investment model".... but for now and the future. It means you discard what happened before.

-rationality : yes some owners still have some. They've invested in new units... paying the full price... Facing now a decrease of rental market.... they could lower their prices.... Better to rent at 70 % of expectations than 0. This is rationality. And it's working (sometimes) even in Thailand.

Edited April 23, 2009 by cclub75

[trogers]

What this means is that new condo units cannot bring down rents sufficiently in a falling rental market, and thus face higher vacancies. The correct investment model is now acquiring old condo units, refurbish them, and rent them out easily with 6-8% return.

-you are inferring a "correct investment model".... but for now and the future. It means you discard what happened before.

-rationality : yes some owners still have some. They've invested in new units... paying the full price... Facing now a decrease of rental market.... they could lower their prices.... Better to rent at 70 % of expectations than 0. This is rationality. And it's working (sometimes) even in Thailand.

I would estimate that rents of new condo units have to fall to 55-60% of last year's level to halt the exodus. The sooner owners of such units realise this, the better.

Will you be able to buy a new condo unit off the present owner at 70% of their acquiring price? Probably not. Thus, as a new investor in that location, you can buy an old unit and refurbish it to obtain a reasonable return - that's the investment model. New condo owners are forced to accept returns less than 6%pa due to high acquisition cost and low rents, while you can achieve 6-8%.

Edited April 23, 2009 by trogers

[donx]

Funny conversation I just had tonight, reminded me of this thread... I have a friend who just told me she was going to buy a unit at Le Raffine Sukhumvit 39, and I went ballistic on her, spewing out NO NO NO NO, in 10 years the pools will all leak and fall down all over each other blah blah blah.... She had mentioned it in passing that she wanted to buy a condo in the city, but I had no idea that she was this serious (she already had a room picked out, etc....).... But she is decidedly Thai (well Half-Thai, but Thai in her way of thinking) and she was saying she just thought it was nice, blah blah blah...

40 million was the price they gave her, and I went bonkers (yes, I just said bonkers), saying christ save that money, invest it somewhere else and you may have 100 million in 5-10 years instead of a broken down POS condo that cannot be sold... Same friend I convince not to buy a new Lexus RX because her old one is just fine... I've been trying to instill the 'save your money, cash is king' idea in her, and I think it's slowly sinking in... She's one of those people who can make a ton of money but has no idea how to manage it, which is the terrible thing about the industry in which she works - I've seen people rise so so high, only to fall off a cliff due to poor money management (a la MC Hammer - what did he have, 20 million USD???? - now broke).

Then I went on to describe the same thing that I've been noticing, empty units all around, and told her 'hey, listen - instead of going into the sales office and having everybody kiss your ass, go look at the place at 7pm, 8pm, midnight, 8am, noon, whatever, and see how many 'sold out' units are occupied, and who is living there... Due diligence can be such a foreign concept to certain people.... but I'm glad I got a hold of her before she went off and blew her money on that condo... I swear there aren't engineers good enough in Thailand to build such a structure without disastrous consequences say 10-20 years down the road.... water is HEAVY!!!!!

I showed her this thread, and of course she couldn't be bothered, but I think my point stuck with her - at least I hope so. 40 million is no joke, and if invested wisely, can take her a long way in this life if she doesn't dump it into some condo....

So I suppose one lesson is that there ARE some buyers. But dam_n maybe they just have too much money on their hands.

I tried to explain to her the 2nd hand condo theory, but I'm not sure it's sticking just yet...

To address the poster who said my points are subjective - yes, they may certainly be, but I've seen A LOT of condos, high-end, decked out, and the wealthiest Thais I know don't buy into the shiny projects... and re: the occupancy of the 2nd hand lowrises, though I can't make a generalization that they have higher occupancy rates than the new 500+ unit giants, I have seen first hand that many of the ones that my friends live in are FULL. So it's a small sample size, but first-hand information nevertheless, which counts in my book.

I can't comment on the "pride of ownership" or the even more hilarious notion of "pride of occupancy," but I'd favor the notion of the "pride of not being a sucker."

Was your friend planning on paying all cash?

[trogers]

Funny conversation I just had tonight, reminded me of this thread... I have a friend who just told me she was going to buy a unit at Le Raffine Sukhumvit 39, and I went ballistic on her, spewing out NO NO NO NO, in 10 years the pools will all leak and fall down all over each other blah blah blah.... She had mentioned it in passing that she wanted to buy a condo in the city, but I had no idea that she was this serious (she already had a room picked out, etc....).... But she is decidedly Thai (well Half-Thai, but Thai in her way of thinking) and she was saying she just thought it was nice, blah blah blah...

40 million was the price they gave her, and I went bonkers (yes, I just said bonkers), saying christ save that money, invest it somewhere else and you may have 100 million in 5-10 years instead of a broken down POS condo that cannot be sold...

She is right in wanting to invest in real estate (over a long term) but chose the wrong development - bad design concept.

With her budget, I would suggest her to see the the Sukothai Residences:

http://www.thaivisa.com/forum/Sukothai-Res...ce-t259667.html

[pkrv]

I have two friends who moved from a 2 bedroom in soi Ruim Rudee to a comparable quality 2 bedroom in Rachada and they saved at least Bt18000 per month. They didn't moved to an old lower rise in Ruim Rudee.

And again, all properties that you discussed are for rental income purpose. Your theory may not apply to the buyers who want to buy and live in the condo. Personally I just won't have the pride of ownership when buying and living in an older low rise building. But that's only me.

That is my point - that refurbishing an old condo for a falling rental market is the correct investment model.

The pride of ownership, and the pride and comfort of the tenant in staying in an old condo, can be largely addressed by refurbishment. It is not easy to find such a refurbished unit in a choice location, and that forces your friends to move to a less desirable location.

Here are photos of my over 20 years old condo unit:

http://www.thaivisa.com/forum/2-bedroom-2-...um-t245532.html

Looks good to me - Yes for me and for what it is worth I agree the strategy. Today is a different day than yesterday. But have already invested in our own future.

[jcon]

donx - yes all cash. She has a plot of land in the same development where Paradon lives, out on on nut, Prime Nature Villa or something like that... buyer willing to purchase at around 43 million (1/2 rai).... She wants to sell that land and buy the condo... I REFUSE to let it happen... I say sell the land, bank the cash, and wait for something to invest in after what I suspect to be another October FireSale in the stock markets.... NO CONDOS IMO.

trogers - I'm just plain against her putting that much cash down on any condo. She already has a beautiful house on 222 sq wah in the city, beautiful... I'd value it around 30-40 million, and it's a hel_l of a lot more peaceful than a condo... but for some reason she wants to buy a condo - I say the house is 100x better, and just stay there and invest the rest of the cash... I hope she listens. I want her to stay as liquid as possible, a couple of more years of work and if she sells her properties she should have around 100 million... if the baht strengthens over the next 5-10 years (and lanna's prediction of 20baht/usd comes true, she'll be able to live a good life anywhere in the world... instead of sitting on a dump of a condo with a leaky pool with oil-money neighbors....

My vote is to buy a nice little house in New Zealand, small but nice, and an apt in the south of France, and just spend time travelling the world... mid-30's she's lucky... and before anybody thinks otherwise, she's a self-made woman... and hot as all hel_l to boot... hrm maybe I should 'jeep' her????

[donx]

donx - yes all cash. She has a plot of land in the same development where Paradon lives, out on on nut, Prime Nature Villa or something like that... buyer willing to purchase at around 43 million (1/2 rai).... She wants to sell that land and buy the condo... I REFUSE to let it happen... I say sell the land, bank the cash, and wait for something to invest in after what I suspect to be another October FireSale in the stock markets.... NO CONDOS IMO.

trogers - I'm just plain against her putting that much cash down on any condo. She already has a beautiful house on 222 sq wah in the city, beautiful... I'd value it around 30-40 million, and it's a hel_l of a lot more peaceful than a condo... but for some reason she wants to buy a condo - I say the house is 100x better, and just stay there and invest the rest of the cash... I hope she listens. I want her to stay as liquid as possible, a couple of more years of work and if she sells her properties she should have around 100 million... if the baht strengthens over the next 5-10 years (and lanna's prediction of 20baht/usd comes true, she'll be able to live a good life anywhere in the world... instead of sitting on a dump of a condo with a leaky pool with oil-money neighbors....

My vote is to buy a nice little house in New Zealand, small but nice, and an apt in the south of France, and just spend time travelling the world... mid-30's she's lucky... and before anybody thinks otherwise, she's a self-made woman... and hot as all hel_l to boot... hrm maybe I should 'jeep' her????

It is interesting because she is an example that goes against your theory that nobody wants to buy those big new expensive condos. Maybe she's the only one out there, but I find it quite interesting nonetheless.

Additionally, it also supports what I have been told by other Thais about condos - they purchase them with cash as an investment and leave them empty.

[unforgiven]

I cannot think of any other country in which investors totally ignore the income potential from an asset and concentrate

soley on the hope of capital gain ................

Try Singapore and HK. What are the prices of their high end condos and the rental value? What kind of property tax do they charge? I know property tax in Singapore is at 19% of annual value, irregardless of whether it is rented out or left vacant.

Are you joking? Do you mean they have to pay the total value of the condo in tax every 5 years or so?????

[trogers]

I cannot think of any other country in which investors totally ignore the income potential from an asset and concentrate

soley on the hope of capital gain ................

Try Singapore and HK. What are the prices of their high end condos and the rental value? What kind of property tax do they charge? I know property tax in Singapore is at 19% of annual value, irregardless of whether it is rented out or left vacant.

Are you joking? Do you mean they have to pay the total value of the condo in tax every 5 years or so?????

No. You got the wrong meaning. Annual value is not the same as capital value. Annual value is the total rental income your property is estimated to be able to obtain.

I have found out that the tax rate has been reduced to 10%

Here is the link: http://www.iras.gov.sg/irasHome/page04.aspx?id=3700

[trogers]

donx - yes all cash. She has a plot of land in the same development where Paradon lives, out on on nut, Prime Nature Villa or something like that... buyer willing to purchase at around 43 million (1/2 rai).... She wants to sell that land and buy the condo... I REFUSE to let it happen... I say sell the land, bank the cash, and wait for something to invest in after what I suspect to be another October FireSale in the stock markets.... NO CONDOS IMO.

trogers - I'm just plain against her putting that much cash down on any condo. She already has a beautiful house on 222 sq wah in the city, beautiful... I'd value it around 30-40 million, and it's a hel_l of a lot more peaceful than a condo... but for some reason she wants to buy a condo - I say the house is 100x better, and just stay there and invest the rest of the cash... I hope she listens. I want her to stay as liquid as possible, a couple of more years of work and if she sells her properties she should have around 100 million... if the baht strengthens over the next 5-10 years (and lanna's prediction of 20baht/usd comes true, she'll be able to live a good life anywhere in the world... instead of sitting on a dump of a condo with a leaky pool with oil-money neighbors....

My vote is to buy a nice little house in New Zealand, small but nice, and an apt in the south of France, and just spend time travelling the world... mid-30's she's lucky... and before anybody thinks otherwise, she's a self-made woman... and hot as all hel_l to boot... hrm maybe I should 'jeep' her????

She has a home and after selling the 1/2 rai land, she has no investment in real estate, just a home. You are suggesting to her to invest all the cash in the stock market - and I am sure she is hesitating. I think she has been prudent, and will probably invest half the cash in real estate and the other half in the stock market.

If she chooses this path, I would recommend her to seriously look at the Sukhothai Residences. It's design concept carries an add-on value to the property - unlike so many other high-end projects that are designed towards max. sales area and splash in with expensive finishes.

[jcon]

Without going into too much detail (I already feel like I've hijacked the thread) trogers, yes she the 1/2 rai and then the current home, but in the near future about 1 rai (and the house on it) next to her current home will be hers through inheritance. So she will always have some form of land (a combined 1.5 rai plot in central bkk is pretty huge all things considered).

And I may have been over-exaggerating a bit when I said I told her to sell the land, cash out and invest in the 'stock market.' I didn't really mean to plow everything into the markets, rather my point to her was just NOT to buy the condo for 40 million. That point still stands.

I just don't see much value in a project like Le Raffine (I swear the pools will collapse onto each other someday... it's just something I don't have confidence in Thai engineers being able to accomplish in the long run).

As for the Sukhothai Residences, well my current view is to NOT buy anything that is not finished, period. I almost got burned, and that was just for 6 million, not 40... My current view is IF buying, buy in a PROVEN project... that's just my own personal opinion. Others may think otherwise.

donx, yes it may sound like a contradiction when I say that I observe off the balcony so many empty units (the implication being no buyers) and then say I have a friend who is willing to drop 40 million... but then again, she is just one person who by chance happens to be cashed up and close to me. I would not extrapolate her position onto that of 'your average condo buyer' (whoever that may be - again, subjective).

I've pointed out to her that she could save huge cash buy buying 2nd hand and going through a refurb to whatever spec she may want - but her main issue is privacy (2 units per floor - private pool, etc. at Le Raffine)... she is not in the position to live in a place where there are more than a few units per floor let alone 10-20. The reason for that is simply personal.

Back on track of the main point of the thread, I'm still observing empty units all over bkk, even in the 'trendiest' of areas... If you look in my thread in the motor forum about the Enzo Ferrari, you can see for yourself the sheer emptiness of the parking structure of that particular building, which by all measures should be 'popular.'

The only way to know if a particular building has tenants is to literally observe it during all hours of the day/night... "Sold out" is the most over-used word in Thai real estate IMO. There can be so many pitfalls in Thai real estate (well, everything in life, really) that the need to eliminate as many potentially damaging factors as possible is of paramount priority (that sounds like a no-brainer, but you'd be surprised how many people just don't do ANY due diligence when spending their cash in Thailand).

[pkrv]

Without going into too much detail (I already feel like I've hijacked the thread) trogers, yes she the 1/2 rai and then the current home, but in the near future about 1 rai (and the house on it) next to her current home will be hers through inheritance. So she will always have some form of land (a combined 1.5 rai plot in central bkk is pretty huge all things considered).

And I may have been over-exaggerating a bit when I said I told her to sell the land, cash out and invest in the 'stock market.' I didn't really mean to plow everything into the markets, rather my point to her was just NOT to buy the condo for 40 million. That point still stands.

I just don't see much value in a project like Le Raffine (I swear the pools will collapse onto each other someday... it's just something I don't have confidence in Thai engineers being able to accomplish in the long run).

As for the Sukhothai Residences, well my current view is to NOT buy anything that is not finished, period. I almost got burned, and that was just for 6 million, not 40... My current view is IF buying, buy in a PROVEN project... that's just my own personal opinion. Others may think otherwise.

donx, yes it may sound like a contradiction when I say that I observe off the balcony so many empty units (the implication being no buyers) and then say I have a friend who is willing to drop 40 million... but then again, she is just one person who by chance happens to be cashed up and close to me. I would not extrapolate her position onto that of 'your average condo buyer' (whoever that may be - again, subjective).

I've pointed out to her that she could save huge cash buy buying 2nd hand and going through a refurb to whatever spec she may want - but her main issue is privacy (2 units per floor - private pool, etc. at Le Raffine)... she is not in the position to live in a place where there are more than a few units per floor let alone 10-20. The reason for that is simply personal.

Back on track of the main point of the thread, I'm still observing empty units all over bkk, even in the 'trendiest' of areas... If you look in my thread in the motor forum about the Enzo Ferrari, you can see for yourself the sheer emptiness of the parking structure of that particular building, which by all measures should be 'popular.'

The only way to know if a particular building has tenants is to literally observe it during all hours of the day/night... "Sold out" is the most over-used word in Thai real estate IMO. There can be so many pitfalls in Thai real estate (well, everything in life, really) that the need to eliminate as many potentially damaging factors as possible is of paramount priority (that sounds like a no-brainer, but you'd be surprised how many people just don't do ANY due diligence when spending their cash in Thailand).

My own home and it is a home (Condominium) in Bangkok is empty for all but 30 days of the year, (my annual leave). So dark, it is dark most of the time. When I am over it is lit up. IMO look to see if juristic, in each and every development to see if it is functioning, if you wish to explore such issues in such a way. I don't drive BTW, I have other means of transport (BTS ];-) car parking space I look at just to ensure no one has 'nicked it' god I can be evil ];-)

I am not sure of the level of paranoia surrounding your friend but we have an army of 30 and meet all criteria

Units are available (Thai only)

http://www.theparkresidence.co.th/news.htm

Project

http://www.theparkresidence.co.th/exterior.htm

[trogers]

I just don't see much value in a project like Le Raffine (I swear the pools will collapse onto each other someday... it's just something I don't have confidence in Thai engineers being able to accomplish in the long run).

This project in Sukhumvit 39 follows the design concept of their first project in Sukhumvit 24. also called 'Le Raffine' - with a spa pool in every unit. Basement construction for the old project started in 1990 and I think it was completed and transferred end 1992 to early 1993.

You can check the old project for problems you think may occur as the building ages.

As an investment, I do not have much appreciation for such a concept. But many units are locally owned for status purpose.

[skytraining]

I agree with the general level of pessimism on display here. However, I have to add that some new projects are holding up well. I live in a new (3 years) condo on Thonglor, and although it may look empty at night (it really does), actually there are very few units vacant. Many rich Thais use the place as a 'weekend break' and then spend the rest of the time in the family home. However, I don't know if this logic holds true for locations with less cache for the Thai psyche.

[trogers]

I agree with the general level of pessimism on display here. However, I have to add that some new projects are holding up well. I live in a new (3 years) condo on Thonglor, and although it may look empty at night (it really does), actually there are very few units vacant. Many rich Thais use the place as a 'weekend break' and then spend the rest of the time in the family home. However, I don't know if this logic holds true for locations with less cache for the Thai psyche.

Your project was transferred in early 2006 and belong to the 2nd wave of developments. Prices during project launch (2004) was Bt60-70,000/m2. There should not be problems.

Those developments having high default in transfers are in the 3rd wave that were launched in 2006 and being transferred last year to early this year.

[skytraining]

I agree with the general level of pessimism on display here. However, I have to add that some new projects are holding up well. I live in a new (3 years) condo on Thonglor, and although it may look empty at night (it really does), actually there are very few units vacant. Many rich Thais use the place as a 'weekend break' and then spend the rest of the time in the family home. However, I don't know if this logic holds true for locations with less cache for the Thai psyche.

Your project was transferred in early 2006 and belong to the 2nd wave of developments. Prices during project launch (2004) was Bt60-70,000/m2. There should not be problems.

Those developments having high default in transfers are in the 3rd wave that were launched in 2006 and being transferred last year to early this year.

Actually mine was the first new quality condo launched after the long post-97 freeze. I agree that really helps a lot, and I think newer projects may struggle.

[midas]

I agree with the general level of pessimism on display here. However, I have to add that some new projects are holding up well. I live in a new (3 years) condo on Thonglor, and although it may look empty at night (it really does), actually there are very few units vacant. Many rich Thais use the place as a 'weekend break' and then spend the rest of the time in the family home. However, I don't know if this logic holds true for locations with less cache for the Thai psyche.

Are you 100 percent sure that they are using their condo as a weekend break?

If they are rich, I find it hard to believe that so many would find simply moving from one location to another

in Bangkok would be that stimulating when they can go out to the country or a coastal resort.

If it was in a different location may be.......................

I have another theory based on my observations after accompanying a friend who was looking to rent

a couple of months ago. In many places we went, the owners were occupying the condo's on the weekend

-but certainly not for a break but to act as host in the show home for any prospective tenants

( that seemed few and far between from their comments and behavior ) that happened to

wander in.. After the various inspections, my friend was contacted incessantly by these owners

who were prepared to offer substantial discounts. Even talking to some of these owners

who appeared to be well off were under a lot of stress and their inability to rent out

condos was causing them a lot of anxiety.

Edited April 26, 2009 by midas

[skytraining]

I agree with the general level of pessimism on display here. However, I have to add that some new projects are holding up well. I live in a new (3 years) condo on Thonglor, and although it may look empty at night (it really does), actually there are very few units vacant. Many rich Thais use the place as a 'weekend break' and then spend the rest of the time in the family home. However, I don't know if this logic holds true for locations with less cache for the Thai psyche.

Are you 100 percent sure that they are using their condo as a weekend break?

If they are rich, I find it hard to believe that so many would find simply moving from one location to another

in Bangkok would be that stimulating when they can go out to the country or a coastal resort.

If it was in a different location may be.......................

I have another theory based on my observations after accompanying a friend who was looking to rent

a couple of months ago. In many places we went, the owners were occupying the condo's on the weekend

-but certainly not for a break but to act as host in the show home for any prospective tenants

( that seemed few and far between from their comments and behavior ) that happened to

wander in.. After the various inspections, my friend was contacted incessantly by these owners

who were prepared to offer substantial discounts. Even talking to some of these owners

who appeared to be well off were under a lot of stress and their inability to rent out

condos was causing them a lot of anxiety.

Seems possible in a few isolated cases. However, I know who a lot of the owners are, and money isn't really an object for them and they like to know they have another home in Thonglor. Certainly all the really large units (250m2) are like that. But the majority here are firmly resident themselves (like me), or have a seemingly steady inflow of Japanese couples renting from them. Of course, vacancy rates are rising everywhere nowadays, but up until now that hasn't been an issue unless an individual unit is particularly poorly decorated (as a small minority are).

[midas]

Seems possible in a few isolated cases. However, I know who a lot of the owners are, and money isn't really an object for them and they like to know they have another home in Thonglor. Certainly all the really large units (250m2) are like that. But the majority here are firmly resident themselves (like me), or have a seemingly steady inflow of Japanese couples renting from them. Of course, vacancy rates are rising everywhere nowadays, but up until now that hasn't been an issue unless an individual unit is particularly poorly decorated (as a small minority are).

All units we visited were immaculately presented and furnished and owners stressed

they would be prepared to provide anything that was wanted. I don't think it's anything to

do with decoration anymore-it's simply there are so fewer people looking to rent.

And your comments about " steady inflow of Japanese couples "surprises me

because I have heard about is how many Japanese executives have been sent home

[skytraining]

Seems possible in a few isolated cases. However, I know who a lot of the owners are, and money isn't really an object for them and they like to know they have another home in Thonglor. Certainly all the really large units (250m2) are like that. But the majority here are firmly resident themselves (like me), or have a seemingly steady inflow of Japanese couples renting from them. Of course, vacancy rates are rising everywhere nowadays, but up until now that hasn't been an issue unless an individual unit is particularly poorly decorated (as a small minority are).

All units we visited were immaculately presented and furnished and owners stressed

they would be prepared to provide anything that was wanted. I don't think it's anything to

do with decoration anymore-it's simply there are so fewer people looking to rent.

And your comments about " steady inflow of Japanese couples "surprises me

because I have heard about is how many Japanese executives have been sent home

I'm sure they were (immaculate). What project are we talking about here?

I agree times are certainly getting harder; and I am sure there is a massive oversupply of condos overall. But some places seem harder hit than others so far. As in all downturns, the borderline and weak projects will get hit the hardest, while the better projects will take a smaller hit. Btw, please don't misconstrue this as optimism: I know just how bad things are, and are likely to get - it's going to be very grim.

[jcon]

I would venture to say that the vast majority of the 'empty' units are either unsold units or units that the owners are just sitting on... not 'weekend' pied-a-terres for Bankokians as suggested by another poster above... Everybody knows that 'weekend homes' for Bangkokians are in Hua Hin...

Now I'm sure there is a market for small condos for 'mia nois,' but I'd say that is an insignificant number and not applicable to the big picture of 'Empty Condo Units.' Also condos for rich kids. But that's' a small number also.

Either way, the market for 3,4,5,6 million THB condos is going to get hit hard... really hard, good projects or bad. Just my opinion.

I must say I'm flabbergasted (yes, I used the word 'flabbergasted') by the high-dollar market however... the 40 million baht 1/2 rai I referred to earlier owned by my friend has a buyer for 45 million as of yesterday. I was/am shocked. My friend purchased in 2006 for 33 million THB, and earlier this year I told her to 'sell it!' whatever the cost... I thought she'd get something in the high 20's... then a buyer came along 2 days ago and my friend asked me 'how much should I ask for?"

I said you should set up a meeting so you can judge the buyer's character and feel how they react to whatever number you throw out.... I threw out 45 million THB, literally just spit out a number.... and she took me literally and went with it and told the buyer 45 million, and the buyer agreed, because "she loves the water." Like I said, I'm shocked. My friend bought in 2006, at basically a peak (or at least I thought) - and now we're in a global recession... and somehow she managed to get a 36% return on that piece of land.... shocked. Farking 12 million profit... in a recession... so there are people with serious cash out there... but I don't think they are buying condos.

Like I've also said before, the rich in BKK do not own condos, they own land... that is a fact. My observation of empty units still stands.

[midas]

I would venture to say that the vast majority of the 'empty' units are either unsold units or units that the owners are just sitting on... not 'weekend' pied-a-terres for Bankokians as suggested by another poster above... Everybody knows that 'weekend homes' for Bangkokians are in Hua Hin...

Now I'm sure there is a market for small condos for 'mia nois,' but I'd say that is an insignificant number and not applicable to the big picture of 'Empty Condo Units.' Also condos for rich kids. But that's' a small number also.

Either way, the market for 3,4,5,6 million THB condos is going to get hit hard... really hard, good projects or bad. Just my opinion.

I must say I'm flabbergasted (yes, I used the word 'flabbergasted') by the high-dollar market however... the 40 million baht 1/2 rai I referred to earlier owned by my friend has a buyer for 45 million as of yesterday. I was/am shocked. My friend purchased in 2006 for 33 million THB, and earlier this year I told her to 'sell it!' whatever the cost... I thought she'd get something in the high 20's... then a buyer came along 2 days ago and my friend asked me 'how much should I ask for?"

I said you should set up a meeting so you can judge the buyer's character and feel how they react to whatever number you throw out.... I threw out 45 million THB, literally just spit out a number.... and she took me literally and went with it and told the buyer 45 million, and the buyer agreed, because "she loves the water." Like I said, I'm shocked. My friend bought in 2006, at basically a peak (or at least I thought) - and now we're in a global recession... and somehow she managed to get a 36% return on that piece of land.... shocked. Farking 12 million profit... in a recession... so there are people with serious cash out there... but I don't think they are buying condos.

Like I've also said before, the rich in BKK do not own condos, they own land... that is a fact. My observation of empty units still stands.

No it doesn't surprise because as you say its LAND ! its a much wider and more meaningful market than for condos.

But when you say " I must say I'm flabbergasted (yes, I used the word 'flabbergasted') by the high-dollar market however.. "

I assume you are again only talking about LAND?

IMO the market for condo's in the 3,4,5,6 million THB will be hit severely but condo's in the 30 -40 million THB bracket

will be even more worse off.

Edited April 27, 2009 by midas

[skytraining]

Once again, I agree with almost everything said above: I've been gloomy for years and am not trying to sell anything here!

But I just want to report the honest fact that there are a few (v*e*r*y few I guess) condos that rich kids/'socialites' want to have a unit in if they are well done and well located. Not many, but some. That doesn't mean they wouldn't sell if someone phoned them up and offered a good price, but they are not looking to sell. Btw, most of the rich kids have family factories in Bang Na or Samukt Prakarn. No doubt they have a Hua Hin condo or two too, but they do seem to want a place to crash in the centre of Bangkok too, and Thonglor seems to be where they feel comfortable partying: my condo carpark has many top-range Italian sports cars parked alongside the regular Benzs and inevitable Japanese family cars for us mere mortals who live a more normal life. Btw, I don't offer this advice to encourage people to speculate - things are going to get ugly...

[jcon]

Ok I've been looking around...

Found one property I liked, was going to show it to my friend... SOLD (TRANSFERRED LAST WEEK!!!). Listed price: 27 million. I was going to suggest an offer of 20 million (but the owner sold for more than that, so I don't feel like I missed it by just a week...)

So, yes, there are good units still selling, but they must be GOOD - REALLY GOOD.

Here is the one I looked at:

http://www.prakard.com/default.aspx?g=posts&t=121892

dam_n nice IMO. 180sqm a bit small for a 'penthouse,' but I liked the decor so it would have been buy and move in, and god knows refurbishing is a pain in the arse... 27 million is way too expensive IMO, but good for him he got what he wanted (He didn't tell me exactly how much he sold it for, but did tell me it was more than 20 million).

So I'm still utterly confused about the market and my own perceptions of it... I'm almost certain like I said before that 3,4,5,6 million baht condos are going to get train-wrecked... and I also thought the high-end would get hit too, but I guess it just depends on how good the unit is - a simple theory, yes... but that's the real answer in this back-and-forth about how good/bad the Thai condo market is: It just depends on the Unit, period.

[donx]

Ok I've been looking around...

Found one property I liked, was going to show it to my friend... SOLD (TRANSFERRED LAST WEEK!!!). Listed price: 27 million. I was going to suggest an offer of 20 million (but the owner sold for more than that, so I don't feel like I missed it by just a week...)

So, yes, there are good units still selling, but they must be GOOD - REALLY GOOD.

Here is the one I looked at:

http://www.prakard.com/default.aspx?g=posts&t=121892

dam_n nice IMO. 180sqm a bit small for a 'penthouse,' but I liked the decor so it would have been buy and move in, and god knows refurbishing is a pain in the arse... 27 million is way too expensive IMO, but good for him he got what he wanted (He didn't tell me exactly how much he sold it for, but did tell me it was more than 20 million).

So I'm still utterly confused about the market and my own perceptions of it... I'm almost certain like I said before that 3,4,5,6 million baht condos are going to get train-wrecked... and I also thought the high-end would get hit too, but I guess it just depends on how good the unit is - a simple theory, yes... but that's the real answer in this back-and-forth about how good/bad the Thai condo market is: It just depends on the Unit, period.

That unit was posted on prakard at the beginning of March and is already sold. Not bad, but I agree with you, it depends on the unit and the price of the unit. I can imagine condos that sell well in the 3 - 6 million baht range so long as they represent great location and value for money.

[Scott123]

I have two friends who moved from a 2 bedroom in soi Ruim Rudee to a comparable quality 2 bedroom in Rachada and they saved at least Bt18000 per month. They didn't moved to an old lower rise in Ruim Rudee.

And again, all properties that you discussed are for rental income purpose. Your theory may not apply to the buyers who want to buy and live in the condo. Personally I just won't have the pride of ownership when buying and living in an older low rise building. But that's only me.

That is my point - that refurbishing an old condo for a falling rental market is the correct investment model.

The pride of ownership, and the pride and comfort of the tenant in staying in an old condo, can be largely addressed by refurbishment. It is not easy to find such a refurbished unit in a choice location, and that forces your friends to move to a less desirable location.

Here are photos of my over 20 years old condo unit:

http://www.thaivisa.com/forum/2-bedroom-2-...um-t245532.html

again, my friend moved from a nice new rental condo in Ruim Rudee to a nice new rental condo in Ratchada. They did not move to an old refurbished lowrise unit in Ruim Rudee.

You can refurbish the condo unit inside the room, but you can not refurbish the lobby, the elevator (if lowrise, the stairs), the swimming pool, the fitness room, the playground. You can not refurbish even the area immediately outside of your unit. No, the pride of ownership issue can do be addressed by refurbishing.

And you still have not told us how much you spend on refurbishing your unit. You need to add this expense to your cost base.

You mentioned new condo get rental return rate of 6%, and you can get 7% with refurbished old condo. That is a wopping 1% with all the effort you put in, and for the price of owning an old lobby....I think I will pass.

Suppose the economic situation improves in 3 years, people would be looking for nice high rise units again, then your claimed advantage of refurbished old lowrise units disappears.

[trogers]

I have two friends who moved from a 2 bedroom in soi Ruim Rudee to a comparable quality 2 bedroom in Rachada and they saved at least Bt18000 per month. They didn't moved to an old lower rise in Ruim Rudee.

And again, all properties that you discussed are for rental income purpose. Your theory may not apply to the buyers who want to buy and live in the condo. Personally I just won't have the pride of ownership when buying and living in an older low rise building. But that's only me.

That is my point - that refurbishing an old condo for a falling rental market is the correct investment model.

The pride of ownership, and the pride and comfort of the tenant in staying in an old condo, can be largely addressed by refurbishment. It is not easy to find such a refurbished unit in a choice location, and that forces your friends to move to a less desirable location.

Here are photos of my over 20 years old condo unit:

http://www.thaivisa.com/forum/2-bedroom-2-...um-t245532.html

again, my friend moved from a nice new rental condo in Ruim Rudee to a nice new rental condo in Ratchada. They did not move to an old refurbished lowrise unit in Ruim Rudee.

You can refurbish the condo unit inside the room, but you can not refurbish the lobby, the elevator (if lowrise, the stairs), the swimming pool, the fitness room, the playground. You can not refurbish even the area immediately outside of your unit. No, the pride of ownership issue can do be addressed by refurbishing.

And you still have not told us how much you spend on refurbishing your unit. You need to add this expense to your cost base.

You mentioned new condo get rental return rate of 6%, and you can get 7% with refurbished old condo. That is a wopping 1% with all the effort you put in, and for the price of owning an old lobby....I think I will pass.

Suppose the economic situation improves in 3 years, people would be looking for nice high rise units again, then your claimed advantage of refurbished old lowrise units disappears.

My unit of 121m2 was bought for Bt5.6m and refurbishment, furniture & equipment cost total Bt1.3m - total investment = Bt6.9m

Unrefurbished unit (next door) is renting out at Bt25,000/month. The 2-year old units (Siri Residence) across the road are asking Bt75,000/month. Mine is Bt45,000/month.

I would not expect the rental rate of my unit (being in an old condo building) will be the same as the new condos, but will move up proportionately as the rental rates along this soi moves up. Thus, 6%pa is the lowest and probably achieve 7.5% on the average over a decade. I did not say the new condos are getting 6%pa at this moment. My estimate is that they will be lucky to get close to 5%pa, assuming they purchased their units at Bt90,000/m2 or more.

I am in the juristic committee and we are progressing in renovating the common areas, spreading the budget over 3 years. Just redone the lift lobbies in the last 3 months. Next 3 months will be the building frontage and entrance.

[Scott123]

Thus, 6%pa is the lowest and probably achieve 7.5% on the average over a decade. I did not say the new condos are getting 6%pa at this moment. My estimate is that they will be lucky to get close to 5%pa, assuming they purchased their units at Bt90,000/m2 or more.

Another assumption you are making based on your subjective opinion.

People bought condos on paper plan 3 or 4 years ago pay much less than Bt90,000/sqm, but the condo were finished and transfer a year (or less) ago. These are brand new condos. They definitely get more than 6% rental return.

Even if they pay Bt90,000/sqm, for a brand new high rise 35 sqm studio condo in prime Sukhumvit and less than 5 minutes walk to BTS, the price is Bt3.15 million, the rent is about Bt20K per month. Even at Bt16k per month rent, it is still much more than 6% return you claimed. And at Bt16K per month in such location, the unit will be rented out in no time.

I am in the juristic committee and we are progressing in renovating the common areas, spreading the budget over 3 years. Just redone the lift lobbies in the last 3 months. Next 3 months will be the building frontage and entrance.

You are counting your active work income as part of passive rental income. Working actively in the juristic committee require time and effort, and is active work, with expection of financial gain in your rental income. (although it is up for debate wether a work permit is required).

I suppose you are a farang on retirement visa. You have a lot of free time, and thus can serve in the juristic committee and spend a lot of time renovate your unit. This is probably the only way to get income without a work permit here. But lets face it, all your work requires time and effort. Many landlords do not want to spend all this time and effort if they have other source of real work income.

Edited May 2, 2009 by Scott123

[trogers]

Thus, 6%pa is the lowest and probably achieve 7.5% on the average over a decade. I did not say the new condos are getting 6%pa at this moment. My estimate is that they will be lucky to get close to 5%pa, assuming they purchased their units at Bt90,000/m2 or more.

Another assumption you are making based on your subjective opinion.

People bought condos on paper plan 3 or 4 years ago pay much less than Bt90,000/sqm, but the condo were finished and transfer a year (or less) ago. These are brand new condos. They definitely get more than 6% rental return.

Even if they pay Bt90,000/sqm, for a brand new high rise 35 sqm studio condo in prime Sukhumvit and less than 5 minutes walk to BTS, the price is Bt3.15 million, the rent is about Bt20K per month. Even at Bt16k per month rent, it is still much more than 6% return you claimed. And at Bt16K per month in such location, the unit will be rented out in no time.

I am in the juristic committee and we are progressing in renovating the common areas, spreading the budget over 3 years. Just redone the lift lobbies in the last 3 months. Next 3 months will be the building frontage and entrance.

You are counting your active work income as part of passive rental income. Working actively in the juristic committee require time and effort, and is active work, with expection of financial gain in your rental income. (although it is up for debate wether a work permit is required).

I suppose you are a farang on retirement visa. You have a lot of free time, and thus can serve in the juristic committee and spend a lot of time renovate your unit. This is probably the only way to get income without a work permit here. But lets face it, all your work requires time and effort. Many landlords do not want to spend all this time and effort if they have other source of real work income.

Hmmm...giving out advice and suggestions in a forum like this, while based in Thailand, may also require you to have a working permit.

Yes, I am semi-retired and am serving on 2 juristic committees - without pay or 'beer lian'. I am a consultant to developers, having my own company and have a WP.

No big deal in serving on a committee - 2 night meetings per month and offering suggestions.

I service my condo units like any home owners servicing their houses when they are being designed and constructed. My attitude is that my condo units should be furbished to a standard as it were my own home, since I am spending big money and wants the interior to last over a decade. The end results will be pleasing to potential tenants.

Did you install any ELCB into your new condo units? I know many new projects do not have ELCBs incorporated into them as this is not a requirement under local building regulation.

Edited May 2, 2009 by trogers