Thailand. Ok Not A Crash! But...

[mommysboy]

Just a trawl through the general media most generally used on Thai Visa, ie, Nation, Bloomberg, The capital rag that must not be quoted, reveals that things don't look good at all. Confidence indicators down, shocking investment figures, tourism languishing, domestic consumption, corruption, and so on. Sounds like a slow pile up to me.

If it was just the Daily Blab sensationalising it might be dismissed but what I see in the business areas is truly shocking, and I have a wide circle of Thai inlaws in the provinces now feeling the pinch.

This place is going downhill fast in my opinion. Others paint a healthy picture of the Thai economy and a rosy future. True it has a free work force (about the only thing free about Thailand) but otherwise how could this possibly be?

[Abrak]

One of the reasons things seem so grim in the domestic economy is that the external economy has grown so fast - with the current account going from 0% to 9% of GDP.

If you look at the latest BoT figures there is quite a strong recovery going on. October exports up 43% on April, car sales up 20% YOY, manufacturing production up 20% from April, capacity utilization 18% since April, cement sales up 7% YOY. 3Q growth 5.5% QOQ SAAR.

[mommysboy]

One of the reasons things seem so grim in the domestic economy is that the external economy has grown so fast - with the current account going from 0% to 9% of GDP.

If you look at the latest BoT figures there is quite a strong recovery going on. October exports up 43% on April, car sales up 20% YOY, manufacturing production up 20% from April, capacity utilization 18% since April, cement sales up 7% YOY. 3Q growth 5.5% QOQ SAAR.

Yawn, Yawn.

You and your official figures.

All about me is a mirage then!

[sokal]

One of the reasons things seem so grim in the domestic economy is that the external economy has grown so fast - with the current account going from 0% to 9% of GDP.

If you look at the latest BoT figures there is quite a strong recovery going on. October exports up 43% on April, car sales up 20% YOY, manufacturing production up 20% from April, capacity utilization 18% since April, cement sales up 7% YOY. 3Q growth 5.5% QOQ SAAR.

Yawn, Yawn.

You and your official figures.

All about me is a mirage then!

You have no idea what you are talking about. Debtor import nations have the most to lose in the next decade, not surplus export nations like Thailand. There will be volatility but no long term trend down.

[Abrak]

Yawn, Yawn.

You and your official figures.

All about me is a mirage then!

Maybe, maybe not. GDP is C+I+G+(N-X). If real GDP falls 3% and (N-X) is +9% then the domestic economy has fallen 12%.

So I have no idea what you are seeing. Maybe a US$45bn increase in reserves (forex reserves/GDP now higher than China) or maybe collapsing banking system, house prices, stockmarket, ballooning fiscal deficit etc.. So what do you see?

I see a very sharp recovery. One property company sold condo 2,000 units in 2 days, two weeks ago. Consumption rising fast, investment still a bit depressed but savings gap far too wide and room for increased fiscal spending. Business confidence is at a 3 year high.

[Capealava]

Yawn, Yawn.

You and your official figures.

All about me is a mirage then!

Maybe, maybe not. GDP is C+I+G+(N-X). If real GDP falls 3% and (N-X) is +9% then the domestic economy has fallen 12%.

So I have no idea what you are seeing. Maybe a US$45bn increase in reserves (forex reserves/GDP now higher than China) or maybe collapsing banking system, house prices, stockmarket, ballooning fiscal deficit etc.. So what do you see?

I see a very sharp recovery. One property company sold condo 2,000 units in 2 days, two weeks ago. Consumption rising fast, investment still a bit depressed but savings gap far too wide and room for increased fiscal spending. Business confidence is at a 3 year high.

That maybe your perception-but I see many Thai's struggling and many factories closing their doors. factories going down. Real estate investment does not reach the average Thai. The selling of condo to wealthy or above average Thai's or foreigners does not constitute a economic recovery. Their have always been the wealthy in Thailand to the determent of the masses. Virtually free labor does keep Thailand going. Daily wages of 250 -300 baht day inspire no one. Monthly salaries of 6000-10000 baht -people barely get by. Even in America with 10-11% unemployment the wealthy continue to rake it in. Trickle down economics does not work. There is more to a economy than selling condos.

[gotlost]

Just believe TAT figures. Everything is beautiful.

[CWMcMurray]

One of the reasons things seem so grim in the domestic economy is that the external economy has grown so fast - with the current account going from 0% to 9% of GDP.

If you look at the latest BoT figures there is quite a strong recovery going on. October exports up 43% on April, car sales up 20% YOY, manufacturing production up 20% from April, capacity utilization 18% since April, cement sales up 7% YOY. 3Q growth 5.5% QOQ SAAR.

Yawn, Yawn.

You and your official figures.

All about me is a mirage then!

Well, I am in the logistics industry and I can tell you that both imports/exports are back on the rise (at tleast for our customers). We have also met with about a half a dozen customers in the last 2 months who are expanding their production lines in Thailand (moving operations from Germany, UK and USA).

So from where I am sitting, the future of Thailand's economy is not all gloom and doom...

Edited December 7, 2009 by CWMcMurray

[trogers]

I see a very sharp recovery. One property company sold condo 2,000 units in 2 days, two weeks ago.

Are you a real estate broker/agent? I do not considered a booking of a condo unit based on brochure a sales, especially when the booking fee is just Bt999.

An actual sales only happens when the condo is constructed, and title transferred upon full payment. Let's see if these 2000 units will actually be sold a few years in the future.

[wordchild]

I have an involvement with a mid-sized Thai speciality retailer, their business has started to see progressive improvement week by week since the end of August. From my perspective confidence may still be fragile, given the political background, but the business climate is undoubtably getting better.

Edited December 7, 2009 by wordchild

[hansnl]

Yawn, Yawn.

You and your official figures.

All about me is a mirage then!

Maybe, maybe not. GDP is C+I+G+(N-X). If real GDP falls 3% and (N-X) is +9% then the domestic economy has fallen 12%.

So I have no idea what you are seeing. Maybe a US$45bn increase in reserves (forex reserves/GDP now higher than China) or maybe collapsing banking system, house prices, stockmarket, ballooning fiscal deficit etc.. So what do you see?

I see a very sharp recovery. One property company sold condo 2,000 units in 2 days, two weeks ago. Consumption rising fast, investment still a bit depressed but savings gap far too wide and room for increased fiscal spending. Business confidence is at a 3 year high.

That maybe your perception-but I see many Thai's struggling and many factories closing their doors. factories going down. Real estate investment does not reach the average Thai. The selling of condo to wealthy or above average Thai's or foreigners does not constitute a economic recovery. Their have always been the wealthy in Thailand to the determent of the masses. Virtually free labor does keep Thailand going. Daily wages of 250 -300 baht day inspire no one. Monthly salaries of 6000-10000 baht -people barely get by. Even in America with 10-11% unemployment the wealthy continue to rake it in. Trickle down economics does not work. There is more to a economy than selling condos.

Daily wage of 250 baht?

In and around Khon Kaen 150-180 Baht.

Teachers with 8000-12000 get worked out of their job for graduates from university that get paid 5000 baht a month.

Building is still "vibrant", but at a much slower pace, or coming to a (temporarily) standstill.

My neighbour, running quite a big building company, normally employing 1500-2000 people, had to lay off 40% of his staff, not enough orders,

and he tells me his income went down nearly 60%.

And indeed, he also told me that a lot of rich people are seeing a loss of income, especially in the Thai-Chinese community.

Due to the loss of income house staff is being laid off, many.

Factories are laying off people, or not hiring new people.

A good indicator that things are not really well is the growth of foodstalls, which is called the considerable growth of self employed!

And the best indicator, crime is rising!

I do have a feeling that the numbers supplied by the officials might be ........, ehhhhh........, doctored?

[Naam]

i am judging the situation from a Pattaya view. it takes me a week or more to get an electrician or a plumber to do some maintenance work in my house. it takes me a month or longer to have something fabricated in a metal shop. the landscaping company tells me they are booked till january. whenever i leave my house for a haircut or a pedicure i see new buildings not only coming up but partly occupied, and... and... and.

what do people expect in a crisis like we are still facing now? the negative views (some of which i just consider to be based on ignorance or personal wishful thinking) aired in this thread are nothing but extremely boooooooring.

YAAAWWWWWNNNNNNN...

p.s. and NO! all your wet dreams that the Thai Baht will crash will not come true. it doesn't look at all like this

[Abrak]

Daily wage of 250 baht?

In and around Khon Kaen 150-180 Baht.

Teachers with 8000-12000 get worked out of their job for graduates from university that get paid 5000 baht a month.

Building is still "vibrant", but at a much slower pace, or coming to a (temporarily) standstill.

My neighbour, running quite a big building company, normally employing 1500-2000 people, had to lay off 40% of his staff, not enough orders,

and he tells me his income went down nearly 60%.

And indeed, he also told me that a lot of rich people are seeing a loss of income, especially in the Thai-Chinese community.

Due to the loss of income house staff is being laid off, many.

Factories are laying off people, or not hiring new people.

A good indicator that things are not really well is the growth of foodstalls, which is called the considerable growth of self employed!

And the best indicator, crime is rising!

I do have a feeling that the numbers supplied by the officials might be ........, ehhhhh........, doctored?

I do think there is danger that peoples perceptions are a bit historic. There is no doubt that things were very grim. The domestic economy (excluding the C/A surplus) is forecast to shrink 12% this year compared to last. Unemployment, even on the official numbers is estimated by the BoT to double compared to last year.

A key number exports, accounting for over 50% of GDP are up 43% since April while manufacturing production and capacity utilization are up 20%. All the numbers are slightly down YOY - so things are not better than a year ago but very much better than 6 months ago.

Forex reserves are up US$45bn - equivalent to 20% of GDP.

Consumption is well up on 6 months ago and around flat YOY. Electricity consumption (a good proxy for GDP growth) is up 3.0% YOY, car sales are up and asset markets (property only mid to low end) are buoyant (especially compared to this time last year.) And the two posts from people involved in real businesses would seem to confirm that.

Obviously if you think 2,000 bookings in two days (with one of the condos (with over 1000 units) sold out in 3 days) doesnt indicate life in the property market and that everything that the BoT puts out is all lies, you can basically make up any story - imminent economic collapse, financial crisis and the baht going to US$1:Bt50.

[trogers]

The initial growth climbing out of a deep recession will benefit production that makes use of the excess capacity that has built up.

Constructing less new projects, but repair and refurbish existing ones. Contractors used to building new projects from scratch will have to restructure operations to meet rising demand in refurbishing work in the next 2-3 years.

Factories that will do well during this period will not be those that add new production capacity, but will be those making new products or those servicing reactivation of the excess capacity.

[Mobi]

One property company sold condo 2,000 units in 2 days, two weeks ago.

I would be most interested in the your source of information on this.

I am not disputing it, but am very surprised.

I will say, that generally speaking, the property sector is even more culpable than TAT in talking the economy up when the converse is really the case and I have even heard of developers and agents being threatened with violence if they dare to write about how dire this sector really is.

Anyway, I'm sure you can set my mind at rest and provide a reliable basis for your piece of "good news".

[thaijasmine]

One property company sold condo 2,000 units in 2 days, two weeks ago.

I would be most interested in the your source of information on this.

I am not disputing it, but am very surprised.

I will say, that generally speaking, the property sector is even more culpable than TAT in talking the economy up when the converse is really the case and I have even heard of developers and agents being threatened with violence if they dare to write about how dire this sector really is.

Anyway, I'm sure you can set my mind at rest and provide a reliable basis for your piece of "good news".

I am with you on this one Mobi

we can't dispute it but its nothing short of astonishing the Thailand market for condominium ( or Bangkok in particular because I know the Pattaya market is far from robust ) seems to have this permanent resilience that you don't see anywhere else ? Why ? What is that " magic ingredient " which props up prices no matter what happens ?

And who is piling into condominiums like this and why ? Why are Thai people so interested in condo's when they are lucky enough to be able invest or speculate in land and buildings that foreigners can' to do and where there would be real opportunities to hide money and with much greater potential for development and capital gain.

The appeal of condominiums to Thai's just doesn't make sense unless there is a crystal clear opportunity to make money

and I cant see ?

Of course it would be far easier for the developers to say they are " sold " and then dispose of the " last few " as small trickle as genuine purchasers come along than to say you are a sitting duck potentially flooding the market with 2000 condo's ?

Who really knows ?

Edited December 7, 2009 by thaijasmine

[chiang mai]

The Thai economy is failing you say, by comparison to where pray tell?

And if it is failing, by what measure - can you supply some objective numbers against which we can measure and see the failure because I for one must be missing it, always happy to learn however.

[trogers]

we can't dispute it but its nothing short of astonishing that Thailand market for condominium ( or Bangkok in particular because I know the Pattaya market is far from robust ) seems to have this permanent resilience that you don't see anywhere else ? Why ? What is that " magic ingredient " which props up prices no matter what happens ?

And who is piling into condominiums like this and why ? Why are Thai people interested in condo's when they are lucky enough to invest or speculate in land and buildings where there are real opportunities to hide money and with far greater potential for development and capital gain.

It just doesn't make sense

There is real and potential demand if you look at the condo sector for the middle-class. The only question in my mind is, how much was booked by end users and long term investors, and how much by flippers.

Where does the real demand comes from? Look at how spread out the present residential areas are, and in low density. The city cannot grow sideways to accommodate the growing population without suffering long traveling time. It will not be like the suburbs of the US - housing estates 80km away and linked to the city center by wide highways.

The city will have to grow like Hong Kong and Singapore, high density living along the mass transit lines.

Real buyers of such condo projects are buying for the future of their children.

[thaijasmine]

we can't dispute it but its nothing short of astonishing that Thailand market for condominium ( or Bangkok in particular because I know the Pattaya market is far from robust ) seems to have this permanent resilience that you don't see anywhere else ? Why ? What is that " magic ingredient " which props up prices no matter what happens ?

And who is piling into condominiums like this and why ? Why are Thai people interested in condo's when they are lucky enough to invest or speculate in land and buildings where there are real opportunities to hide money and with far greater potential for development and capital gain.

It just doesn't make sense

There is real and potential demand if you look at the condo sector for the middle-class. The only question in my mind is, how much was booked by end users and long term investors, and how much by flippers.

Where does the real demand comes from? Look at how spread out the present residential areas are, and in low density. The city cannot grow sideways to accommodate the growing population without suffering long traveling time. It will not be like the suburbs of the US - housing estates 80km away and linked to the city center by wide highways.

The city will have to grow like Hong Kong and Singapore, high density living along the mass transit lines.

Real buyers of such condo projects are buying for the future of their children.

" Real buyers of such condo projects are buying for the future of their children " that I can accept .

But selling 2,000 units in 2 days, two weeks ago isn't a market - its a gold rush amidst

stories around the world about deflationary woes - so why the frenzy in Bangkok ?

[Scottish Thailander]

One property company sold condo 2,000 units in 2 days, two weeks ago.

I would be most interested in the your source of information on this.

I am not disputing it, but am very surprised.

I will say, that generally speaking, the property sector is even more culpable than TAT in talking the economy up when the converse is really the case and I have even heard of developers and agents being threatened with violence if they dare to write about how dire this sector really is.

Anyway, I'm sure you can set my mind at rest and provide a reliable basis for your piece of "good news".

I read about it in the unnameable paper and CBRE posted this too.....

LPN and Supalai sell out over 4,000 units in four condominium projects in one weekend

LPN and Supalai reported that they had sold the ma

jority of units in four projects that were launched on the weekend of November 21 and 22, 2009.

LPN launched and sold 1,026 units at Lumpini Ville, Ladprao Chokchai. The average unit size was 29.5 square meters and the average achieved price was 1.43 million Baht per unit or around 48,500 Baht per square metre. LPN also reported that they had sold 2,200 units (81.5%) of their 2,702 units at Lumpini Park Pinklao. All of the 2,702 units in this development are 1 bed which come in 4 size options ranging from 28 – 36 square metres, and pricing ranging from 46,000 – 52,000 Baht a square metre.

The company expects to complete Lumpini Ville, Ladprao Chokchai in Q4 2010 and Lumpini Park Pinklao in Q1 2011. LPN has been offering potential purchasers down payments of 10% with 90% on completion.

Supalai reported that they had sold 600 units at Supalai Park Ratchayothin out of 804 units which were 131 two-bedroom units, 643 units were one bedroom, 30 studio units. The average size of the one-bedroom units was 49.5 square meters and we understand that

prices achieved for the one-bedroom units were 3.22 million Baht ( 65,000 Baht per square metre)Supalai also reported that they sold out all 544 units at Supalai Park Asoke located 600 metres of the Rama 9 MRT station.

ST.

[meom]

we can't dispute it but its nothing short of astonishing that Thailand market for condominium ( or Bangkok in particular because I know the Pattaya market is far from robust ) seems to have this permanent resilience that you don't see anywhere else ? Why ? What is that " magic ingredient " which props up prices no matter what happens ?

And who is piling into condominiums like this and why ? Why are Thai people interested in condo's when they are lucky enough to invest or speculate in land and buildings where there are real opportunities to hide money and with far greater potential for development and capital gain.

It just doesn't make sense

There is real and potential demand if you look at the condo sector for the middle-class. The only question in my mind is, how much was booked by end users and long term investors, and how much by flippers.

Where does the real demand comes from? Look at how spread out the present residential areas are, and in low density. The city cannot grow sideways to accommodate the growing population without suffering long traveling time. It will not be like the suburbs of the US - housing estates 80km away and linked to the city center by wide highways.

The city will have to grow like Hong Kong and Singapore, high density living along the mass transit lines.

Real buyers of such condo projects are buying for the future of their children.

" Real buyers of such condo projects are buying for the future of their children " that I can accept .

But selling 2,000 units in 2 days, two weeks ago isn't a market - its a gold rush amidst

stories around the world about deflationary woes - so why the frenzy in Bangkok ?

The wife's got flyers for the LPN ones. Believe they were advertised at 2999 or 3999/month for 30 year period and I guess mostly Thai people bought into them.

[Abrak]

One property company sold condo 2,000 units in 2 days, two weeks ago.

I would be most interested in the your source of information on this.

I am not disputing it, but am very surprised.

Well I cant really give you a totally satisfactory answer because it is, that is what they told me.

You can see that LPN was going to launch 2 new projects at the end of last month...

http://www.nationmultimedia.com/2009/11/17...ss_30116733.php

One of the projects Lumpini Ladprao Chokchai 4 has been posted on their website as 'Sold Out - See you next project' (it consists of 1020 units) since day 3 of launch. www.lpn.co.th. The company has a very strong track record of converting bookings into sales.

(And I now see that CBRE say they sold 3000 units.)

Edited December 7, 2009 by Abrak

[Abrak]

The wife's got flyers for the LPN ones. Believe they were advertised at 2999 or 3999/month for 30 year period and I guess mostly Thai people bought into them.

This is the key to their succes. If you think about the period 1985-1997, interest rates never really dropped below 10% and mortgages were difficult to get. So if you could get what is now a Bt3999/month unit, it would have cost you at least Bt10,000/month. And just consider most Thais - would they rather own a unit for Bt3-4k a month or rent one for at least as much.

I did one project with LPN for Bt7000/month opposite the Grammy Building in Asoke. Grammy were charging their staff Bt3000/month for parking. So for an extra Bt4,000 you got parking and a condo.

[thaijasmine]

The wife's got flyers for the LPN ones. Believe they were advertised at 2999 or 3999/month for 30 year period and I guess mostly Thai people bought into them.

This is the key to their succes. If you think about the period 1985-1997, interest rates never really dropped below 10% and mortgages were difficult to get. So if you could get what is now a Bt3999/month unit, it would have cost you at least Bt10,000/month. And just consider most Thais - would they rather own a unit for Bt3-4k a month or rent one for at least as much.

I did one project with LPN for Bt7000/month opposite the Grammy Building in Asoke. Grammy were charging their staff Bt3000/month for parking. So for an extra Bt4,000 you got parking and a condo.

I accept what you are saying but there is nothing unique to Thailand about doing this ?

I just pulled up the following clips regarding our neighbouring countries.

Indonesia

Jakarta´s private property market faces an impending glut in new condominium units in the coming years as investors are adopting a wait-and-see attitude pending the global economic recovery and the results of this year’s election process, according to DTZ.

Singapore

A glut of new condo apartments in Singapore is adding to the property downturn as real estate investors adopt a wait and see attitude rather than jump into the market, it is claimed.

China

A glut of completed property in Shanghai is empty as China's real estate sector suffers from lack of demand.Both commercial and residential sectors are affected despite the Government slashing interest rates, introducing more favourable mortgage terms and trying to get the banks to lend.Now new homes lack buyers and high rises offices can't find tenants Ok Developers are stalling projects and bankruptcies are feared.

So again I am ask myself what is the “ magic ingredient ” that makes Bangkok so special as to avoid this ? what makes the Thailand economy so dramatically different from these other countries ?

[trogers]

So again I am ask myself what is the " magic ingredient " that makes Bangkok so special as to avoid this ? what makes the Thailand economy so dramatically different from these other countries ?

I do not think you can ask one general question and expect a general answer.

Real estate is sectorial. When we say there is still demand in residential condos, it is definitely not in the market aimed at foreign buyers. That sector, where asking prices are Bt90k/m2 and more, is depressed and supply exceed demand. Transactions that are still made will be those in choice locations and choice units, and distress sales.

The sector still moving are for the lower and middle class locals, along mass transit lines on both side of the river, with asking prices in the range of Bt40-50k/m2. And a smaller demand in locations like Soi Ari for the working professionals pricing at Bt70-80k/m2.

Market in Singapore is speculative and price rise driven by flippers, as there is no shortage of home ownership with HDB covering 70% of the home market.

Market in Jakarta was aimed largely at foreigners.

[lazygourmet]

Real buyers of such condo projects are buying for the future of their children.

Future of their children is in a posh suburbia gated community... certainly not in a condo

[trogers]

Real buyers of such condo projects are buying for the future of their children.

Future of their children is in a posh suburbia gated community... certainly not in a condo

Such an aim is the precise cause for the sub-prime mess - living beyond one's means.

[badge]

OK, so Ive got a question.

I saw this Article about a couple in Mornington Heights, Manhattan Island NY, 15mins away from Times Square, living in a 58sqm condo, the smallest in NY apparently.

They paid $150,000, about 5m THB, or roughly 85,000THB a sqm.

My question is, why on earth are real estate projects in Bangkok, Thailand, being offered at 50%, 100% premiums to Manhattan Island??

A selection of similarly sized and prcied condo's in Bangkok, now officially(un) with real estate the same price as Manhattan periphery

http://www.cbre.co.th/en/bangkok-condo-con...humvit-6463.asp

http://www.cbre.co.th/en/Bangkok-Condo-Mil...m-Residence.asp

http://www.cbre.co.th/en/Bangkok-Condomini...ukhumvit-23.asp

http://www.cbre.co.th/en/Bangkok-Condo-Eig...-Residences.asp

[thaijasmine]

OK, so Ive got a question.

I saw this Article about a couple in Mornington Heights, Manhattan Island NY, 15mins away from Times Square, living in a 58sqm condo, the smallest in NY apparently.

They paid $150,000, about 5m THB, or roughly 85,000THB a sqm.

My question is, why on earth are real estate projects in Bangkok, Thailand, being offered at 50%, 100% premiums to Manhattan Island??

Another very good question

Obviously the Thai developers have so much they can teach the likes of Donald Trump

[trogers]

OK, so Ive got a question.

I saw this Article about a couple in Mornington Heights, Manhattan Island NY, 15mins away from Times Square, living in a 58sqm condo, the smallest in NY apparently.

They paid $150,000, about 5m THB, or roughly 85,000THB a sqm.

My question is, why on earth are real estate projects in Bangkok, Thailand, being offered at 50%, 100% premiums to Manhattan Island??

A selection of similarly sized and prcied condo's in Bangkok, now officially(un) with real estate the same price as Manhattan periphery

http://www.cbre.co.th/en/bangkok-condo-con...humvit-6463.asp

http://www.cbre.co.th/en/Bangkok-Condo-Mil...m-Residence.asp

http://www.cbre.co.th/en/Bangkok-Condomini...ukhumvit-23.asp

http://www.cbre.co.th/en/Bangkok-Condo-Eig...-Residences.asp

The '15 mins' is deceptive. Try converting that to km.

The units of CBRE above are deemed equal to '5 mins' from Time Square (Asoke). I would imagine 15 mins to be similar to units located beyond Sukhumvit 77, pricing in the Bt55k-65k/m2 range.

Just for info, I paid Bt50k/m2 for a unit in Sukhumvit 24, and Bt35k/m2 for 3 units near BTS Prakhanong.

Edited December 9, 2009 by trogers