Resales

[jjonz]

I understand that in Thai culture anything 'second hand' is deemed as being inferior and therefore of less value.

Whilst this applies in the West to many things, houses are not. This seems to be paradoxical in Thailand insofar as a plot of land will increase in value. My understanding is that this is because 'houses' per se, have never been considered much of an 'asset' in their being able to be rebuilt when either too many termites have also made it their home, or, a gust of wind blew it away. There are of course exceptions to this, classic houses such as Jim Thompson's, or the many historic sino portugese mansions, to name a few.

The political situation in Thailand, particularly since their latest coup and ensuing red/yellow bunfight has of course put off potential investors/homebuyers and then on top of all that, the financial meltdown engendered in the West (this time).

Added to all of this, the fact that foreigners aren't allowed to own land outright, or are subject to a miserly 30 year lease - not at all in keeping with the Westerner's idea of a more substantial/resilient home (read, concrete, tiles and possibly a pool), are another factor in the foreign element being wary of investing here, despite all the Western designed homes/villas aimed at the foreign market by Thais.

And so, which of all the aforegoing factors do members feel have been the larger contributory factor to the present parlous state of the housing market here in Thailand? Cultural differences regarding perceptions of a 'home'/unstable political situation/financial meltdown/non foreigner friendly laws pertaining to land and home ownership, or a combination of all three?

Edited December 11, 2009 by jjonz

[seaeagle]

Since the issues of land ownership aren't new and they've always been with us, I think you only should have 2 of your points here.

Clearly, the instability hasn't helped, but the world economic situation is far and away the biggest reason for a poor market in residential homes.

[gotlost]

Since the issues of land ownership aren't new and they've always been with us, I think you only should have 2 of your points here.

Clearly, the instability hasn't helped, but the world economic situation is far and away the biggest reason for a poor market in residential homes.

I agree with your assesment. Instability and world economics are the driving factor for the decline in the resale market of homes.

[johnnyk]

Many Thais do not want a 2nd hand house because there may be ghosts. Superstitious maybe to our way of thinking, but its the way many Thais think.

Western economies have busted a lot of retirement funds. 'nuff said there.

Jim Thompson house is not part of either scenario, its not for sale and in fact is several old houses bought upcountry, disassembled and trucked to BKK. Somewhat atypical.

[trogers]

I do not see difficulty in resales of condo units in choice locations if they are sensibly priced.

Where I am in Prakhanong, 3-4 units are bought and sold every month out of about 400 units in a 14 year old project.

[rgs2001uk]

I wish someone would tell the Thai's anything second hand is inferior and of less value, there are some slums on Rama 4 I would like to get my hands on, who knows what the land is worth.

The concept of farang ownership is of no concern to Thais who go about their business as usual, often with a differing outlook on property investment to most farangs.

From what I have observed most Thais will go for capital growth over regular income.

In the past month in the area I live I have watched two second hand properties being sold for cash.

A 2 storey townhouse sold for 2 million baht, and will be rented out for 6,000 baht per month, a single storey house on about 60 tw, sold for about 3 500 000 baht, will be rented out for about 8 000 baht per month.

Depending on the location, I view as buying a piece of land and getting the house for free.

I know of areas where houses are being sold from anywhere from 3 to 6 million baht, the house is then demolished and a new house built, usually at a cost of 2 to 4 million baht.

Not so far away from the same area there are new houses for sale at almost double these prices, usually bought by farang or richer Thais.

The Thais will continue buying property, new or second hand irrespective of what farangs do.

[yabaaaa]

I do not see difficulty in resales of condo units in choice locations if they are sensibly priced.

Where I am in Prakhanong, 3-4 units are bought and sold every month out of about 400 units in a 14 year old project.

And for its age Taiping still looks pretty good!!

[trogers]

I do not see difficulty in resales of condo units in choice locations if they are sensibly priced.

Where I am in Prakhanong, 3-4 units are bought and sold every month out of about 400 units in a 14 year old project.

And for its age Taiping still looks pretty good!!

Only weak point of Taiping Towers is its location near the other end of Ekkamai.

[LivinLOS]

I have lived in multiple homes in the 'higher end' to mid end range (15 - 30m villas) here on Phuket..

Even these so called high end homes.. One collapsed totally, landslide, another the pool shifted and is wrecked, a retaining wall looks like its going to give way.. The woodwork is rotting, the design is substandard in the 'cant see it' type of things.. Multiple mates are all in a nice looking condo development, and I just got told that one of the 3 pools there is shifted cracked and the sinking fund doesnt have enough to tackle the issue with a rebuild so they are just patching it up and putting more water in !!

Basically it will be a rare one of these still standing at the end of a 30 year lease and the one I am currently in I dont know if it will be standing at 10 years after construction. Thats without the insane (to me) level of maintenance that properties require, termites, rot, mildew and mold, sea air and corrosion..

Now I am sure that somewhere out there, some builder is making real top quality homes, with the right foundations, and true attention to detail throughout.. I just dont see them is all.. But western homes I have lived in, one old coach house dated from the 1700's can anyone see that happening with anything short of a Palace here.

[dave111223]

It could also be that the quality/style of building seems to have improved vastly over the past 10 years or so.

I think you'd be pretty hard pressed to find a 15 or 20 year home which was built anywhere close to today's standards.

So if you wanted a "modern" home you'd really only be looking in the new - > 5 year (maybe 10) year old bracket.

Obviously there are many factors, this is just 1 i noticed.

[trogers]

I have lived in multiple homes in the 'higher end' to mid end range (15 - 30m villas) here on Phuket..

Even these so called high end homes.. One collapsed totally, landslide, another the pool shifted and is wrecked, a retaining wall looks like its going to give way.. The woodwork is rotting, the design is substandard in the 'cant see it' type of things.. Multiple mates are all in a nice looking condo development, and I just got told that one of the 3 pools there is shifted cracked and the sinking fund doesnt have enough to tackle the issue with a rebuild so they are just patching it up and putting more water in !!

Basically it will be a rare one of these still standing at the end of a 30 year lease and the one I am currently in I dont know if it will be standing at 10 years after construction. Thats without the insane (to me) level of maintenance that properties require, termites, rot, mildew and mold, sea air and corrosion..

Now I am sure that somewhere out there, some builder is making real top quality homes, with the right foundations, and true attention to detail throughout.. I just dont see them is all.. But western homes I have lived in, one old coach house dated from the 1700's can anyone see that happening with anything short of a Palace here.

Thais are not used to designing and building heavy structures on slopes. They are basically trained to handle thick marine clay.

Back in 1993, I had to identify the causes of cracks in beams and slabs of a 5-star resort in Phuket. Five months earlier, cracks were evaluated and repaired on consultation with a professor of a top university, but the cause was not identified.

New cracks developed and I was called in, as my company does structural repairs. We made a good margin, identified the causes and stopped further cracking and repaired and tested the structure.

[chickencurry]

Basically it will be a rare one of these still standing at the end of a 30 year lease and the one I am currently in I dont know if it will be standing at 10 years after construction. Thats without the insane (to me) level of maintenance that properties require, termites, rot, mildew and mold, sea air and corrosion..

Agree with you on all that. We're not on the same development are we?

[LivinLOS]

My last million dollar villa

Wonder how long the resale will take on that !!! Offers anyone.

[stgrhe]

Where was this house, Samui, Phuket?

[LivinLOS]

Phuket..

The before.

[katabeachbum]

Phuket..

The before.

Nice

but no foundation

my house starts 14 meters under ground, but my groundlevel floor is 0,6 meter over ground

most thais dont build like this, so I had to have it build myself

several houses in Hua Hin are actually cheaper than the bare land next to it

and the cost to have it demolished is like 1-200k baht

back to OP, thais dont buy resale cause of the ghosts and cause they are hard to finance. exception is prime location like Thonglor or beachfront Hua Hin

Farang dont buy them cause they aint got the cash presently

I belive farang ownership is not a major issue

[johnnyk]

Where was this house, Samui, Phuket?

southern California?

[trogers]

Engineer No. 1 - "I told you his 2 SUVs are 2 tonnes each".

Engineer No. 2 - "I searched TV and all the posts said 1.2 tonnes each. Anyway, I think you added too much water to that pool".

[ignis]

It is to do with Financing..

there is a house for sale across the road and it is cheap is 6 years old @ 1.85 million, some 6 months ago a Thai family wanted to buy, in the end they could not get the Mortgage, because they liked the area they went to the next Village and have now bought a brand new house no problems with a Mortgage... The house is the same size and design 3 bedroom detached and cost 2.45 million...

Across the road they have an added kitchen and utility room already built on, water pumps and tank, grills to the windows/doors etc. The brand new house has non of these...

Is Financing a new house a Thai thing, or buying 2nd hand depends on the day you apply?

[trogers]

It is to do with Financing..

there is a house for sale across the road and it is cheap is 6 years old @ 1.85 million, some 6 months ago a Thai family wanted to buy, in the end they could not get the Mortgage, because they liked the area they went to the next Village and have now bought a brand new house no problems with a Mortgage... The house is the same size and design 3 bedroom detached and cost 2.45 million...

Across the road they have an added kitchen and utility room already built on, water pumps and tank, grills to the windows/doors etc. The brand new house has non of these...

Is Financing a new house a Thai thing, or buying 2nd hand depends on the day you apply?

Banks have poor valuation departments. Easier to find out the market value of new properties, difficult to establish market values for old properties. Thus, banks prefer mortgages on new properties.

And this weakness in the Thai financial institutions is a boon for cash rich investors who can go around and pick and choose undervalued properties in good locations.

[chickencurry]

Farang dont buy them cause they aint got the cash presently

I belive farang ownership is not a major issue

I would dispute that - I know working expats in Singapore and HK who are holding cash, and especially those looking at retirement - why would you hold shares at the moment? And why hold cash? (low interest rates). A lot of people think about property for investment - now whether that's a good idea, that's another argument - I'm not going to argue with them as I have a villa for sale.

I know of a resale sold close to our villa to Singapore expats (French) earlier this year. Ours has just gone up for sale (a resale) and we have 2 viewings next week and Christmas week - both couples are Europeans.

[Benjie]

Banks have poor valuation departments. Easier to find out the market value of new properties, difficult to establish market values for old properties. Thus, banks prefer mortgages on new properties.

And this weakness in the Thai financial institutions is a boon for cash rich investors who can go around and pick and choose undervalued properties in good locations.

To sell on to whom?

[alfieconn]

Since the issues of land ownership aren't new and they've always been with us, I think you only should have 2 of your points here.

Clearly, the instability hasn't helped, but the world economic situation is far and away the biggest reason for a poor market in residential homes.

Have to disagree with you there old chap, the first sign of the housing market slowing down, especially in the tourist areas was due to the government clamping down on the company/ nominee issue.

Up until the time that this issue came to light many people did not even realise that buying a house and land through a company with nominee shareholders was in fact illegal and if they had known would probaly have never used that route.

[trogers]

Banks have poor valuation departments. Easier to find out the market value of new properties, difficult to establish market values for old properties. Thus, banks prefer mortgages on new properties.

And this weakness in the Thai financial institutions is a boon for cash rich investors who can go around and pick and choose undervalued properties in good locations.

To sell on to whom?

Depends on the property, its location, asking price and the market demand. I bought four 2nd hand condo units in lower Sukhumvit between Jul 2008 and Sep 2009. Two are leased out, one under renovation and I am living in the fourth with a tenant booked to move in this early Jan.

[Benjie]

Banks have poor valuation departments. Easier to find out the market value of new properties, difficult to establish market values for old properties. Thus, banks prefer mortgages on new properties.

And this weakness in the Thai financial institutions is a boon for cash rich investors who can go around and pick and choose undervalued properties in good locations.

To sell on to whom?

Depends on the property, its location, asking price and the market demand. I bought four 2nd hand condo units in lower Sukhumvit between Jul 2008 and Sep 2009. Two are leased out, one under renovation and I am living in the fourth with a tenant booked to move in this early Jan.

I still don't see how you decide they are undervalued though, if people can't get mortgages on them (or its difficult to) this has a direct negative impact on price (demand), Doesn't mean they are undervalued, just means they are a lower price.

[trogers]

I still don't see how you decide they are undervalued though, if people can't get mortgages on them (or its difficult to) this has a direct negative impact on price (demand), Doesn't mean they are undervalued, just means they are a lower price.

My first condo bought in Jul 2008. Previous owner already had an offer from a Thai, but I made the same offer with a slight discount - owner pays all costs for title transfer. My offer was accepted because he did not want to wait on processing time for mortgage application and the uncertainty that the application be rejected.

About 8 months later, a similar unit on a lower floor (inferior view) was put out into the market at a price 10% higher than my offer and subsequently sold.

[jjonz]

Since the issues of land ownership aren't new and they've always been with us, I think you only should have 2 of your points here.

Clearly, the instability hasn't helped, but the world economic situation is far and away the biggest reason for a poor market in residential homes.

Have to disagree with you there old chap, the first sign of the housing market slowing down, especially in the tourist areas was due to the government clamping down on the company/ nominee issue.

Up until the time that this issue came to light many people did not even realise that buying a house and land through a company with nominee shareholders was in fact illegal and if they had known would probaly have never used that route.

Forgot about this particular element. Your quite right. The stupidity of clamping down on 'nominees' by the junta in response to Taksin's having already sold his own communications empire to Singapore via this route - read 'locking stable doors after the horse has bolted', was no doubt the beginning of the end.

[katabeachbum]

It is to do with Financing..

there is a house for sale across the road and it is cheap is 6 years old @ 1.85 million, some 6 months ago a Thai family wanted to buy, in the end they could not get the Mortgage, because they liked the area they went to the next Village and have now bought a brand new house no problems with a Mortgage... The house is the same size and design 3 bedroom detached and cost 2.45 million...

Across the road they have an added kitchen and utility room already built on, water pumps and tank, grills to the windows/doors etc. The brand new house has non of these...

Is Financing a new house a Thai thing, or buying 2nd hand depends on the day you apply?

Banks have poor valuation departments. Easier to find out the market value of new properties, difficult to establish market values for old properties. Thus, banks prefer mortgages on new properties.

And this weakness in the Thai financial institutions is a boon for cash rich investors who can go around and pick and choose undervalued properties in good locations.

the banks situation is much more complex. They are involved in financing the project, and they choose to move the risk to individual buyers of new units

2nd hand they are not interested, cause its not being pushed by central bank office or commisions

[katabeachbum]

Farang dont buy them cause they aint got the cash presently

I belive farang ownership is not a major issue

I would dispute that - I know working expats in Singapore and HK who are holding cash, and especially those looking at retirement - why would you hold shares at the moment? And why hold cash? (low interest rates). A lot of people think about property for investment - now whether that's a good idea, that's another argument - I'm not going to argue with them as I have a villa for sale.

I know of a resale sold close to our villa to Singapore expats (French) earlier this year. Ours has just gone up for sale (a resale) and we have 2 viewings next week and Christmas week - both couples are Europeans.

Lucky you. I just dont see the buyers wether I say 12 mill or 20 mill baht for same property

[sirineou]

Personally, I would never buy a resale in Thailand, in Many areas in Thailand there there are no building codes, and where there are building codes there is lax enforcement and corruption. How can I know if the right amount and gage of steel is used in the structure? if electric wiring is done properly? Is steel welded and primed properly? etc.

This might be a contributing factor in low resales.