Resales

[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.

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

Financing development projects, and financing unit buyers after transfer will not remove the risk from the bank. Just that the previous risk the bank took up with the developer is now changed to mortgage risk between bank and unit buyers.

In fact financing new condo units carries higher risk than 2nd hand condo units during the development of speculative bubbles. We have seen prices can fall more than 50% when the bubble burst - see US sub-prime and Dubai.

[Livinginexile]

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.

Agreed!

As long as you are able to sell the condo to a farang and the location and quality is good then there is no problem re selling.

I have just sold my condo on Sukhumvit and realised a 35% profit in just 3 years!

Edited December 14, 2009 by Livinginexile

[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.

Agreed!

As long as you are able to sell the condo to a farang and the location and quality is good then there is no problem re selling.

I have just sold my condo on Sukhumvit and realised a 35% profit in just 3 years!

The one at Soi 13?

[Benjie]

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.

slight discount<undervalued

[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.

slight discount<undervalued

rising prices due to flipping = overvalued

depressed demand due to lack of bank finance = undervalued

One measure is comparing returns of asset class over a period of time and against general price movement for that period, mid 2008 to mid 2009, after the subprime bubble burst in mid 2007.