No money down realestate

[en184]

Hi,

I have been reading various books on realestate, and would like to know, if no money down real estate deals are available in bangkok from developers.  I know that they are for thai nationals, but are they available for farangs.  

If anybody is doing this already, please contact me by private message.  I am interested in flipping a couple of pieces of real estate in thai.

[en184]

Speculators richer than before

"In future if the situation becomes hotter we might have to increase the down payment," says Mr Tikhamporn.

PROPERTY: L.P.N. chief sees exploitation of gap between demand and supply of moderately priced condos

NINA SUEBSUKCHAROEN

Property speculators today are more financially sound than those seen in the pre-crisis days, says Tikhamporn Plengsrisuk, managing director of L.P.N. Development Plc.

For one thing, he said, speculators now are completing down-payments and taking over the condominium units they booked. In the boom years it was common for people to transfer contracts for a profit before taking possession.

L.P.N. levies a 1% fee on the transfer of a purchase contract, which enables it to track how many buyers are speculating, but there did not appear to be many in the initial phase, he said. Some sell when the transfer of the unit draws near but even at that point there are not too many.

``Today's speculators are in a stronger financial position and are taking advantage of the gap between supply and demand,'' Mr Tikhamporn said.

L.P.N. is trying to discourage the practice by not allowing any one individual to book too many units. ``In future we might only allow one unit per person and increase the down payment.''

Booking an L.P.N. unit requires around 100,000 baht, which means that those buying for occupancy or for speculation have to have some cash in hand at the outset, he said.

``In future if the situation becomes hotter we might have to increase the down payment. If you ask whether we welcome speculators, we have to welcome them. This is business, they are akin to our salesmen.''

A clear sign of how hot the downtown condominium market has become was seen last month when people lined up to book units at L.P.N.'s Lumphini Suite Sukhumvit 41 from midnight even though the doors opened at 8:30 am.

All 159 units of the 485-million-baht development were sold in just four hours.

Among those waiting from midnight was a British fund manager who said he was used to queues back home.

``We feel uneasy about this. We are not happy because people started waiting from midnight. We should be able to sell without clients having to wait this long,'' Mr Tikhamporn said.

Bookings are transparent as they are displayed on a board for all to see. Senior L.P.N. staff wanted units but were not allowed to book in advance, with Mr Tikhamporn, who sent 15 of his employees to join the queue to book on their behalf.

``I told them to join the queue at 6 am but there were 19 people ahead of the workers. Others got the units our senior members wanted,'' he said.

Seeing this huge demand, L.P.N. is now seeking one or more new locations in the Sukhumvit area to develop. It earlier tried unsuccessfully to acquire a plot at President Park for development. It was to meet the demand of those waiting for the development at President Park that the company launched the Sukhumvit 41 project. However, SET-listed L.P.N. will not be moving out of the middle-market niche on which its business has thrived, as it thinks this segment is the best target with demand clearly apparent.

Mr Tikhamporn says that about one million people live in the 10 districts that make up the heart of the capital. At the same time, at least 600,000 people work in central Bangkok, occupying around two million square metres of office space. His objective is to draw only 1% of those 600,000 people to buy one of the company's condominiums each year.

``I don't want a lot, just around 1%, is that a lot? The population increases by around 2% each year and I only want 1% is that a lot?''

Those who think the property market is getting overheated should bear in mind that this year only around 24 to 25 condominium projects have been launched, bringing in an additional 4,500 units. Around 60-70% are for the upper market with very little for the middle and lower markets, he said.

``Mostly it is the high-end market with a little for the middle market but nothing in the lower end. However there is demand at the lower end too,'' Mr Tikhamporn said, pointing out that in densely populated suburban areas no one has launched any condo projects priced at around 600,000 to 700,000 baht a unit.

``Projects that have been launched since the beginning of this year are all in the centre of the city, mostly Sukhumvit,'' he said. L.P.N. is the only company with projects in other areas such as Rama III and Narathiwat Ratchanakarin.

Looking to the future, Mr Tikhamporn said the condo market would continue to bear watching. ``Next year will be even stronger than this year. This year is only the beginning. People who want to enter this market cannot do so right away, it takes time to design.''

He's not worried about selling units as he is sure sales will remain good for the remainder of this year and next.

``Whether a person is buying to live or speculate, it clearly shows there is a gap between supply and demand. So therefore next year there will be new developers but I think there is room for them to work.''

[george]

Can it be a collapse on the way? The Post speculates...

Chumpol warns of housing crash

Growth of 20-30% a year `not natural'

Nareerat Wiriyapong and Busrin Treerapongpichit

Siam Cement, Thailand's largest industrial conglomerate, yesterday warned of a possible collapse in the property market in the next couple of years, saying that the current supply exceeds demand.

Group president Chumpol NaLamlieng said the growth rate of 20-30% annually in the property market was not natural. The market in the high-priced segment, in particular, with unit prices of 10 million baht onward, is oversupplied.

``I wonder if the number of potential homebuyers believed to have high purchasing power is as high as the builders of high-end projects have projected,'' Mr Chumpol said.

Siam Cement yesterday reported net profit of 4.36 billion baht in the third quarter of this year, up 32% from the same period last year, on consolidated revenue of 36.02 billion baht, up 6% from the same period last year.

Revenues from the cement business grew 8% on the back of a rise in local construction projects while the petrochemical business expanded 4% year-on-year, helped by rising petrochemical prices.

Its paper and packaging business posted a 12% growth in revenues due to higher pulp and paper prices. The higher sales were also the result of the consolidation of United Pulp and Paper (UPPC), into Siam Cement's financial statement following the group's acquisition of a controlling stake in its Philippine joint venture.

For the nine-month period, net profit rose 47% to 13.97 billion baht from 9.5 billion baht in the same period of last year.

Mr Chumpol said revenues were expected to increase in a range of 5-10% in the current quarter and 10% for the whole year with the group set to achieve its sales targets for the year even in terms of exports, which has been affected by the stronger baht.

Exports account for roughly 30% of Siam Cements total turnover, he said.

Mr Chumpol said interest expense was expected to decrease by almost two billion baht this year and next year, due to low interest rates. The overall interest expense is estimated at eight billion baht this year.

He said the petrochemical and paper and pulp businesses would be key areas of expansion for Siam Cement outside the country, mainly through equity acquisitions of existing manufacturers.

On-going discussions on an acquisition of a paper company in Indonesia is not likely to be concluded this year, he added.

Vice-president Kan Trakulhoon said the group was targeting to reduce liabilities by bringing the net debt to a level lower than three times its earnings before interest, tax, depreciation and amortisation (EBITDA).

The level currently is approximately 3.4-3.5 times, down from 4.2 times last year.

Net debt is 123 billion baht, compared to 126 billion baht in 2002. It is expected to be reduced to 120 billion baht by the end of the year.

Of the total debt, 86.5 billion baht was in terms of debentures, of which 10 billion baht are short-term and the rest have a long-term maturity.

``Next year, our planned issue of at least 12.5 billion baht of new debentures will likely carry an interest rate less than 3.5% '' he said.

Generally, the firm issues debentures annually worth at least half the amount of its matured debentures in each year. Siam Cement is due to have matured debentures of 25 billion baht next year.

Siam Cement shares closed yesterday on the Stock Exchange of Thailand at 193 baht, up six baht, on trade worth 638 million baht.

--Bangkok Post 2003-10-30

[Butterfly]

yeah got that warning already from my broker this morning. Obviously people are starting to get nervous. If SET reaches 700 in less than 2 months, I am out there. I have started to sell some of my holdings already.

How is that for an economic recovery ?  

[monitorlizard]

Hate to disagree lads but the property market is just getting heated up. Yes, the high end of houses and condos are exceeding demand. But what about the middle and lower end?

Demand far outweighs supply. I have a friend (Thai), part owner of a company that develops and builds units for the middle market niche. The last 2 projects have been sold out. I am always begging to buy one of his units in one of his projects. He expects demand to continue for many years to come. Most of his projects have been on the outskirts of Bangkok! And they are selling out.

I also think that if low interest rates continue to stay at record levels then the housing boom will continue to ride higher. There is no other place to put your money. Banks pay 1% or less. Your money loses value due to inflation. People would much rather buy real estate than play the stock market.

Signs of the US economy improving (at least until the 2004 election) is also fueling the housing boom. There is one going on right now in California. And don't forget London!

If I were living in LOS, I would buy a property. Its an asset.

[Butterfly]

There is always demand for property, but at what price ? if people are going to be "house poor" because the low interest rates mean higher buying prices, where is the "real" savings or the incentive to buy property ? how these people are going to pay if there is a serious "correction" in the economy ? This is 1997 all over again. Of course it will be different but it will have the same damaging effect.

California and SF in particularly are getting hit pretty bad for rent capacity. The next phase is real state crash in California. This is exactly the same scenario we had in the late 80s. Funny how cycles work.

[plachon]

There is always demand for property, but at what price ? if people are going to be "house poor" because the low interest rates mean higher buying prices, where is the "real" savings or the incentive to buy property ? how these people are going to pay if there is a serious "correction" in the economy ? This is 1997 all over again. Of course it will be different but it will have the same damaging effect.

California and SF in particularly are getting hit pretty bad for rent capacity. The next phase is real state crash in California. This is exactly the same scenario we had in the late 80s. Funny how cycles work.

I don't know where Montitor is talking about exactly, but wherever I go in Thailand, I see empty property, esp. townhouses, mostly left over from the last crash (some even have 20 foot trees growing up inside them!). Sure demand is picking up, but supply is outstripping it again, IMHO.

Butterfly & others on a v. long earlier thread (started by a now v. silent Mrentoul) knows my opinions on the likelihood of a coming crash in the next 2-5 years. Nothing I see has changed my opinion on that, though I would say an earlier scenario is more likely than the later one. The SET is now totally mental defying the real economic growth, so a significant correction in that could precede an overall crash, just as it did pre-97.

[stopper]

When the investors and institutions start pulling their money out of the Thai stock market, it is like the old saying, "It goes up like an escalator and down like an elevator."  Meaning the market rise and fall.

[easymoney]

Yes remember tulips are still a hold and buy into weakness

[Butterfly]

SET is close to 700 already. Time to pull out in a few weeks or even a few days

[plachon]

SET is close to 700 already. Time to pull out in a few weeks or even a few days

Thing's are going really mental on SET, eh, 'fly. You really pulling out when it hits 700 or just rationalising a bit? I remember an "expert" in the B. Post, saying optimistically at the beginning of this year that he expected it to finish the year around 450, if the economy grew well. Well, the economy's gone up 6 or 7 % and the SET's gone well over 100 % now. Who's fueling the bull and is it gonna crash or just drop down to a more rational level soon? Or perhaps could it carry on soaring into 2004 before the inevitable happens? Give us your end of year prediction mate. By the way, are you a closet fan of the unforgettable Ned's Atomic Dustbin, or is your avatar just a silent protest against Ongkarak glow worms?

[Butterfly]

SET is close to 700 already. Time to pull out in a few weeks or even a few days 

Thing's are going really mental on SET, eh, 'fly. You really pulling out when it hits 700 or just rationalising a bit? I remember an "expert" in the B. Post, saying optimistically at the beginning of this year that he expected it to finish the year around 450, if the economy grew well. Well, the economy's gone up 6 or 7 % and the SET's gone well over 100 % now. Who's fueling the bull and is it gonna crash or just drop down to a more rational level soon? Or perhaps could it carry on soaring into 2004 before the inevitable happens? Give us your end of year prediction mate. By the way, are you a closet fan of the unforgettable Ned's Atomic Dustbin, or is your avatar just a silent protest against Ongkarak glow worms?

I got the avatar from this board library and I thought it looked pretty good

I have no idea where we are heading here. Could there be more room for growth ? sure, why not. But I was not expecting 700 before end of next year. Some of my stocks went up 150% in less than 6 months with growth accelerating in the last 3 months.

Even Toxin this morning in the Post thought it was "overvalued". Probably due to the fact that his company is trying to take over some other companies and can't because valuation is too high. hahahahaha !!!

Anyhow, I have unloaded already 30% and wait for the next bull run at 700/750 to unload another 30%

At 800, it is starting to be dangerous, but the Thais are back into the SET and play it like it is the casino. It's 1996 all over again. It could reach 1200 by next year with such a "foolish" game. Holly Cow, I made 1m Euro in less than 3 years when I started with only 200k (and yes I am bragging about it )

[plachon]

("Holly cows" - Xmas has come early for some, eh? _The beers are on Butterfly lads n' ladies next time you bump into the jammy git. )

But, such growth can't be sustained realistically much longer - or so logic dictates. But this is LOS, the Amazing One, and like you say who knows what's happening here. Could be so much funny money rolling in from domestic and foreign sources, that this bull could go on and on before it hits the crash barriers at 120kph. I wouldn't like to predict, but it's like a genuine casino these days. No need to travel to Cambodia for good, clean, legal fun these days, eh?

PS. Not familar with Ned's classic hits then 'fly/ "Kill Your Television" was one of their best.

[monitorlizard]

i dont see how there would be a property crash in california. Yes there was a downturn in Los Angles and san Diego for a bout 10 years but look what happened the prices skyrocketed! back then there was problems with base closings and the downsizing of military companies. Long Beach and other communities near LA were really hit hard.

Should not happen again as the economy is more diversified with small to medium sized companies. In LA there are toy manufactures now shipping toys to Asia!

Yes the rents in San Francisco have dropped about 10% But look at the market. Houses are being over bid by 20,000 -50,000 dollars. The average house there is around 500,000 or more and I expect it to hit 1 million easily within 20 years! Remember 45 sq miles is the size.

You should read the report from UC Berkeley about the housing problem in California. Each year the situation gets worse. The need and new property starts are way out of whack. PM me and i will send the link to you. Its a bit long but a good read.

Its funny how you say that people cannot afford the houses anymore. I use to believe that as well. But I see an interesting trend happening now in california.......the new "interest only" loans. Yes you never pay down your principal. so people can borrow 300,000 and pay 800 Usd payments per month. don't forget japan has the 40 year loans and in some cases loans that are transferred to the next generation.

i see nothing but upside for the 550,000 to 700,000 apartments in Bangkok. The typical rents are returning 3,000-4,000 baht per month (36,000 -48,000) which is a comfortable 7% yearly return.

How did the condos that are not built yet at Lat Phrao sell out in a few hours on the first day?

Yes, shophouses or the chinese style shop and house on top are not doing so well. Neither are the townhomes. But housing estates are doing well. The Thais love the idea of a planned community with amentities and security.

I am looking at one at Phutomanton 2. Not cheap though, small house is 4 million. I will probably pass it up.

I wouldn't play the stock market as I see it as another form of gambling. And we know the Thais love to gamble just like the Chinese.

Only thing I regret is not buying the Australian dollar when it was 55 cents to the USD. What is it now? Nearly 70? The signs were there....high interest rates in a futile attempt to cool down the property market. Howard must be doing something right!

[plachon]

I wouldn't play the stock market as I see it as another form of gambling. And we know the Thais love to gamble just like the Chinese.

Only thing I regret is not buying the Australian dollar when it was 55 cents to the USD. What is it now? Nearly 70? The signs were there....high interest rates in a futile attempt to cool down the property market. Howard must be doing something right!

like it or not Lizard, you're also gambling when buy your house - gambling that the price will rise and the economy won't crash at some point inthe future, thereby wiping out your investment. (Unless it's your only house, in which case it still serves a purpose of shelter). At least with the stock market, gambling or not, you can pull out a lot easier than a house when the tide turns. And why is it OK to speculate on currency, but not on stocks? Just curious.

[Butterfly]

<font color='#000000'>Hate to disagree lads but the property market is just getting heated up. Yes, the high end of houses and condos are exceeding demand. But what about the middle and lower end?

Demand far outweighs supply. I have a friend (Thai), part owner of a company that develops and builds units for the middle market niche. The last 2 projects have been sold out. I am always begging to buy one of his units in one of his projects. He expects demand to continue for many years to come. Most of his projects have been on the outskirts of Bangkok! And they are selling out.

I also think that if low interest rates continue to stay at record levels then the housing boom will continue to ride higher. There is no other place to put your money. Banks pay 1% or less. Your money loses value due to inflation. People would much rather buy real estate than play the stock market.

Signs of the US economy improving (at least until the 2004 election) is also fueling the housing boom. There is one going on right now in California. And don't forget London!

If I were living in LOS, I would buy a property. Its an asset.</font>

Would hate to disagree with you but you are drinking the Kool Aid like the other guys. Sure, there is more space for growth in the property market in Thailand, but is it a "reasonable" growth ? I don't think so. If you put down the beer for more than 1 or 2 days, you will realize that Bangkok is nothing more than a dump. The only think that make this "third world" city worthwile is the "food" and the "angels" and everything that goes with them. The rest is decorum. Sure the city has improved a lot, but the only reason that could make you "think" to make that kind of investment is the "cheap" value of the properties for the level of "service" you were getting in such a big city. Now that the "cheap" factor is gone, what are you left with ? not much. About 2 years ago I was about to buy a 15 million bath condo with 500 square meters (I hope it was), still a good deal for western standard. I would have bought it cash if the owner would have go for it at 12 millions. It has been 2 years and I checked again 3 months ago, and the owner was still trying to sell it. Now with the property boom, he wants 20 millions. For 20 millions I can get something nice in Europe or even in the US, and it would be "safer" in terms of currency risks. Only the Thais are stupid enough to get sucked up again in the same bubble as they did in 1996.

Re: California. I don't deny California is still in a boom phase but this is primarly due to a few "abnormal" things:

1. Low interest rates that just keep fueling the bubbles. People don't realize that the savings in interest rates they will get will be "cancelled out" by the bigger price tag of their property.

2. A bear stock market in the US that forces some investors to "re-evaluate" their strategy into something more "stable". Real Estate has always been a good bet when things are going bad. You get the incomes from the rent and it's like a "dividend" without the underlying risk of a "security". With an average 7% return, it beats any money market or fixed income funds for that level of risk.

There was an interesting story in some paper about the "future" liabilities that "current" house owners will face with their "huge" loand and prospect of more unemployment. A lot of foreclosure are expected. You think the S&L crash was bad ? you think the dot crash was bad ? wait until this one happens because this time we are not talking about "unrealized gains" losses but "real physical things" being lost. What about those GDP "abnormal" growth ? What are they good for if there are no growth in jobs ? that won't help people pay for their mortgage. It's all "paper" growth, which makes it worthless in "real" terms.

so stop drinking the Kool Aid because this is the same BS I was hearing in the 1990s before everything crashed in the property market. Before a crash there is always a boom. You have to buy the property when it crash, not when it's booming.