Cost Of Housing In Phuket

[petercallen]

I agree with you except for your last comment.

There is no need to build, You can buy brand new houses, 3 year old houses that have never been lived in and deteriorating.

,Nearly completed houses with solar hot water, built of bricks not hollow cement blocks and the construction seems quite good,

Quality roof tiles and good windows either hardwood or aluminium which i prefer.

Get on your bike and have a look around especially the north of the island where i believe most retired people will be buying

in the future,I liked the Rawai area and though it was a great place to live but over the last 2 years the traffic has got very bad there

its turning into another tourist area, given a few more years it will be as bad as Patong.

If you take the time to look you will see there are brand new houses of all different qualities of construction all over the island

any ready made house in any completed neighborhood, I think youe need to ad the cost of my last comment too. Why would anyone sell at their cost price, if they have no loans or other urgent reason? and in Phuket very few have

and the pices will go up again. when the recession ends, construction prices will rice with 30-50% within few months (Phuket minimum salary just went up with 10?%), making increased price of existing new builds, and of course start covering the lack of increase in value of used homes

The basic wage in Phuket for a Thai person is approx 220 baht a day,Burmese work in the building industry not Thais

100 to 500% markup on costs is not a fair profit

[stevenl]

I really think some people know very little about real estate, my price is what i believe is a fair market price after looking at lots of properties

And since you have been looking for quite some time now, it seems that none of the sellers agree with your fair price.

But I give up Peter, you're not listening to what anybody is saying, only to what is in your own mind.

[LivinLOS]

Phuket is a very strange market, in that very often Thai build quality meets buyers who plainly say things like " It doesn't really interest me what the build cost are and if the mark up for the developer is higher than it would be in the West" I mean why wouldnt you care if someones making a 300% markup on the replacement cost ?? Its the same old tuktuk argument (comparing Thai prices to a taxi in the west end).

The market here has less debt, and low to no taxation theres less cost of holding on.. Tho with Thai build quality combined with the forces of the tropics, theres still a substantial ongoing cost of ownership (ask any of my past landlords !!). So the market has been driven by fresh of the plane buyers for the last decade who often didnt care about local values, compared the 'shell' to the developed west without considering the foundations, or zoning (lack of them) implications. And in many ways over paid for the risk as they didnt perceive the full risk. Combine this with Thai face over pricing (and inability to take a baht less then a neighbor sold) and there was a nice spiral effect.

Currently theres a lot less hot money.. I saw a 38m advertised baht villa on a golf course recently quietly sell for 12m !! The build and land cost for this place back in 00 - 02 when it was done was around the 18m mark !! I was tempted myself as it really was the best buy I have seen in 5 plus years of watching, but the timing was at the point when I just didnt want it, even so deeply discounted. From friends in the industry I am told theres still enquirers in the mega money stuff, the 80 - 150 mil cliff top homes, but from what I can see mere mortals homes are going very slowly and price reductions not really finding buyers (Like peters example of a 8m home superior to a 16m home.. Price discovery just not working). You see the same homes advertised month after month, year after year sometimes.

Personally I think the whole world will be heading into a double dip.. And that doesnt spell happy times for values in the near term, so wouldnt be in a hurry.. Or build it how you want as build costs unlikely to go down. Over the longer haul simple rising populations will drive pricing up but all boats wont float equally.

Edited December 27, 2010 by LivinLOS

[barka]

I really think some people know very little about real estate, my price is what i believe is a fair market price after looking at lots of properties

And since you have been looking for quite some time now, it seems that none of the sellers agree with your fair price.

But I give up Peter, you're not listening to what anybody is saying, only to what is in your own mind.

i agree steve he knows all..... he does not want to listen only talk..

[KarenBravo]

100 to 500% markup on costs is not a fair profit

Do you think the building companies care about "fair profit", or, ever lower their prices from contract to contract?

You're looking at this through the eyes of Western Culture and it's mores and morals.

As GOM has mentioned "face" is yet another variable. No mortgages, no buying chain, far more property of "one-offs" that were built by the land owner, or, lessee, makes properties harder to price for the non-expert and causes prices to behave illogically.

[SeanPhuket]

What type of buyer are you?

1) Looking for value?, or

2) Bargain hunter?, or

3) Willing to pay whatever if you like something?

The first, lots of value real estate about but who sets the value? Seller, buyer, or the neighbourhood?

The second, lots of bargains about too; but on Phuket a bargain is normally associated with a halted construction project. Even then a seller can still sit on it as Phuket is predominately a CASH market as is his project.

The third, well, one word only - Russians. Why would a seller sell their real estate below their value when they know sooner or later somebody will come along and buy it on this resort island. Remember this owner is likely to be a cash owner too.

One has to think if one himself has an unrealistic value of the local real estate market.

[petercallen]

I really think some people know very little about real estate, my price is what i believe is a fair market price after looking at lots of properties

And since you have been looking for quite some time now, it seems that none of the sellers agree with your fair price.

But I give up Peter, you're not listening to what anybody is saying, only to what is in your own mind.

i agree steve he knows all..... he does not want to listen only talk..

You are wrong there are sellers and myself who would agree on a selling price no problem.

Its important to me that my partner likes the house as well.

Any time she says its up to you i lose interest in a property straight away

[KarenBravo]

You are wrong there are sellers and myself who would agree on a selling price no problem.

Its important to me that my partner likes the house as well.

Any time she says its up to you i lose interest in a property straight away

What's this got to do with some of your statements in your OP?

[Benjie]

You are wrong there are sellers and myself who would agree on a selling price no problem.

Its important to me that my partner likes the house as well.

Any time she says its up to you i lose interest in a property straight away

But you aren't agreeing on a selling price because you aren't buying them.

[grumpyoldman]

And since you have been looking for quite some time now, it seems that none of the sellers agree with your fair price.

But I give up Peter, you're not listening to what anybody is saying, only to what is in your own mind.

i agree steve he knows all..... he does not want to listen only talk..

I think this is just a favorite conversation piece of the OP's.

This seems to me just like an open conversation as if we were sitting at the bar making b.s. about the RE market here.

Does Mr. Callen have his views pretty solidified on this topic? No argument there. Is anyone in the thread going to change his views? Probably not, so if the conversation is frustrating for you, best to grab a beer and head to another group of mates ;-)

[petercallen]

Completely different than in the west.

I guess the main thing is that there are few mortgages and no buying chains.

Because of this, there isn't so much pressure to lower prices for quick sales.

OP, also, you throw in the whole "face" scenario here and it's faaarrrr from doing business in the west.

Example- my brother owns a house in a silimilar neighborhood as mine in the U.S., he sells it for for 4 millionthb. My similar house, due to needing cash I sell for 3.5. In the west I don't "lose face" in my family, hell that concept doesn't even exist, we all do we we have to do, my brother probably needs to buy all the beers at the next family BBQ, but thats about it.

Here if Somchai gets 14 millionthb for his house, you can be dam_n sure that his related neighbor down the street is not going to get a satang less. That makes the equation very different.

As you know mate, some people are prepared to sell there property and make a good profit.

Then they listen to a estate agent and make the property so expensive they have little chance of selling it in the current market.

I have talked to different agents and they do not seem to know how to value a property properly

[barka]

I think this is just a favorite conversation piece of the OP's.

This seems to me just like an open conversation as if we were sitting at the bar making b.s. about the RE market here.

Does Mr. Callen have his views pretty solidified on this topic? No argument there. Is anyone in the thread going to change his views? Probably not, so if the conversation is frustrating for you, best to grab a beer and head to another group of mates ;-)

here here.....money taiks....bushit walks

[stevenl]

I think this is just a favorite conversation piece of the OP's.

This seems to me just like an open conversation as if we were sitting at the bar making b.s. about the RE market here.

Does Mr. Callen have his views pretty solidified on this topic? No argument there. Is anyone in the thread going to change his views? Probably not, so if the conversation is frustrating for you, best to grab a beer and head to another group of mates ;-)

You're right, and would love to do that. Can't unfortunately at the moment, but do agree with you, except I would leave out 'probably'.

[grumpyoldman]

As you know mate, some people are prepared to sell there property and make a good profit.

Then they listen to a estate agent and make the property so expensive they have little chance of selling it in the current market.

I have talked to different agents and they do not seem to know how to value a property properly

Thus the difference in the market here and in the western world.

In the west, logic says price it so it will sell. Not here.

[KarenBravo]

In the west, logic says price it so it will sell. Not here.

In a nut-shell.

[LivinLOS]

As you know mate, some people are prepared to sell there property and make a good profit.

Then they listen to a estate agent and make the property so expensive they have little chance of selling it in the current market.

I have talked to different agents and they do not seem to know how to value a property properly

But is there any proper values.. Its entirely down to the owners need / desire to make a sale..

Value it yourself.. Make them the offer.. If they say not.. Both of you havent reached true value..

For me, I dont argue the absolute numbers, theres land I thought expensive at 4 mil thats now probably over 15.. But if I bought it back then I wouldnt have had my money in the metals markets which are up as much or more and with absolute liquidity. But what baffles me more is the fact that I can rent a house for maybe 2 - 3% of its for sale price (note I dont say value) and the landlord has to maintain it.. Then if something bad happens to the house, or the area, I have total freedom. Thats puzzling to me, and I can only think it shows theres too many people too keen to 'own'..

[BangTaoBoy]

The basic wage in Phuket for a Thai person is approx 220 baht a day,Burmese work in the building industry not Thais

100 to 500% markup on costs is not a fair profit

I don't see how cheap labour is all that relevant. Half of all tradesmen in the UK are Poles or such like, due to there lower wages. Did the house buyer start getting better deals on property? Of course they didn't, it was just a larger profit margin for the developer.

Again I believe this has something to do with what I said in another thread recently. The combination of a developing country, which is on the whole very poor, having certain areas that have become international holiday destinations. This will always throw the figures way out of wack. So what it's Burmese building them for next to nothing, if you think that means you're in for a bargain, with only the same percentage mark up on build cost as in the UK or US then you are being a bit daft. That's not how it works, and quite frankly why would or should it.

If houses are the price they are, and that's how they stay year after year, then that's what they cost, and if you don't want to pay that much you don't buy it, couldn't be simpler. If people don't drop their price then obviously they aren't in any hurry to sell, so who are you to moan that they are doing something wrong. It seems very much like sour grapes to me on a lot of peoples part. They want to buy houses at a price people don't want or need to sell them at. Tuff tittes to you, I say.

[babsy65]

I know very little about the real estate here or anywhere else in the world. But looking at it from a basic view point, I think property here is roughly a third to a quarter of the price it would be in the UK. Considering what kind of place this is and how much fun it is to live here, then that's great value for me.

So when people say property is overpriced, I'm sure they're right, but I still see most of it as a bargain.

As for quality and spec, I have seen a lot of new builds in the UK that have problems from the get go as well, so you're not always guarenteed a high quality finish there either.

I bought an apartment in Cleveland square, sold it 4 years later and made 260k.

Bought an apartment in Patong, sold it 4 years later at 1 mil loss - thankfully, the exchange rate was in my favour -

Pointless really to compare UK property prices with those in Phuket.

Phuket, such a fun place to live in??? Well, I'll take the money anyday and it's goodbye from me.

[BangTaoBoy]

I bought an apartment in Cleveland square, sold it 4 years later and made 260k.

Bought an apartment in Patong, sold it 4 years later at 1 mil loss - thankfully, the exchange rate was in my favour -

Pointless really to compare UK property prices with those in Phuket.

Phuket, such a fun place to live in??? Well, I'll take the money anyday and it's goodbye from me.

That was kind of the point I was making in my last post, they aren't comparable so why are some people comparing cost of labour, and mark up on build costs etc etc.

You sold at a loss because obviously you needed or wanted to sell, which isn't the case for most people here.

260k is a nice little earner, but if you re-invest it in the West, how far does that go these days? What could you buy and maintain for any length of time with that.

Edit: I honestly believe a lot of people over do the whole 'face' thing. Yes I know it is a charecteristic they can sometimes have, but it gets way over played, it's more of a stereotype thing now. The Thai people I know would not let what their neighbours were up to, have any affect on what price they sold their house for. I think you'll find there's a little more to most Thais than that!

Edited December 27, 2010 by BangTaoBoy

[KarenBravo]

Deafening silence from Mr. Callen..........

[HDRIDER]

You have been here 5 years, your looking for a house to buy, your Dad, Son and you have been into real estate and your still looking, hhmmm, maybe good you dont have real estate business here.

you can still find a bargin if you know where to look, after 5 years here i am sure you know who to talk to about real estate

[babsy65]

I bought an apartment in Cleveland square, sold it 4 years later and made 260k.

Bought an apartment in Patong, sold it 4 years later at 1 mil loss - thankfully, the exchange rate was in my favour -

Pointless really to compare UK property prices with those in Phuket.

Phuket, such a fun place to live in??? Well, I'll take the money anyday and it's goodbye from me.

That was kind of the point I was making in my last post, they aren't comparable so why are some people comparing cost of labour, and mark up on build costs etc etc.

You sold at a loss because obviously you needed or wanted to sell, which isn't the case for most people here.

260k is a nice little earner, but if you re-invest it in the West, how far does that go these days? What could you buy and maintain for any length of time with that.

Edit: I honestly believe a lot of people over do the whole 'face' thing. Yes I know it is a charecteristic they can sometimes have, but it gets way over played, it's more of a stereotype thing now. The Thai people I know would not let what their neighbours were up to, have any affect on what price they sold their house for. I think you'll find there's a little more to most Thais than that!

I agree, there isn't much one can do in the property business in London with 260k. - unless you are happy to live in a 1 bed flat in Lewisham .

Considering that 260k was the profit, adding my initial down payment, plus the 9 mil from the sale of my apartment in Patong, MINUS the big screw-ups (plenty of those).... well, I believe I will still be ok to re-invest in Central London.

I sold at a loss because I just wanted out of Thailand. In the three years I lived there, I found Patong extremely boring and hollow. Mind you, I live in Bali now and the place is just as boring - on a different scale.

Back to the topic - Estate agents in Phuket are crap. They are just a bunch of losers in their own countries who come over to Phuket and re-invent themselves as property consultants and set up estate agencies.

I once made 5 appointments with 5 different agents. I stressed the fact that I was flying into Phuket from Bali and they all confirmed their appointments. Needless to say that nobody showed up. Only 2 out of the 5 called me with all sort of stupid excuses.

Bad luck and trouble to all of them, I say. Especially one in particular, Simple Simon.

[LivinLOS]

The basic wage in Phuket for a Thai person is approx 220 baht a day,Burmese work in the building industry not Thais

100 to 500% markup on costs is not a fair profit

I don't see how cheap labour is all that relevant. Half of all tradesmen in the UK are Poles or such like, due to there lower wages. Did the house buyer start getting better deals on property? Of course they didn't, it was just a larger profit margin for the developer.

Again I believe this has something to do with what I said in another thread recently. The combination of a developing country, which is on the whole very poor, having certain areas that have become international holiday destinations. This will always throw the figures way out of wack. So what it's Burmese building them for next to nothing, if you think that means you're in for a bargain, with only the same percentage mark up on build cost as in the UK or US then you are being a bit daft. That's not how it works, and quite frankly why would or should it.

Why its relevant is that its all down to replacement costs.. If I can build a house for 5m and the same type of house is asking 15m.. then someones making way too much money and that froth is the first thing to get eliminated as soon as a bubble market slows down.. Someone else can replicate the same 5m build so unless you have secured a headland clifftop the chance of a property falling in value 66% (which is what it needs to do pretty much to make it less appealing than building it just the way you want, designed for you.. Or close when you add the convenience aspects of buying v building) is quite real.

In the west your not only paying for the build.. Your paying for rules. People dont seem to see that, or at least rarely acknowledge it.. Zoning and planning consent is a huge asset value (look at land with and without in UK values) and ask any one whose bought here to find a disco open, or a Thai all night Karaoke open nearby and the price of those rules suddenly becomes well worth paying. Insulation from bad neighbors, burning plastic, roaming soi dogs etc all needs to be considered in pricing and in size of land required.

Similarly the wests mature markets do have fairly efficient price discovery.. Sure prices may have dropped 20 - 30% already and may (will IMO) go further, but move ahead of the curve, be 5 or 10% under market and buyers appear. As I mentioned a home here recently sold for approx 30% of its asking price.. He turned down 28m a couple of years ago and had to take 12 now to find a replacement buyer. That lack of buyers at nearly any price is a sign of a immature market and a lack of true price discovery and consensus 'values'. The boom and bust cycles are driven by farangs, often new to the market, who piled in during the 2000 - 06 period with a 'property only goes up mindset' the lack of leverage and debt is keeping people holding on, but we will see how that goes if theres much more pain in reduced pension portfolios, falling western currencies, and cash calls back there.

Buy a house if you love the building and want it as a long term home.. Dont buy one if your primarily looking for an appreciating asset or somewhere to park your money. Plenty of better hedges for that IMO.

[barka]

Deafening silence from Mr. Callen..........

hes shot himself in the foot this time maybe he lost his confidence .or he better ask his wife if he can buy.....

[petercallen]

You have been here 5 years, your looking for a house to buy, your Dad, Son and you have been into real estate and your still looking, hhmmm, maybe good you dont have real estate business here.

you can still find a bargin if you know where to look, after 5 years here i am sure you know who to talk to about real estate

I said i have been following the market here for over 4 years.

We have been looking for a house to purchase for 2 months

We have seen houses that are value but they are not exactly what we want.

Since there are hundreds if not thousands of houses available we intend to keep

looking until we find what we want.

Why hurry the majority of houses are not going to be sold

[inmysights]

The laws of Supply and Demand, just don't seem to apply in this country when it comes to property.

Or anything else.

[petercallen]

What type of buyer are you?

1) Looking for value?, or

2) Bargain hunter?, or

3) Willing to pay whatever if you like something?

The first, lots of value real estate about but who sets the value? Seller, buyer, or the neighbourhood?

The second, lots of bargains about too; but on Phuket a bargain is normally associated with a halted construction project. Even then a seller can still sit on it as Phuket is predominately a CASH market as is his project.

The third, well, one word only - Russians. Why would a seller sell their real estate below their value when they know sooner or later somebody will come along and buy it on this resort island. Remember this owner is likely to be a cash owner too.

One has to think if one himself has an unrealistic value of the local real estate market.

Well Sean , i would not pay 3.2M for a house that 3 years ago cost around 1.5M

[inmysights]

By the by, I know of a quarter rai in the heart of Chalong with a Western style marbled kitchen/bathrooms (2) and parquet floored bungalow for 3 mil. PM if interested.

Edited December 28, 2010 by inmysights

[petercallen]

Deafening silence from Mr. Callen..........

hes shot himself in the foot this time maybe he lost his confidence .or he better ask his wife if he can buy.....

In post 13 you said you bought a house 4 years ago and would be lucky to get your money back.

Who has shot himself in the foot , you i think

[KarenBravo]

Since there are hundreds if not thousands of houses available we intend to keep

looking until we find what we want.

Why hurry the majority of houses are not going to be sold

Sensible attitude in any property market.