Bkk Condo Glut

[Hooters]

why am I not surprised that Khaan has an advertisement for a house in Chang Mai for sale in his personal profile?

http://jitikan.com/

In any case the reason I believe the market will rise here is because America is a basket case and Europe is imploding. Asia is the hot spot for investment and is set for record growth .

Edited November 18, 2011 by Hooters

[midas]

why am I not surprised that Khaan has an advertisement for a house in Chang Mai for sale in his personal profile?

http://jitikan.com/

In any case the reason I believe the market will rise here is because America is a basket case and Europe is imploding. Asia is the hot spot for investment and is set for record growth .

China's debt pileup raises risk of hard landing

http://www.reuters.com/article/2011/10/10/us-china-debt-idUSTRE79901L20111010

Edited November 18, 2011 by midas

[rgs2001uk]

I have no agenda other than to counteract you people on here that constantly spew garbage that the Bangkok

condominium market is totally impervious to every crisis that is thrown at it the only market in the whole world that can only keep rising and nothing else

Well, you obviously aren't comprehending what is being said.

No-one has said that the Bangkok condo market can keep rising and nothing else. Thats your interpretation of whats being said and its clearly wrong.

you talk in the same way just like these people who flog timeshare

mmm, I have noticed that you are fond of insulting rather than informing. I will take that as the insult it is meant to be.

Reading your posts is like the same kind of assurances I get from e-mails sent from real estate agents

or at worst " businessmen " from Nigeria.

I'll be looking for you on the street corners shouting HURRY HURRY !! get your Bangkok condominium bargain now

before prices go up

Well, its simple, don't read them. They obviously upset you.

The fact is, we will never agree. Its that simple.

you say nobody has said property prices can keep rising and nothing else ? then how do you describe what " hooters "

says here ?

" In the next several years the buyers sitting on the fence will be shocked to see that BKK property has priced them out of the market. "

I don't see anything insulting in saying that someone who seems reluctant to consider the negative aspects

is using a similar approach to those who try to sell the benefits of timeshare?

and your posts don't upset me at all...................they amuse me

Quote from above,

"you say nobody has said property prices can keep rising and nothing else ? then how do you describe what " hooters "

says here ?

" In the next several years the buyers sitting on the fence will be shocked to see that BKK property has priced them out of the market. "

I would say its already happened. Lets assume a condo purchase price of 4 million 10 years ago, or $100k.

Condo appreciates at 5% for 10 years, condo now worth 6 million, or in todays money, $200k.

Your purchase will now cost 100% more, another factor not mentioned, inflation.

[BillJohnson]

I have no agenda other than to counteract you people on here that constantly spew garbage that the Bangkok

condominium market is totally impervious to every crisis that is thrown at it the only market in the whole world that can only keep rising and nothing else

Well, you obviously aren't comprehending what is being said.

No-one has said that the Bangkok condo market can keep rising and nothing else. Thats your interpretation of whats being said and its clearly wrong.

you talk in the same way just like these people who flog timeshare

mmm, I have noticed that you are fond of insulting rather than informing. I will take that as the insult it is meant to be.

Reading your posts is like the same kind of assurances I get from e-mails sent from real estate agents

or at worst " businessmen " from Nigeria.

I'll be looking for you on the street corners shouting HURRY HURRY !! get your Bangkok condominium bargain now

before prices go up

Well, its simple, don't read them. They obviously upset you.

The fact is, we will never agree. Its that simple.

you say nobody has said property prices can keep rising and nothing else ? then how do you describe what " hooters "

says here ?

" In the next several years the buyers sitting on the fence will be shocked to see that BKK property has priced them out of the market. "

I don't see anything insulting in saying that someone who seems reluctant to consider the negative aspects

is using a similar approach to those who try to sell the benefits of timeshare?

and your posts don't upset me at all...................they amuse me

Quote from above,

"you say nobody has said property prices can keep rising and nothing else ? then how do you describe what " hooters "

says here ?

" In the next several years the buyers sitting on the fence will be shocked to see that BKK property has priced them out of the market. "

I would say its already happened. Lets assume a condo purchase price of 4 million 10 years ago, or $100k.

Condo appreciates at 5% for 10 years, condo now worth 6 million, or in todays money, $200k.

Your purchase will now cost 100% more, another factor not mentioned, inflation.

But now you are miximg the strength of the THB, which is also an important component into this conversation and something very hard to predict.

In fact, had you paid for the condo 10 years ago, let's presume those 4million, the THB was 44 to 1 USD or 90k USD. But in 1996 the rate was 1usd = 25THB. This is one of my concerns and reason why I would prefer to stay away, especially as the THB "feels" too strong right now, I wouldn't be surprise if we see a 10% devaluation within a year or so, but then again, If I was sure about it, I would bet all my cash on it!

I have decided to NOT buy a condo in BKK due to the following reasons and opted for the following strategy:

**I want to be able to leave the country in a heartbeat if I need to. There is a farang on my building trying to sell his 6.9million condo for a year now.

**THB feels too strong right now

**I pay 20k THB on an appartment that is worth 6+ million (or 4%), with close to zero maintaince expenses or hassles such as thai contracts, lawyers, bills to pay, condo meetings, transfers fees, etc

**I prefer to have multiple bank saving accounts in 4 different currencies, including THB at 3.75% year, I use the currency is strongest at the moment. As the THB gets weaker, I plan to shift more USD to THB into that 3.75% account

**I have invested in comercial real estate in my home country @8% a year, safer for me and I use the income to pay for my rent in BKK or where ever I decide to be

On the flip side, condo prices here DO FEEL cheap, so financially, if you have a wife, income in THB, business or see yourself in Thailand for another 10 years, this will go a long way.

Bottom line, unless the THB really crashes (ie, hits 40) I will stay away and opt for a more diversified portifolio (4 currencies, income bonds, stock, real estate at home, etc), but I understand and may agree with those who decide to invest here.

If you are worried agains prices/inflation going up too much, this is what I suggest:

Say a 500k USD portifolio:

Invest 1/5 of your wealthy in THB (at a fixed interest) (100k x 30 @ 3.5% after taxes = 105.000thb per year)

1/5 in Thai Stocks (ie, THD ETF) as a growth hedge (or you can also pick developers if investing in SET)

1/5 in income generating bonds USD based (ie, BND ETD) or USD real estate income (say 3-5% a year) = avg of 4k USD year

1/5 in dividend ETF

1/5 in cash for opportunities or balancing the portilofio

With the above, I see some scenarios:

1) If your home economy crashes or thailand grows, you have the THD ETF growth and THB valuation as a hedge, or 2/5 of your portilofio, use it to pay your bills here and reinvest your USD at home. Market will also be cool as it becomes expensive for farangs

2) If Thailand gets in trouble (ie, political, flooding, etc), SET and THB crashes, you got 3/5 of your portifolio in USD to enjoy a cheap THB, and rental as market will be cool.

What do you guys think about this scenario and strategy?

Edited November 20, 2011 by BillJohnson

[london]

Interesting post BillJohnson.

Re your investment portfolio of $500k US:

Invest 1/5 of your wealthy in THB (at a fixed interest) (100k x 30 @ 3.5% after taxes = 105.000thb per year)

1/5 in Thai Stocks (ie, THD ETF) as a growth hedge (or you can also pick developers if investing in SET)

1/5 in income generating bonds USD based (ie, BND ETD) or USD real estate income (say 3-5% a year) = avg of 4k USD year

1/5 in dividend ETF

1/5 in cash for opportunities or balancing the portilofio

sounds ok.....but there are couple of things I would suggest....on my assumption that you are doing this in order to fund living in Thailand.

Re fixed interest at 3.5%: even disregarding the tax you will pay on your interest, your money is actually reducing as the rate of return is less than inflation. I am never too happy with this.

Re: Thai stocks (ETF or direct): in the present cycle, I am very wary about investing in stocks as they appear to me to be in a bearish phase and your $100K may (and in my opinion is likely) to reduce by around 20% in the next 12-18 months. I have sold out of all my Thai equity holdings some 6 months back and have now only a very small amount invested in a managed fund.

Re: Bonds ($US denominated) or REIT's: although I am strangely quite bullish on the $US over the next 3 or more years, again, you would need to generate at least a return of near 6% to stay ahead of inflation. Added to that the impact of any negative correction USD/THB, well, it would leave you very much underwater. Many people have been doing this in the past, and their present situation attests to this not being a good idea.

Re: dividend EFT: similar comments to the above.

Re: cash for opportunities: yes, I am very much in favour of this.

OK, its easy to say what I wouldn't do, now let me tell you what I have done and before I start, there are many posters out there whose knowledge of financial markets etc dwarfs mine, so please understand that I am speaking from my own perspective NOT as any expert.

I have sold down ALL my equity holdings in every market apart from Australia, where I have sold down around 50%, and in Indonesia where i am holding all my equities.

I have parked most of these funds in Australian Fixed Term deposits where I have been able to get returns of between 6.5% - 7.8% from 12 months to 5 years.

I have not sold down any of my properties in Asia, BUT I have reduced my holdings in Australia.

Re $US: as I stated above, I am quite bullish on the $US over the mid term, however, I have NO funds in it at present and NO funds in any $US investments (including real estate or equities). My only concern with the $US is if it loses Reserve Currency status. If that happens, then all bets are off and I would not look at it.

I see that the THB is quite stable against the $US and many other currencies, despite the current disaster.

My question therefore is what would cause the THB to collapse against the $US or the $US to rise substantially against the THB, or ANY OTHER Asian currency for that matter ?

Asia is booming.

The West is in decline.

My portfolio is almost totally invested in Asia. Thats where I see the future.

[BillJohnson]

Interesting post BillJohnson.

I see that the THB is quite stable against the $US and many other currencies, despite the current disaster.

My question therefore is what would cause the THB to collapse against the $US or the $US to rise substantially against the THB, or ANY OTHER Asian currency for that matter ?

Asia is booming.

The West is in decline.

My portfolio is almost totally invested in Asia. Thats where I see the future.

Not trying to hijack a topic on real estate into Forex, but to answer your question, I presume any collapse (or threat as we see) will make all investors pull out their USD out of Thailand to buy the dips? That would sky rocket the THB and all other EM currencies. I would wait for one of these crashes before I think about buying a condo here, if that doesnt happen, well, bad luck/prediction ;-)

Thank you for your comments above,

[london]

Not trying to hijack a topic on real estate into Forex, but to answer your question, I presume any collapse (or threat as we see) will make all investors pull out their USD out of Thailand to buy the dips? That would sky rocket the THB and all other EM currencies. I would wait for one of these crashes before I think about buying a condo here, if that doesnt happen, well, bad luck/prediction ;-)

Thank you for your comments above,

I'm probably fortunate as I bought my condos years ago (incidentally when others were spruking "collapse" at the time!) so even IF they collapsed in value, which I don't see and am NOT saying, I'm ok as the rent is stable.

The thing I try to do is to invest where I am going to use the funds, thus avoiding any issues with currency fluctuations. The only time I move from this position, are times like now where the returns I can get in a stable market (ie: Australia) are just too attractive to bypass.

That said, there are a couple of expats who post on Thaivisa who are doing brilliantly out of their Thai condo holdings. Certainly, if I could duplicate what they do, well.........

Good luck !!