Cnx Property Maze

[x-pat]

I've been in Chiang Mai for a month and looked at roughly 50 properties so far. Recent observations confirm my first impression from my visit in August. The Chiang Mai property market is a bit of a minefield.

(*) Basically, there are no "market prices" for land in any given area. There is no data on average land value. If one obtains asking prices for two lots next to each other from different owners, the quoted prices often vary wildly. Differences of more than 30% are not uncommon.

(*) The boom has not leveled off yet. Land value appreciation is rapid. Especially some suburbian areas are high-growth. This situation probably offers some good investment opportunties. Unfortunately it also makes owners greedy. Some owners are inclined to quote now what the land will be worth in a couple of years.

(*) Farangs almost always receive higher quotes. Not that this is Chiang Mai specific.

(*) 95% of all Internet offerings are over-priced.

(*) Best prices are obtained through the local network. Frequently land that is for sale is not signposted. Only neighbours, friends, and relatives are "in the know". It is cumbersome to explore these kind of offers, but most likely rewarding.

(*) The information one gets from agents and owners is rarely 100% accurate. There are often deviations from the actual land size (even with a chanote title). Hardly anyone seems to know square meters / square footages of houses. Bring your measurement tape. :-)

(*) Building quality is often pretty bad, especially that of buildings built before 2000 and Moo Baan houses (which are built for profit). I don't even mention interior design quality. It's not so easy to find a good quality 2nd hand house.

(*) Rents are very high compared to property value, especially in the suburbs and Moo Baans. I have seen many houses being offered at around 1% of their value for monthly rent, which I find ridiculously high.

These are of course not universal truths, but just some of my impressions. I am interested if anyone else had similar experiences.

Yesterday I found my dream property by the way. A large Thai style teak house situated on the shore of the Ping on approx. 1 rai land. It is a central style Thai house with a panlom rather than a Lanna style house. Absolutely beautiful. Unfortunately the asking price of 10 Mio THB is above my budget. So, it remains a dream I am afraid.

Cheers, X-Pat

[mogoso]

[quote=x-pat,2005-

(*) Basically, there are no "market prices" for land in any given area. There is no data on average land value. If one obtains asking prices for two lots next to each other from different owners, the quoted prices often vary wildly. Differences of more than 30% are not uncommon.

(And more)

(*) 95% of all Internet offerings are over-priced.

(Mother in law is buying some rice paddies for 70,000 baht per rai, which to me seemed high till I saw land within a couple of hundred meters being sold on the internet for 400,000 baht per rai. same road, rice paddie also)

(*) Best prices are obtained through the local network. Frequently land that is for sale is not signposted. Only neighbours, friends, and relatives are "in the know". It is cumbersome to explore these kind of offers, but most likely rewarding.

(Thats good advice, shes buying from the local pooyai, she bought some adjoining rai two years past from another local. We get a rice crop and a bean crop off the land and as an investment the return from the crops grown (by others) isn't too bad. Plus theres the value of land appreciation for the long term.)

(*) Building quality is often pretty bad, especially that of buildings built before 2000 and Moo Baan houses (which are built for profit). I don't even mention interior design quality. It's not so easy to find a good quality 2nd hand house.

(It's not too easy getting a new house to snuff. We'll build with my wifes uncle acting as the contractor with a huge amount of oversight from me. But as I don't retire for four more years, I've got alot of time to research designs. As for the interior, I'm going to experiment with cabinet making on my present home. I guess I'll have to watch all the reruns of the new yankee workshop and listen carefully to Norm.)

These are of course not universal truths, but just some of my impressions. I am interested if anyone else had similar experiences.

[jaideeguy]

(Thats good advice, shes buying from the local pooyai, she bought some adjoining rai two years past from another local. We get a rice crop and a bean crop off the land and as an investment the return from the crops grown (by others) isn't too bad. Plus theres the value of land appreciation for the long term.)

Most of what you say is true, except i would like to add that when it comes to land purchases here in LOS....YOU CAN'T TRUST ANYONE!! even[and maybe especially] the pooyai ban, village head, kamnan or any other official. i can say this thru personal experience when i bought 4 beautiful rai with no decent access, but was promised by both the pooyai and kamnan [who were working together to separate the falang and his bhatt].

My own fault for trusting....and the worse part about my situation is that as far as i know.......i have no recourse!! anyone know of a realtor's board of ethics??

I love this place and the people, but when there is the smell of big bhatt in the air, the sharks come out in the most [seemingly] honest people.

and in the 8 yrs i've been here, i've heard too many other 'horror stories' about land purchases both with falang and thais as well. they stab their own in the back when it comes to bhatt!!

Just keep your eyes open, try to find a decent lawyer to check details, and TRUST NO ONE!!

[tango]

I've been in Chiang Mai for a month and looked at roughly 50 properties so far. Recent observations confirm my first impression from my visit in August. The Chiang Mai property market is a bit of a minefield.

(*) Basically, there are no "market prices" for land in any given area. There is no data on average land value. If one obtains asking prices for two lots next to each other from different owners, the quoted prices often vary wildly. Differences of more than 30% are not uncommon.

(*) The boom has not leveled off yet. Land value appreciation is rapid. Especially some suburbian areas are high-growth. This situation probably offers some good investment opportunties. Unfortunately it also makes owners greedy. Some owners are inclined to quote now what the land will be worth in a couple of years.

(*) Farangs almost always receive higher quotes. Not that this is Chiang Mai specific.

(*) 95% of all Internet offerings are over-priced.

(*) Best prices are obtained through the local network. Frequently land that is for sale is not signposted. Only neighbours, friends, and relatives are "in the know". It is cumbersome to explore these kind of offers, but most likely rewarding.

(*) The information one gets from agents and owners is rarely 100% accurate. There are often deviations from the actual land size (even with a chanote title). Hardly anyone seems to know square meters / square footages of houses. Bring your measurement tape. :-)

(*) Building quality is often pretty bad, especially that of buildings built before 2000 and Moo Baan houses (which are built for profit). I don't even mention interior design quality. It's not so easy to find a good quality 2nd hand house.

(*) Rents are very high compared to property value, especially in the suburbs and Moo Baans. I have seen many houses being offered at around 1% of their value for monthly rent, which I find ridiculously high.

These are of course not universal truths, but just some of my impressions. I am interested if anyone else had similar experiences.

Yesterday I found my dream property by the way. A large Thai style teak house situated on the shore of the Ping on approx. 1 rai land. It is a central style Thai house with a panlom rather than a Lanna style house. Absolutely beautiful. Unfortunately the asking price of 10 Mio THB is above my budget.    So, it remains a dream I am afraid.

Cheers, X-Pat

<{POST_SNAPBACK}>

I agree with most of what you have written. I have watched the asking prices on real estate skyrocket in recent years: but, the same home advertised 5-6 years ago is still awaiting a buyer. Take any of the back issues of any of the magazines aimed at the farang market in Chiangmai, and compare their realty ads. You will find many homes for rent or for sale today that were advertised years ago. In some, the ads never change from month to month, none are deleted I suppose because this bulk-outs the magazine. I once enquired of an advertised piece of furniture only to be told it was sold three years ago.

I suggest you build your own home on land large enough for privacy, yet close to town and schools.

The least expensive area currently in the Chiangmai area is West of Sanpatong towards Mae Wiang. Why… because it is deemed too far away. Currently it truly is too far from town for a comfortable commute; but, not for long, as the 4-lane highway along the canal fronting the Night Safari is to be driven further south to the West of Sanpatong. This will be an alternate parallel to the current ‘super’ highway heading south from Airport plaza intersection past Tesco Lotus, which is rapidly becoming congested. Take this ‘super’ to the only traffic lights in the center of Sanpatong (~20km), turn right (west) and go ~ another 20 to 30 km: the ‘new’ projected 4-lane from Night Safari intersects this Sanpatong route at about the 15km point west. So residents living in this general area will soon have a short trip into Chiangmai versus the current 40 km “L” route they take now.

There are plots of land going far cheaper here than, for instance, Mae Rim at ~600,000 per rai; or behind Lanna Hospital / Lanna Tech at 7 million per rai; or the Mae Ping riverside at 10-15 Million per rai along the Patan road North towards Mae Rim. The 10 million you quote for 1 rai on the Mae Ping including a teak house is a bargain… considering the price of teak and of land.

10 million is well out of my league,too. A friend purchased land in the area west of Sanpatong and recently Bangkokians, teachers, police officials and civil servants were and are buying up 5-rai (plus) plots of land in the area at a fast pace. They are buying up farming plots to plant longan, or to build a house on. Why… because it’s the cheapest area; most are on government wages after all. But land prices there are escalating semi-annually at least. SorPor Kor titles are gradually being converted into saleable land titles so government can get some monies in transfer fees. In 10 years they expect the city limits of Chiangmai to include this area. Mae Wiang itself is too far away to benefit. Close to Sanpatong is too expensive with a building plot (and rice paddies) now going for over 1 million Baht vs 500,000 Baht three years ago. I have my eye on several nice 5-rai plots and yet to decide which to invest in.

Simply tour this area and ask in any Moo Bahn that interests you, what land is for sale. Build your own dream home at a fraction of what the realty magazines and ads targeting farangs are asking here in Chiangmai. Caveat emptor, as you infer, when viewing advertised house sales or even rentals: many have possible future problems being situated in former rice paddies on iffy soil. In the city you could be permanently residing next to the neighbour from hel_l, a disco, or a future junk yard. A lot of advertised homes are built with exposed brick which sucks in the rain, on former rice paddies, or on mountain housing estates which are cool but enveloped in smoke for three months of the year while hill tribes burn off crops. I have seen the same homes advertised for years now. One, asking 25 million 6 years ago sold for less than half that a year or so ago. I’d guestimate that most are awaiting the gullible. There's a house currently advertised in a local 'trade' magazine advertising a nice looking house in Sankamphaeng: the same house is advertised on a Bangkok site for more, and the house is advertised on a local golf club noticeboard for ~500,000 baht less than either. Even rents are generally 20,000 to 35,000 plus baht: yet most farangs here do not make enough to pay that amount and still have enough to take care of their families. At a loss to explain. BTW the sellers in the area I mentioned at the beginning are not greedy...yet.

In closing, I’d like to thank you for having opened this discussion with your well thought out discourse on the ‘real’ situation in Chiangmai. Cheers.

[p1p]

Good thread so far

Property truly is a maze here. The house we bought was on the market at one price. When we opined it was too expensive, they knocked 30% off. We offered about half that figure and purchased it. (Discount of over 65%!) We are in a Moo Bahn and paid somewhat less than the (then) "value" of the land alone for the house and land. Plots close to us were on the market from the estate office for much higher figures per Sq Wah.

Just shows what can happen with a desperate seller.

[x-pat]

x-pat: Differences of more than 30% are not uncommon.

mogoso: (And more)

Yes, indeed. In one instance, the price difference for two neighbouring plots of orchard land I saw in Saraphee was almost 100%. Obviously, the owner of the more expensive land was not really ready to part with it. Very striking differences, such as this one are somewhat rare, however, while 20%-30% variation is quite common.

I am not taking into account the farang factor, of course. Some people, upon seeing a Western face, perform quick mental arithmetic -usually multiplication- before they name a price. In order to avoid this sort of thing, my wife is doing the negotiating before I step into the picture. But since my wife is from Bangkok, she occasionally gets Bangkokian-adjusted quotes from the Northerners.

jaideeguy: Most of what you say is true, except i would like to add that when it comes to land purchases here in LOS....YOU CAN'T TRUST ANYONE!

Not trusting anyone seems to be the most rational attitude until one has visited several dozens of sites in a given area and a has obtained a realistic picture.

jaideeguy: i can say this thru personal experience when i bought 4 beautiful rai with no decent access, but was promised…

This seems to be a common problem everywhere in Thailand. I hear that for the third time now. It’s also one of the favourite strategies of land developers. First they buy land plots adjacent to the road. Next, the inner land is cut off from the road. Finally, the developers buy the inner land at bargain prices since it doesn’t have access anymore. In principle, it is possible to sue for road access. But is it practical? Quite risky to rely on future decisions of oboto, owners, and poo yai baans.

tango: I once enquired of an advertised piece of furniture only to be told it was sold three years ago.

Hilarious! Perhaps the termites are chewing on it already.

tango: I have watched the asking prices on real estate skyrocket in recent years: but, the same home advertised 5-6 years ago is still awaiting a buyer.

LOL. Chiang Mai seems to boast an extraordinary number of non-sellers. Who would be surprised, given the fantasy prices that some property owners quote? Perhaps the rapid appreciation of land after the crisis has made them altitude sick.

tango: The 10 million you quote for 1 rai on the Mae Ping including a teak house is a bargain…

Yes, I thought so, too. Especially when considering the location, which is between the superhighway and the first ring road. And there are some large old trees on the land. Unfortunately too big for our pocket.

tango: A friend purchased land in the area west of Sanpatong and recently Bangkokians, teachers, police officials and civil servants were and are buying up 5-rai (plus) plots of land in the area at a fast pace.

Funny that you mention this. We have bought land in Sanpatong two years ago. It’s a fully developed plot ready for building in the middle of a rice paddy with 180 deg. mountain views. And yes, there are many Bangkokians in that area. Anyway, we have decided not to build there, because of our little daughter who needs to go to school in a few years. Daily trips of 30 km back and forth seem a bit deterring, with or without extended canal road.

We are presently looking at three areas. One of them is west of the city (north and south of CMU), at the foot of the mountains. This area is quite idyllic and close to the city. There are lots for 3 to 4 million per rai. There is also non-chanote land for lower prices. Another interesting area is the land between Mae Jo (Phrao) road and Doi Saket road, where moo baans have proliferated in recent years (and still do). Rimping, Carrefour, and Lotus are all within 5 to 10 min reach and there’s a large shopping mall going up soon, I’ve been told. Developed residential land is 2-4 million, depending on proximity to the ring road. Rice fields can be bought for 1.5 million per rai and less. Another area we are looking at is Hang Dong west of the Samoeng intersection. That land is connected to the city by Hang Dong (Hot) road and the canal road. There is Lanna international school and the American Pacific school in the Hang Dong area. Unlike the east side of Samoeng intersection, it is not in the flight path of CNX airport. Undeveloped land can be bought at about 1 million per rai, or even less for larger plots.

tango: Build your own dream home at a fraction of what the realty magazines and ads targeting farangs are asking here in Chiangmai.

I think that’s the only sensible option. Looking for a decent 2nd hand house is like searching the proverbial needle in the haystack. Not that there is a scarcity of offerings, but the architectural standards are shockingly low. The ones with good architecture and interior tend to end up in those realty magazines you mentioned, accompanied by equally shocking price tags. Instant moo baan houses are not an option either, not for us anyway. Uniformity and boring architecture are tolerable, but paying double or triple of what properties cost outside and living wall to wall to Mr. Neighbour are real drawbacks.

Thanks for your thoughtful comments.

Cheers, X-Pat

Edited December 9, 2005 by x-pat