The Price Of A Rai

[David48]

Highest and best use

You should assess market value at the 'highest and best use' of the asset as recognised in the market. The concept of 'highest and best use' takes into account any potential for a use that is higher than the current use.

The current use of an asset may not reflect its optimal value. Optimal value is defined by the IVSC as:

…the most probable use of a property which is physically possible, appropriately justified, legally permissible, financially feasible, and which results in the highest value of the property being valued.

Source: http://www.ato.gov.a...1737.htm&page=3

... sometimes that 'rice paddy' is worth 1million Baht per rai

[samsiam]

... sometimes that 'rice paddy' is worth 1million Baht per rai

....sometimes much much more.

[David48]

Just a word on how property prices can rise and fall ...

THERE was a time when the price of the land surrounding Japan's Imperial Palace (about the size of Disneyland) was said to be worth more than the whole of California. Apocryphal, surely, but it summed up the hype during Japan's property bubble in the late 1980s. When prices plunged—by as much as 80% in two years—it took the economy more than a decade to emerge blinking out of the bomb crater ...

Source:- http://www.economist.com/node/9955765

[Paangjang]

Mother in law baught some land in Satun last December (a million miles away from Isaan) Don't know how many rai she baught but i know she paid 2.4 million per rai. They have rubber plantations.

[somo]

This thread has become a discussion about property speculation. Looking at the OP is was about arable land 50k from the nearest town. This is also a farming forum. Pricing arable land for farming is just about the returns possible by growing stuff on it not whether you might get planning permission in 20 years for a different use. On that basis it would be interesting to know if anyone can present a case for buying arable land for more than 40k/rai and what they would grow.

[cardholder]

... sometimes that 'rice paddy' is worth 1million Baht per rai

....sometimes much much more.

This is getting more like Fantasy Football League.

Next thing you know someone will be saying that Andy Carroll is worth GBP 35 million !

Edited April 23, 2012 by cardholder

[David48]

This thread has become a discussion about property speculation. Looking at the OP is was about arable land 50k from the nearest town. This is also a farming forum. Pricing arable land for farming is just about the returns possible by growing stuff on it not whether you might get planning permission in 20 years for a different use. On that basis it would be interesting to know if anyone can present a case for buying arable land for more than 40k/rai and what they would grow.

somo ... I couldn't agree with you more, I put my hand up as contributing to sidetracking the OP's question.

As for your spin ... the GF's parents seem to do OK fish and prawn/shrimp farming, but you need a non-acid, clay based soil with access to ample water.

OH ... who is Andy Carroll ?

[Gary A]

The cost of the land must be figured on the number of years to pay back the purchase price. The water supply is quite important and determines whether you can get a second rice crop. For some reason most consider a payback within seven years as the guideline. In our area, a second crop is all but impossible. In a good year we net maybe 4,000 baht per rai. That would mean there it will take seven years to come up with 28,000 baht provided you have no natural disasters such as flooding or drought.

Naturally a double crop per year will reduce the seven years and a different crop such as sugar cane will give more net profit. We have never tried cassava but most will say that is also more profitable than rice.

The bottom line is that if you pay more than 40,000 baht per rai, you will be working for very little if anything. If farming is your goal, better to rent the land. Rent in this area starts at 500 baht per rai per year and goes up to 800 baht depending on the quality of the land.

Of course speculating on land purchases is another story and those prices have very little to do with a farming return as evidenced by the crazy prices the land sells for.

[somo]

That's roughly the same as how I value farm land. Cassava can earn you 4-6k/rai/yr (assuming you contract out all the work) but so much depends on the price at harvest time. Using an 18 month growing cycle improves things. I use 5 years as a payback period and agree that renting is the way to go especially if you can do a longer term agreement. Most arable land will not get a change of use in the future and it's price will largely be controlled by the value of the crops that can be grown.

[somo]

This thread has become a discussion about property speculation. Looking at the OP is was about arable land 50k from the nearest town. This is also a farming forum. Pricing arable land for farming is just about the returns possible by growing stuff on it not whether you might get planning permission in 20 years for a different use. On that basis it would be interesting to know if anyone can present a case for buying arable land for more than 40k/rai and what they would grow.

somo ... I couldn't agree with you more, I put my hand up as contributing to sidetracking the OP's question.

As for your spin ... the GF's parents seem to do OK fish and prawn/shrimp farming, but you need a non-acid, clay based soil with access to ample water.

OH ... who is Andy Carroll ?

Not sure that fish/prawn farming counts as arable farming but I have heard of some people making money at it. In our area security would be an issue as most of the fish would disappear into the locals stomachs before it could be sold.

Andy Carroll, if you were not being sarcastic, was probably the most overpriced footballer ever. Like some of the land prices here he was worth nowhere near the 35 million quid Liverpool paid for him

[David48]

OH ... who is Andy Carroll ?

Not sure that fish/prawn farming counts as arable farming but I have heard of some people making money at it. In our area security would be an issue as most of the fish would disappear into the locals stomachs before it could be sold.

Andy Carroll, if you were not being sarcastic, was probably the most overpriced footballer ever. Like some of the land prices here he was worth nowhere near the 35 million quid Liverpool paid for him

somo ... not being sarcastic. I'm an Aussie so the PL doesn't rate over here much, not like in Thailand.

As for the Fish/Prawn Farming, drop by the thread

[somo]

Your fish/prawn thread is fascinating David. Interesting too that the land there is now too expensive to justify starting in the biz. It's only viable for your GF's family as presumably they have owned the land for a long time so it is paid for.

[David48]

somo ... thanks for the appreciative comments.

And as you mentioned, the land is worth much more then the agricultural component when judged as a pure return on the land ... ROI

I'll update the Fish/Prawn Farming tread when I get some more visuals because the fish harvest only occurs about every 9 months so I have to wait for the appropriate time for photos etc.

With the last fish catch, the lassie was tasked with the transport to the Fish Market in Bangkok, hence the final posts.

Thanks again for the interest.

Oh, one thing that I have researched is the potential to make a fishing pond.

There is quite a trade in anglers paying to fish the various lakes, and the barramundi catch seems to be most popular ... but that's all pie in the sky stuff for the foreseeable future.

[samsiam]

You can appreciate the cost of land here when compared to Australia...by that I mean land in Australia can be much cheaper than here....so why would you bother here.

I am seriously thinking to return to Oz and buy a 1000/1500 acre cattle property.

[NewlyMintedThai]

You can appreciate the cost of land here when compared to Australia...by that I mean land in Australia can be much cheaper than here....so why would you bother here.

I am seriously thinking to return to Oz and buy a 1000/1500 acre cattle property.

Depends on where you want to be, surely?

[cardholder]

You can appreciate the cost of land here when compared to Australia...by that I mean land in Australia can be much cheaper than here....so why would you bother here.

I am seriously thinking to return to Oz and buy a 1000/1500 acre cattle property.

Obviously, nobody wants to be in Australia.

I heard that property in Cambodia was even more expensive than Australia.

[jamescollister]

Don't know much about cattle, but don't think you get many cows to the acre in most of Australia. Was in Curtan Springs [NT] and they spoke of one cow to 5 square miles. Did look at rubber here in the north, after taxes, local ,state and Fed, plus all the other costs that you are forced to pay it was a no go. Yet I can make a living here from a small rubber plantation. Quess when looking at value there is more to it than just runing costs and land prices. No tax on small farmers in Thailand and a tax for flushing the toilet in Australia. Round my area of Vic not too many small farmers doing well, but plenty of cheap farm land around. Jim

[samsiam]

Depends entirely on where in Australia....the spot you talk is wide open spaces with blades of grass 2 for every square metre.....northern NSW....several thousand more.

[jamescollister]

Depends entirely on where in Australia....the spot you talk is wide open spaces with blades of grass 2 for every square metre.....northern NSW....several thousand more.

As I said, no nothing about beef cattle, just know that the OZ Governments don't make anything easy. Everything seems to be focused on the big players. If you go that way keep us informed, I could have bough land for rubber in the north cheaper than in Thailand, but the tax and other costs mean it is not a substanible live style. Seems most farmers are selling up and getting jobs in Vic. rather than people selling their million dollar homes and taking up farming. Jim

[samsiam]

Might have a lot to do with debt also...if you have no debt, you can make a nice living and lifestyle off of circa 1500 acres in a nice spot......but I have not lived there for some time, so things change....but regardless debt is a big factor.

[somo]

Debt is a major factor for farmers here too. They are all in as much as they can get and can't ever seem to escape from it. They just cannot earn enough from their land. This brings me back to the original topic re the value of arable land here in Thailand and note that not one of the members here can come up with a crop that justifies paying more than 40k/rai. Water seems an important factor as if it was possible to irrigate the land inexpensivley then it may be worth paying more than 40k. Irrigating cassava can lead to much larger harvests and therefore profits.

[aussieruss]

HI all my inlaws buy land around 30-40,000 for farming but don't look at dearer because they worry it isto hard to pay back with the crops they grow And some falangs don't go out on a limb because they don'tknow if there being taken for a ride As for finding high return for farming well falangs have stupid ideas so not to much support from the ones you love and (support) but I have been buying my land for15years bit by bit waiting for the day I retire One block I brought 3years ago was 10 rai with no access 25,000per per rai then 5rai came up next to the main road that joins to my 10 rai so I had to buy the block it was 100,000 per rai but now have 15rai with hwy frontage for 50,000per rai I have done this 4times now this is the way to do it if you have time and you find out who play cards these people always no who is selling land around town But to do this with out being riped off you should spend a little time where think you would like to settle Rent ? regards RUSSELL

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[TommoPhysicist]

Debt is a major factor for farmers here too. They are all in as much as they can get and can't ever seem to escape from it. They just cannot earn enough from their land. This brings me back to the original topic re the value of arable land here in Thailand and note that not one of the members here can come up with a crop that justifies paying more than 40k/rai. Water seems an important factor as if it was possible to irrigate the land inexpensivley then it may be worth paying more than 40k. Irrigating cassava can lead to much larger harvests and therefore profits.

This is one of the reasons foreigners should not be allowed to own land, in person or by proxy.

They inflate the price of the land beyond the ability of local, real farmers, to purchase.

I actually hope one day they have the lot taken from them, but suspect it will never happen.

[samsiam]

Debt is a major factor for farmers here too. They are all in as much as they can get and can't ever seem to escape from it. They just cannot earn enough from their land. This brings me back to the original topic re the value of arable land here in Thailand and note that not one of the members here can come up with a crop that justifies paying more than 40k/rai. Water seems an important factor as if it was possible to irrigate the land inexpensivley then it may be worth paying more than 40k. Irrigating cassava can lead to much larger harvests and therefore profits.

This is one of the reasons foreigners should not be allowed to own land, in person or by proxy.

They inflate the price of the land beyond the ability of local, real farmers, to purchase.

I actually hope one day they have the lot taken from them, but suspect it will never happen.

Its ok Tommy....if you cannot afford, you can always be a renter.....not so bad.

[cdnvic]

Deleted one post and a reply. If you can't make your point without insults, keep it to yourself.

[Cashboy]

Just in the interest of comparing

http://www.shropshir...sive-in-the-uk/

In the most expensive area of the UK farmland price averages 7,500 Pounds per acre. That would be 3,000 Pounds/ 150,000 Bt per Rai.

I know that overheads would be a lot higher in the UK, but if I was in the market and looking to invest in farmland, I certainly wouldn't be interested at 300,000 Bt per Rai. I'm talking about agricultural, not buiding land, obviously.

I was thinking exactly the same comparing the UK farm land prices.

Hertfordshire, Bedfordshire, Buckinghamshire Arable farm land is about £6500 an acre.

Arable farm land in green belt means you will not be able to develop this land. You cannot even use it for horses (horses are not farm animal in UK).

That equates to 130,000 bt per rai. (GB£1 = 50bt ; 1 Rai - 0.4 Acres).

Talking to Thai people in Udonthani area, I am getting the impression that the going price is 50,000 bt per Rai for good quality land.

I thought I would bring up that recently I was looking at foreign property on Ebay UK out of interest. I am seeing agricultural land in Bulgaria (to me third world like Thailand in farming) sell for about £400 an acre => 8,000 bt a Rai.

I have no idea of the quality of this land but it makes Thailand look expensive.

Someone has mention that renting rice farm land in Thailand is about 800bt per rai.

On 50,000bt capital outlay, the return of 800bt is 1.6% per annum.

This is very low but I think I would rather have my capital invested in land than a Western bank.

Though the risk could be worse when the land is registered in a Thai girl..................LOL

What I also was thinking (perhaps not relevant to this thread) is the labour cost.

In the UK a farmer labourer gets the minimum wage of £6.10 => 300 bt per hour. Say an 8 hour day => 2,400 bt

In Thailand I believe that a farm labourer would get 300 bt per day.

So looking at your the capital cost to labour cost per day:

UK 130,000 bt : 2400 bt => 1.85 Thailand 50,000 bt : 300 bt => 0.6

Obviously other considerations have to be taken such as sales prices of crops.

On the above calculations; Thai farm land would still appear to be a good investment at 50,000 bt per rai.

But on a commercial basis, renting at 800 bt per rai seems a very safe viable proposition for us farang that cannot own land in Thailand.

Edited June 11, 2012 by Cashboy

[somo]

I think comparing land and labour prices with other countries is interesting but not really very helpful.

The only thing that that should be of relevance to a crop farmer is what he can make in profit/rai/year. So much depends on produce prices, weather pests etc but I think that if on average you can make 5000Baht net profit per year per rai then you are doing quite well.

Buying the land for 50k will mean a 10 year wait just to get your money back.

Renting for 800 Baht is indeed a much better alternative to buying at that price.