Building 'Bubble' In Chiang Mai!

[jaideeguy]

I'm sure others notice the way too many new buildings and moobaan developments under construction and find it amazing and wondering where the buyers are going to come from?? New shophouses, Malls, housing developments etc.

Seems like a bubble to me and like most bubbles, it has to burst at some point. Will Chiang Mai survive?? And can there be a local depression/recession when the houses and shops are all built and there is no one to occupy them?? Or they get forclosed on like in the last 'bubble'.

Your thoughts on this appreciated.....

[tolstoy]

jaidee sounds more like jaded to me.

what bubble? There is a boom in building why does it need to be a bubble. Developers are trying to build and accomadate for growth.

There is a need for housing and many housing developments are booked in advance.

I am pleased to see new growth, I wonder why when you see development you think of the worst.

[cmsally]

I believe it is something to do with talk of anti money laundering laws that might be introduced.

Means some people are trying their best to plough it into building just in case.

[Thailand]

Not just building but they seem to be selling as well!

[JimShortz]

From conversations I have had with Thai's from Bangkok it seems that since the flooding down there many of the rich folk are choosing to buy a second home up here. That could certainly explain a lot of the new developments - that do indeed seem to be selling...

[daoyai]

Just part of the worldwide population explosion. "Growth" is percieved as a good thing, unfortunatly it is just the human march toward destruction of the resourses that sustain us. Many are also fleeing BKK in search of greener pastures, especially in light of last years flooding and the prediction of the city sinking in the not so distant future.

[chiang mai]

I beieve the PM was quite explicit on this point when she said there would be no flooding this year, so that rules out that possible theory.

[lannarebirth]

I believe it is something to do with talk of anti money laundering laws that might be introduced.

Means some people are trying their best to plough it into building just in case.

That's what I think too. It's not a bubble per se as it all seems to be supply side driven and reports don't seem to indicate any shaky loans at present.

[TommoPhysicist]

My misses would like me to buy a little 'holiday home' in or around CM.

The number of deserted homes on many moobaans is unbelievable, but the prices are still astronomic.

We looked at some condos a few weeks ago, a brightly coloured 'rebuild on the right, as you drive to Doi Saket (shortly after the 121 lights). Prices from 160k and up ....... they are having trouble selling them. Plenty of places in town starting at 200k.

We also have some friends (foreigners) trying to sell in the CM area, nothing second hand sells unless at 'fire sale' prices.

[Berkshire]

Home builders are in business to make money. If they are building, it certainly means that there are buyers. If there's any sort of "bubble" brewing, it's going to be the speculators who lose. These are people buying to rent or hoping that their investment goes up in value. But as we all know, Thais prefer to buy new homes as opposed to used ones. Used homes can sell, but only if the price is far below market value. I should say that about the only people willing to overpay for used homes and condos are newbie farangs. So there may be a market there afterall.

[jaideeguy]

jaidee sounds more like jaded to me.

what bubble? There is a boom in building why does it need to be a bubble. Developers are trying to build and accomadate for growth.

There is a need for housing and many housing developments are booked in advance.

I am pleased to see new growth, I wonder why when you see development you think of the worst.

"There is a need for housing and many housing developments are booked in advance."

Are they pre-sold?? Wife says no.

Actually, what I see are many empty and abandoned houses in and around CM already and predict that this 'bubble' will only add to that and pardon me, but I have seen traffic more than double in the last 10 yrs here and the thought of the housing actually being occupied and doubling again is a bit frightening. I'm not anti growth, but growth without zonning and planning is a recipe for the chaos that is present down south. I moved to the outskirts of CM to have a peacefull lifestyle and hope that it stays that way for a while.

[beb]

A few months ago I was riding my bicycle in the South Eastern part of CM and came upon a new development that had at least 20 homes with 1 or 2 actually occupied. The rest were quickly being reclaimed by weeds. It seems that housing bubbles are never housing bubbles until people stop buying. When you have entire developments sitting empty, I'd say there might be a bubble on its way.

[kaptainrob]

Empty, abandoned houses everywhere. Mainly because Thai's buy 'new', rather than renovate. New, so there are no 'pee' to exorcise. New, so they can get easy, cheap finance. New, because owners (often Bank mortgagors) ask crazy prices which bear no resemblance to real value.

I have looked at virtually all new quality developments, and with few exceptions, the 2 bedroom condo's and/or town homes close to the city are long gone! Mainly sold to southern Thai's, Bangkok and beyond.

[lannarebirth]

As I said i think the building is mainly related to money laundering legislation as alluded to by cmsally. That, and perhaps because insurance on Thailand bank deposits has plunged in recent years from 10m Baht to 1M Baht. Anyhow, it mostly appears to be driven by the supply side rather than demand.

[el jefe]

A bubble would imply that speculators are buying up properties in the hope to resell them at a higher price. That is definitely not the case. If anything the opposite is true. An oversupply leads to lower prices.

Builders will build as long as there are enough buyers to make a profit on a development. The builders don't care if there is no resale value on any existing house or condo. Anyone who buys should be prepared to own forever.

I'm with Jaideeguy and would like to see the development slow, but that's just not going to happen.

[hellodolly]

jaidee sounds more like jaded to me.

what bubble? There is a boom in building why does it need to be a bubble. Developers are trying to build and accomadate for growth.

There is a need for housing and many housing developments are booked in advance.

I am pleased to see new growth, I wonder why when you see development you think of the worst.

"There is a need for housing and many housing developments are booked in advance."

Are they pre-sold?? Wife says no.

Actually, what I see are many empty and abandoned houses in and around CM already and predict that this 'bubble' will only add to that and pardon me, but I have seen traffic more than double in the last 10 yrs here and the thought of the housing actually being occupied and doubling again is a bit frightening. I'm not anti growth, but growth without zonning and planning is a recipe for the chaos that is present down south. I moved to the outskirts of CM to have a peacefull lifestyle and hope that it stays that way for a while.

I agree with you in a way. It is a building boom and at the same time a bubble. As a earlier poster mentioned money laundering could be a part of it. Laundered money is not that concerned with if there is a need or not. They know that the will be getting large chunks of it back as legal money. There is plenty of housing around it is as other posters say people want new. Also the fear of a flood in Bangkok again will die down and they will stop buying here in Chiang Mai.

What they should do is put property taxes on all property that is improved on other than farming. Owners of unsold homes will become more realistic on their asking prices and Developers will not be that willing to build when they have to pay tax's on no matter if it is sold or not.

The money raised could go into improving infrastructure. That is after the politicians get their cut.

[tolstoy]

"Are they pre-sold?? Wife says no."

I stand corrected because your wife is A: and expert in real estate. B: with the government and knows who has paid for what. C: Is a village farm girl with an education and knows more about everything and everyone in Thailand than anyone else.

Yes, many developments go unused for a while. Sometimes it is because they don't have a well laid out plan. Someone inherrited some money and wanted to use it up. As others have said might be hiding their wealth in investments.

However, I know for a fact that 2 of the large condominium developments going on near the center of town already have about 40% filled and they still have another 10 months of construction to go.

There are fools that throw money away on developments but there are still a lot of well managed development firms that know where and when to build.

I suspect those that go un lived in didn't know their target audience and didn't build to accomodate them.

[isanbirder]

A bubble would imply that speculators are buying up properties in the hope to resell them at a higher price. That is definitely not the case. If anything the opposite is true. An oversupply leads to lower prices.

Builders will build as long as there are enough buyers to make a profit on a development. The builders don't care if there is no resale value on any existing house or condo. Anyone who buys should be prepared to own forever.

I'm with Jaideeguy and would like to see the development slow, but that's just not going to happen.

This is a misunderstanding of what 'property bubble' often means in Thailand. The last major one, about 15-20 years ago, consisted of whole towns being built, and hardly a house being occupied. This is money laundering pure and simple... one might also call it throwing money down the drain.

There is one of these ghost towns at Lomsak, near the bus station; another near Saklek. In Chiangmai, there is a smaller one opposite the old army training ground out towards the 700 years stadium.

Presumably the developers think they're going to sell them, but the newly, and illicitly, rich never learn.

[TommoPhysicist]

Presumably the developers think they're going to sell them, but the newly, and illicitly, rich never learn.

The trick to money laundering is to sell at any price, but to sell.

If they were to sell at half the build+land cost, people would buy, and they would launder.

[OneZero]

Home builders are in business to make money. If they are building, it certainly means that there are buyers. If there's any sort of "bubble" brewing, it's going to be the speculators who lose. These are people buying to rent or hoping that their investment goes up in value. But as we all know, Thais prefer to buy new homes as opposed to used ones. Used homes can sell, but only if the price is far below market value. I should say that about the only people willing to overpay for used homes and condos are newbie farangs. So there may be a market there afterall.

Quote: " I should say that about the only people willing to overpay for used homes and condos are newbie farangs."

+1 I know farangs in the 2nd hand condo flipping business who hard sell (like lying used car salesmen) to any available ignorant off shore contacts interested in getting on the Chiang Mai express. The availability of non bar girl university coeds is frequently used as a topic of social discussion. This acts as a primary motivator / selling point to avoid or completely ignore the inflated asking prices.

[heybruce]

Everyone should be able to answer this question: If you own property and don't want it to lose value, of course there's no property bubble. If you are thinking of buying but first want prices to go down, obviously there's a property bubble.

We should know which answer is correct in five or ten years.

[worgeordie]

One thing for sure they never learn from the past,and it seems like

its happening all over again, but thats OK ,even with over supply,

repossessions,the prices of property never seems to fall,its another

fact in mysterious Thailand

regards Worgeordie

[chiang mai]

One thing for sure they never learn from the past,and it seems like

its happening all over again, but thats OK ,even with over supply,

repossessions,the prices of property never seems to fall,its another

fact in mysterious Thailand

regards Worgeordie

What is that "they" haven't learned from the past, please share.

[Semper]

Maybe this "bubble" will burst and the Baht will plummet.

[worgeordie]

One thing for sure they never learn from the past,and it seems like

its happening all over again, but thats OK ,even with over supply,

repossessions,the prices of property never seems to fall,its another

fact in mysterious Thailand

regards Worgeordie

What is that "they" haven't learned from the past, please share.

You must not have been here when the last property bubble burst,or you would have remembered what happened

regards Worgeordie PS THEY been property developers,speculators.

[chiang mai]

One thing for sure they never learn from the past,and it seems like

its happening all over again, but thats OK ,even with over supply,

repossessions,the prices of property never seems to fall,its another

fact in mysterious Thailand

regards Worgeordie

What is that "they" haven't learned from the past, please share.

You must not have been here when the last property bubble burst,or you would have remembered what happened

regards Worgeordie

Which is why I am asking you to explain and educate.

[worgeordie]

One thing for sure they never learn from the past,and it seems like

its happening all over again, but thats OK ,even with over supply,

repossessions,the prices of property never seems to fall,its another

fact in mysterious Thailand

regards Worgeordie

What is that "they" haven't learned from the past, please share.

You must not have been here when the last property bubble burst,or you would have remembered what happened

regards Worgeordie

Which is why I am asking you to explain and educate.

Just Google Asia financial crisis, sure it will explain everything in simple terms as to what happened,

regards Worgeordie

[chiang mai]

Bank lending of the 1997 crisis was not based on domestic property loans so you'll need to come up with a different angle I'm afraid, if you don't have one we will all understand.

http://en.wikipedia.org/wiki/1997_Asian_financial_crisis

[worgeordie]

Bank lending of the 1997 crisis was not based on domestic property loans so you'll need to come up with a different angle I'm afraid, if you don't have one we will all understand.

http://en.wikipedia....inancial_crisis

No the bubble was not caused solely by domestic property loans ,but also speculation in the stock market, also people where buying

10 20 condos with only a down payment,hoping to resell quickly ,there where many factors involved, but property ,not just domestic played a big part,

regards Worgeordie

[chiang mai]

Bank lending of the 1997 crisis was not based on domestic property loans so you'll need to come up with a different angle I'm afraid, if you don't have one we will all understand.

http://en.wikipedia....inancial_crisis

No the bubble was not caused solely by domestic property loans ,but also speculation in the stock market, also people where buying

10 20 condos with only a down payment,hoping to resell quickly ,there where many factors involved, but property ,not just domestic played a big part,

regards Worgeordie

Bank lending of the 1997 crisis was not based on domestic property loans so you'll need to come up with a different angle I'm afraid, if you don't have one we will all understand.

http://en.wikipedia....inancial_crisis

No the bubble was not caused solely by domestic property loans ,but also speculation in the stock market, also people where buying

10 20 condos with only a down payment,hoping to resell quickly ,there where many factors involved, but property ,not just domestic played a big part,

regards Worgeordie

Here's a clue from the link: "The crisis started in Thailand .......... At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency".