Thailand Sees Property Boom Despite Global Crisis

[Ferangled]

Foreigners cannot generally finance property purchases in Thailand. This is not the same situation Spain.

Personally I think you've hit the nail on the head and this is precisely why the higher end properties see good returns year after year.

These are generally cash purchases by foreigners and do not rely on credit, totally different to Spain where many Germans & Brits were actually re-mortgaging to buy 2nd properties.

In regard to "Thai" housing development, different story; I see literally thousands of empty estates of entry level housing, not attractive to foreigners and not being bought by the Thais. Empty estates are being trumped by almost identical, newer replicas before any units have sold, rendering them practically worthless... but the prices don't seem to reduce.... yet.

[PattayaPhom]

PattayaPhom Foreigners name --and not bad position next to 7-11-super Thai maket and Tesco lotus

Condo name..Lotus isnt 300 meters from the beach, its up on Suk.

Edited June 27, 2012 by PattayaPhom

[spidermike007]

Of course a banking executive will say there is no bubble. It's their bread and butter. Crooks

Exactly. A pronouncement by a non-visionary banker, who has zero ability to see the forest, beyond the trees. Classic myopia. Just wait. The local economy may take a bath. Too many elements are working against Thailand, and the local businesses, and government are doing very little to counteract the potential problems.

[PattayaPhom]

Foreigners cannot generally finance property purchases in Thailand. This is not the same situation Spain.

Personally I think you've hit the nail on the head and this is precisely why the higher end properties see good returns year after year.

These are generally cash purchases by foreigners and do not rely on credit, totally different to Spain where many Germans & Brits were actually re-mortgaging to buy 2nd properties.

In regard to "Thai" housing development, different story; I see literally thousands of empty estates of entry level housing, not attractive to foreigners and not being bought by the Thais. Empty estates are being trumped by almost identical, newer replicas before any units have sold, rendering them practically worthless... but the prices don't seem to reduce.... yet.

Sattahip and Bang Saray have many entry level developments starting at 1.9mil and sold out.....mostly to Navy staff.Location as usaual plays a main factor on popularity.

[ginjag]

PattayaPhom, Have I a buyer ?? My friend is selling, naturally this is not top end--top end normally one would live, lower end but nice is where you would lock up and visit twice a year for holiday. Same hotel room. But having said all that there are so many at a low price, in and around Pattaya. My detached in Issan is my home-Jomptien is a holiday stay only but will not rent out.

[Ferangled]

Foreigners cannot generally finance property purchases in Thailand. This is not the same situation Spain.

Personally I think you've hit the nail on the head and this is precisely why the higher end properties see good returns year after year.

These are generally cash purchases by foreigners and do not rely on credit, totally different to Spain where many Germans & Brits were actually re-mortgaging to buy 2nd properties.

In regard to "Thai" housing development, different story; I see literally thousands of empty estates of entry level housing, not attractive to foreigners and not being bought by the Thais. Empty estates are being trumped by almost identical, newer replicas before any units have sold, rendering them practically worthless... but the prices don't seem to reduce.... yet.

Sattahip and Bang Saray have many entry level developments starting at 1.9mil and sold out.....mostly to Navy staff.Location as usaual plays a main factor on popularity.

Very true, location, location, location, and sorry I meant to write... estates with thousands of empty houses... thousands of estates would be exaggerating! I have one particular estate in mind which has been built in phases, but despite selling about 5 properties of 100 or so in Phase 1, the developers have continued to Phase 2, Phase 3 and are now starting Phase 4. Quite who they are expecting to buy these houses is not clear.

The only developments that seem to sell out regularly are the high end 50/ 60 million + bracket.

[Kabinretiree]

Having just returned back to Bangkok today, from a week in Jomtien and Pattaya looking for a new low end Condo to buy for my weekend visits, I must have looked at nearly 40 developments. The price range in which I have been looking is between THB 1.5m - 2.3 M for a 35 - 40 m2 one bedroom Condo, no seaviews and most are set back well away from the beach in scrub land for that kind of money.

After my week long investigations, what I can tell you, is these places are selling off the plan like hot cakes. Real Estate agents are snapping them them for speculative re-sales closer to completion date. Most of the developments I looked at, havent been started yet and will take at least two years to complete but a lot of them are already 90% sold out. I hesitated on several offers, by next day they were gone and not available any more. That happened numerous times. Prices seemed to even escalate by THB300,000 from the time of my intitial enquiry to the time I wanted to discuss a contract. That too was a frequent occurance.

My observation is that there is a HUGE influx of Russians in Pattaya with a lot of money to spend. Every second Real Estate agent is either Russian or panders to the Russian purchasers. Most brochures and real estate posters and signs aligning both sides of nearly every street in Pattaya are written in Russian.

I hear that a lot of the new Developments are also being funded with Russian money by Russian developers. So....beleive it or not. There are still a lot of cashed up Foreigner tourists out there buying up new condos like there is no tomorrow. Whether they plan these purchases for speculation, renting/investment or holiday units, I dont know, but I came back to Bangkok today with my tail between my legs, empty handed after being trampled in the rush to buy condos in Pattaya.

Or at least, that was my impression anyway.

[SantiSuk]

We moved into our condo on Sukhumvit at On Nut about 6 months ago. 20 of the 22 units on our floor were still empty. That remains the case today. The block gives every impression of being about 25% occupied.

Bubble writ large. There are at least 5 more high rise condos completing soon within half a click of our place. I would not advise anyone to buy a condo right now if you dont mind renting for a while; Give it a year or two and there will be some rich pickings for the smart investors.

[wotaplonker]

I think the litmus test for all of these new developments is the % of these new condos that have lights on at night. Passing many of these condos on the way home each night the lights are off in the individual rooms. Next time you drive down Suk at night just see how many condo rooms have lights on. My bet is you can count the number on one hand. Which means many are unsold and if they are not sold the money to build them remains unpaid.

A friend of mine related a similar story about the condos in Beijing except that the Chinese authorities actually employed someone to go and turn the lights on at night, to give the impression of occupancy.

wow 'Condos with their lights on spotting' marvellous at last ive found something to replace train spotting!!

[kanderson]

Pretty much covered in - Real Estate and Home ownership forum.

[JSixpack]

I know 'lights on at night' is hardly any official benchmark but its all I can go on right now.

Totally misleading. Please don't perpetuate that silliness.

Even if a condo is empty, it may have been sold. I know old condo buildings in prime locations where every unit was sold many years ago. Yet you often don't see many lights on there at night--at the particular time you look. And that has been the case through boom and bust.

You can check w/ the condo office you want to know how many units have been sold in the building.

This thread has certainly brought out all our resident Chicken Littles.

Edited July 9, 2012 by JSixpack

[Thai at Heart]

This so called "boom" is the biggest risk to Thailand financially. If we have learnt anything in the last 30 years of financial ups and downs around the world, the vast majority of them were caused by people over extending themselves to put money into bricks and mortar. This worries me more than the scare mongering about Thailand becoming Greece.

It probably won't end up with a currency crisis since the banks learnt that lesson last time, and most of the money is financed in baht, but at the end, someone has to buy these properties or prices will come down, taking many with them on the way. Until we realise that purchasing houses isn't the same as telephones or cars, and there is some pretty tough regulation of the financing of property markets, all economies that indulge in large level speculative construction projects on the basis that "property" ALWAYS goes up are playing with fire. Thailand is no more immune to this problem than any other country.

[w11guy]

Japanese and other foreigners are currently enjoying low rents, Sompop said.

Really? Maybe in Sukhumvit. If you look to rent a new apartment, it's expensive. Even in low key areas people are asking for 15,000-20,000 for a 42sqm apartment. Just because it's new.

You often see the same apartments pop up time and time again. The prices stay the same.

Those are just the asking prices, not what people actually pay. The condos in my building are advertised at 30-35k. I pay 23k. That's the reality.

[w11guy]

The parlous state of the world banking system is starting to look increasingly shakier every day and this

will surely affect Thailand eventually?

There is np need for me to say anything about the banks in Europe but even the Gov of the Bank of England is sounding gloomy ( http://www.bbc.co.uk...siness-18587254 ) and there are some very sinister theories regarding the National Westminster bank computer glitch in UK which some are saying now will go on for many weeks more.( some are saying they are short of cash )

We all know also about the banking downgrades even in USA so where is all this money to buy more property coming from ?

There is nothing sinister about the RBS computer glitch. A junior support staff deleted the batch schedule and they didn't have a back up. That would be a complete disaster to recover from. Computer glitches happen every minute of every day; there is nothing sinister about it.

Where is the money coming from? Russia. There is an avalanche of money leaving Russia. Not many Russians with money would invest in their own country, so they need to invest in places like Thailand.

Edited July 9, 2012 by w11guy

[TommoPhysicist]

Property has almost always been the root cause of financial collapse since the late '80s

Not true, check stub money is the problem.

When banks can credit checking accounts without holding the physical notes to pay out all checking account holders, there is a problem. Savings, checking and term accounts money should not all be lumped together by the banks.

Edited July 9, 2012 by TommoPhysicist

[w11guy]

Evrywhere you look building. it reminds me of 1997! just the same

In Pattaya, they never stop building. Why ?

Because lots of Russians have the cash to buy them. No bank borrowing needed.

[silsburyhill]

There is no property "boom" in Bangkok. Condo prices in particular are trickling up, barely in line with inflation. Land costs are the main factor for increasing prices, not greed by developers.

Greed by landowners then?

[w11guy]

I know 'lights on at night' is hardly any official benchmark but its all I can go on right now.

Totally misleading. Please don't perpetuate that silliness.

Even if a condo is empty, it may have been sold. I know old condo buildings in prime locations where every unit was sold many years ago. Yet you often don't see many lights on there at night--at the particular time you look. And that has been the case through boom and bust.

You can check w/ the condo office you want to know how many units have been sold in the building.

This thread has certainly brought out all our resident Chicken Littles.

But that means they've been bought by speculators, so still proves that market is massively oversupplied. They can't be rented on sold on, so what is the point of having them. There are still no people to actually live in them. I often see condos sold at 20-30% discount. I think the discounts will be getting much bigger over the next few years.

[ttelise]

Haha, did anyone catch the SMC comment about secondary mortgage bonds which are nothing but a CMO?

Didn't learn much from 2008 financial crisis since CMOs were the primary and root cause. That's exactly what US did was improve liquidity by bundling loans, securitizing them and seeking them as a security such as a CMO or a REMIC.

The truth is they must really be concerned about the risk classifications and liquidity concerns that may arise due to bubble burst/defaults of a large portion of their portfolio to resort to bundling and securitizing large blocks of property loans.