Softening Of Condo Prices.......

[Thighlander]

I was away for 18 months, and I see signs of a softening condo market. It was like this in the States before the crash. First, you see more and more freebies, like furniture or kitchen/TV. Now, some builder financing. Also, some new units ready to move into. It appears that you can put "low down," too. It still is quiute expensive, and it seems like there is a lot of room for downside. The unit I just looked at is 1.9 million for a studio. It would only rent for 8000 per month. A 5% gross (before expenses).

If anyone has any reports on condo activity in BKK, please post links or comments. Cheers.

[craigt3365]

BANGKOK: -- A property bubble is forming in Bangkok and other Thai cities, as well as in Vietnam and Myanmar, partly because of euphoria over the forthcoming Asean Economic Community, an economist has warned, while a senior banking executive played down such fears, saying no bubble had been detected.

Given the debt crisis in Europe and the collapse of the property sector in Spain, there are signs of a property bubble in Bangkok, especially in the market for high-rise condominiums along Sukhumvit Road, Sompop Manarungsan, president of the Panyapiwat Institute of Technology, said yesterday.

He pointed to the heavy advertising for condos in all media, particularly pamphlets and new media channels such as short message service (SMS, or text messaging).

.....

[andytime]

Aside from the fact that the Thai developers have built in expectation of providing enough rooms for the Summer and Winter olympics along with the world football and rugby tournaments (simultaneously) and that there are few tenants with falling prices and there are no lights on in many of the buildings i am not sure what could possibly go wrong...... Thailand can be a new hub for something.... overpriced, unoccupied condos.

[PattayaPhom]

Khao Takiab has many condos with very few lights on, however they were all sold befor completion and most started at over 5 million.....its not an indicator as to whether they are sold or not. People own condos for holidays or maybe just a crashpad in the city. Thailand is a totally different market to Spain so thats like apples and oranges.

[glbv]

Theres a difference between vacation rentals and city rentals, Im in a fairly new (3 year old) apartment on Soi Thonglor, Its a very nice building and I love it here but maybe 80% of the building is vacant. This is not the kind of place you purchase as a vacation home. Anyone that thinks that 1000s-10000s of vacant apartments that are around Bangkok are due to foreigners buying vacation rentals are kidding themselves.

The whole market reminds me of about 6months-1year before the USA bubble collapsed. Im from NY and I would see this exact thing, tons of high end homes being build for a target market that doesn't exists. Theres only so many Thais out there that can afford multimillion baht condos or 60k+ monthly rent.

[givenall]

Khao Takiab has many condos with very few lights on, however they were all sold befor completion and most started at over 5 million.....its not an indicator as to whether they are sold or not. People own condos for holidays or maybe just a crashpad in the city. Thailand is a totally different market to Spain so thats like apples and oranges.

Or maybe just speculators, that can’t hold on to the property for long

[Berek]

Condo's are where the funny money is spent (hidden)

[brianP]

Will be interesting to see what happens to the Thai High rent/own market when the predicted Chinese,USA, Europe economies Bottom out.

[hansnl]

OLooking around Khon Kaen, I see very much building activity.

Most of it is condo's, the simple kind.

I also see a lot of condo's finished and not occupied.

Same with town houses, building goes on and on, and very many empty.

The higher priced homes, building projects are speeding down.

Strange for Thailand, rental prices are going down also, not much, but definitely going down.

I guess the market for houses is getting saturated, like in Bangkok & Pattaya.

[jalansanitwong]

There was a huge condo tower built in soi 1Sth Sathorn back in the late 90's called Pantip Tower. They wanted 90,000 b per month which at the time was two times more than Sukhumvit rates. You even had to pay a fortune to put a phone line in !

Not surprisingly the place was mostly empty. There were a couple of units that appeared to be occupied (pot plants on the balcony) , i bet they were relatives of the developers. Free rent. Thais certainly wouldnt pay for it.

You can build a large house in the provinces for 500,000 b... lock up stage.

[khunron13]

There was a huge condo tower built in soi 1Sth Sathorn back in the late 90's called Pantip Tower. They wanted 90,000 b per month which at the time was two times more than Sukhumvit rates. You even had to pay a fortune to put a phone line in !

Not surprisingly the place was mostly empty. There were a couple of units that appeared to be occupied (pot plants on the balcony) , i bet they were relatives of the developers. Free rent. Thais certainly wouldnt pay for it.

You can build a large house in the provinces for 500,000 b... lock up stage.

Ok.

[jalansanitwong]

Theres a difference between vacation rentals and city rentals, Im in a fairly new (3 year old) apartment on Soi Thonglor, Its a very nice building and I love it here but maybe 80% of the building is vacant. This is not the kind of place you purchase as a vacation home. Anyone that thinks that 1000s-10000s of vacant apartments that are around Bangkok are due to foreigners buying vacation rentals are kidding themselves.

The whole market reminds me of about 6months-1year before the USA bubble collapsed. Im from NY and I would see this exact thing, tons of high end homes being build for a target market that doesn't exists. Theres only so many Thais out there that can afford multimillion baht condos or 60k+ monthly rent.

Where i come from ,Melbourne Aus, theyre calling the outer suburbs the "Genoble of Real estate". Thousands of homes have been built (35- 40 km from cbd)with no consideration regarding infrastructure, transport, jobs etc. Our new LA style getthos.

Here in BKK there are far too many luxury estates coming onto the market 10 million -15 milion for a house....crazy .Many Thais with money would rather build in their home provinces expecially if only 2-3 hours from BKK and so much cheaper. Farangs wont buy these homes because theyre too big and family orientated. Most farangs with money here are 50-70 years old with a young isan village wife. Theyre not going to buy these TV soapie palaces.

Developers were pushing homes for 5 million b + and guaranteeing high rent and capital gain of 200% in 10 years. In Bang Kae on Bangkoks west side? Thats mostly a working man's slum area . And its prone to flooding. Those original houses are now surrounded by thousands upon thousands of newer homes. Many of the older houses develop cracks in the walls partly due to being built with cheap Burmese labour. Most of these houses being built in BKK are worth what youre prepared to pay for them .....which aint much !

Edited July 9, 2012 by jalansanitwong

[rak sa_ngop]

"Genoble of Real estate". do you mean Chernobyl perchance?

[Thighlander]

This is a sidewalk.....it is near a condo I bought for about 1 million baht in Summerlin, Nevada. That is about the standard access to some very expensive condos on Sukhumvit. Except, there is no four lane road, no trees, and you must share the walkway with cars, tuk-tuks, and a lot of other stuff. If you live more than 50 meters from the main road it will be a complete nightmare (getting out). I don't think the speculators have factored in this kind of thing...only area, and square footage.

Edited July 9, 2012 by Thighlander

[eeeya]

I don't think you can get a reliable estimate of occupancy of a building by looking at lights on. I look out from my place and its all dark. Yet the building is all sold out

Sent from my HTC One X using Thaivisa Connect App

[w11guy]

Khao Takiab has many condos with very few lights on, however they were all sold befor completion and most started at over 5 million.....its not an indicator as to whether they are sold or not. People own condos for holidays or maybe just a crashpad in the city. Thailand is a totally different market to Spain so thats like apples and oranges.

But check individual buildings and you'll find that many units and for sale/rent. So they really are empty.

[think_too_mut]

Khao Takiab has many condos with very few lights on, however they were all sold befor completion and most started at over 5 million.....its not an indicator as to whether they are sold or not. People own condos for holidays or maybe just a crashpad in the city. Thailand is a totally different market to Spain so thats like apples and oranges.

I would say, Hua Hin is not an example. That place has always been expensive, rich Thais getting a retreat home.

Some buildings even have rooms in the parking area of the building (40-50 box size dormitories, in the parking), where your driver rests while you are doing a woman upstairs.

Sorry, I believe HH is not a good example.

[think_too_mut]

Condo's are where the funny money is spent (hidden)

That could be the blurr westerners love to embrace.

Rich Thais, to park their money and show to the creditors what they have when applying for more credit to advance their businesses, that coul be it.

No interest in leasing, selling or anything. Just to insert that value figure in their applications, where they may have more than 1 property under their belt, perhaps dozens.

To verify what I am saying, in a Mickey Mouse way, just click on American Express Credit Card application - the property you own is essential.

Of course, they (rich Thais) are way above that, but the priciple is the same.

[Thighlander]

but property would barely hold half it's worth on a credit app, compared with cash.

[Nisa]

I don't think you can get a reliable estimate of occupancy of a building by looking at lights on. I look out from my place and its all dark. Yet the building is all sold out

Sent from my HTC One X using Thaivisa Connect App

I have found a number of building like this. I haven't checked in the last 6-months but condos seem to sell out as fast as the build them ... people actually staying there is another story.

[mmushr00m]

Same with my condo. It's all sold out but alot of units are unoccuppied.

Some bought the units as income/rental properties. Others hope to make a quick baht by buying the units cheaper (off plan) and selling them for a profit once the building is completed.

[californiabeachboy]

I don't think you can get a reliable estimate of occupancy of a building by looking at lights on. I look out from my place and its all dark. Yet the building is all sold out

Sent from my HTC One X using Thaivisa Connect App

I have found a number of building like this. I haven't checked in the last 6-months but condos seem to sell out as fast as the build them ... people actually staying there is another story.

Yes, Bangkok seems to me to be an "impulse" market. People from other countries come here for a few weeks, are seduced by the low prices relative to other major cities, and end up buying something. Then they live here for a few weeks/months, and decide they really don't want to live here (wow, it is really hot in Bangkok - all year long!), so they don't live here too much of the year, thus the lights out.

It is so easy to build "up" here, so supply can always be increased, I would think it will always be a long-term soft market, with short-lived booms when money is easy.

[CraigSchuler]

There was a huge condo tower built in soi 1Sth Sathorn back in the late 90's called Pantip Tower. They wanted 90,000 b per month which at the time was two times more than Sukhumvit rates. You even had to pay a fortune to put a phone line in !

Not surprisingly the place was mostly empty. There were a couple of units that appeared to be occupied (pot plants on the balcony) , i bet they were relatives of the developers. Free rent. Thais certainly wouldnt pay for it.

You can build a large house in the provinces for 500,000 b... lock up stage.

I'd really like to know where and who can build a house for 500k baht? we're getting ready to have one built in a small remote village in Issan and 500k baht won't get very far.

[think_too_mut]

There was a huge condo tower built in soi 1Sth Sathorn back in the late 90's called Pantip Tower. They wanted 90,000 b per month which at the time was two times more than Sukhumvit rates. You even had to pay a fortune to put a phone line in !

Not surprisingly the place was mostly empty. There were a couple of units that appeared to be occupied (pot plants on the balcony) , i bet they were relatives of the developers. Free rent. Thais certainly wouldnt pay for it.

You can build a large house in the provinces for 500,000 b... lock up stage.

I'd really like to know where and who can build a house for 500k baht? we're getting ready to have one built in a small remote village in Issan and 500k baht won't get very far.

This house, Wang Nam Yen, was 120K baht. hundredtwenty. The guy (a farang) paid that much for building materials. The family was building 2 houses at the same time, next to each other (rightmost is a glimpse of that other house), all labour was from the family at no cost. OK, hardly anyone can pull that off, just trying to say what the basic cost is.

The house has western kitchen (fittings not included in 120K) and bathroom, aircon-ready, 90sqm. Been in it, tiles on the floor.

This one, nearby, was for sale for 250K baht, probably 300sqm. In need of renovation throughout. A policeman bought it, refurbished and now it's for sale 500K .

[Kilgore Trout]

Condo's are where the funny money is spent (hidden)

That could be the blurr westerners love to embrace.

Rich Thais, to park their money and show to the creditors what they have when applying for more credit to advance their businesses, that coul be it.

No interest in leasing, selling or anything. Just to insert that value figure in their applications, where they may have more than 1 property under their belt, perhaps dozens.

To verify what I am saying, in a Mickey Mouse way, just click on American Express Credit Card application - the property you own is essential.

Of course, they (rich Thais) are way above that, but the priciple is the same.

I don't know much about real estate here but my feeling on it is the tax.

Even condos that I have rented; there's something about the lease with the furniture etc. that they do to understate the value. I've been told thats why people won't lower the price if you don't want furniture or rent unfirnished units.

I think if the owners were paying full tax on their units, they wouldn't be empty.

Edited July 11, 2012 by Kilgore Trout

[Lakegeneve]

I don't think you can get a reliable estimate of occupancy of a building by looking at lights on. I look out from my place and its all dark. Yet the building is all sold out

Sent from my HTC One X using Thaivisa Connect App

I have found a number of building like this. I haven't checked in the last 6-months but condos seem to sell out as fast as the build them ... people actually staying there is another story.

Yes, Bangkok seems to me to be an "impulse" market. People from other countries come here for a few weeks, are seduced by the low prices relative to other major cities, and end up buying something. Then they live here for a few weeks/months, and decide they really don't want to live here (wow, it is really hot in Bangkok - all year long!), so they don't live here too much of the year, thus the lights out.

It is so easy to build "up" here, so supply can always be increased, I would think it will always be a long-term soft market, with short-lived booms when money is easy.

Can't really agree with the "impulse" foreign buyer perception at all. The overwhelming majority of buyers are middle class and rich Thais. Some are speculators who buy off the plan and will flip it prior to or once finished. Some units are sold 2-3 times before it is finished. I have a friend living in soi 24 who purchased a condo for 18m a few years ago, it was sold 3 times before the building was completed and he moved in. Some buyers buy 5-10 condo units in one building.

However, most are thais buying for investment purposes, long term, future family members (eg. children for uni). That is why so many condos are empty in some building. It is an investment which the owner can just sit on. I have seen some condo units that are 5, 8 even 12 years old which have never had anyone reside there! (The 12 yr old condo had a layer of dust so thick it was hard to see the carpet). Crazy but with no tax liabilities on unrented condos ( only pay tax if generates a rental income) then there is not much incentive to rent when someone is affluent and annual jurist fees are relatively low. However, the picture varies depending on the building, location and ownership structure - as it does in any market.

There are also many a silly owner who thinks that they will always get the premium price and won't negotiate down. Thus, the condo is vacant for 1-2 years. However, the opposite is also true that some owners will give a good discount for long term rental - usually 2 years and usually in older condos. I know of 3 friends who have done this in the last 6 months, eg a nice 3 bed in an established inner city building dropped from 40k to 30k a month for a 2 yr lease.

The market is varied depending on the condo. However, it does seem that there are too many overpriced condos coming onto the market at the higher end and market forces should dictate a small decrease in prices at the higher end. Low and middle end look solid but perhaps with lower annual appreciation compared with the past 5 years it seems. However, that is just all mere uninformed and ignorant speculation on my part.

[think_too_mut]

I don't know much about real estate here but my feeling on it is the tax.

Even condos that I have rented; there's something about the lease with the furniture etc. that they do to understate the value. I've been told thats why people won't lower the price if you don't want furniture or rent unfirnished units.

I think if the owners were paying full tax on their units, they wouldn't be empty.

It's actually more canine that that. The first place we rented was a "mansion", which had furniture, crew, could be rented (rarely done) short term, jacked up elec, phone and water bills.

It also had furniture that was built in, impossible to remove. On the bill it was separately stated what it was (say, 3,000B out of 8,000B rent). Quite substantial for furniture (no fridge, no tv, simple table and 1 chair) that would normally be barely enough to say the room was "partly furnished". So, there is a trick how they depreciate the fittings at a faster pace and returns than the walls.

Next one, at Sukhumvit+, was really fully furnished but we never saw the bill, just kept on paying into the owners account. And water, elec and phone were at government rates, in our name.

[IsaanUSA]

Interesting thread. I find myself agreeing with Lakegeneve's reply. If there is no tax liability, then it does sound like a good investment (for a Thai family that will need money for kids' college, etc).

I wonder what it is like living in a 20% occupied building.

[think_too_mut]

I wonder what it is like living in a 20% occupied building.

Beautiful. All services same you just notice the lift is always yours.

[Thighlander]

I'm surprised that no one has mentioned that the Thais are very reluctant to buy a used home, especially if it has been lived in by a farang.