The Bubble For Studio/1-Bed Is Ripe For Bursting

[bbradsby]

they said the same in london back in the late 90's... now its 2012 and prices are still rising. Property is always a safe haven, long-term.

Japan says LOL.

California, Arizona, Nevada, Florida... say LOL to keep from crying. Back in the 'day they all said real estate here could never go down! It's all very simple: supply & demand. I agree with the OP: Bangkok's non-prime, tinybox condo market goose is almost cooked and ready for plucking.

[Naam]

I think you will find that (mostly) they are valid reasons regardless of how much money the owner has.

I long ago gave up trying to understand why Thais and farangs hang onto the sort of decaying wrecks that seem to be on every street and beachfront here. Unused, unrented, costing them money in common fees, producing little or no income and depreciating in value daily due to lack of maintenance. I think they are bonkers. In their shoes I would ditch them and buy something productive, or renovate them properly and rent them out at sensible prices.

But hey, I'm just a self-made GBP millionaire who retired at 50 and doesn't need to own any property here, so what the hell do I know?

one GBP million bought 75.5 million Baht seven years ago. today it buys 48.5 million Baht. but hey, what the hell is 27 million Baht for a selfmade BlackPudding GBP millionaire.

[BlackPuddingBertha]

But hey, I'm just a self-made GBP millionaire who retired at 50 and doesn't need to own any property here, so what the hell do I know?

one GBP million bought 75.5 million Baht seven years ago. today it buys 48.5 million Baht. but hey, what the hell is 27 million Baht for a selfmade BlackPudding GBP millionaire.

More erroneous assumptions. I managed to make my wealth increase in value by about 40% in the last 7 years, and only part of it is in GBP anyway. A small part of it was tied up in the house I lived in, and which I managed to sell at about the peak of its value. Today it is probably worth about 25% less. I converted the proceeds of that into GBP when the GBP was at it lowest point ever against the EUR, since which time it has improved by another 20%. I also bought quite a lot more GBP with EUR at that time, as a 1:1 value for the GBP against the EUR was clearly absurd.

Had it all been in THB I would not have been able to do this, my investment possibilities would have been very limited indeed and for all my gains I would have been largely dependent on luck and the vagaries of the exchange rate of a currency that has only a tiny international market, which is not my idea of a carefree life.

Indeed had it all been in THB I might have been tempted to buy a lot of property here like a few other people I know, who are now having trouble trying to sell and get back what they paid for it. No, I'd rather own things that can be traded easily, and in currencies that are fully trade-able, thanks.

Not to mention that I dont care to have much money tied up in a country in which I have no permanent right of abode.

My only reason for specifying GBP millionaire was so that some people with knobbly foreheads wouldn't assume that I was talking about a million THB, or indeed a million JPY or a million USD or a million EUR, which are worth somewhat less.

[tingtongtourist]

they said the same in london back in the late 90's... now its 2012 and prices are still rising. Property is always a safe haven, long-term.

The Op talk about real estate in Thailand, is not the same safe haven here as law and many conditions dont favour farang,either for house or even condo in Thailand

the two market forces is that places near to BTS and transport, yes will get more expensive but also some building laws and restriction just been lifted mean a lot more places will come on market.

Same as always most people dont want to sell for amount lower than they did buy so also this why the market here will always be slow.

yes probably a buyers market but a farang who is cautious would not buy IMO

I think there are poster/s on this site who probably have a condo they would sell to some new farang for a stupid price, but i tire to talk/argue with them but soon many will be on here to claw each other apart

[BlackPuddingBertha]

I think there are poster/s on this site who probably have a condo they would sell to some new farang for a stupid price, .....

I don't think it, I know it.

[Naam]

I managed to make my wealth increase in value by about 40% in the last 7 years, and only part of it is in GBP anyway.

that means you missed 2009 with its possibilities to increase your wealth by 100% if you were a prudent investor and by 300-500% if you were a risk taker.

[Baloney pony]

Again, IMO holding costs are minimal. The whole argument is whether you believe those holding costs are unacceptable or trivial. There are plenty of people to fill both groups. Not sure why folks keep insisting on trying to make it all one way or the other.

From what i've seen most condos in Thailand behave like depreciating assets/liabilities however you want to class them. There are a few that actually do appreciate but generally their location value is already priced in. Putting them on a portfolio as a rental investment seems very iffy especially if they are sitting empty most of the time. The only way this is worthwhile is if you can get a guaranteed 2-3% appreciation. I don't see that happening for most 1 br condos. I see a lot of condos being flogged at plan cost still, even those built just a few years ago close to mrt/bts locations.

Holding costs might be minimal but the lost opportunity cost isn't. During the same time period where people were talking about how great investing in condos was around 2006-2009, 2009 onward was the great bull bounce for the equities and bond market in the U.S. Just about any decent index weighted fund like Vanguard mutual funds have had 10-30% returns during that period up until now.

Edited November 22, 2012 by Baloney pony

[Heng]

Again, IMO holding costs are minimal. The whole argument is whether you believe those holding costs are unacceptable or trivial. There are plenty of people to fill both groups. Not sure why folks keep insisting on trying to make it all one way or the other.

From what i've seen most condos in Thailand behave like depreciating assets/liabilities however you want to class them. There are a few that actually do appreciate but generally their location value is already priced in. Putting them on a portfolio as a rental investment seems very iffy especially if they are sitting empty most of the time. The only way this is worthwhile is if you can get a guaranteed 2-3% appreciation. I don't see that happening for most 1 br condos. I see a lot of condos being flogged at plan cost still, even those built just a few years ago close to mrt/bts locations.

Holding costs might be minimal but the lost opportunity cost isn't. During the same time period where people were talking about how great investing in condos were 2006-2009, 2009 onward was the great bull bounce for the equities and bond market in the U.S. Just about any decent index weighted like Vanguard mutual funds have had 10-30% returns during that period.

No doubt there are opportunity costs, but in my experience it's not an 'either or' issue in terms of one's assets/portfolio as a whole. For me, when I've found friends or family with unused resources, it usually means that they have so much redundancy in other areas of their revenue streams that it's trivial to get to excited about it. It's all relative and it seems like a lot of folks want to make it sound like 'if only' these people who own swaths of property and businesses had access to their 'business acumen.' Sometimes vacant properties are just those few pairs of sandals in your shoe closet that you let collect a little dust and don't bother to wear. It's not like they are going anywhere.

[Baloney pony]

Again, IMO holding costs are minimal. The whole argument is whether you believe those holding costs are unacceptable or trivial. There are plenty of people to fill both groups. Not sure why folks keep insisting on trying to make it all one way or the other.

From what i've seen most condos in Thailand behave like depreciating assets/liabilities however you want to class them. There are a few that actually do appreciate but generally their location value is already priced in. Putting them on a portfolio as a rental investment seems very iffy especially if they are sitting empty most of the time. The only way this is worthwhile is if you can get a guaranteed 2-3% appreciation. I don't see that happening for most 1 br condos. I see a lot of condos being flogged at plan cost still, even those built just a few years ago close to mrt/bts locations.

Holding costs might be minimal but the lost opportunity cost isn't. During the same time period where people were talking about how great investing in condos were 2006-2009, 2009 onward was the great bull bounce for the equities and bond market in the U.S. Just about any decent index weighted like Vanguard mutual funds have had 10-30% returns during that period.

No doubt there are opportunity costs, but in my experience it's not an 'either or' issue in terms of one's assets/portfolio as a whole. For me, when I've found friends or family with unused resources, it usually means that they have so much redundancy in other areas of their revenue streams that it's trivial to get to excited about it. It's all relative and it seems like a lot of folks want to make it sound like 'if only' these people who own swaths of property and businesses had access to their 'business acumen.' Sometimes vacant properties are just those few pairs of sandals in your shoe closet that you let collect a little dust and don't bother to wear. It's not like they are going anywhere.

I realize that someone like Warren Buffet isn't losing sleep over empty factories somewhere on his company roster but i'm referring more to the investors who do buy into 1br condos with the full expectations of 7-9% yield. Not all the people holding empty units are the <1% aristocratic rich descended from SEA family legacies.

[Heng]

Again, IMO holding costs are minimal. The whole argument is whether you believe those holding costs are unacceptable or trivial. There are plenty of people to fill both groups. Not sure why folks keep insisting on trying to make it all one way or the other.

From what i've seen most condos in Thailand behave like depreciating assets/liabilities however you want to class them. There are a few that actually do appreciate but generally their location value is already priced in. Putting them on a portfolio as a rental investment seems very iffy especially if they are sitting empty most of the time. The only way this is worthwhile is if you can get a guaranteed 2-3% appreciation. I don't see that happening for most 1 br condos. I see a lot of condos being flogged at plan cost still, even those built just a few years ago close to mrt/bts locations.

Holding costs might be minimal but the lost opportunity cost isn't. During the same time period where people were talking about how great investing in condos were 2006-2009, 2009 onward was the great bull bounce for the equities and bond market in the U.S. Just about any decent index weighted like Vanguard mutual funds have had 10-30% returns during that period.

No doubt there are opportunity costs, but in my experience it's not an 'either or' issue in terms of one's assets/portfolio as a whole. For me, when I've found friends or family with unused resources, it usually means that they have so much redundancy in other areas of their revenue streams that it's trivial to get to excited about it. It's all relative and it seems like a lot of folks want to make it sound like 'if only' these people who own swaths of property and businesses had access to their 'business acumen.' Sometimes vacant properties are just those few pairs of sandals in your shoe closet that you let collect a little dust and don't bother to wear. It's not like they are going anywhere.

I realize that someone like Warren Buffet isn't losing sleep over empty factories somewhere on his company roster but i'm referring more to the investors who do buy into 1br condos with the full expectations of 7-9% yield. Not all the people holding empty units are the <1% aristocratic rich descended from SEA family legacies.

Didn't say they all were. I'm speaking from my own observations and experiences like everyone else here. Of course there are people out there that are on payment plans and probably are struggling to make their mortgage payments and are hurt by vacancies.... and there are indeed plenty of people that pick up real estate like most people would pick up groceries though and probably don't count how many grains of rice are left in the pantry. Most of the latter that I have encountered are all of late 1st or 2nd generation 'wealth,' hardly 70-80 year legacy type wealth, although they are out there as well, the extended extremities of these families are fairly well represented all over the country and often reap the benefits of their lineage. I deal with both types on a daily basis and neither are in short supply.

[Baloney pony]

Didn't say they all were. I'm speaking from my own observations and experiences like everyone else here. Of course there are people out there that are on payment plans and probably are struggling to make their mortgage payments and are hurt by vacancies.... and there are indeed plenty of people that pick up real estate like most people would pick up groceries though and probably don't count how many grains of rice are left in the pantry. Most of the latter that I have encountered are all of late 1st or 2nd generation 'wealth,' hardly 70-80 year legacy type wealth, although they are out there as well, the extended extremities of these families are fairly well represented all over the country and often reap the benefits of their lineage. I deal with both types on a daily basis and neither are in short supply.

You may encounter these people daily in your life and perhaps you are part of them as well but if you look at the country as a whole they are a tiny percentage of the population. Thailand's wealth inequality is tremendous. Social mobility is also far below that of the developed world still. So you may be right in saying they are late 1st or 2nd generation wealthy but most likely they had connected family members in government to get into that position of success anyhow. I wouldn't put most of them in the self made category because nepotism, corruption, family connections etc.. plays a huge role in who gets to be the plantation owner and who gets to be the peon in the fields in a feudal society.

Btw, you're basically not so subtly bragging that the Thais you know are so rich that basic investment principles are irrelevant. I'd say that's more troubling from an efficient markets point of view because it means that the income streams are more from economic rent seeking and monopolistic activity.

Edited November 22, 2012 by Baloney pony

[Heng]

Didn't say they all were. I'm speaking from my own observations and experiences like everyone else here. Of course there are people out there that are on payment plans and probably are struggling to make their mortgage payments and are hurt by vacancies.... and there are indeed plenty of people that pick up real estate like most people would pick up groceries though and probably don't count how many grains of rice are left in the pantry. Most of the latter that I have encountered are all of late 1st or 2nd generation 'wealth,' hardly 70-80 year legacy type wealth, although they are out there as well, the extended extremities of these families are fairly well represented all over the country and often reap the benefits of their lineage. I deal with both types on a daily basis and neither are in short supply.

You may encounter these people daily in your life and perhaps you are part of them as well but if you look at the country as a whole they are a tiny percentage of the population. Thailand's wealth inequality is tremendous. Social mobility is also far below that of the developed world still. So you may be right in saying they are late 1st or 2nd generation wealthy but most likely they had connected family members in government to get into that position of success anyhow. I wouldn't put most of them in the self made category because nepotism, corruption, family connections etc.. plays a huge role in who gets to be the plantation owner and who gets to be the peon in the fields in a feudal society.

Btw, you're basically saying that the Thais you know are so rich that basic investment principles are irrelevant. I'd say that's more troubling from an efficient markets point of view because it means that the income streams are more from economic rent seeking and monopolistic activity.

Not sure what that tangent/borderline rant was for, but yeah, to simply look at average incomes from some fact book, or worse yet, to assume most locals or foreigners one associates with are an accurate representation of the entire market, and to assume that these people are also the bulk of property owners is IMO/IME erroneous. These 'bubble/imminent crash' threads are a staple of any Thai related forum, and they are all very similar in that they seem to be more like outlets to vent one's frustration about market forces (which exist here like anywhere else) and prices. "There's no way these small numbers of elite locals and foreigners are going to sustain the market for much longer. Reality surely is going to set in soon!" "The guy who didn't accept my offer surely just made the worst mistake of his life... I'm surely the last cash paying customer for the next 100 miles or years even!" And yes, no doubt... reality does set it, just not the one they are ranting and wishing for.

The only 'generalization' people can ever seem to come to is...."these people don't know what they are doing!" or "ah, they must be cheating the system some how." Neither is a particularly rational or logical conclusion.

[Baloney pony]

Not sure what that tangent/borderline rant was for, but yeah, to simply look at average incomes from some fact book, or worse yet, to assume most locals or foreigners one associates with are an accurate representation of the entire market, and to assume that these people are also the bulk of property owners is IMO/IME erroneous. These 'bubble/imminent crash' threads are a staple of any Thai related forum, and they are all very similar in that they seem to be more like outlets to vent one's frustration about market forces (which exist here like anywhere else) and prices. "There's no way these small numbers of elite locals and foreigners are going to sustain the market for much longer. Reality surely is going to set in soon!" "The guy who didn't accept my offer surely just made the worst mistake of his life... I'm surely the last cash paying customer for the next 100 miles or years even!" And yes, no doubt... reality does set it, just not the one they are ranting and wishing for.

The only 'generalization' people can ever seem to come to is...."these people don't know what they are doing!" or "ah, they must be cheating the system some how." Neither is a particularly rational or logical conclusion.

Actually, to be honest most of your replies seem to be coming from someone who has a chip on their shoulder and is uncomfortable with people pointing out real economic concerns in real estate here. You're probably interpreting things through an ethnocentric lens i'm afraid. Not everyone who is saying it could be a bubble is out to get Thai people or harbors some personal financial insecurities like you say either. I've actually been seriously looking to buy but there are an awful lot of red flags in this market.

In fact my "rant" is just an illustration of the economic reality here, Thais aren't exceptional or different from the rest of SEA. All the countries here are developing and have similar issues with the exception of Singapore.

So put away your flags and war paint, culture warrior.

Edited November 22, 2012 by Baloney pony

[trogers]

Of course there are people out there that are on payment plans and probably are struggling to make their mortgage payments and are hurt by vacancies.... and there are indeed plenty of people that pick up real estate like most people would pick up groceries though and probably don't count how many grains of rice are left in the pantry.

As a prudent investor hunting for bargains in a property downturn, I need only to look at those properties held by owners who had struggled and hurt, and failed to hold their units. The super rich can keep their units and left alone to cling onto their beliefs of worth of their units.

Such a state of affair is of great help to me as well, as I will have less competitors when picking up bargains. Most super rich only come into the market deep in an upswing.

[BlackPuddingBertha]

No doubt there are opportunity costs, but in my experience it's not an 'either or' issue in terms of one's assets/portfolio as a whole. For me, when I've found friends or family with unused resources, it usually means that they have so much redundancy in other areas of their revenue streams that it's trivial to get to excited about it. It's all relative and it seems like a lot of folks want to make it sound like 'if only' these people who own swaths of property and businesses had access to their 'business acumen.' Sometimes vacant properties are just those few pairs of sandals in your shoe closet that you let collect a little dust and don't bother to wear. It's not like they are going anywhere.

I know several farangs in Pattaya who own finished condos, or have contracts on off-plan builds, but who dont appear to have anything else to their name at all. Some have tenants from time to time but in several cases they have no tenants (because their rental asking prices are way too high) and in all cases they have units up for sale (again at prices that are way over the top). Some of them have financed their (investment) purchases on credit even though they have nothing that I would call a job or an income.

I'm sure the people you describe must exist also, but I've never met any of them.

[Heng]

Not sure what that tangent/borderline rant was for, but yeah, to simply look at average incomes from some fact book, or worse yet, to assume most locals or foreigners one associates with are an accurate representation of the entire market, and to assume that these people are also the bulk of property owners is IMO/IME erroneous. These 'bubble/imminent crash' threads are a staple of any Thai related forum, and they are all very similar in that they seem to be more like outlets to vent one's frustration about market forces (which exist here like anywhere else) and prices. "There's no way these small numbers of elite locals and foreigners are going to sustain the market for much longer. Reality surely is going to set in soon!" "The guy who didn't accept my offer surely just made the worst mistake of his life... I'm surely the last cash paying customer for the next 100 miles or years even!" And yes, no doubt... reality does set it, just not the one they are ranting and wishing for.

The only 'generalization' people can ever seem to come to is...."these people don't know what they are doing!" or "ah, they must be cheating the system some how." Neither is a particularly rational or logical conclusion.

Actually, to be honest most of your replies seem to be coming from someone who has a chip on their shoulder and is uncomfortable with people pointing out real economic concerns in real estate here. You're probably interpreting things through an ethnocentric lens i'm afraid. Not everyone who is saying it could be a bubble is out to get Thai people or harbors some personal financial insecurities like you say either. I've actually been seriously looking to buy but there are an awful lot of red flags in this market.

In fact my "rant" is just an illustration of the economic reality here, Thais aren't exceptional or different from the rest of SEA. All the countries here are developing and have similar issues with the exception of Singapore.

So put away your flags and war paint, culture warrior.

If I had a chip on my shoulder I think my post would sound more like your previous post (#41). If you read my post I did mention that it's both Thais and foreigners that some people apparently have issues with and are subsequently feeding these 'bubble about to burst' type threads.

Edited November 22, 2012 by Heng

[Heng]

Of course there are people out there that are on payment plans and probably are struggling to make their mortgage payments and are hurt by vacancies.... and there are indeed plenty of people that pick up real estate like most people would pick up groceries though and probably don't count how many grains of rice are left in the pantry.

As a prudent investor hunting for bargains in a property downturn, I need only to look at those properties held by owners who had struggled and hurt, and failed to hold their units. The super rich can keep their units and left alone to cling onto their beliefs of worth of their units.

Such a state of affair is of great help to me as well, as I will have less competitors when picking up bargains. Most super rich only come into the market deep in an upswing.

As mentioned, it's all relative. I would say the market is much more fluid... there's an endless cycle of people losing or giving up on their land/buildings/condos/etc. And there's an endless line of people waiting to take those properties off their hands. Just look at the growth of the legal execution department auction system.

[Heng]

No doubt there are opportunity costs, but in my experience it's not an 'either or' issue in terms of one's assets/portfolio as a whole. For me, when I've found friends or family with unused resources, it usually means that they have so much redundancy in other areas of their revenue streams that it's trivial to get to excited about it. It's all relative and it seems like a lot of folks want to make it sound like 'if only' these people who own swaths of property and businesses had access to their 'business acumen.' Sometimes vacant properties are just those few pairs of sandals in your shoe closet that you let collect a little dust and don't bother to wear. It's not like they are going anywhere.

I know several farangs in Pattaya who own finished condos, or have contracts on off-plan builds, but who dont appear to have anything else to their name at all. Some have tenants from time to time but in several cases they have no tenants (because their rental asking prices are way too high) and in all cases they have units up for sale (again at prices that are way over the top). Some of them have financed their (investment) purchases on credit even though they have nothing that I would call a job or an income.

I'm sure the people you describe must exist also, but I've never met any of them.

A better place to 'observe' (well not to go just for fun because it's a dreadfully boring place) would be the land department office of any major city. You'll see plenty of all types (locals and foreigners). The people with their actual chanotes and often binders of chanotes and those with photocopies of their chanotes. Then you don't have to filter out who's treading water and who is 100% equity in their properties.

Edited November 22, 2012 by Heng

[Khun Jean]

No doubt there are opportunity costs, but in my experience it's not an 'either or' issue in terms of one's assets/portfolio as a whole. For me, when I've found friends or family with unused resources, it usually means that they have so much redundancy in other areas of their revenue streams that it's trivial to get to excited about it. It's all relative and it seems like a lot of folks want to make it sound like 'if only' these people who own swaths of property and businesses had access to their 'business acumen.' Sometimes vacant properties are just those few pairs of sandals in your shoe closet that you let collect a little dust and don't bother to wear. It's not like they are going anywhere.

I know several farangs in Pattaya who own finished condos, or have contracts on off-plan builds, but who dont appear to have anything else to their name at all. Some have tenants from time to time but in several cases they have no tenants (because their rental asking prices are way too high) and in all cases they have units up for sale (again at prices that are way over the top). Some of them have financed their (investment) purchases on credit even though they have nothing that I would call a job or an income.

I'm sure the people you describe must exist also, but I've never met any of them.

GBP miljonair but never seen people 'like that'. Oh, i see, end up in Pattaya amongst the bargirls. Everything clear now.

How is the bullet proof vest, still fits?

Edited November 22, 2012 by Khun Jean

[trogers]

As mentioned, it's all relative. I would say the market is much more fluid... there's an endless cycle of people losing or giving up on their land/buildings/condos/etc. And there's an endless line of people waiting to take those properties off their hands. Just look at the growth of the legal execution department auction system.

Growth is probably due to the increase in built area (esp in Bangkok) from the burst bubble of 2007-8. Will take at least 4-5 years from litigation to auction. Not all properties have bidders during auctions, only those that are better located.

[Heng]

As mentioned, it's all relative. I would say the market is much more fluid... there's an endless cycle of people losing or giving up on their land/buildings/condos/etc. And there's an endless line of people waiting to take those properties off their hands. Just look at the growth of the legal execution department auction system.

Growth is probably due to the increase in built area (esp in Bangkok) from the burst bubble of 2007-8. Will take at least 4-5 years from litigation to auction. Not all properties have bidders during auctions, only those that are better located.

In my experience the auctions have been steadily growing in popularity, as for the auction inventory (and in this I'm limited to Bangkok and Chonburi in experience), it's a pretty diverse mix of properties, old and new... haven't noticed any particular trend of 'time period' origin. I'm not aware of the bubble you mentioned, we've been steadily building for the last 7-8 years now. As boom and bust isn't limited to those who can't meet their mortgage requirements, there are endless permutations of failed business ventures and personal issue type seizures as well. There's plenty of 'junk' on the market, but I rarely see a 'no bid' as if individuals or vested parties don't take the property, the finance companies do to sell it to less informed customers or to simply wait for appreciation (although surely, some of the experts around here seem to 'know better' and these silly companies are just buying into steadily depreciating assets).

Edited November 22, 2012 by Heng

[Baloney pony]

As mentioned, it's all relative. I would say the market is much more fluid... there's an endless cycle of people losing or giving up on their land/buildings/condos/etc. And there's an endless line of people waiting to take those properties off their hands. Just look at the growth of the legal execution department auction system.

Growth is probably due to the increase in built area (esp in Bangkok) from the burst bubble of 2007-8. Will take at least 4-5 years from litigation to auction. Not all properties have bidders during auctions, only those that are better located.

In my experience the auctions have been steadily growing in popularity, as for the auction inventory (and in this I'm limited to Bangkok and Chonburi in experience), it's a pretty diverse mix of properties, old and new... haven't noticed any particular trend of 'time period' origin. I'm not aware of the bubble you mentioned, we've been steadily building for the last 7-8 years now. As boom and bust isn't limited to those who can't meet their mortgage requirements, there are endless permutations of failed business ventures and personal issue type seizures as well. There's plenty of 'junk' on the market, but I rarely see a 'no bid' as if individuals or vested parties don't take the property, the finance companies do to sell it to less informed customers or to simply wait for appreciation (although surely, some of the experts around here seem to 'know better' and these silly companies are just buying into steadily depreciating assets).

You realize that REO sales aren't anything new in the world and not invented by Thais right? It happens all the time in the U.S. too. That doesn't mean there isn't lots of distressed property on the books or a bubble in the works. In fact it's impossible to tell for certain because a lot of banks and financial companies hold onto property to keep their financial sheets intact.

Also, if appreciation was such a certainty why am I finding so many 3-5 year old condos close to the bts/mrt selling literally at plan cost or at a discount in many cases? These aren't shoddy crap boxes but 2 br units in luxury developments.

Edited November 22, 2012 by Baloney pony

[Heng]

As mentioned, it's all relative. I would say the market is much more fluid... there's an endless cycle of people losing or giving up on their land/buildings/condos/etc. And there's an endless line of people waiting to take those properties off their hands. Just look at the growth of the legal execution department auction system.

Growth is probably due to the increase in built area (esp in Bangkok) from the burst bubble of 2007-8. Will take at least 4-5 years from litigation to auction. Not all properties have bidders during auctions, only those that are better located.

In my experience the auctions have been steadily growing in popularity, as for the auction inventory (and in this I'm limited to Bangkok and Chonburi in experience), it's a pretty diverse mix of properties, old and new... haven't noticed any particular trend of 'time period' origin. I'm not aware of the bubble you mentioned, we've been steadily building for the last 7-8 years now. As boom and bust isn't limited to those who can't meet their mortgage requirements, there are endless permutations of failed business ventures and personal issue type seizures as well. There's plenty of 'junk' on the market, but I rarely see a 'no bid' as if individuals or vested parties don't take the property, the finance companies do to sell it to less informed customers or to simply wait for appreciation (although surely, some of the experts around here seem to 'know better' and these silly companies are just buying into steadily depreciating assets).

You realize that REO sales aren't anything new in the world and not invented by Thais right? It happens all the time in the U.S. too. That doesn't mean there isn't lots of distressed property on the books or a bubble in the works. In fact it's impossible to tell for certain because a lot of banks and financial companies hold onto property to keep their financial sheets intact.

Also, if appreciation was such a certainty why am I finding so many 3-5 year old condos close to the bts/mrt selling literally at plan cost or at a discount in many cases? These aren't shoddy crap boxes but 2 br units in luxury developments.

Did I say it was invented here? There's that 'chip' tone again. Funny. Of course there are plenty of distressed properties on the market, they are plenty that are continually seized and returned to the market as mentioned.

As for your question, there are all types of property owners out there. Some have more slack, some have virtually none. And who said sticker price = value? There can be a huge amount or relatively modest amount of margin 'filler' in new build (and presale, off plan, etc.) pricing.

Edited November 22, 2012 by Heng

[Baloney pony]

And who said sticker price = value? There can be a huge amount or relatively modest amount of margin 'filler' in new build (and presale, off plan, etc.) pricing.

Except i've done enough research the past few months to learn the actual purchase price for those units and a lot of them are being resold at original purchase price. The owner's condos in those cases did not have any appreciation. I have seen the appreciation you're talking about but they tend to be truly exceptional units. A lot of sellers try to tack on their own "appreciation" estimates and put it on the market but those units remain unsold and sitting empty.

Maybe that's the appreciation you're thinking about..the ones that sellers post up with no actual takers?

[Heng]

I agree that appreciation is not a sure thing across the board. My main point was to provide the MO for a lot of property owners who may have unused or vacant properties, the very relative nature of any property in the their 'big picture,' and the medium/long term mindset involved therein.

[bangkokburning]

How much would these boxes have to depreciate before becomong a solid investment? My hunch is 55-65%.

I look at those 3m boxes and think I personally would not touch that for more than 1.25 with taxes and fees paid.

I mean, these are hot, lifeless boxes stacked atop one another. No garden, no pool, often no parking attached to the unit itself. Often too few or the wrong types of windows. Most have really crappy balconies. No gas cookers.

[Baloney pony]

How much would these boxes have to depreciate before becomong a solid investment? My hunch is 55-65%.

I look at those 3m boxes and think I personally would not touch that for more than 1.25 with taxes and fees paid.

I mean, these are hot, lifeless boxes stacked atop one another. No garden, no pool, often no parking attached to the unit itself. Often too few or the wrong types of windows. Most have really crappy balconies. No gas cookers.

There are small 32-35 sqm studios within your 1.25 m price range available with developers like LPN or grand udelight. They are small but they tend to have well taken care of facilities, security, and pool. I would never buy a small condo unit from a no name developer though. They turn into slum tenants pretty quickly.

[bangkokburning]

How much would these boxes have to depreciate before becomong a solid investment? My hunch is 55-65%.

I look at those 3m boxes and think I personally would not touch that for more than 1.25 with taxes and fees paid.

I mean, these are hot, lifeless boxes stacked atop one another. No garden, no pool, often no parking attached to the unit itself. Often too few or the wrong types of windows. Most have really crappy balconies. No gas cookers.

There are small 32-35 sqm studios within your 1.25 m price range available with developers like LPN or grand udelight. They are small but they tend to have well taken care of facilities, security, and pool. I would never buy a small condo unit from a no name developer though. They turn into slum tenants pretty quickly.

The shoeboxes I'm near are about 2.5+ for a studio, 30sqm at best. Up in Huay Kwang we have the Colory, waaaay overpriced and still not completed. Diamond Rachada empty, finish on outside of building is sketchy. Big prison block on the main road. Then Rythm, right on two hugely trafficed streets, another uninspiring building. Closed balcony, full of the wrong kind of glass. No pools I sm aware of, they all look totally empty and if its not crowded enough here, another two condos are going up.

Anyway - I need a great location, a great balcony, proper windows and a pool. Ill have to wait for 1.2m I think.

[Khun Jean]

How much would these boxes have to depreciate before becomong a solid investment? My hunch is 55-65%.

I look at those 3m boxes and think I personally would not touch that for more than 1.25 with taxes and fees paid.

I mean, these are hot, lifeless boxes stacked atop one another. No garden, no pool, often no parking attached to the unit itself. Often too few or the wrong types of windows. Most have really crappy balconies. No gas cookers.

3000 baht a month and for a rental period not longer than maybe 2-3 months. Buying.... no way.