Udon Enjoying A Property Boom Prior To Asean Economic Community Kickoff

[webfact]

Udon enjoying a property boom prior to AEC kickoff

Somluck Srimalee

The Nation

UDON THANI: -- Listed property firms are itching to roll out residential projects in Udon Thani before the Asean Economic Community gets going in 2015, as the northeastern province is the gateway to Vientiane, the capital of Laos.

"Udon Thani has all the facilities to support people's lifestyles. Most retail businesses have opened a branch in this province," Naporn Sunthornchancharoen, senior executive vice president of Land & Houses, said last week.

"There's also infrastructure such as roads and a ring road linking Udon to Vientiane.

"It is suitable for Thai and foreign investors to use as their hub to invest in Laos when the AEC blooms in 2015."

According to a survey by The Nation, Land & Houses, Sansiri, Supalai, LPN Development and Pruksa Real Estate bought land in Udon after they saw strong demand from both local and foreign investors. Most buyers have a business in Vientiane but prefer to live in Udon because it has better facilities and is only two hours away by car.

Srettha Thavisin, president of Sansiri, said the company sees potential in Udon for both high-rise condominiums and low-rise projects, mainly single family homes and townhouses. The company has bought land to serve demand from both local customers and foreigners who operate a business in this province or are venturing into Vientiane.

Demand is focused on homes costing less than Bt5 million per unit, said Opas Sripayak, managing director of LPN Development. The company is considering condos priced at not more than Bt2 million per unit in this province.

Land & Houses became interested in Udon when it noticed the demand from both local investors and those from other provinces who set up in Udon to export or trade with Vientiane.

Land prices in the central business district of Udon have shown signs of doubling, said Porntip Thanasriwanitchai, president of the Udon Thani Property Club.

Leading property firms from Bangkok have started to look for land in the CBD. For example, Land & Houses has succeeded in securing property to develop a residential project this or next year, while Supalai also has to find a site to develop residences in this province.

The cost to buy centrally located land has surged at least 100 per cent from Bt100,000 per square wa to Bt150,000-Bt200,000, she added.

The Udon Thani Provincial Lands Office has raised assessed values by an average of 61 per cent.

For example, land on Posri Road in Udon Thani city shows an official reference price of Bt150,000 per square wah or Bt60 million per rai.

But the market price averages Bt200,000 per square wah, Porntip said.

Udon Thani's property market averages Bt8 billion a year, of which a third is developed by 22 local builders, a third by landowners who hire local contractors and a third by local homebuilders offering designs to landowners wanting to build a home.

Housing demand from natives of Udon also comes from those who marry foreigners and those who work overseas and send money back to their family.

They gravitate towards single family homes priced Bt2 million-Bt3 million with an average of 120 square metres of space and two to three bedrooms, she said.

-- The Nation 2013-01-14

[hansnl]

Same in Khon Kaen

[TheGhostWithin]

Im glad this has been published, I have been going to Udon since 2004 and have noticed big changes. I enjoy a bit of a quiet place, so have not enjoyed the changes as much, but the locals love all the nice coffee shops, food shops etc. A really big mall there, comparable to the Central mall in Khon Kaen, or Central World (with a few less brand names) in Bangkok. Just as shiny, just as beautiful, and a little more friendly as the Isaan culture goes.

A lot of ladies marry foreign men here, who tend to be 45+, and have a good stash of money to find a home here. Properties have been steadily rising, if they double that would be crazy, I already consider the prices too high, especially around Posri Road.

I have considered buying here, but like many places outside of the South and Bangkok, there is no real "drawcard" attractions. It is a lovely place, with lovely people, and I enjoy going back each year to share a week or two with my old friends.

[bkk_mike]

How do these people get to be journalists...?

A surge from Bt100,000 per square wa to Bt150,000-Bt200,000 is 50 to 100%, not "at least 100%".

"Supalai also has to find a site to develop residences in this province" - where is this coming from as it doesn't say who the quote's from? The nearest quoted person is the president of the Udon Thani Property Club. If he's the one saying it, it could merely be wishful thinking on his part, and should have been something like - Supalai is also believed to be look for a site to develop residences. As it's currently stated, you have to wonder why it's compulsory?

[jamescollister]

Ubon is the same, development everywhere, new roads, industry moving up from the flood prone south. New cars and traffic problems, lots of investment money around.

Seems crazy at times, but looks like the boom and bust of the west is here to stay. Jim

[backtonormal]

Isaan is booming and will continue to grow for many years with major investment from this government and other ASEAN companies. Just 6km down the road from Khon Kaen the papers have been signed for a major container depot at Tha Pra. Hundred of jobs. Dont need to grow rice no more.

[NanLaew]

A lot of moneyed Bangok eyes fell on Isaan's provincial pleasures while they were escaping from 'the flood that never was' in Bangkok. They realised that it's only a half-day drive, or an hour on a plane and they can have a nice country home for satangs on the baht.

I too can attest to the big changes in the past five years but particularly in the last 24 months. Our little moobahn started having weekend fishing competitions on the lake to get some cash for drainage and street lighting since the city has been dragging its feet on the issue despite approving house building that has seen everything from private houses to 12 and 20 room apartments springing up. All of a sudden, there's brand new street lights burning and piles of drain pipes and a couple of back-hoes tearing up the streets. It appears that there's a pissing contest going on between the city and someone in the moobahn who the city reckons is getting above their station. Must be elections due no?

[thrilled]

^{People like udon.Not just farangs but thai's also.I guess I should say khonkaen also.They are both good areas.}

[IssanDM]

Big changes have happened even outside the ring road where the wife and I have a farm. Over the last 2 years we have had our road paved from the main road to just passed our house. Street lighting has been added and just last week city water mains were put in and connected to the house . Just in time too because the water from the farms well is becoming contaminated with iron.

Over the last 13 years I have seen this town explode from the sleepy place it was to a very busy town. It has about everything an expat needs to live a comfortable life. I'm just happy I'm only 10 km. out of the city center in a peacefully part of the jungle...for now .

[MobileContent]

I have seen major changes in Udon over the past 2 years. Just dropped by Central last weekend for some shopping at TOPS and the parking lot at Central was flooded with cars from Laos, including a Bentley and a Porsche. Also booming is Sakon Nakhon which is getting soon a Robinson department store. We are seriously now looking into buying a property in either Sakon Nakhon city or Udon Thani.

[JLCrab]

IMHO, for all of northern Isaan, you can either buy now or wait for prices to drop. Regardless of what you hear from the boomers, all of BKK industry and population may not be moving to Udon & KK after all.

[JLCrab]

The inter-modal container depot at Tha Pra has been on the books for a long time and will only be truly feasible when the SRT dual tracking is completed. The region can certainly support a growing infrastructure. A lot of those condominium projects even if sold are completely empty of residents. How long will be it be before those 'moneyed' persons from BKK are bored out of their wits in the sticks.

I often have these conversations with the local Thai persons and say: Look. They can't move the airport, they can't move the harbor, and the government and the Palace resident persons are not moving to Isaan any time soon. Just my 50 satang as I see the moo-bahns with the bedrooms not much bigger than the beds swallowing up the local rice fields.

[jamescollister]

IMHO, for all of northern Isaan, you can either buy now or wait for prices to drop. Regardless of what you hear from the boomers, all of BKK industry and population may not be moving to Udon & KK after all.

Yet many are moving north, gateway to that big hungry monster to the north. Jim

[JLCrab]

Sure JC. Being 6 or 8 hours driving time closer to that hungry monster to the north may make a lot of sense if you are driving an 18 wheel vehicle.

The big draw for many factories to locate in Isaan is that many or most of their workers in the BKK Central region come from Isaan anyway. You see the factories now that provide worker buses in KK to their locations on the outskirts of town.

But the bigwigs are still going to be in BKK where most or all the big decisions are made.

[jamescollister]

Sure JC. Being 6 or 8 hours driving time closer to that hungry monster to the north may make a lot of sense if you are driving an 18 wheel vehicle.

The big draw for many factories to locate in Isaan is that many or most of their workers in the BKK Central region come from Isaan anyway. You see the factories now that provide worker buses in KK to their locations on the outskirts of town.

But the bigwigs are still going to be in BKK where most or all the big decisions are made.

Never thought that the rich Bangkok elite were packing there bags to live up in the boonies, but a lot of their businesses are.

This yet to be built high speed rail link to China, will save on shipping costs. All other costs are lower than BKKs industrial areas. A large local labor force, place has a lot going for it from a business stance.

Think prices will continue to rise for now [speculators ] then they will slow. If you were already in before the boom you can't lose. Jim

[JLCrab]

One of my favorite sights on the road to BKK from KK is 'Seagate City' 20km or so south on Khorat on Hi-way 2. Huge disc-drive / memory gadget factory buildings and dormitory residences for thousands of workers along with them. Lots of great minimum or low-paying jobs to go along with the few resident engineers and factory managers who might buy from Land&Houses etc.

If properly handled at the ports putting containers on a carrier will always be the lower cost export method than by rail or truck even within the region.

[jamescollister]

One of my favorite sights on the road to BKK from KK is 'Seagate City' 20km or so south on Khorat on Hi-way 2. Huge disc-drive / memory gadget factory buildings and dormitory residences for thousands of workers along with them. Lots of great minimum or low-paying jobs to go along with the few resident engineers and factory managers who might buy from Land&Houses etc.

If properly handled at the ports putting containers on a carrier will always be the lower cost export method than by rail or truck even within the region.

Shipping is cheaper than rail or truck over distance, but in this case many of the new industrial zones opening up are in central China. Probably closer to Northern Thailand than the eastern sea board of China.

There is already a river port in or near Chang Rai that ships to China, a lot of rubber goes that way.

At my nearest border crossing, Chong Mek the amount of freight crossing into Thailand from Lao/Vietnam on it's way to China, just keeps growing. Jim

[jay-uk]

I read this news article today which is talking about the same subject. Bottom paragraph also relates to property/land prices in Udon Thani and Ubon Ratchathani which they says are set to double:

http://www.property-...provinces-27176

Edited January 16, 2013 by jay-uk

[JLCrab]

Everything you say is true, JC. I am just suggesting that herein may be a case of (as Former US Federal Reserve Chairman Alan Greenspan once put it) 'irrational exuberance'.

BTW have you ever heard of the YangTze (ChiangJiang) River inward to central China from Port of Shanghai?

[jay-uk]

I read this news article today which is talking about the same subject. Bottom paragraph also relates to property/land prices in Udon Thani and Ubon Ratchathani which they says are set to double:

http://www.property-...provinces-27176

and another article in Bangkok post:

http://www.bangkokpost.com/news/local/330988/look-to-isan-for-opportunities-in-real-estate

[jamescollister]

Everything you say is true, JC. I am just suggesting that herein may be a case of (as Former US Federal Reserve Chairman Alan Greenspan once put it) 'irrational exuberance'.

BTW have you ever heard of the YangTze (ChiangJiang) River inward to central China from Port of Shanghai?

Yes realize that you can ship inland on rivers into China, yet we buy fruit [ apples etc ] that come over land. Don't think the Vietnamese or the Chinese would be bothered trucking goods overland if it were cheaper by sea. More and more trucks are on the road with non Thai plates.

Believe the Ford motor company is opening a new parts factory in Ubon this year, would think a lot off those parts will be bound for the opening markets in China.

As said China is a big monster to the north, any gateway will be used and land values will rise if you live along the gateway.

Jim

[NeverSure]

With all due respect, when prices are going up, and "everyone" believes they will keep going up just because they "always go up," it's a good time to bail out. Common sense and ROI prudence have gone out the window in favor of speculation.

In the article linked above, who has the crystal ball that says prices are set to double? Anyone with that kind of clairvoyance would be so rich he would no longer be writing for a publication. This is indeed irrational exuberance.

"However, recent signals suggest there has been a slowing down in the BMR (Bangkok) market, where the absorption rate of new housing units has been flat at 35-40% and inventory levels are surging.

Moreover, housing prices are rising at a higher rate than average income growth, dragging down affordability. Although many developers have introduced smaller-sized units keeping prices down in some instances, how much smaller can room sizes become? Some are already as small as 20-30 square metres." Link

So they have overbuilt BKK into a bubble that will burst, because they actually say people can no longer afford to buy. Now, drunk on their excess in Bangkok but having overbuilt it, they will move to other areas with far less demand from people who can actually pay the prices.

Farm land doesn't make sense for ROI. Land prices for housing don't make sense based on affordability of the actual end user.

The only reason prices are going up is speculation driven by those who believe land prices will go up "because they always do." That was proven wrong in 1997 in LOS and in 2006 in the US. A lot of the "smartest people around" got fooled and ruined. Big Wall Street firms and banks went bust. Some didn't go bust only because they got bailed out.

Six years later the US housing market hasn't recovered although there are signs but not proof that it may have bottomed out. Six years ago the smartest money around was betting on further price increases but they instead crashed. I could go back to the Spring of 2006 and find articles like this, just before everything crashed in just two months in the summer. Just like the silver crash in around 1980, when it went from $50 an ounce to $5 an ounce overnight, when it happens it's too late to get out. Silver has never since recovered to those prices more than 30 years later.

When this real estate speculative bubble bursts in LOS, it will set the country's economy back for ten years or more. Thai banks may need international bailouts. Farm land will again be worth a price based on what it can produce. Home prices will again be based on what people can afford because after all, no one can repeal the law of supply and demand.

There is too much supply and the lack of demand is beginning to show. The cracks are there to see for those who have eyes to see.

Edited January 16, 2013 by NeverSure

[JLCrab]

There is now much overland transport and it will be expanding for sure. Even years back, Thai friends in KK were telling me that I should buy land. I would say I am non-Thai and cannot own land. They would say: No problem. You can put it in my name.

I am only suggesting caution. This does make me think of what Joe Kennedy ( President JFK's father) said about the stock-market in the 1920's (from Wikipedia):

(Joe) Kennedy later claimed he knew the rampant stock speculation of the late 1920s would lead to a crash. It is said that he knew it was time to get out of the market when he received stock tips from a shoe-shine boy.

[PattayaPhom]

All on borrowed money from SCB and the likes at 10%

[jamescollister]

Think you have to draw a line between house prices and industrial investment. If the world economy doesn't implode then Thailand will continue to grow as a manufacturing nation.

With industry, job growth, higher wages for skilled workers on and on it goes. They have a long way to go before catching up to the west, you can't put the genie back in the bottle.

Prices will rise in accordance with the wealth of the nation. Imagine things like this were talked about many years ago in reference to Singapore. jim

[farangme]

Glad we got in three years ago. Lots of new things in Udon. Only bugger is the traffic, which has gotten ridiculous. Rest of TL is only a 2,500 baht plane flight away.

[tlcwaterfall]

Im glad this has been published, I have been going to Udon since 2004 and have noticed big changes. I enjoy a bit of a quiet place, so have not enjoyed the changes as much, but the locals love all the nice coffee shops, food shops etc. A really big mall there, comparable to the Central mall in Khon Kaen, or Central World (with a few less brand names) in Bangkok. Just as shiny, just as beautiful, and a little more friendly as the Isaan culture goes.

A lot of ladies marry foreign men here, who tend to be 45+, and have a good stash of money to find a home here. Properties have been steadily rising, if they double that would be crazy, I already consider the prices too high, especially around Posri Road.

I have considered buying here, but like many places outside of the South and Bangkok, there is no real "drawcard" attractions. It is a lovely place, with lovely people, and I enjoy going back each year to share a week or two with my old friends.

I would suggest that the Shopping centre in Udon is significantly bigger than Khon Kaen. I have visited both many times and really there is no comparison between the two. Udon Central is absolutely huge compared to Khon Kean.

[ubonrthai]

I would suggest that the Shopping centre in Udon is significantly bigger than Khon Kaen. I have visited both many times and really there is no comparison between the two. Udon Central is absolutely huge compared to Khon Kean.

According to Central's web site Udon has over 400 retail shops compared to Khon Kaen which has over 250. Ubon's is almost identical to Khon Kaen.

[JLCrab]

UdonT and KK Central Plazas have the same major tenants as do all the Central Plazas country-wide.

Also, there was the TukCom center (the old Oasis) close-by to consider when the Central Group made their decision on just how big to make the KK Central Plaza version.

Edited January 24, 2013 by JLCrab

[defib]

One thing for sure, Udon will not gain much on the tourist trail. Rental properties available in Udon can be counted on two hands, no tourist company having issan let alone Udon as a destination to visit, very little to see, Chiang Mai, Phuket or Pattaya it is not. And why Bangkok yuppies would come to a place that is the butt of their jokes is a mystery. It will be, no doubt, become a busier Thai market town, but never a 'boom town'!!!