When Will The Chiang Mai Building Bubble Burst?

[jonwilly]

A friend of mine for the last ten years is a Chartered Accountant.

He has always told me that for reasons he does not know, Chiang Mai is The Washing Machine of Thailand.

It's always been easy to clean dirty money up here, then else where.

john

[CobraSnakeNecktie]

A friend of mine for the last ten years is a Chartered Accountant.

He has always told me that for reasons he does not know, Chiang Mai is The Washing Machine of Thailand.

It's always been easy to clean dirty money up here, then else where.

john

Myanmar by some accounts produces more Meth (Yaba) than all other countries put together and a lot of it is imported or trafficked thru Thailand.

Myanmar is also second largest producer of Opium products in the world behind Afghanistan.

If they move a shipment in or thru Thailand then why take the money back to Myanmar? Not a lot of safe investments there and the money could get seized.

Makes a lot of sense to Invest and launder the proceeds in Thailand.

Even more legitimate businesses in Myanmar might want to hide money assets in Thailand.

Laundering money isn't just about illegal activities.. Often its about hiding the source or ownership so that it cannot be tracked and seized.

[Gonzo the Face]

Well here is one thought

The Russians have Pattaya and are seriously working on Phuket.

The Chinese will claim Chiang Mai as theirs.

Think what you want, the Chinese are very astute thinkers.

Why Chiang Mai ????

You just read the answer.....

It will no longer be Chiang Mai, but rather China Mai.

C H I A N G Mai

C H I N A Mai

All needed be done is drop the ' G ' and switch the ' I and A ' and there you have it..... China Mai.

Think of the cost savings in all the signs alone.

[Greenside]

BookMan,

Very interesting video. The "George Jao" segment is the China I recall after

spending 91'/94' in country. Every culture is driven by its own saints and demons

so to speak. And then there are in innate behavioral tendencies of the species

compounding these actions. Have the Chinese come to accept the "air" viewed

in this video? Just one thing...yes, they have. This is air.

Everyone should take a few minutes out to watch that video (the satellite pictures are interesting too) but the level of air pollution is what really scares me. If China somehow escapes economic meltdown and/or social unrest, will we be overwhelmed by that all year round suffocating smog before too long? Too depressing for our children.

Edited March 25, 2013 by Greenside

[cheeryble]

Love to see some evidence about money laundering, corruption etc so easily bandied.

Anyway.....

I once tried to estimate on TV how much a condo developer needs to charge per sq metre.

I ended up more or less justifying the need for present level of pricing and one of the factors was reward for the risk of non-completion or delay. (I suggested this would gradually draw up the older condo prices which seems to be the case. They may be older but that is compensated by better locations).

I now note two projects which seem to have halted completely and suffered this risk.

One is the complete renovation of Lily Valley in Chang Kian.

The other is the big seven building Korean project just down the road near the new conference centre. (this had a lot of trouble from local residents, of whom I was one, forming a protest movement.) After a wee bit of groundwork it must now be two or three years the site's been dead. I just noticed that even their showroom/office looked abandoned with weeds.

In any case these two are not happening.

Anyone know the score?

ps interesting I believe that condo complex was going to be aimed at Koreans and sold in Korea.

Edited March 25, 2013 by cheeryble

[CobraSnakeNecktie]

Love to see some evidence about money laundering, corruption etc so easily bandied. Anyway..... I once tried to estimate on TV how much a condo developer needs to charge per sq metre. I ended up more or less justifying the need for present level of pricing and one of the factors was reward for the risk of non-completion or delay. (I suggested this would gradually draw up the older condo prices which seems to be the case. They may be older but that is compensated by better locations). I now note two projects which seem to have halted completely and suffered this risk. One is the complete renovation of Lily Valley in Chang Kian. The other is the big seven building Korean project just down the road near the new conference centre. (this had a lot of trouble from local residents, of whom I was one, forming a protest movement.) After a wee bit of groundwork it must now be two or three years the site's been dead. I just noticed that even their showroom/office looked abandoned with weeds. In any case these two are not happening. Anyone know the score? ps interesting I believe that condo complex was going to be aimed at Koreans and sold in Korea.

it's not going to be easy to document specific cases of money laundering because obviously they are trying to hide it from all authorities including Thai Visa readers.

A good place to start is the FATF. (Financial Action Task Force on money laundering)

http://en.wikipedia.org/wiki/FATF_blacklist

http://en.wikipedia.org/wiki/Financial_Action_Task_Force (task force on anti money laundering)

As of 2012 Thailand was on a short list(blacklisted) of countries that are rated Not cooperative and high risk for money laundering.

I saw some announcement Thailand might be lifted from the blacklist but not evident to me that has been accomplished.

Here is nice quote from article at Thai Law forum

http://www.thailawforum.com/the-darker-side-of-tropical-bliss-foreign-mafia-in-thailand/

"In its constant strive to attract foreign investment, Thailand has neglected to establish controls for any funds being transferred into the Kingdom from abroad. Meanwhile, control mechanisms do exist for outgoing funds. This is, for example, one of the reasons why it was discovered that former prime minister – and since fugitive convicted criminal – Thaksin Shinawatra had transferred his shares inShin Corporation to a mailbox company in the British Virgin Islands audaciously called “Ample Rich Co., Ltd.”, a name that haunts him to this day. The influx of foreign funds has paralyzed Thailand in its actions how to trace the origins of such payments, which has effectively transformed the country into one of the easiest places where to hide your ill-gotten wealth – and made it attractive to the mafia."

Edited March 25, 2013 by CobraSnakeNecktie

[cheeryble]

Thankyou for the effort CSN

but I personally know two of these developers, and a friend knows another, these are people who've done multiple projects.

They're pretty regular and hardworking and no reason to believe they are not what they seem.

Edited March 25, 2013 by cheeryble

[CobraSnakeNecktie]

Thankyou for the effort CSN

but I personally know two of these developers, and a friend knows another, these are people who've done multiple projects.

They're pretty regular and hardworking and no reason to believe they are not they seem.

Just because an activity is well documented it doesn't mean it applies to ALL the members of a population.

And of course this stuff is well compartmentalized and nobody is going to advertise it anyway.

Hypothetically if I was going to launder money I wouldn't tell the developer anyway. Someone borrowing money doesn't really need to question its history to put it to use.

Edited March 25, 2013 by CobraSnakeNecktie

[CMTourist]

Up until a few years ago 80% of the condos in Chiang Mai had been built before 1997.

This is likely just a rebound from so many years of suppressed building.

Same for shopping malls, until recently not a single new one since 1997.

Extraordinary when you consider the money pumped in to infrastructure, which usually triggers enormous new development elsewhere in Thailand

[hellodolly]

Up until a few years ago 80% of the condos in Chiang Mai had been built before 1997.

This is likely just a rebound from so many years of suppressed building.

Same for shopping malls, until recently not a single new one since 1997.

Extraordinary when you consider the money pumped in to infrastructure, which usually triggers enormous new development elsewhere in Thailand

I have only been here for 7 years the only infrastructure improvement I have seen is they buried some over head wiires on Changklang and Thai Pa road.

O wait the internet has improved does that count.

but I did here of some road work being done once some where along the river and they tore down a foot bridge across the river.

[CMTourist]

Up until a few years ago 80% of the condos in Chiang Mai had been built before 1997.

This is likely just a rebound from so many years of suppressed building.

Same for shopping malls, until recently not a single new one since 1997.

Extraordinary when you consider the money pumped in to infrastructure, which usually triggers enormous new development elsewhere in Thailand

I have only been here for 7 years the only infrastructure improvement I have seen is they buried some over head wiires on Changklang and Thai Pa road.

O wait the internet has improved does that count.

but I did here of some road work being done once some where along the river and they tore down a foot bridge across the river.

Yes, 7 years isn't the same as the 16 since 1997 and considering when Chiang Mai's favorite son was ousted, isn't enough to know how much infrastructure has been built in that period.

Since you're aware of your own lack of knowledge, why did you post?

[hml367]

Up until a few years ago 80% of the condos in Chiang Mai had been built before 1997.

This is likely just a rebound from so many years of suppressed building.

Same for shopping malls, until recently not a single new one since 1997.

Extraordinary when you consider the money pumped in to infrastructure, which usually triggers enormous new development elsewhere in Thailand

I have only been here for 7 years the only infrastructure improvement I have seen is they buried some over head wiires on Changklang and Thai Pa road.

O wait the internet has improved does that count.

but I did here of some road work being done once some where along the river and they tore down a foot bridge across the river.

Yes, 7 years isn't the same as the 16 since 1997 and considering when Chiang Mai's favorite son was ousted, isn't enough to know how much infrastructure has been built in that period.

Since you're aware of your own lack of knowledge, why did you post?

+1

[hellodolly]

Up until a few years ago 80% of the condos in Chiang Mai had been built before 1997.

This is likely just a rebound from so many years of suppressed building.

Same for shopping malls, until recently not a single new one since 1997.

Extraordinary when you consider the money pumped in to infrastructure, which usually triggers enormous new development elsewhere in Thailand

I have only been here for 7 years the only infrastructure improvement I have seen is they buried some over head wiires on Changklang and Thai Pa road.

O wait the internet has improved does that count.

but I did here of some road work being done once some where along the river and they tore down a foot bridge across the river.

Yes, 7 years isn't the same as the 16 since 1997 and considering when Chiang Mai's favorite son was ousted, isn't enough to know how much infrastructure has been built in that period.

Since you're aware of your own lack of knowledge, why did you post?

I at least acknowledged a little bit of work.

You just assume that time automatically improves things. Check out the old city drive up to the zoo or Niehmanhamin I seriously doubt that any thing has been done in the last 16 years there. I also believe that they did improve one highway interchange. Try driving down the east side of the river from the Narwwhat bridge to the super highway.

Don't stop to quickly you might break some ones nose.

[hml367]

Up until a few years ago 80% of the condos in Chiang Mai had been built before 1997.

This is likely just a rebound from so many years of suppressed building.

Same for shopping malls, until recently not a single new one since 1997.

Extraordinary when you consider the money pumped in to infrastructure, which usually triggers enormous new development elsewhere in Thailand

I have only been here for 7 years the only infrastructure improvement I have seen is they buried some over head wiires on Changklang and Thai Pa road.

O wait the internet has improved does that count.

but I did here of some road work being done once some where along the river and they tore down a foot bridge across the river.

Yes, 7 years isn't the same as the 16 since 1997 and considering when Chiang Mai's favorite son was ousted, isn't enough to know how much infrastructure has been built in that period.

Since you're aware of your own lack of knowledge, why did you post?

I at least acknowledged a little bit of work.

You just assume that time automatically improves things. Check out the old city drive up to the zoo or Niehmanhamin I seriously doubt that any thing has been done in the last 16 years there. I also believe that they did improve one highway interchange. Try driving down the east side of the river from the Narwwhat bridge to the super highway.

Don't stop to quickly you might break some ones nose.

There has been plenty done in the last 16 years. You would have a hard time recognizing the old city even 10 years ago.

MSPain

Edited March 25, 2013 by hml367

[cheeryble]

To be fair the ring road system was put in ahead of it's time and still has room for a lot more traffic.

(Sadly it's the detail like where it hits town that's not been devilled).

BTW Hello Dolly just a decade ago the canal road south simply didn't exist and the whole canal has been enlarged right through. That canal road is now being extended on further south from it's right angle bend east.

To add to that there has been an awful lot of large drains going in all the time.

Someone mentioned internet.

This really IS infrastructure and it has improved enormously, though still lacking on the international level (though that is not CM's fault and the lack only affects some sophisticated users).

Edited March 25, 2013 by cheeryble

[hellodolly]

I have only been here for 7 years the only infrastructure improvement I have seen is they buried some over head wiires on Changklang and Thai Pa road.

O wait the internet has improved does that count.

but I did here of some road work being done once some where along the river and they tore down a foot bridge across the river.

Yes, 7 years isn't the same as the 16 since 1997 and considering when Chiang Mai's favorite son was ousted, isn't enough to know how much infrastructure has been built in that period.

Since you're aware of your own lack of knowledge, why did you post?

I at least acknowledged a little bit of work.

You just assume that time automatically improves things. Check out the old city drive up to the zoo or Niehmanhamin I seriously doubt that any thing has been done in the last 16 years there. I also believe that they did improve one highway interchange. Try driving down the east side of the river from the Narwwhat bridge to the super highway.

Don't stop to quickly you might break some ones nose.

There has been plenty done in the last 16 years. You would have a hard time recognizing the old city even 10 years ago.

MSPain

Perhaps they have paved some roads but they are still inadequate for the boom we are experiencing unless you are talking of the developments in the out lying areas. Even at that I see where they are just going to cause further traffic problems at the new Promenade Mall due to come on line this week but probably three more months. And what about all the malls going in down on the road to the zoo.

When I say develop infrastructure I am talking of making the existing services more usable not just burring a few wires. You know widen roads that are obviously not up to the job.

I did mention that I had heard of one such project along the river. Still no improvement in getting to the other side at certain times of the day.

[hellodolly]

To be fair the ring road system was put in ahead of it's time and still has room for a lot more traffic. (Sadly it's the detail like where it hits town that's not been devilled). BTW Hello Dolly just a decade ago the canal road south simply didn't exist and the whole canal has been enlarged right through. That canal road is now being extended on further south from it's right angle bend east. To add to that there has been an awful lot of large drains going in all the time. Someone mentioned internet. This really IS infrastructure and it has improved enormously, though still lacking on the international level (though that is not CM's fault and the lack only affects some sophisticated users).

Thanks for the update on Canal road. I never get over that way so I am unfamiliar with it. But it is still for the most part out laying areas where they have upgraded to usable standards.

[CMTourist]

Up until a few years ago 80% of the condos in Chiang Mai had been built before 1997.

This is likely just a rebound from so many years of suppressed building.

Same for shopping malls, until recently not a single new one since 1997.

Extraordinary when you consider the money pumped in to infrastructure, which usually triggers enormous new development elsewhere in Thailand

I have only been here for 7 years the only infrastructure improvement I have seen is they buried some over head wiires on Changklang and Thai Pa road.

O wait the internet has improved does that count.

but I did here of some road work being done once some where along the river and they tore down a foot bridge across the river.

Yes, 7 years isn't the same as the 16 since 1997 and considering when Chiang Mai's favorite son was ousted, isn't enough to know how much infrastructure has been built in that period.

Since you're aware of your own lack of knowledge, why did you post?

I at least acknowledged a little bit of work.

You just assume that time automatically improves things. Check out the old city drive up to the zoo or Niehmanhamin I seriously doubt that any thing has been done in the last 16 years there. I also believe that they did improve one highway interchange. Try driving down the east side of the river from the Narwwhat bridge to the super highway.

Don't stop to quickly you might break some ones nose.

I don't assume time automatically improves things. I KNOW what has been built in the last 16 years.

You have already admitted you don't have the knowledge and that you only stay in your own little area and therefore have no idea of the massive infrastructure buildout that has occured in Chiang Mai in the last 16 years, so why do you keep posting?

Its not helping advance the discussion for those of us who really do have an interest in whether Chiang Mai is being overbuilt and is in a property bubble and have the knowledge to at least begin a rational assessment.

[Greenside]

To be fair the ring road system was put in ahead of it's time and still has room for a lot more traffic. (Sadly it's the detail like where it hits town that's not been devilled).

Plus the fact that the developments that are mushrooming up on every spare wah alongside of them are not required to allow for any car spaces, so one of the three lanes spends much of its time as a very expensive (and dangerous) car park. A triumph of forward thinking...

Edited March 26, 2013 by Greenside

[AnotherOneAmerican]

I see the big bubble in CM as mainly Foreigner Condos and Thai shop-houses.

Most of the new shop-houses are 3Mbht, considering a home loan of 2.7M ...... repayments about 25kbht/month. How could anyone make a profit?

Condos for foreigners .... 5M, OK so seem cheap to newcomers who can't buy houses, but I can't see anyone ever recovering the initial cost.

[cheeryble]

I see the big bubble in CM as mainly Foreigner Condos and Thai shop-houses........

Condos for foreigners .... 5M, OK so seem cheap to newcomers who can't buy houses, but I can't see anyone ever recovering the initial cost.

The new condos are not "foreigner condos". Their main market is Thais. Many of the ads don't even have English language on them, and they are certainly all mainly Thai.

As to 5m. What does that and the fact that "you can't see anyone recovering the cost....." mean?

Why not give a cogent argument why a certain price per square metre is not realistic and tell us how you would offer condos cheaper than the developers are?

Edited March 26, 2013 by cheeryble

[AnotherOneAmerican]

I see the big bubble in CM as mainly Foreigner Condos and Thai shop-houses........

Condos for foreigners .... 5M, OK so seem cheap to newcomers who can't buy houses, but I can't see anyone ever recovering the initial cost.

The new condos are not "foreigner condos". Their main market is Thais. Many of the ads don't even have English language on them, and they are certainly all mainly Thai.

As to 5m. What does that and the fact that "you can't see anyone recovering the cost....." mean?

Why not give a cogent argument why a certain price per square metre is not realistic and tell us how you would offer condos cheaper than the developers are?

When a 3 bedroom house (inc land) sells for 2M Vs a 2 bed condo selling for 5M, one can only assume a measure of profiteering somewhere.

I thought the whole idea behind condos (western reasoning) was that they cost less to build than individual houses.

Perhaps this only applies to housing in America, or do you know better?

Edited March 26, 2013 by AnotherOneAmerican

[scotinsiam]

I see the big bubble in CM as mainly Foreigner Condos and Thai shop-houses........

Condos for foreigners .... 5M, OK so seem cheap to newcomers who can't buy houses, but I can't see anyone ever recovering the initial cost.

The new condos are not "foreigner condos". Their main market is Thais. Many of the ads don't even have English language on them, and they are certainly all mainly Thai.

As to 5m. What does that and the fact that "you can't see anyone recovering the cost....." mean?

Why not give a cogent argument why a certain price per square metre is not realistic and tell us how you would offer condos cheaper than the developers are?

When a 3 bedroom house (inc land) sells for 2M Vs a 2 bed condo selling for 5M, one can only assume a measure of profiteering somewhere.

I thought the whole idea behind condos (western reasoning) was that they cost less to build than individual houses.

Perhaps this only applies to housing in America, or do you know better?

Hi,

I imagine the difference is in the location, For example the condo I recently purchased is a few minutes walk from the moat and not a drive from the City. For me as a foreign buyer I also enjoy the fact that I do own the condo and do not have any land ownership issues. I also enjoy the extra security I have with being in a condo complex - All in all very happy. I was also brought up to believe you residence is just that and should not be looked at as an investment - I don't really see a price slump on the horizon in CM however.

best regards

S

[Happyman108]

I see the big bubble in CM as mainly Foreigner Condos and Thai shop-houses........

Condos for foreigners .... 5M, OK so seem cheap to newcomers who can't buy houses, but I can't see anyone ever recovering the initial cost.

The new condos are not "foreigner condos". Their main market is Thais. Many of the ads don't even have English language on them, and they are certainly all mainly Thai.

As to 5m. What does that and the fact that "you can't see anyone recovering the cost....." mean?

Why not give a cogent argument why a certain price per square metre is not realistic and tell us how you would offer condos cheaper than the developers are?

When a 3 bedroom house (inc land) sells for 2M Vs a 2 bed condo selling for 5M, one can only assume a measure of profiteering somewhere.

I thought the whole idea behind condos (western reasoning) was that they cost less to build than individual houses.

Perhaps this only applies to housing in America, or do you know better?

I guess the some of main reason for condo are :

1. build more place to stay within a smaller plot of land hence is building condo "upward".

2. reason for building "upward" being some people prefer to stay nearer or in town area whereby land price could be anytime 5-10 times more.

3. Some buyer prefer better security and easy to maintain....

4. Some condo have better facilities as compare to housing estate (of course some hosue project come with facilities too)

5. Easier transportation also some reasons for people buying condo......

And so on.....

[hellodolly]

Happyman108, on 26 Mar 2013 - 19:36, said:

AnotherOneAmerican, on 26 Mar 2013 - 18:46, said:

cheeryble, on 26 Mar 2013 - 18:34, said:

AnotherOneAmerican, on 26 Mar 2013 - 15:15, said:

I see the big bubble in CM as mainly Foreigner Condos and Thai shop-houses........

Condos for foreigners .... 5M, OK so seem cheap to newcomers who can't buy houses, but I can't see anyone ever recovering the initial cost.

The new condos are not "foreigner condos". Their main market is Thais. Many of the ads don't even have English language on them, and they are certainly all mainly Thai.

As to 5m. What does that and the fact that "you can't see anyone recovering the cost....." mean?

Why not give a cogent argument why a certain price per square metre is not realistic and tell us how you would offer condos cheaper than the developers are?

When a 3 bedroom house (inc land) sells for 2M Vs a 2 bed condo selling for 5M, one can only assume a measure of profiteering somewhere.

I thought the whole idea behind condos (western reasoning) was that they cost less to build than individual houses.

Perhaps this only applies to housing in America, or do you know better?

I guess the some of main reason for condo are :

1. build more place to stay within a smaller plot of land hence is building condo "upward".

2. reason for building "upward" being some people prefer to stay nearer or in town area whereby land price could be anytime 5-10 times more.

3. Some buyer prefer better security and easy to maintain....

4. Some condo have better facilities as compare to housing estate (of course some hosue project come with facilities too)

5. Easier transportation also some reasons for people buying condo......

And so on.....

Also many condos have a view you can't see from ground level.

No lawns to mow

No gardens to tend

No leaky roofs to repair

No security needed when you travel just lock the door and go.

If you enjoy the above buy a house on large acreage.

If you don't buy a condo

both are the right decision to get what you like.

If you are doing it for income purposes that is another ball game.

There are certainly people making money at it. But all the empty condos and houses tell me that some people are losing money on it.

I was reading the promo for the new Promenade Mall and the builders mentioned that they did not think Chiang Mai could support it. Hence they were building one to attract customers from as far away as China. Sounded to me like they did not expect the population growth developers are expecting.

Edited March 26, 2013 by hellodolly

[jbrain]

I see the big bubble in CM as mainly Foreigner Condos and Thai shop-houses........

Condos for foreigners .... 5M, OK so seem cheap to newcomers who can't buy houses, but I can't see anyone ever recovering the initial cost.

The new condos are not "foreigner condos". Their main market is Thais. Many of the ads don't even have English language on them, and they are certainly all mainly Thai.

As to 5m. What does that and the fact that "you can't see anyone recovering the cost....." mean?

Why not give a cogent argument why a certain price per square metre is not realistic and tell us how you would offer condos cheaper than the developers are?

When a 3 bedroom house (inc land) sells for 2M Vs a 2 bed condo selling for 5M, one can only assume a measure of profiteering somewhere.

I thought the whole idea behind condos (western reasoning) was that they cost less to build than individual houses.

Perhaps this only applies to housing in America, or do you know better?

The main reason for building a condo is that he can sell it easily sell 49% to foreigners, where with a housing estate he has to wait for foreigners who are dumb enough to put it into the name of their soon to be ex- wife/girlfriend.

Business plan of condo's is that if they sell 40% they are out of costs,and the 51% that has to be Thai owned and will probably stay empty forever is the least of their concern, so the developer is almost guaranteed to drive a Ferrari soon after he starts the project.

Edited March 26, 2013 by jbrain

[CMTourist]

Supalai recently announced that prices for land in good locations in Chiang Mai are the same as in Bangkok. Condos are selling for 60-70,000 Baht per square meter. Again, Bangkok prices. They also announced it was cheaper to build in Bangkok as materials are cheaper as that's where most of them are produced.

Greater Bangkok has a population of near 14 million and is the center of government, finance, business, education and every other sector of the Thai economy.

Chiang Mai is maybe half a million if you include the surrounding villages and has no leading economic sector.

I don't see Chiang Mai prices as rational based on these comparisons alone.

However, I do think there is real unmet demand, I just think developers are getting ahead of it and there could be a bust coming until the current builds are mopped up by demand growth

[mickmac]

One thing I don't think anyone has mentioned yet, is that Chiang Mai is on a geological fault line. Would you like to be in a condo when the floors starts shaking?

[hellodolly]

One thing I don't think anyone has mentioned yet, is that Chiang Mai is on a geological fault line. Would you like to be in a condo when the floors starts shaking?

Been through it twice no big deal. Could be worse could be in San Francisco.

Both quakes were not on the fault under Chiang Mai.

Are you sure Bangkok is tsunami proof?

[driedmango]

Chiang mai is just starting to boom, all those years as a top world city for travel and the new fame in china will see about 20 years of reckless growth and never ending condos. Prices will catch up with expensive cities maybe 20 x for the most desirable locations. I hope they rein in the air pollution and keep it fun and full if festivals.