When Will The Chiang Mai Building Bubble Burst?

[cheeryble]

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.

"Supalai" is wrong.

New condos in CM are selling for 35-76,000 baht/sqm..........however the vast majority, the peak of the bell curve, is in the lower end of that range and certainly well below the figures mentioned by "Supalai". My guess is that all averages......mean, median, and mode.....are between 40-50,000, about two thirds of what "Supalai" says. That's a big enough error to be called grossly inaccurate. Or is Supalai comparing the most expensive locations in CM like for like with the most expensive locations in BKK or disingenuously comparing the best in CM with the mediocre in BKK?

Edited March 27, 2013 by cheeryble

[IsaanUSA]

Good thread. Too much to read now, I'll have to come back later.

Quick question though. Developer takes out a loan, builds the product, people pay money, "bubble" pops. The developer got paid already. A certain percentage of the residents will have paid cash for their units, a certain percentage will continue working and making payments on their mortgage, and some people will default on their loan. To me that does not seem so bad, but is that a best-case scenario for a bubble pop? Perhaps that is my problem, because I am imagining a soft pop since only a certain percentage of people might default. I guess it depends on how far leveraged everybody is.

[WinnieTheKhwai]

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.

No argument with any of that, though the traditional reason for building tall (high land prices in a downtown metropolitan area) doesn't seem to apply as much to Chiang Mai, where they (also) build condo's WAY out, where land prices really aren't all that high.

Meanwhile you can actually buy a small house inside the moat for about 3 million if you look hard. Or a townhouse walking distance from the moat, the riverside area etc for under 2 mil, so pretty much the same money as a condominium. Less actually when comparing square meters, but then like you said there is value in having a big view, easier security and so on.

Then again I'm in a condo in Bangkok right now and even though it has two bedrooms it feels absolutely tiny. I really wouldn't want to live in such cramped conditions longer term and especially not if it's more than just me.

[NeverSure]

We had a thread in the news section about some worry because Thai banks have 40% of their loans in real estate. That's kind of all your eggs in one basket. So I don't think that it's all cash or money laundering.

If this housing bubble bursts it will take the banks down with it. Anyone ever hear of the US and its real estate and banking crash about 7 years ago, or Thailand in '97? Does everyone realize that Thailand has never paid the money back to the IMF for bailing out its banks in '97? And here we go again?

Thailand is so debt ridden in all areas it is scary. Consumers buying cars, cell phones, houses, all on credit not to mention the new fashion of having a Mastercard or Visa. Businesses borrowing and expanding to meet the "new demand." The government can't hurry fast enough to borrow enough to go far enough into debt to suit them. Scam after scam with rice scheme the government can't afford and they admit it, new car rebates but the government just said it doesn't have enough money to pay the buyers next month, a flood control loan which money seems to have disappeared and now 2 tril baht for what surely will be a corruption ridden train building scheme...

The banks can't hurry fast enough to lend money to developers or consumers for these real estate projects. Yes, Thais are buying, but what do they repay with? This was part of the US crash. Excessive consumer debt and repos and foreclosures and bankruptcies were massive.

It not only took the US banks down, it took the government down. The government just doesn't have to admit it because they can print money, but they are fking things up royally, as are most Western and Asian countries. It's right there for us all to see.

If you're American: "Save your Confederate money boys, the South will rise again," hahaha.

[cheeryble]

We had a thread in the news section about some worry because Thai banks have 40% of their loans in real estate. That's kind of all your eggs in one basket.

Got to say I'm amazed it's as low as 40%.

I thought real estate loans were the banks stock in trade. If you asked me in the street I would have said 80%.

Just goes to show how much our personal opinions count for ha-ha.

Thailand is so debt ridden in all areas it is scary. Consumers buying cars, cell phones, houses, all on credit not to mention the new fashion of having a Mastercard or Visa

Are you basing this on figures? I'd love to see them.

Also be interested to know how much richer the citizenry is becoming from all this spending. Cos it's got to go somewhere. Perhaps even to those who are taking on debt.

Edited March 28, 2013 by cheeryble

[hellodolly]

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.

No argument with any of that, though the traditional reason for building tall (high land prices in a downtown metropolitan area) doesn't seem to apply as much to Chiang Mai, where they (also) build condo's WAY out, where land prices really aren't all that high.

Meanwhile you can actually buy a small house inside the moat for about 3 million if you look hard. Or a townhouse walking distance from the moat, the riverside area etc for under 2 mil, so pretty much the same money as a condominium. Less actually when comparing square meters, but then like you said there is value in having a big view, easier security and so on.

Then again I'm in a condo in Bangkok right now and even though it has two bedrooms it feels absolutely tiny. I really wouldn't want to live in such cramped conditions longer term and especially not if it's more than just me.

Yes I have to agree with you on that if I had kids I would want a house in a neighborhood where they could get out and interact with other kids. A condo would be a no no for me.

But fortunately I don't my youngest just turned 48 so I can think only of my self now, Besides the wife would not like to clean rooms we have no need for and if I was in a house it would be more than a four room house including a bathroom and Kitchen.

[hellodolly]

We had a thread in the news section about some worry because Thai banks have 40% of their loans in real estate. That's kind of all your eggs in one basket. So I don't think that it's all cash or money laundering.

If this housing bubble bursts it will take the banks down with it. Anyone ever hear of the US and its real estate and banking crash about 7 years ago, or Thailand in '97? Does everyone realize that Thailand has never paid the money back to the IMF for bailing out its banks in '97? And here we go again?

Thailand is so debt ridden in all areas it is scary. Consumers buying cars, cell phones, houses, all on credit not to mention the new fashion of having a Mastercard or Visa. Businesses borrowing and expanding to meet the "new demand." The government can't hurry fast enough to borrow enough to go far enough into debt to suit them. Scam after scam with rice scheme the government can't afford and they admit it, new car rebates but the government just said it doesn't have enough money to pay the buyers next month, a flood control loan which money seems to have disappeared and now 2 tril baht for what surely will be a corruption ridden train building scheme...

The banks can't hurry fast enough to lend money to developers or consumers for these real estate projects. Yes, Thais are buying, but what do they repay with? This was part of the US crash. Excessive consumer debt and repos and foreclosures and bankruptcies were massive.

It not only took the US banks down, it took the government down. The government just doesn't have to admit it because they can print money, but they are fking things up royally, as are most Western and Asian countries. It's right there for us all to see.

If you're American: "Save your Confederate money boys, the South will rise again," hahaha.

Not that familiar with the crash of 97 but as you say they never did repay the loan that got them out of it.

In order to borrow more money for their populist schemes they had to shove it off on another department where it would no longer reflect in the National debt.

[jbrain]

We had a thread in the news section about some worry because Thai banks have 40% of their loans in real estate. That's kind of all your eggs in one basket. So I don't think that it's all cash or money laundering.

If this housing bubble bursts it will take the banks down with it. Anyone ever hear of the US and its real estate and banking crash about 7 years ago, or Thailand in '97? Does everyone realize that Thailand has never paid the money back to the IMF for bailing out its banks in '97? And here we go again?

Thailand is so debt ridden in all areas it is scary. Consumers buying cars, cell phones, houses, all on credit not to mention the new fashion of having a Mastercard or Visa. Businesses borrowing and expanding to meet the "new demand." The government can't hurry fast enough to borrow enough to go far enough into debt to suit them. Scam after scam with rice scheme the government can't afford and they admit it, new car rebates but the government just said it doesn't have enough money to pay the buyers next month, a flood control loan which money seems to have disappeared and now 2 tril baht for what surely will be a corruption ridden train building scheme...

The banks can't hurry fast enough to lend money to developers or consumers for these real estate projects. Yes, Thais are buying, but what do they repay with? This was part of the US crash. Excessive consumer debt and repos and foreclosures and bankruptcies were massive.

It not only took the US banks down, it took the government down. The government just doesn't have to admit it because they can print money, but they are fking things up royally, as are most Western and Asian countries. It's right there for us all to see.

If you're American: "Save your Confederate money boys, the South will rise again," hahaha.

Not that familiar with the crash of 97 but as you say they never did repay the loan that got them out of it.

In order to borrow more money for their populist schemes they had to shove it off on another department where it would no longer reflect in the National debt.

They repaid the IMF debt way ahead of schedule with money Thaksin borrowed from Singapore.

[cheeryble]

They repaid the IMF debt way ahead of schedule with money Thaksin borrowed from Singapore.

Now why did you have to go and introduce facts?

Edited March 28, 2013 by cheeryble

[elektrified]

"Thailand is so debt ridden in all areas it is scary. Consumers buying cars, cell phones, houses, all on credit not to mention the new fashion of having a Mastercard or Visa. Businesses borrowing and expanding to meet the "new demand." The government can't hurry fast enough to borrow enough to go far enough into debt to suit them. Scam after scam with rice scheme the government can't afford and they admit it, new car rebates but the government just said it doesn't have enough money to pay the buyers next month, a flood control loan which money seems to have disappeared and now 2 tril baht for what surely will be a corruption ridden train building scheme...

The banks can't hurry fast enough to lend money to developers or consumers for these real estate projects. Yes, Thais are buying, but what do they repay with? This was part of the US crash. Excessive consumer debt and repos and foreclosures and bankruptcies were massive."

It is true that many Thais live on credit but also many, many Thais are getting richer and richer. I was observing at a court conducted, real estate auction today while my partner was bidding on a small piece of land adjacent to one of her lots. There were a good number of people there that could not have been more than 28-34 years old, bidding on 2-4 million THB properties. There were also people whom I saw bidding, that based on their dress, appearance, etc. looked like laborers or people with menial jobs bidding also. Being that the successful bidder had to pay 1/3 cash on the spot, there were a good number of people there with brief cases full of cash. There were also people bidding on properties where the opening bid was 17 million THB. So there are a lot of Thais buying with disposable cash.

[Sparkles]

Slightly off topic but an indicator of the mindset of this Government and its people. The wonderful 100,000 baht discount for first time car buyers has already seen 20,000 cars repossessed by the car companies for non payment and its only early days. There's a big black hole down the road and foreigners might be enlisted to help fill it in.

[CobraSnakeNecktie]

Slightly off topic but an indicator of the mindset of this Government and its people. The wonderful 100,000 baht discount for first time car buyers has already seen 20,000 cars repossessed by the car companies for non payment and its only early days. There's a big black hole down the road and foreigners might be enlisted to help fill it in.

how is that even possible?

When did the program start? how many payments have to be missed before repossession?

I would like to see that reality show. "Bankok Repo"

or maybe "Land of Repo"

Edited March 28, 2013 by CobraSnakeNecktie

[NeverSure]

We had a thread in the news section about some worry because Thai banks have 40% of their loans in real estate. That's kind of all your eggs in one basket. So I don't think that it's all cash or money laundering.

If this housing bubble bursts it will take the banks down with it. Anyone ever hear of the US and its real estate and banking crash about 7 years ago, or Thailand in '97? Does everyone realize that Thailand has never paid the money back to the IMF for bailing out its banks in '97? And here we go again?

Thailand is so debt ridden in all areas it is scary. Consumers buying cars, cell phones, houses, all on credit not to mention the new fashion of having a Mastercard or Visa. Businesses borrowing and expanding to meet the "new demand." The government can't hurry fast enough to borrow enough to go far enough into debt to suit them. Scam after scam with rice scheme the government can't afford and they admit it, new car rebates but the government just said it doesn't have enough money to pay the buyers next month, a flood control loan which money seems to have disappeared and now 2 tril baht for what surely will be a corruption ridden train building scheme...

The banks can't hurry fast enough to lend money to developers or consumers for these real estate projects. Yes, Thais are buying, but what do they repay with? This was part of the US crash. Excessive consumer debt and repos and foreclosures and bankruptcies were massive.

It not only took the US banks down, it took the government down. The government just doesn't have to admit it because they can print money, but they are fking things up royally, as are most Western and Asian countries. It's right there for us all to see.

If you're American: "Save your Confederate money boys, the South will rise again," hahaha.

Not that familiar with the crash of 97 but as you say they never did repay the loan that got them out of it.

In order to borrow more money for their populist schemes they had to shove it off on another department where it would no longer reflect in the National debt.

They repaid the IMF debt way ahead of schedule with money Thaksin borrowed from Singapore.

I see. Moving your debt from one credit card to another is paying it off? Thailand just keeps going farther into debt, and no one knows the actual amount.

[NeverSure]

"Thailand is so debt ridden in all areas it is scary. Consumers buying cars, cell phones, houses, all on credit not to mention the new fashion of having a Mastercard or Visa. Businesses borrowing and expanding to meet the "new demand." The government can't hurry fast enough to borrow enough to go far enough into debt to suit them. Scam after scam with rice scheme the government can't afford and they admit it, new car rebates but the government just said it doesn't have enough money to pay the buyers next month, a flood control loan which money seems to have disappeared and now 2 tril baht for what surely will be a corruption ridden train building scheme...

The banks can't hurry fast enough to lend money to developers or consumers for these real estate projects. Yes, Thais are buying, but what do they repay with? This was part of the US crash. Excessive consumer debt and repos and foreclosures and bankruptcies were massive."

It is true that many Thais live on credit but also many, many Thais are getting richer and richer. I was observing at a court conducted, real estate auction today while my partner was bidding on a small piece of land adjacent to one of her lots. There were a good number of people there that could not have been more than 28-34 years old, bidding on 2-4 million THB properties. There were also people whom I saw bidding, that based on their dress, appearance, etc. looked like laborers or people with menial jobs bidding also. Being that the successful bidder had to pay 1/3 cash on the spot, there were a good number of people there with brief cases full of cash. There were also people bidding on properties where the opening bid was 17 million THB. So there are a lot of Thais buying with disposable cash.

Ghosts from the past. A lot of people "get rich" in a bubble. They flip properties and make a bundle. The problem is they keep going back in for more and more, and on a larger scale. "Hey, this is so easy I don't know why everyone isn't doing it." Then the bubble bursts and all that they had made is lost unless they paid cash for what they own and that is rare for ordinary people. Paying cash doesn't allow the leverage to buy as much as you want and therefore make your really big fortune.

When this bubble bursts...

Just before the bubble burst in the US, my sister told me that her son (my nephew) was a millionaire doing real estate deals in Las Vegas, Nevada. I doubt there are many here who don't know that Las Vegas was a big boom area but one of the biggest bust areas, and still is.

One day he was a "millionaire" and the next day he was selling used cars for a pittance, with a bankruptcy on his record that would last 7 years and keep him from even buying a car to replace his repossessed Mercedes. My sister had to loan him money for a used car, and he was 40 years old.

I tried to tell him, I tried to warn him, and it did no good. Experience is the only teacher here, and LOS doesn't remember 1997 when there was no new car scam with repos, no easy home loans, few credit cards, no smartphone contracts, but basically a real estate bubble.

This time you have not only the real estate bubble, but all of the other consumer debt, the unreal government debt going into fraudulent things, and this time your average Thai will get caught, and away go the smartphones, new cars, homes, and the government will be again begging the IMF.

[Loaded]

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.

No argument with any of that, though the traditional reason for building tall (high land prices in a downtown metropolitan area) doesn't seem to apply as much to Chiang Mai, where they (also) build condo's WAY out, where land prices really aren't all that high.

Meanwhile you can actually buy a small house inside the moat for about 3 million if you look hard. Or a townhouse walking distance from the moat, the riverside area etc for under 2 mil, so pretty much the same money as a condominium. Less actually when comparing square meters, but then like you said there is value in having a big view, easier security and so on.

Then again I'm in a condo in Bangkok right now and even though it has two bedrooms it feels absolutely tiny. I really wouldn't want to live in such cramped conditions longer term and especially not if it's more than just me.

Initially it seems strange that so much money is going into the development of the land on the ring roads and very little, apart from boutique hotels, into the old city. However, I discovered while looking for property that most plots of land have strict building restrictions applied to them. If you are considering buying an old building facing the inside of the moat and developing the land, you'll have to start building somewhere around 3m from the edge of the road. In addition, around 400 chanotes within the old city are subject to the Tessabahn confiscating up to 40% of the land at any time at government fixed prices. The old city will remain old for a long time.

Edited March 28, 2013 by Loaded

[driedmango]

"Thailand is so debt ridden in all areas it is scary. Consumers buying cars, cell phones, houses, all on credit not to mention the new fashion of having a Mastercard or Visa. Businesses borrowing and expanding to meet the "new demand." The government can't hurry fast enough to borrow enough to go far enough into debt to suit them. Scam after scam with rice scheme the government can't afford and they admit it, new car rebates but the government just said it doesn't have enough money to pay the buyers next month, a flood control loan which money seems to have disappeared and now 2 tril baht for what surely will be a corruption ridden train building scheme...

The banks can't hurry fast enough to lend money to developers or consumers for these real estate projects. Yes, Thais are buying, but what do they repay with? This was part of the US crash. Excessive consumer debt and repos and foreclosures and bankruptcies were massive."

It is true that many Thais live on credit but also many, many Thais are getting richer and richer. I was observing at a court conducted, real estate auction today while my partner was bidding on a small piece of land adjacent to one of her lots. There were a good number of people there that could not have been more than 28-34 years old, bidding on 2-4 million THB properties. There were also people whom I saw bidding, that based on their dress, appearance, etc. looked like laborers or people with menial jobs bidding also. Being that the successful bidder had to pay 1/3 cash on the spot, there were a good number of people there with brief cases full of cash. There were also people bidding on properties where the opening bid was 17 million THB. So there are a lot of Thais buying with disposable cash.

Ghosts from the past. A lot of people "get rich" in a bubble. They flip properties and make a bundle. The problem is they keep going back in for more and more, and on a larger scale. "Hey, this is so easy I don't know why everyone isn't doing it." Then the bubble bursts and all that they had made is lost unless they paid cash for what they own and that is rare for ordinary people. Paying cash doesn't allow the leverage to buy as much as you want and therefore make your really big fortune.

When this bubble bursts...

Just before the bubble burst in the US, my sister told me that her son (my nephew) was a millionaire doing real estate deals in Las Vegas, Nevada. I doubt there are many here who don't know that Las Vegas was a big boom area but one of the biggest bust areas, and still is.

One day he was a "millionaire" and the next day he was selling used cars for a pittance, with a bankruptcy on his record that would last 7 years and keep him from even buying a car to replace his repossessed Mercedes. My sister had to loan him money for a used car, and he was 40 years old.

I tried to tell him, I tried to warn him, and it did no good. Experience is the only teacher here, and LOS doesn't remember 1997 when there was no new car scam with repos, no easy home loans, few credit cards, no smartphone contracts, but basically a real estate bubble.

This time you have not only the real estate bubble, but all of the other consumer debt, the unreal government debt going into fraudulent things, and this time your average Thai will get caught, and away go the smartphones, new cars, homes, and the government will be again begging the IMF.

so better to try and fail than sit in the sidelines judging. And smartphone s are cheap, and may a persons 1st ever personal computer.. its the farang spending all there money on plane tickets and women

[hellodolly]

"Thailand is so debt ridden in all areas it is scary. Consumers buying cars, cell phones, houses, all on credit not to mention the new fashion of having a Mastercard or Visa. Businesses borrowing and expanding to meet the "new demand." The government can't hurry fast enough to borrow enough to go far enough into debt to suit them. Scam after scam with rice scheme the government can't afford and they admit it, new car rebates but the government just said it doesn't have enough money to pay the buyers next month, a flood control loan which money seems to have disappeared and now 2 tril baht for what surely will be a corruption ridden train building scheme...

The banks can't hurry fast enough to lend money to developers or consumers for these real estate projects. Yes, Thais are buying, but what do they repay with? This was part of the US crash. Excessive consumer debt and repos and foreclosures and bankruptcies were massive."

It is true that many Thais live on credit but also many, many Thais are getting richer and richer. I was observing at a court conducted, real estate auction today while my partner was bidding on a small piece of land adjacent to one of her lots. There were a good number of people there that could not have been more than 28-34 years old, bidding on 2-4 million THB properties. There were also people whom I saw bidding, that based on their dress, appearance, etc. looked like laborers or people with menial jobs bidding also. Being that the successful bidder had to pay 1/3 cash on the spot, there were a good number of people there with brief cases full of cash. There were also people bidding on properties where the opening bid was 17 million THB. So there are a lot of Thais buying with disposable cash.

Ghosts from the past. A lot of people "get rich" in a bubble. They flip properties and make a bundle. The problem is they keep going back in for more and more, and on a larger scale. "Hey, this is so easy I don't know why everyone isn't doing it." Then the bubble bursts and all that they had made is lost unless they paid cash for what they own and that is rare for ordinary people. Paying cash doesn't allow the leverage to buy as much as you want and therefore make your really big fortune.

When this bubble bursts...

Just before the bubble burst in the US, my sister told me that her son (my nephew) was a millionaire doing real estate deals in Las Vegas, Nevada. I doubt there are many here who don't know that Las Vegas was a big boom area but one of the biggest bust areas, and still is.

One day he was a "millionaire" and the next day he was selling used cars for a pittance, with a bankruptcy on his record that would last 7 years and keep him from even buying a car to replace his repossessed Mercedes. My sister had to loan him money for a used car, and he was 40 years old.

I tried to tell him, I tried to warn him, and it did no good. Experience is the only teacher here, and LOS doesn't remember 1997 when there was no new car scam with repos, no easy home loans, few credit cards, no smartphone contracts, but basically a real estate bubble.

This time you have not only the real estate bubble, but all of the other consumer debt, the unreal government debt going into fraudulent things, and this time your average Thai will get caught, and away go the smartphones, new cars, homes, and the government will be again begging the IMF.

so better to try and fail than sit in the sidelines judging. And smartphone s are cheap, and may a persons 1st ever personal computer.. its the farang spending all there money on plane tickets and women

I was a little curious as to where the property for the real estate auction came from.

I was wondering if it was repossessions that finance investors had let slip by because there was not enough profit in it for them. so they let it go to the general public.

Not savvy enough about these things but could they not be indicative of a bubble getting ready to burst.

[cheeryble]

.

Initially it seems strange that so much money is going into the development of the land on the ring roads and very little, apart from boutique hotels, into the old city. However, I discovered while looking for property that most plots of land have strict building restrictions applied to them. If you are considering buying an old building facing the inside of the moat and developing the land, you'll have to start building somewhere around 3m from the edge of the road. In addition, around 400 chanotes within the old city are subject to the Tessabahn confiscating up to 40% of the land at any time at government fixed prices. The old city will remain old for a long time.

Interesting Loaded.....

And the many many wats in the moat area means more restrictions imposed on height nearby.

[cheeryble]

Thailand just keeps going farther into debt, and no one knows the actual amount.

Actually household debt figures are available as it's of such concern to you perhaps you could dig them out for us?

Then you'll know if they are looking dangerous or as is more common a stimulus to growth and added prosperity for all.

[binjalin]

it seems common opinion Chiang Mai is and will be booming - the building of all those new shopping malls and maybe a BTS within 10 years I think points towards further expansion before settling down any time soon

[chiangmaiexpat]

Initially it seems strange that so much money is going into the development of the land on the ring roads and very little, apart from boutique hotels, into the old city. However, I discovered while looking for property that most plots of land have strict building restrictions applied to them.

Not only the building restrictions are pushing development outwards, but even more so land prices. Land inside the moat area is now more expensive than land in the inner city of Frankfurt, Cologne, or Munich, which is just plain crazy, because compared to these German cities, Chiang Mai offers just a fraction of the infrastructure, local purchase power, and level of economic development. This makes it of course very unattractive for investors, considering that you can't even build high-rise structures due to building regulations.

Hence, the developers are forced to move outwards due to market prices. Land within the superhighway boundaries and even up to the inner ring road is already too expensive for low density residential development. So, the Moo Baans are now being built around the outer ring road and beyond. The commercial development usually follows within a few years and it has now reached the ring roads. Obviously, this urban sprawl is fuelled by sheer greed, which in case of Chiang Mai has reached astonishing proportions.

Since hoarding land doesn't cost much in Thailand and zoning laws aren't enforced strictly, the result is not just urban sprawl, but also to patchy and uncontrolled development with lots of undeveloped spaces in between and a chaotic mix of industrial, residential, and commercial use. A familiar pattern... If continued, Chiang Mai might become the L.A. of Thailand.

Cheers, CM-Expat

Edited March 29, 2013 by chiangmaiexpat

[WinnieTheKhwai]

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.

Bangkok is such a specific case that almost any comparison becomes iffy.

So perhaps it makes more sense to compare with the Pattaya area. Population size of the wider area wouldn't be too different (especially the property-buying demographic), and it's a smaller area, so actually some genuine reasons to build tall.

There is over supply here in Pattaya too, of course.

Let's do the building I am in now as an example. It is located in between Pattaya bay and Jomtien, on the road where all the Songthaews between the two pass. So it's 10 baht and 5-10 minutes to anywhere downtown Pattaya, and you can walk to Jomtien. Also the bus to Bangkok airport leaves from that very spot; I had to go into Bangkok the other day and just took that bus and connected to the airport rail link into town, which is easier/faster than getting into Ekamai especially during rush hours.

On the other side the back entrance is actually towards the beach. Yes, I can walk from my room straight on to the beach.

In summary it's hard to think of better locations.

Building itself is older, but managed well. New swimming pools, new elevators, and there are some tennis courts. 9 floors, 3 elevators. Plenty covered parking. (it seems fewer residents have cars here compared to Chiang Mai, so lots of space)

Single units are small, 36 sq. meter. Most have a sea view. Some people combine two adjacent rooms so they have space for a kitchen and living room.

Prices as posted on the notice board downstairs range between 1.8 mil and 2.2 mil for the single units.

I see ads for new buildings starting around 1.6 mil, same as Chiang Mai.

Given all of this I think CM prices are rather high; house prices in the Pattaya area are MUCH higher, making condo's relatively a more attractive deal. There are some rather unexciting 3 bedroom one floor bungalows in the same compound that go for prices two-three times of what you'd expect in Chiang Mai; that money would buy a mansion in CM.

Thoughts?

Edited March 31, 2013 by WinnieTheKhwai

[Puwa]

While we're speculating about speculation, here's my guess at answering the original question "when will the bubble burst?"

Second half of 2013/ first half of 2014, when national events trigger new political violence, foreign investors balk, new possible concurrent Singapore property bubble pops, and the dominoes start to tip. Probably not as bad as '97, but a correction nonetheless.

I figure there's about a 30% chance this is correct.

[CobraSnakeNecktie]

While we're speculating about speculation, here's my guess at answering the original question "when will the bubble burst?"

Second half of 2013/ first half of 2014, when national events trigger new political violence, foreign investors balk, new possible concurrent Singapore property bubble pops, and the dominoes start to tip. Probably not as bad as '97, but a correction nonetheless.

I figure there's about a 30% chance this is correct.

Timing stuff is the hardest. It's easy to be right but at the wrong time and lose a lot of money.

My take is similar about the dominoes.

China is the big domino that takes out the other Asian tigers if and when it's massive bubble pops.

Domestic political stability is a concern. Even CM's own Marc Faber is cautious on Thailand for this reason.

World pressure to cooperate & clamp down on Thailand elite status as a money laundering destination. That's one "Hub" claim that holds.

EU or US economic crisis could be major factor on exports and reverse carry trades now flowing into Thailand.

[cheeryble]

Even CM's own Marc Faber is cautious on Thailand for this reason.

Marc Faber would hedge about the sun coming up

[CobraSnakeNecktie]

Even CM's own Marc Faber is cautious on Thailand for this reason.

Marc Faber would hedge about the sun coming up

he is known as Dr. Doom but he only turned negative on Thailand after the upheaval in BKK and I don't think he has reversed it.

Does anybody read his newsletter to comment on his views? He was glowing about Thailand for many years.

[cheeryble]

Does anybody read his newsletter to comment on his views? He was glowing about Thailand for many years.

Dare I suggest he was glowing as the stockmarket went down and went negative as it went all the way up?

(his difference with Nouriel Roubini who was always negative and whose record on bear calls for the S and P have been appallingly inaccurate.

No doubt Doomo's still getting his newsletter and performance fees however.....nice work if you can get it, for spouting forth with about as much chance of being accurate as my wide's cleaning lady.

Edited March 31, 2013 by cheeryble

[elektrified]

While we're speculating about speculation, here's my guess at answering the original question "when will the bubble burst?"

Second half of 2013/ first half of 2014, when national events trigger new political violence, foreign investors balk, new possible concurrent Singapore property bubble pops, and the dominoes start to tip. Probably not as bad as '97, but a correction nonetheless.

I figure there's about a 30% chance this is correct.

Timing stuff is the hardest. It's easy to be right but at the wrong time and lose a lot of money.

My take is similar about the dominoes.

China is the big domino that takes out the other Asian tigers if and when it's massive bubble pops.

Domestic political stability is a concern. Even CM's own Marc Faber is cautious on Thailand for this reason.

World pressure to cooperate & clamp down on Thailand elite status as a money laundering destination. That's one "Hub" claim that holds.

EU or US economic crisis could be major factor on exports and reverse carry trades now flowing into Thailand.

I agree with both of you domino-wise. The bubble is going to burst. Timing; well I don't know. As CSN says that is the most difficult thing. I've been wrong before timing-wise so I won't speculate in that regard. Thailand will soon be signing the anti money laundering treaty with Europe, USA, etc. I was told that by my broker who is with one of the largest firms in Thailand. She even handed me a U.S. tax form to sign (which I politely refused)! A guy from the main Bangkok Office emailed me a month later and told me that once the treaty is signed, my account will be closed immediately if I don't sign the U.S. tax form. No doubt, banks will then follow suit.

Marc Faber actually was somewhat bullish at the last quarter of last year on certain Thai shares, some real estate investments, (and of course Thai gold) until recently he has apparently changed his mind on valuations.

With regard to US or EU economic concerns, I suspect there is a lot more going on in the EU, Cypress, etc. than we are being told -- just like what happened in the USA in 2007-2008. Gotta give time for the fat cat insiders to sell and get out before breaking the real news to the commoners.

Edited March 31, 2013 by elektrified

[worgeordie]

Bubbles in Thailand don't burst, they just deflate,the value of property never really falls

like it does in Europe or U.S.A.

regards Worgeordie

[AnotherOneAmerican]

What usually happens is

The properties with loans outstanding get repossessed and left to rot by the banks who are not allowed to sell at below outstanding loan price.

The properties owned outright purchased as investments are left to rot, can't sell, won't lower price.

Many condo developments and moobaans around ChiangMai still left derelict from the 1990s crash.

Edited March 31, 2013 by AnotherOneAmerican