When Will The Chiang Mai Building Bubble Burst?

[cheeryble]

I've lived in three different condominiums in Chiang Mai, in every one the parking was full but most of the units empty.

You managed to choose the three condominiums where "most of the units were empty"?

I wouldn't be able to take you to ONE like that.....certainly after it's had time to sell.

(unless you mean empty as in residents were away a lot)

ps: If I see a variety of different blinds and curtains at the windows I draw the obvious conclusion.

pps: actually I heard the Unique hadn't filled up yet, but that might not be surprising givenonly three months old and it's lousy location feet from next door condo and there's a Unique 2 now on plan which will steal the view of Unique 1 the other way!!

Have you lived in any condos in Chiang Mai? I've lived in Hillside 4, Cityview Condo, and Hillside 3, each for at least a year, most of rooms empty on the floors I lived on. That doesn't mean they weren't owned, but they were empty. Different blinds and curtains means that the owners chose not to put the same blinds and curtains in every unit. Wnen I open my curtains in my current Hillside 3 unit I have an excellent view of the new Punna Condo, and over the past four years I've seen activity in only a small number of the rooms.

The fact that units are owned does not mean there isn't a bubble. Most of the houses were owned when the bubble burst in the U.S. and many parts of Europe.

OK I've come up with a bit of actual evidence to occupation.

If you find that illegitimate what evidence for a bubble are you offering?

Edited May 15, 2013 by cheeryble

[heybruce]

I've lived in three different condominiums in Chiang Mai, in every one the parking was full but most of the units empty.

You managed to choose the three condominiums where "most of the units were empty"?

I wouldn't be able to take you to ONE like that.....certainly after it's had time to sell.

(unless you mean empty as in residents were away a lot)

ps: If I see a variety of different blinds and curtains at the windows I draw the obvious conclusion.

pps: actually I heard the Unique hadn't filled up yet, but that might not be surprising givenonly three months old and it's lousy location feet from next door condo and there's a Unique 2 now on plan which will steal the view of Unique 1 the other way!!

Have you lived in any condos in Chiang Mai? I've lived in Hillside 4, Cityview Condo, and Hillside 3, each for at least a year, most of rooms empty on the floors I lived on. That doesn't mean they weren't owned, but they were empty. Different blinds and curtains means that the owners chose not to put the same blinds and curtains in every unit. Wnen I open my curtains in my current Hillside 3 unit I have an excellent view of the new Punna Condo, and over the past four years I've seen activity in only a small number of the rooms.

The fact that units are owned does not mean there isn't a bubble. Most of the houses were owned when the bubble burst in the U.S. and many parts of Europe.

OK I've come up with a bit of actual evidence to occupation.

If you find that illegitimate what evidence for a bubble are you offering?

I simply pointed out that your evidence is weak. A building boom that seems to outstrip the population increase, rental prices much lower than monthly payments on a condo purchase, prices out of reach of the average Thai person, and concerns about a "build it cheap and sell it fast" mentality make me suspect a bubble. I can't prove it, but I'd want some strong evidence that current prices are sustainable before investing a few million baht in a condo.

Again, have you lived in a condo in Chiang Mai? Or do you simply drive by them and hear things that sales agents tell you?

[AnotherOneAmerican]

I'm guessing CB has made a significant investment in an overpriced CM condo.

So we can understand his interest in not being viewed as a 'loser' either by himself or others.

[cheeryble]

I'm guessing CB has made a significant investment in an overpriced CM condo.

So we can understand his interest in not being viewed as a 'loser' either by himself or others.

Haha that's your stab in the dark eh?

I would never be other than honest, and I think the question about a bubble is legitimate.

However even as I examine the situation I see many friends and acquaintances buying units, and mostly for personal or family use. Only a couple are to rent.....with personal use likely later. The renters aren't bothered about return but to get money into baht based property long term. All purchases but one are cash, and the one partial mortgagee has very solid income.

My contributions to the forum may sometimes be playing the devil's witness, but I try to be as even handed as possible and think I have brought some worthwhile opinion here.

My conclusion is a slowdown in growth looks likely but it's quite possible i could be proved wrong.

In any case in international terms condos are still very good value and shared upkeep brings very meaningful economy of scale.

Edited May 15, 2013 by cheeryble

[binjalin]

I've lived in three different condominiums in Chiang Mai, in every one the parking was full but most of the units empty.

You managed to choose the three condominiums where "most of the units were empty"?

I wouldn't be able to take you to ONE like that.....certainly after it's had time to sell.

(unless you mean empty as in residents were away a lot)

ps: If I see a variety of different blinds and curtains at the windows I draw the obvious conclusion.

pps: actually I heard the Unique hadn't filled up yet, but that might not be surprising givenonly three months old and it's lousy location feet from next door condo and there's a Unique 2 now on plan which will steal the view of Unique 1 the other way!!

Have you lived in any condos in Chiang Mai? I've lived in Hillside 4, Cityview Condo, and Hillside 3, each for at least a year, most of rooms empty on the floors I lived on. That doesn't mean they weren't owned, but they were empty. Different blinds and curtains means that the owners chose not to put the same blinds and curtains in every unit. Wnen I open my curtains in my current Hillside 3 unit I have an excellent view of the new Punna Condo, and over the past four years I've seen activity in only a small number of the rooms.

The fact that units are owned does not mean there isn't a bubble. Most of the houses were owned when the bubble burst in the U.S. and many parts of Europe.

well you have picked the 'top two' for worst parking:

1. CityView

2. Hillside Four

followed by (in no particular order)

Gaele Thong, Riverside, Supanich

[AnotherOneAmerican]

I'm guessing CB has made a significant investment in an overpriced CM condo.

So we can understand his interest in not being viewed as a 'loser' either by himself or others.

Haha that's your stab in the dark eh?

I would never be other than honest, and I think the question about a bubble is legitimate.

However even as I examine the situation I see many friends and acquaintances buying units, and mostly for personal or family use. Only a couple are to rent.....with personal use likely later. The renters aren't bothered about return but to get money into baht based property long term. All purchases but one are cash, and the one partial mortgagee has very solid income.

My contributions to the forum may sometimes be playing the devil's witness, but I try to be as even handed as possible and think I have brought some worthwhile opinion here.

My conclusion is a slowdown in growth looks likely but it's quite possible i could be proved wrong.

In any case in international terms condos are still very good value and shared upkeep brings very meaningful economy of scale.

I am purchasing one 1.8M house 12Km outside town to live in, no secret (145m2).

You managed to post no information about your CM property circumstances, why the big secret?

Go on, how much did you spend on a condo/s

[CMNightRider]

I'm guessing CB has made a significant investment in an overpriced CM condo.

So we can understand his interest in not being viewed as a 'loser' either by himself or others.

Haha that's your stab in the dark eh?

I would never be other than honest, and I think the question about a bubble is legitimate.

However even as I examine the situation I see many friends and acquaintances buying units, and mostly for personal or family use. Only a couple are to rent.....with personal use likely later. The renters aren't bothered about return but to get money into baht based property long term. All purchases but one are cash, and the one partial mortgagee has very solid income.

My contributions to the forum may sometimes be playing the devil's witness, but I try to be as even handed as possible and think I have brought some worthwhile opinion here.

My conclusion is a slowdown in growth looks likely but it's quite possible i could be proved wrong.

In any case in international terms condos are still very good value and shared upkeep brings very meaningful economy of scale.

I am purchasing one 1.8M house 12Km outside town to live in, no secret (145m2).

You managed to post no information about your CM property circumstances, why the big secret?

Go on, how much did you spend on a condo/s

Did you have to purchase the land in a Thais name or did you do the land purchase some other way?

[CobraSnakeNecktie]

It's all about China

If you get a chance check out this episode of Vice on HBO

http://hbo.vice.com/episode-six

Jim Chanos the fund manager claims up to 50% of China's recent growth is from domestic construction.

For comparison the US economy leading up to the real estate bubble was only about 17% domestic construction.

They might keep building for a few years before the reckoning.

This adjustment of investment reality and capital flight will have a significant effect on Thailand's real estate valuations.

Edited May 15, 2013 by CobraSnakeNecktie

[scotinsiam]

I've lived in three different condominiums in Chiang Mai, in every one the parking was full but most of the units empty.

You managed to choose the three condominiums where "most of the units were empty"?

I wouldn't be able to take you to ONE like that.....certainly after it's had time to sell.

(unless you mean empty as in residents were away a lot)

ps: If I see a variety of different blinds and curtains at the windows I draw the obvious conclusion.

pps: actually I heard the Unique hadn't filled up yet, but that might not be surprising givenonly three months old and it's lousy location feet from next door condo and there's a Unique 2 now on plan which will steal the view of Unique 1 the other way!!

I agree. The fact that condos are so easy to "lock and go" is why many expats choose to rent or buy them, as many only live here part time, or live here full time but travel overseas for work. I did this, and still do, for many years, and know of many others in the same position. A condo may sit empty for half of the year, but does not mean its un occupied.

I have bought one in CM and it is in a great location and close to everything I want. The building is completely sold and my place will be empty for 6 - 8 months per year as I work in Bangkok / Sattahip so keep rental places there and in Pattaya.

It has good security which is important to me and plenty of parking - lol, so my truck can sit there while I am elsewhere - I have done 600KM this year since I got it.

[heybruce]

I'm guessing CB has made a significant investment in an overpriced CM condo.

So we can understand his interest in not being viewed as a 'loser' either by himself or others.

Haha that's your stab in the dark eh?

I would never be other than honest, and I think the question about a bubble is legitimate.

However even as I examine the situation I see many friends and acquaintances buying units, and mostly for personal or family use. Only a couple are to rent.....with personal use likely later. The renters aren't bothered about return but to get money into baht based property long term. All purchases but one are cash, and the one partial mortgagee has very solid income.

My contributions to the forum may sometimes be playing the devil's witness, but I try to be as even handed as possible and think I have brought some worthwhile opinion here.

My conclusion is a slowdown in growth looks likely but it's quite possible i could be proved wrong.

In any case in international terms condos are still very good value and shared upkeep brings very meaningful economy of scale.

I am purchasing one 1.8M house 12Km outside town to live in, no secret (145m2).

You managed to post no information about your CM property circumstances, why the big secret?

Go on, how much did you spend on a condo/s

1.8 million baht? According to cheeryble "Have heard the latest going up Nimmana is 60% booked off plan no footings in yet. I have been told it's 76,000 psm." So for the same amount you could have bought a 24 square meter condo on Nimmanhamin. Bet you're feeling some serious buyer's remorse now.

[cheeryble]

1.8 million baht? According to cheeryble "Have heard the latest going up Nimmana is 60% booked off plan no footings in yet. I have been told it's 76,000 psm." So for the same amount you could have bought a 24 square meter condo on Nimmanhamin. Bet you're feeling some serious buyer's remorse now.

Yes from the look of the unit size on the video it looks like prices will start at about 3.5 or 4m.

I wouldn't touch it with a bargepole and the outlook is mediocre, but as we all know the real money here is in Thai hands and like everywhere they like to have location location location.

Personally though Nimman is a very nice area I wouldn't want to live there and having lived years in the heart of Chelsea (London) and frequented the Chelsea Arts Club, Aspinalls, the Speakeasy, the Middle Earth, the Queens Elm and the Cross Keys and the like where there is real depth in people and they actually have something interesting to say and are leaders in their field even if it's only being bohemian, who actually know what a conversation is rather than sitting fiddling with a cellphone taking photos of themselves and talking about what they just ate and how "aroi" it was.

For me that's depressing but hey the shops are nice and the girls are very pretty.

Edited May 15, 2013 by cheeryble

[elektrified]

1.8 million baht? According to cheeryble "Have heard the latest going up Nimmana is 60% booked off plan no footings in yet. I have been told it's 76,000 psm." So for the same amount you could have bought a 24 square meter condo on Nimmanhamin. Bet you're feeling some serious buyer's remorse now.

Yes from the look of the unit size on the video it looks like prices will start at about 3.5 or 4m.

[/url]
I wouldn't touch it with a bargepole and the outlook is mediocre, but as we all know the real money here is in Thai hands and like everywhere they like to have location location location.
Personally though Nimman is a very nice area I wouldn't want to live there and having lived years in the heart of Chelsea (London) and frequented the Chelsea Arts Club, Aspinalls, the Speakeasy, the Middle Earth, the Queens Elm and the Cross Keys and the like where there is real depth in people and they actually have something interesting to say and are leaders in their field even if it's only being bohemian, who actually know what a conversation is rather than sitting fiddling with a cellphone taking photos of themselves and talking about what they just ate and how "aroi" it was.
For me that's depressing but hey the shops are nice and the girls are very pretty.

Well said. Pretty much mirrors my thoughts. Edited May 16, 2013 by elektrified

[Thighlander]

76000 psm is 250 psf. I just sold in Phoenix at about 60 psf. Minimum wage is 7.80 per hour. Taiwanese buyer, paying cash.

Edited May 16, 2013 by Thighlander

[cloudhopper]

....and the Taiwanese guy gets to be the legal owner of the land and house too!

[cheeryble]

76000 psm is 250 psf. I just sold in Phoenix at about 60 psf. Minimum wage is 7.80 per hour. Taiwanese buyer, paying cash.

Congratulations on your sale.

Did you have to wait long or is the market improved?

Yes an international comparison is valid but perhaps not with your place in Arizona, where there is an awful lot of land.

Nor is the Nimmana a typical price example here.

Was your condo in the centre of a boutique area? Did it look like the video?

In America building materials are very cheap, and though labour isn't so cheap it is highly efficient and fast.

What I'm saying is Arizona ain't Paris London, New York City, Sydney or Tokyo or even Bangkok, where many buyers here come from.

Edited May 16, 2013 by cheeryble

[Thighlander]

They were selling for 220 psf, five years ago. New building cost would be 120 psf+land. http://www.zillow.com/homedetails/2121-W-Royal-Palm-Rd-APT-1065-Phoenix-AZ-85021/68956935_zpid/

[heybruce]

76000 psm is 250 psf. I just sold in Phoenix at about 60 psf. Minimum wage is 7.80 per hour. Taiwanese buyer, paying cash.

What I'm saying is Arizona ain't Paris London, New York City, Sydney or Tokyo or even Bangkok, where many buyers here come from.

They were selling for 220 psf, five years ago. New building cost would be 120 psf+land. http://www.zillow.com/homedetails/2121-W-Royal-Palm-Rd-APT-1065-Phoenix-AZ-85021/68956935_zpid/

Interesting. Five years ago house prices per square foot were almost the same as condo prices in Chiang Mai now. Then the bubble burst and prices fell to less than a third of their peak values.

Phoenix Arizona is not Paris, London, New York City, Sydney or Tokyo, but neither is Chiang Mai. Phoenix, like Chiang Mai, is a popular retirement city with one large and several smaller universities, and a population almost ten times that of Chiang Mai. While there's lots of land (though not a lot of water) for development near Phoenix, there's no shortage of land or water around Chiang Mai, and land prices here, for those who can buy it, are quite reasonable. There is a wide range of prices for condos in the central Phoenix or Scottsdale area, but all that I looked at were below $220 per square foot, and most well below that price--the average seems to be around $100 to $120 per square foot, and some were much lower than that.

Obviously there are too many differences between life in a city in the southwest of the U.S. and life in Chiang Mai Thailand to attempt to summarize. However I still think evidence suggest there is a bubble in Chiang Mai. Of course in Thailand there may not be a bursting of the bubble, just many years with lots of empty condos owned by people who refuse to sell at a loss. People who want to sell won't be able to do so, and people who want to rent will find some bargains.

[binjalin]

I've lived in three different condominiums in Chiang Mai, in every one the parking was full but most of the units empty.

You managed to choose the three condominiums where "most of the units were empty"?

I wouldn't be able to take you to ONE like that.....certainly after it's had time to sell.

(unless you mean empty as in residents were away a lot)

ps: If I see a variety of different blinds and curtains at the windows I draw the obvious conclusion.

pps: actually I heard the Unique hadn't filled up yet, but that might not be surprising givenonly three months old and it's lousy location feet from next door condo and there's a Unique 2 now on plan which will steal the view of Unique 1 the other way!!

I agree. The fact that condos are so easy to "lock and go" is why many expats choose to rent or buy them, as many only live here part time, or live here full time but travel overseas for work. I did this, and still do, for many years, and know of many others in the same position. A condo may sit empty for half of the year, but does not mean its un occupied.

I have bought one in CM and it is in a great location and close to everything I want. The building is completely sold and my place will be empty for 6 - 8 months per year as I work in Bangkok / Sattahip so keep rental places there and in Pattaya.

It has good security which is important to me and plenty of parking - lol, so my truck can sit there while I am elsewhere - I have done 600KM this year since I got it.

you bought in Unique?

[AnotherOneAmerican]

I'm guessing CB has made a significant investment in an overpriced CM condo.

So we can understand his interest in not being viewed as a 'loser' either by himself or others.

Haha that's your stab in the dark eh?

I would never be other than honest, and I think the question about a bubble is legitimate.

However even as I examine the situation I see many friends and acquaintances buying units, and mostly for personal or family use. Only a couple are to rent.....with personal use likely later. The renters aren't bothered about return but to get money into baht based property long term. All purchases but one are cash, and the one partial mortgagee has very solid income.

My contributions to the forum may sometimes be playing the devil's witness, but I try to be as even handed as possible and think I have brought some worthwhile opinion here.

My conclusion is a slowdown in growth looks likely but it's quite possible i could be proved wrong.

In any case in international terms condos are still very good value and shared upkeep brings very meaningful economy of scale.

I am purchasing one 1.8M house 12Km outside town to live in, no secret (145m2).

You managed to post no information about your CM property circumstances, why the big secret?

Go on, how much did you spend on a condo/s

Did you have to purchase the land in a Thais name or did you do the land purchase some other way?

Yes, I did make am making the purchase in a Thais name, my own Thai name.

Edited May 16, 2013 by AnotherOneAmerican

[cheeryble]

Yes, I did make am making the purchase in a Thais name, my own Thai name.

HAHA!

A touche to end all touches.

[CMNightRider]

Yes, I did make am making the purchase in a Thais name, my own Thai name.

HAHA!

A touche to end all touches.

Yes, I did make am making the purchase in a Thais name, my own Thai name.

Well, good for you that you are a Thai citizen that can legally own land in Thailand.

[Thighlander]

76000 psm is 250 psf. I just sold in Phoenix at about 60 psf. Minimum wage is 7.80 per hour. Taiwanese buyer, paying cash.

Congratulations on your sale.

Did you have to wait long or is the market improved?

Yes an international comparison is valid but perhaps not with your place in Arizona, where there is an awful lot of land.

Nor is the Nimmana a typical price example here.

Was your condo in the centre of a boutique area? Did it look like the video?

In America building materials are very cheap, and though labour isn't so cheap it is highly efficient and fast.

What I'm saying is Arizona ain't Paris London, New York City, Sydney or Tokyo or even Bangkok, where many buyers here come from.

Commodity prices are global. Took about 20 days to get it under contract.

This is a chart of a real estate bubble bursting. A metro area of 4.2 million people.

Edited May 16, 2013 by Thighlander

[CMNightRider]

Yes, I did make am making the purchase in a Thais name, my own Thai name.

HAHA!

A touche to end all touches.

HA! HA!, touche what???

[cheeryble]

Thankyou for the chart Thighlander.

To recur, it would need:

1. Giveaway mortgages used in a very large percentage of sales.

2. High default levels.

3. Another global and/or national financial collapse.

As to 1, we know a lot of sales here are cash, but I for one woukd be interested to know whether 100% mortgages which have been mentioned only extend to select groups like government employees.

Do you have evidence about these?

[WinnieTheKhwai]

<p>I don't see why a mortgage bubble is required..  Thinking back at what started in the USA, the property crisis caused the banking crisis.   That doesn't mean that a banking (crisis) absolutely needs to be a consequence.  Indeed if you build Chiang Mai completely full with condominiums so you have 100 empty condos for every resident, then inevitably the rents and resale prices come down (yes, owners with plenty money won't lower prices, but anyone who would like some money will need to rent at a price that the market will bear.)</p>

<p> </p>

<p>If this massive oversupply was financed with cash and not based on a property spiel where a mortgage repayment depended on being able to rent out the property, then you will still have that property bubble bursting, but limited effect on banking.</p>

Edited May 17, 2013 by WinnieTheKhwai

[cheeryble]

Of course what normally happens is supply gradually fits itself to demand with maybe an interim waiting period for market adjustment.

It's a negative feedback mechanism as with other forms of systems.

Edited May 17, 2013 by cheeryble

[AnotherOneAmerican]

Thankyou for the chart Thighlander.

To recur, it would need:

1. Giveaway mortgages used in a very large percentage of sales.

2. High default levels.

3. Another global and/or national financial collapse.

As to 1, we know a lot of sales here are cash, but I for one woukd be interested to know whether 100% mortgages which have been mentioned only extend to select groups like government employees.

Do you have evidence about these?

There are very few cash sales.

Foreigners tend to pay cash as they can't get credit, and less than 50,000 foreigners in CM.

The 1M Thais usually buy on credit.

I don't consider 5% of the population of the CM metropolitan area to be significant.

Edited May 17, 2013 by AnotherOneAmerican

[Dante99]

Thankyou for the chart Thighlander.

To recur, it would need:

1. Giveaway mortgages used in a very large percentage of sales.

2. High default levels.

3. Another global and/or national financial collapse.

As to 1, we know a lot of sales here are cash, but I for one woukd be interested to know whether 100% mortgages which have been mentioned only extend to select groups like government employees.

Do you have evidence about these?

Any one of the three could do it and there are other possible causes.

Re: 100% mortgages. A Thai friend advised me that he got a 120% mortgage, an occurrence that has not been uncommon in Thailand's past, part is "sometimes" kicked back to the banker. So 100% should not be hard to find but like everything in Thailand, deals are only available to select groups which often can be joined with the right papers.

.

[cheeryble]

Just learned a little more about mortgage availability from someone whose wife just got one.

He said 100% was only available to govt and bank employees (I'm not saying there are not exceptions).

His wife managed to get an 85%.

He said that what you could get was a mortgage based on having a business for not long, but the books would have to be shown and what seemd to show that the banks actually meant business was they rang up to check on his wife's employment, and in the case of a friend of hers getting mortgage via having a shop, they actually went round to check the business and the books.

This doesn't sound like America 2007/8

ps: The house they are waiting for is in a moobahn which turns out to be approx 50% sold but is nowhere near fully built or finished.

Seems to be a lot of demand.