Thai Banks Slow Lending To Small Developers

[webfact]

BUBBLES
Banks slow lending to small developers
SUCHEERA PINIJPARAKARN
THE NATION

BANGKOK: -- Banks have slowed down the provision of loans to small provincial property developers that lack both their own plots of land and sufficient capital, out of concern over a bubble possibly developing in the provincial market.

Kasikornbank executive vice president Patchara Samalapa said recently that the bank had slowed its extension of loans to small developers since late last year, because of concern over an overheating of the property market in the provinces.

Major developers' expansion of projects to the provinces has encouraged local small companies to rush to develop their own projects, he said.

The banks are now more cautious about the rapid growth of the property sector and should not participate in lending to those developers that possess neither the land nor the funding, despite the property boom in the provinces, he said.

The Bank of Thailand's warning about the property market is reasonable grounds for slowing down project financing for smaller developers, he added.

"Major developers have enough capital to buy plots of land, unlike small developers, which don't have their own plots and seek credit to purchase land. We are therefore unable to support them because of the high risk," Patchara said.

Kasikornbank's outstanding lending to small developers accounts for Bt10 billion of its overall small and medium-sized enterprise portfolio of Bt450 billion, he said.

Thanachart Bank, meanwhile, will also only consider lending to local developers if they have their own plots, to avert the likely risk from this segment of the market, said executive vice president Jiratchyuth Amyongka.

The bank has been paying less attention to small developers for a while, unless they have enough cash flow and/or a sufficient backlog of work, he said.

With local developers having been influenced by the arrival of major developers, which have broadened their projects to the provinces, Thanachart Bank has had to be more selective and lend only to those with potential in order to ensure their ability to repay debt, he added.

"Some local developers might see an opportunity from provincial urbanisation and seek project finance to operate on a larger scale than before, which is a worry for the bank. We suggest to these companies that they develop their projects phase by phase."

There is still room at the bank for local developers, but it has to select those involved in segments with good potential, such as low-rise developments, because such projects are not the target of speculators, unlike the projects of major developers in the provinces, he stressed.

According to the Bank of Thailand's latest monthly monetary-policy report, the property sector in some areas has rapidly expanded and the central bank has found a higher rate of speculation.

The Monetary Policy Committee (MPC) will closely watch the situation to reduce the impact from the increased speculation, the April report said.

Even though lending by commercial banks and the repayment ability of borrowers remain stable, it found signs of lending relaxation, reflecting the ratio of income to debt, which fell to 4.4 times in February from the average of 4.6 times five years ago.

The central bank surveyed property developers in the provinces and found that the number of condominium projects had increased and some speculation had been observed, reflected by the high rate of lease agreements, causing the projects to be sold rapidly. The report noted that the number of lease agreements sold to other buyers was increasing as well.

Ruechukorn Siriyothin, assistant BOT governor in charge of financial-institutions policy, said it was not clear how much speculation was going on because developers had not provided much detail; however, the central bank's regional offices were monitoring the matter.

"Some projects sold out from attractive promotions," she said.

The debt-to-equity ratio of listed property developers increased between 2010 and 2012. Land and Houses had a D/E ratio of 1.05 last year against 0.75 in 2010. Pruksa Real Estate's ratio was 1.18 in 2012, up from 0.45 in 2010, and Sansiri's was 2.11, up from 1.5.

According to a survey by the Agency for Real Estate Affairs (AREA), Phuket had 15,500 new condominium units worth Bt34.6 billion as of the end of last month, some 75 per cent of which had already been sold.

Sales average 1,630 units a month, so the inventory remaining in the Phuket market would only take about 2.3 months to sell out.

Chiang Mai had 10,700 new residential units worth Bt23.4 billion as of March 31, some 71 per cent of which had been sold. The absorption rate in the province is 2,010 units a month, so the inventory will take only six weeks to be depleted.

Meanwhile, the Pattaya market had 122,600 new condos worth Bt321 billion. With 75 per cent having been sold and demand averaging 5,850 units a month, the market now has 5.2 months of inventory, AREA said.


-- The Nation 2013-04-18

[yoshiwara]

Banks all over are reluctant to make loans based on projected earnings from a new development.

What they want to see is an existing net income stream to support repayments. For a budding entrepreneur this might mean holding on to an existing salaried career until at least a loan has been secured on a new project.

[realenglish1]

While the banks have it right in so far as the amount of sales being made monthly they are in for a rude awakining.

Do the math . If you buy a 1 bedroom condo for 5 million then you need to rent it out for about 30,000 per month however that is very high and you can find many properties that rent for much much less

Many many Thais buy a condo with the idea that they can rent it out after. The problem is there is saturation in the market place for rentals and soon many Thais will realize that they cannot rent out for what they believed they could and cannot make the payments to the bank and are forced to sell.

This is a big bubble waiting to happen and few if any Thais have taken notice

[KhunHehe]

fearing condo bubble...this is the mother of all bubblicious bubbles.

"I'll buy in five years," I told a young female agent showing me a Phra Khanong two-bedroom unit for 15,000,000 baht.

"Why?" she asked.

"Because it'll be less than half price then," I responded knowing that my free lunch invite had just been canceled. (True. I was not given the buffet and drinks in the lobby but was ushered off the elevator on the ground floor and presented a saccharine smile.)

"How do you know that?" she asked. [We were boarding the elevator when she asked.]

"How long have you been in this business?" I asked.

"Three years," she said proudly.

"So you have seen prices escalate. [quizzical look] Go up every day," I said. [Elevator doors opening on the ground floor.]

"Yes, why?"

"Because you can't imagine prices falling, and because it seems crazy, it will happen." [Agent boards elevator, nonplussed.]

I had the same discussion with colleagues in the US who were doubling down on real estate before the crash, internet stocks before the 2001 tumble, and, most recently, when wandering through Chinatown, Bangkok and the Chinese gold shops were packed after gold fell about $50 to around $1,700 USD.

That's one nice thing about getting old. The eyes may not work as well, but they see a lot more.

Edited April 18, 2013 by KhunHehe

[gtm2k]

well done.... its about time someone took notice and did something !

[Danbit]

I do not understand the Condo market in Thailand. I live at Panya Resort, Crystal Bay Golf Club. There are 3 high rise buildings from 1990.

All condoes are sold, most are empty only about 5% occupation, prices are allmost the same as when they was build/sold. You can see what is for sale/rent in the C building at www.thaigolf.dk

Most of them are for sale, when sold, then the prices ar discounted to the 1990 prices, could be 5% higher.

The owners do not have much money so the fight, not to pay maintenance fee, it will be paid, when they sell the condo and it takes years.

Now they build 3 new building at Sukhumit Road "Paradiso", they will probably be sold and for speculation, there is no need for them, as there allready are plenty of empty condoes for rent or sale. Prices are so high that normal Thais are not able to rent them.

I expect a great bubble soon and the Banks will suffer.

[hansnl]

While the banks have it right in so far as the amount of sales being made monthly they are in for a rude awakining.

Do the math . If you buy a 1 bedroom condo for 5 million then you need to rent it out for about 30,000 per month however that is very high and you can find many properties that rent for much much less

Many many Thais buy a condo with the idea that they can rent it out after. The problem is there is saturation in the market place for rentals and soon many Thais will realize that they cannot rent out for what they believed they could and cannot make the payments to the bank and are forced to sell.

This is a big bubble waiting to happen and few if any Thais have taken notice

Indeed.

In Khon Kaen, many new condo projects for the rental market are very lightly occupied, stopped during construction, etc.

The condo projects for sale are vastly overpriced if built by Bangkok developers, and do not sell very fast.

Projects by "local" developers are cheaper, however, sales are slow.

I was in the market to buy a condo.

Not any more after seeing the signs.

[hourlay]

fearing condo bubble...this is the mother of all bubblicious bubbles.

"I'll buy in five years," I told a young female agent showing me a Phra Khanong two-bedroom unit for 15,000,000 baht.

"Why?" she asked.

"Because it'll be less than half price then," I responded knowing that my free lunch invite had just been canceled. (True. I was not given the buffet and drinks in the lobby but was ushered off the elevator on the ground floor and presented a saccharine smile.)

"How do you know that?" she asked. [We were boarding the elevator when she asked.]

"How long have you been in this business?" I asked.

"Three years," she said proudly.

"So you have seen prices escalate. [quizzical look] Go up every day," I said. [Elevator doors opening on the ground floor.]

"Yes, why?"

"Because you can't imagine prices falling, and because it seems crazy, it will happen." [Agent boards elevator, nonplussed.]

I had the same discussion with colleagues in the US who were doubling down on real estate before the crash, internet stocks before the 2001 tumble, and, most recently, when wandering through Chinatown, Bangkok and the Chinese gold shops were packed after gold fell about $50 to around $1,700 USD.

That's one nice thing about getting old. The eyes may not work as well, but they see a lot more.

In summary, Real Estate anywhere in the world => not good , share anywhere in the world => not good , gold => not good.

Before , it was nice to get some interest on your K . Now it's already nice to just keep your K as it is.

What can we do with our money , please ?

[ChanJoonYee]

fearing condo bubble...this is the mother of all bubblicious bubbles.

"I'll buy in five years," I told a young female agent showing me a Phra Khanong two-bedroom unit for 15,000,000 baht.

"Why?" she asked.

"Because it'll be less than half price then," I responded knowing that my free lunch invite had just been canceled. (True. I was not given the buffet and drinks in the lobby but was ushered off the elevator on the ground floor and presented a saccharine smile.)

"How do you know that?" she asked. [We were boarding the elevator when she asked.]

"How long have you been in this business?" I asked.

"Three years," she said proudly.

"So you have seen prices escalate. [quizzical look] Go up every day," I said. [Elevator doors opening on the ground floor.]

"Yes, why?"

"Because you can't imagine prices falling, and because it seems crazy, it will happen." [Agent boards elevator, nonplussed.]

I had the same discussion with colleagues in the US who were doubling down on real estate before the crash, internet stocks before the 2001 tumble, and, most recently, when wandering through Chinatown, Bangkok and the Chinese gold shops were packed after gold fell about $50 to around $1,700 USD.

That's one nice thing about getting old. The eyes may not work as well, but they see a lot more.

In summary, Real Estate anywhere in the world => not good , share anywhere in the world => not good , gold => not good.

Before , it was nice to get some interest on your K . Now it's already nice to just keep your K as it is.

What can we do with our money , please ?

Tell that to the people queuing up overnight in Singapore to buy condo units even before they are built.

[KhunHehe]

fearing condo bubble...this is the mother of all bubblicious bubbles.

"I'll buy in five years," I told a young female agent showing me a Phra Khanong two-bedroom unit for 15,000,000 baht.

"Why?" she asked.

"Because it'll be less than half price then," I responded knowing that my free lunch invite had just been canceled. (True. I was not given the buffet and drinks in the lobby but was ushered off the elevator on the ground floor and presented a saccharine smile.)

"How do you know that?" she asked. [We were boarding the elevator when she asked.]

"How long have you been in this business?" I asked.

"Three years," she said proudly.

"So you have seen prices escalate. [quizzical look] Go up every day," I said. [Elevator doors opening on the ground floor.]

"Yes, why?"

"Because you can't imagine prices falling, and because it seems crazy, it will happen." [Agent boards elevator, nonplussed.]

I had the same discussion with colleagues in the US who were doubling down on real estate before the crash, internet stocks before the 2001 tumble, and, most recently, when wandering through Chinatown, Bangkok and the Chinese gold shops were packed after gold fell about $50 to around $1,700 USD.

That's one nice thing about getting old. The eyes may not work as well, but they see a lot more.

In summary, Real Estate anywhere in the world => not good , share anywhere in the world => not good , gold => not good.

Before , it was nice to get some interest on your K . Now it's already nice to just keep your K as it is.

What can we do with our money , please ?

I wouldn't buy gold, and I wouldn't buy real estate in Thailand. But Thailand was never really good for real estate when one considers how cheap rentals are here (notwithstanding the ridiculous prices one finds on Craigslist). Too many Thai buying condos on the MRT and BTS fringes and awaiting development in those areas. Maybe they're right, but the buildings are sitting vacant, some units rented. Of course, who would want to live way out there and sacrifice convenience while waiting for the malls to be built? It just seems like a bad investment.

The US dollar is losing value in Thailand, and the US market just entered a correction. On the positive side, US corrections over the past year or so have been short lived as the uptrend resumes. I'm sitting tight in equities.

Real estate looks attractive in the US, but that's because prices are firming up, not because they offer more than negligible ROI.

I wouldn't open an online book/media store.

US and Japanese equities are the place to be, but don't buy a set of falling knives.

Edited April 18, 2013 by KhunHehe

[KhunHehe]

fearing condo bubble...this is the mother of all bubblicious bubbles.

"I'll buy in five years," I told a young female agent showing me a Phra Khanong two-bedroom unit for 15,000,000 baht.

"Why?" she asked.

"Because it'll be less than half price then," I responded knowing that my free lunch invite had just been canceled. (True. I was not given the buffet and drinks in the lobby but was ushered off the elevator on the ground floor and presented a saccharine smile.)

"How do you know that?" she asked. [We were boarding the elevator when she asked.]

"How long have you been in this business?" I asked.

"Three years," she said proudly.

"So you have seen prices escalate. [quizzical look] Go up every day," I said. [Elevator doors opening on the ground floor.]

"Yes, why?"

"Because you can't imagine prices falling, and because it seems crazy, it will happen." [Agent boards elevator, nonplussed.]

I had the same discussion with colleagues in the US who were doubling down on real estate before the crash, internet stocks before the 2001 tumble, and, most recently, when wandering through Chinatown, Bangkok and the Chinese gold shops were packed after gold fell about $50 to around $1,700 USD.

That's one nice thing about getting old. The eyes may not work as well, but they see a lot more.

In summary, Real Estate anywhere in the world => not good , share anywhere in the world => not good , gold => not good.

Before , it was nice to get some interest on your K . Now it's already nice to just keep your K as it is.

What can we do with our money , please ?

Tell that to the people queuing up overnight in Singapore to buy condo units even before they are built.

They're doing the same thing in Thailand. Some people have a knack for buying at the top. The Japanese are particularly good at it.

[thenervoussurgeon]

In the 1st post it said that Pattaya has 122,600 new condo's with 75% sold ,i wonder how many of those have been sold to actuall buyers who intend to live in them ,how many are" Bought" by the developer to sell later how many are purchased to rent out and how many purchased as an investment to sell at a profit later? i bet not a lot are actually lived in.

[paulmw]

fearing condo bubble...this is the mother of all bubblicious bubbles.

"I'll buy in five years," I told a young female agent showing me a Phra Khanong two-bedroom unit for 15,000,000 baht.

"Why?" she asked.

"Because it'll be less than half price then," I responded knowing that my free lunch invite had just been canceled. (True. I was not given the buffet and drinks in the lobby but was ushered off the elevator on the ground floor and presented a saccharine smile.)

"How do you know that?" she asked. [We were boarding the elevator when she asked.]

"How long have you been in this business?" I asked.

"Three years," she said proudly.

"So you have seen prices escalate. [quizzical look] Go up every day," I said. [Elevator doors opening on the ground floor.]

"Yes, why?"

"Because you can't imagine prices falling, and because it seems crazy, it will happen." [Agent boards elevator, nonplussed.]

I had the same discussion with colleagues in the US who were doubling down on real estate before the crash, internet stocks before the 2001 tumble, and, most recently, when wandering through Chinatown, Bangkok and the Chinese gold shops were packed after gold fell about $50 to around $1,700 USD.

That's one nice thing about getting old. The eyes may not work as well, but they see a lot more.

In summary, Real Estate anywhere in the world => not good , share anywhere in the world => not good , gold => not good.

Before , it was nice to get some interest on your K . Now it's already nice to just keep your K as it is.

What can we do with our money , please ?

Tell that to the people queuing up overnight in Singapore to buy condo units even before they are built.

Reason not much land left in Singapore to build on, many are moving across the causeway.

[how241]

well done.... its about time someone took notice and did something !

+1

[firestar]

fearing condo bubble...this is the mother of all bubblicious bubbles.

"I'll buy in five years," I told a young female agent showing me a Phra Khanong two-bedroom unit for 15,000,000 baht.

"Why?" she asked.

"Because it'll be less than half price then," I responded knowing that my free lunch invite had just been canceled. (True. I was not given the buffet and drinks in the lobby but was ushered off the elevator on the ground floor and presented a saccharine smile.)

"How do you know that?" she asked. [We were boarding the elevator when she asked.]

"How long have you been in this business?" I asked.

"Three years," she said proudly.

"So you have seen prices escalate. [quizzical look] Go up every day," I said. [Elevator doors opening on the ground floor.]

"Yes, why?"

"Because you can't imagine prices falling, and because it seems crazy, it will happen." [Agent boards elevator, nonplussed.]

I had the same discussion with colleagues in the US who were doubling down on real estate before the crash, internet stocks before the 2001 tumble, and, most recently, when wandering through Chinatown, Bangkok and the Chinese gold shops were packed after gold fell about $50 to around $1,700 USD.

That's one nice thing about getting old. The eyes may not work as well, but they see a lot more.

There is another side to every coin.

I've seen people in the UK say it's a bubble then look at the prices double every 7 years while they sat on the sidelines.

Gold is down 15%, it brings it down to 2011 levels, there was a huge amount of money to be made in the run up for the majority of investors.

Property is probably a little over-bought having said that in premium Bangkok areas prices are still lower than almost any city of similar size.

[wjthornton]

Did anybody notice that the article says Chiangmai has about 10,000 units selling 2,000 a MONTH and will be depleted in less than six WEEKS? No wonder Thais get in trouble with bubbles given math like that!

[Markaew]

Maybe these developers believed the nonsense about the news of increased tourism by the millions and expected sales to increase as a result. Their lies are catching up with them.

[Dr Wanchai]

fearing condo bubble...this is the mother of all bubblicious bubbles.

"I'll buy in five years," I told a young female agent showing me a Phra Khanong two-bedroom unit for 15,000,000 baht.

"Why?" she asked.

"Because it'll be less than half price then," I responded knowing that my free lunch invite had just been canceled. (True. I was not given the buffet and drinks in the lobby but was ushered off the elevator on the ground floor and presented a saccharine smile.)

"How do you know that?" she asked. [We were boarding the elevator when she asked.]

"How long have you been in this business?" I asked.

"Three years," she said proudly.

"So you have seen prices escalate. [quizzical look] Go up every day," I said. [Elevator doors opening on the ground floor.]

"Yes, why?"

"Because you can't imagine prices falling, and because it seems crazy, it will happen." [Agent boards elevator, nonplussed.]

I had the same discussion with colleagues in the US who were doubling down on real estate before the crash, internet stocks before the 2001 tumble, and, most recently, when wandering through Chinatown, Bangkok and the Chinese gold shops were packed after gold fell about $50 to around $1,700 USD.

That's one nice thing about getting old. The eyes may not work as well, but they see a lot more.

I surmise that you are a multi millionaire (Western srandards) by now since you seem to have the ability to predict the future !

Growing old sometimes instilled in oneself delusion of grandeur !

[KhunHehe]

fearing condo bubble...this is the mother of all bubblicious bubbles.

"I'll buy in five years," I told a young female agent showing me a Phra Khanong two-bedroom unit for 15,000,000 baht.

"Why?" she asked.

"Because it'll be less than half price then," I responded knowing that my free lunch invite had just been canceled. (True. I was not given the buffet and drinks in the lobby but was ushered off the elevator on the ground floor and presented a saccharine smile.)

"How do you know that?" she asked. [We were boarding the elevator when she asked.]

"How long have you been in this business?" I asked.

"Three years," she said proudly.

"So you have seen prices escalate. [quizzical look] Go up every day," I said. [Elevator doors opening on the ground floor.]

"Yes, why?"

"Because you can't imagine prices falling, and because it seems crazy, it will happen." [Agent boards elevator, nonplussed.]

I had the same discussion with colleagues in the US who were doubling down on real estate before the crash, internet stocks before the 2001 tumble, and, most recently, when wandering through Chinatown, Bangkok and the Chinese gold shops were packed after gold fell about $50 to around $1,700 USD.

That's one nice thing about getting old. The eyes may not work as well, but they see a lot more.

I surmise that you are a multi millionaire (Western srandards) by now since you seem to have the ability to predict the future !

Growing old sometimes instilled in oneself delusion of grandeur !I

Actually, you're right. And I owe it all to hard knocks, hard work, and finally enjoying life in SE Asia.

I would offer my condolences on your financial situation (based on the snide envy your post shows), but I know that your little bank account is very narak, as the Thai say, and cute plays well here.

Your sense of humor, on the other hand, appears as impoverished as your ability to learn from others. Don't count on experience to be your guide. I see your ilk falling off bar stools, remounting, and falling again. But there's always a smile handy...like a baby full of gas.

Edited April 18, 2013 by KhunHehe

[firestar]

Did anybody notice that the article says Chiangmai has about 10,000 units selling 2,000 a MONTH and will be depleted in less than six WEEKS? No wonder Thais get in trouble with bubbles given math like that!

"Chiang Mai had 10,700 new residential units, some 71 per cent of which had been sold. The absorption rate in the province is 2,010 units a month, so the inventory will take only six weeks to be depleted."

With reading skills like that no wonder cranky Farangs can only look on bitterly as the Thais they lecture keep getting richer.

[laislica]

In the 1st post it said that Pattaya has 122,600 new condo's with 75% sold ,i wonder how many of those have been sold to actuall buyers who intend to live in them ,how many are" Bought" by the developer to sell later how many are purchased to rent out and how many purchased as an investment to sell at a profit later? i bet not a lot are actually lived in.

Yep, the developer Buys them - it's good for the stats and the bank, some buyers even rush to - snap one up before.....

On to the next project ha ha ha

[MarkCyr]

I think the real estate market in Thailand is the same as in Manila. Every mall you go to there are people pimping new developments. In Manila, agents will just walk over and talk to you in coffee shops. It seems like everybody is rushing to put that super cheap down payment on their dream condo.

The problem with dreams is that you eventually have to wake up. And a lot of people will have to do just that when it comes time to pay the balance on handover. I expect a lot of defaults (which is good if you plan to buy in 5 years!)

[fish fingers]

with the strong baht its quite possible there will be a short term exodus of farang deciding its the right time to move back and selling up

[techboy]

Maybe these developers believed the nonsense about the news of increased tourism by the millions and expected sales to increase as a result. Their lies are catching up with them.

Good grief. The whole point of your post is to Thai bash with the dubious assertion that there was misinformation about projected tourism. On that count I am not convinced that you are correct. And the theory about developers being motivated to build condos for people most of whom would not be here long enough to even sign a contract... No lies catching up with anybody- at least not based on your ummm stuff?...

[MaiChai]

The smart buyer buys a bank repo or a 2nd hand property that is established. Both of these seem to have little value to the Thai buyer? My motivation to buy a condo would be so I don't waste money on rent, but the price would need to be right and similar to renting. Guess I will be waiting for the bubble to burst?

[jack1964]

I really dont know how many of you making comment have actually purchased here in Thailand, and have had cause to complain about the market here, but this market is the same as any market in principal. I sold my last condo at a profit, behind the Avenue Shopping centre in Pattaya, and have just purchased my next one off plan. I have no complaints. It's once again down to Location, developer, and pricing. If we also look forward to a few years down the track, the congressing of most of our neighbouring countries into Pattaya, business growth, and development, and then throw a bullet train from Bangkok into the mix, and there you have the foundations for Pattaya to forge through any pre-concieved bubble. I wont buy in Phuket or Chiang Mai at this point, simply because I do not know their market as yet, but I have a very good grounding in Pattaya's, and have no fear of throwing my money at it, once again, location, developer, development and price. Its not the poorest of the poor Thai's throwing their money into speculative property in Pattaya, its educated middle and upper middle class, and the wealthy, many of whom are either paying cash, or those taking a loan who can see what the future of Pattaya should really be. 2018, a bullet train from Pattaya to Bangkok to go to work, 45 minutes, or a Bangkok to Bangkok journey in a car 120 minutes? The future aint that glum if as always you invest wisely, here, or anywhere around the globe.

[Markaew]

Maybe these developers believed the nonsense about the news of increased tourism by the millions and expected sales to increase as a result. Their lies are catching up with them.

Good grief. The whole point of your post is to Thai bash with the dubious assertion that there was misinformation about projected tourism. On that count I am not convinced that you are correct. And the theory about developers being motivated to build condos for people most of whom would not be here long enough to even sign a contract... No lies catching up with anybody- at least not based on your ummm stuff?...

I wasn't trying to convince you. If you can't see the potential connection then that is a weakness on your part.

[zig]

Maybe these developers believed the nonsense about the news of increased tourism by the millions and expected sales to increase as a result. Their lies are catching up with them.

I am not sure, if it has anything to do with the expectations on tourism. I know a few Thais who have bought condos as their second properties on loans simply because it is considered to be 'a good investment' based on the assumption that property prices always go up. At the same time many of the new condo buildings which are built in last few years are staying 70-80% empty, even supposedly all the units are sold. There are more and more new condo buildings being built and I just cannot see that this could continue forever.

By the way, I have seen some news last year that the government was considering implementing a property tax of 0.1% on residential units. I suppose that if they would reconsider and make it 0.5% or 1% like in many other countries then the bubble would burst much faster, but I doubt it will happen since most decision-making government officials probably have many such properties themselves.

[Markaew]

Maybe these developers believed the nonsense about the news of increased tourism by the millions and expected sales to increase as a result. Their lies are catching up with them.

I am not sure, if it has anything to do with the expectations on tourism. I know a few Thais who have bought condos as their second properties on loans simply because it is considered to be 'a good investment' based on the assumption that property prices always go up. At the same time many of the new condo buildings which are built in last few years are staying 70-80% empty, even supposedly all the units are sold. There are more and more new condo buildings being built and I just cannot see that this could continue forever.

By the way, I have seen some news last year that the government was considering implementing a property tax of 0.1% on residential units. I suppose that if they would reconsider and make it 0.5% or 1% like in many other countries then the bubble would burst much faster, but I doubt it will happen since most decision-making government officials probably have many such properties themselves.

Good info.

What I am saying is developers may see a percentage of guys coming into the country and falling for a girl and setting her up in a condo where he can come back and visit when he wants. Thais quickly go for the "can you buy me a car, condo, phone, operation, cow?" etc.

Edited April 19, 2013 by Markaew

[BlackJack]

In the 1st post it said that Pattaya has 122,600 new condo's with 75% sold ,i wonder how many of those have been sold to actuall buyers who intend to live in them ,how many are" Bought" by the developer to sell later how many are purchased to rent out and how many purchased as an investment to sell at a profit later? i bet not a lot are actually lived in.

a lot of developers hold a certain % of the units to guarantee that when the AGM comes around that they can use their voting rights to get anything passed - like hiking the common fees - which they get a % of - control the books and cream of 15% on any work done in the block

They also sell off the junk units as all the good ones are sold (to themselves of course)

Then release the good ones at a higher price later on.

win win