Thailand Safe From Property Bubble, Says Banker

[dcutman]

Its obvious you dont have access to Google, because you never have supply a link to your claims, and not even sure how you come up with some of this stuff.

i heard real estate bubble when when prices were skyrocketing and i hear real estate bubble when there is an oversupply (prices have been and are still dropping) e.g. in Thailand. without a common denominator or definition of "bubble" a discussion makes no sense.

NeverSure

These are the same geniuses who tell me there is no real estate bubble when my own two lying eyes know better.

in this context i don't understand the ridiculous rumour that real estate prices have risen 39% above estimated inflation during the last years. i have no idea what the markets in other concentrated urban areas are doing but i am rather well informed what's going on in the "greater Pattaya" area. here we have an oversupply bubble for both detached homes and condos with prices well below cost of new construction and far below construction cost prevailing 8-9 years ago.

some few exceptions (luxury condos prime seafront) exist as far as prices are concerned. however, the occupation/sold quota is extremely low.

http://www.phuketgazette.net/thailandnews/2013/Land-prices-upcountry-doubling-20542.html

http://www.nationmultimedia.com/business/Land-prices-soar-as-new-projects-launched-30201464.html

http://www.joelizzerd.com/latest/pattaya-hua-hin-and-phuket-land-prices-keep-rising

Your quotes/links are from a property developers blog, the Nation (which is notorious pro-property development) and a farang newspaper in Phuket, hardly the world centre of expertise on this subject I would suggest - fact is that you have offered three opinions as evidence and nothing more hence I suggest the case is unproven.

Do you believe the Bangkok Post? because it is there to. As well as 40 other sources saying the same exact thing. Google it.

The problem with you and many others, you are not willing to accept facts, and you will not/cannot offer any evidence, because your delusions dont have evidence.

I don't need any evidence, I'm not the one who's trying to prove their point, you are! All I say to you is that you haven't proved your case simply by producing links to a couple of Thai newspapers, that's about as authoratative and convincing as reading something in the Sun or the National Enquirer.

What ever! Stay in your dream world.

[lungmi]

Greece : Doctored economic balances to be member of Euroland.

Italy: Brother in mind of Thaksin ( who is the clone?) promoted corruption on all levels.

Spain: Real estate bubble created the crisis.

Why Thailand needs to copy the worst of European politics?

Oh, I understand. Thailand, the hub of counterfeit products, sometimes better than the original.

[Thereisnoif]

I almost peed on myself when I saw a billboard on the tollway on the way to the airport advertising super fancy houses for sale at between 1 to 3 Million Euros right in the middle of the very area that got heavily flooded last time around.

A fool's market if there ever was one .

[Naam]

I almost peed on myself when I saw a billboard on the tollway on the way to the airport advertising super fancy houses for sale at between 1 to 3 Million Euros right in the middle of the very area that got heavily flooded last time around.

A fool's market if there ever was one .

fools don't have 1 or more million EURos to spend on a home

[Thai at Heart]

NeverSure

These are the same geniuses who tell me there is no real estate bubble when my own two lying eyes know better.

i heard real estate bubble when when prices were skyrocketing and i hear real estate bubble when there is an oversupply (prices have been and are still dropping) e.g. in Thailand. without a common denominator or definition of "bubble" a discussion makes no sense.

in this context i don't understand the ridiculous rumour that real estate prices have risen 39% above estimated inflation during the last years. i have no idea what the markets in other concentrated urban areas are doing but i am rather well informed what's going on in the "greater Pattaya" area. here we have an oversupply bubble for both detached homes and condos with prices well below cost of new construction and far below construction cost prevailing 8-9 years ago.

some few exceptions (luxury condos prime seafront) exist as far as prices are concerned. however, the occupation/sold quota is extremely low.

It's very regionally sensitive obviously. I think you are correct, that there is a contradiction. There is a bubble in supply not prices per se.

As I said, it all depends who ends up holding the baby.

They need to get a handle on supply and move the unsold stock before building more.

i would wholeheartedly agree with you if i had not learned during the last years a surprising, even humiliating lesson. i live in a rather small but upscale 'moo baan', one of dozens (plural!) a Thai gentleman has "developed". because of some (insignificant) engineering advice i rendered a few years ago we have become (sort of / kinda) friends which allowed to me to ask some quite impolite questions such as (now i exaggerate a wee bit!) "how come your neck hair raising and cold shivers creating method of building detached homes in mini-instalments as far as construction stages are concerned has not lead to your bankruptcy a long time ago?"

he then explained to me that he was taught this specific method by his father who was taught by his grandfather who used the method before Mao came into power but then opted to move from southern China to Thailand because there applying the method became, unlike in communist China, again feasible. with a smile on his face he admitted that he has not the faintest idea about "markets, currencies, globalisation, economic cycles..." and that his method has one single but strong foundation, namely patience.

here's what he told me:

-i buy land,

-if possible land that will appreciate in value,

-if it doesn't appreciate during my life time it will appreciate during the life time of my children,

-i look for a subcontractor who is looking for a job and then start construction with foundations,

-i wait till i find subcontractors who look for jobs for other stages of construction and have them

carried out step by step,

-i don't let time frames or dead lines pressure me, the buildings will be finished sooner... or later.

-once they are finished i sell 50% and 50% i let.

-the profit of getting all construction stages far below average cost outweigh the cost of blocked capital.

-i don't finance!

-as simple as that.

For the normal Joe average this works, but at the end of the day it is now in the realm of stock market quoted developers building large developments.

I am not convinced there is a catastrophe around the corner, but presumably it is always better to have the market under supplied than in an oversupply situation

[chiangmaikelly]

I am not convinced there is a catastrophe around the corner, but presumably it is always better to have the market under supplied than in an oversupply situation

If there was a catastrophe around the corner there would be high unemployment. Decreasing currency value. Low rates of foreign investment. Declining GDP. Stock market crashing. Now lets take a look at the reality of the situation. No unemployment; importing workers from other countries. Increasing currency value and purchasing power. High rates of foreign investment. Increasing GDP. Stock market at all time highs.

Econ 101. You are welcome.

[thhMan]

Not much different than a car salesman telling you the second hand car your buying is a real gem and owned by some old lady that never drove it.

Never... Ever... trust the ramblings of someone with a vested interest in the business...

[Thai at Heart]

I am not convinced there is a catastrophe around the corner, but presumably it is always better to have the market under supplied than in an oversupply situation

If there was a catastrophe around the corner there would be high unemployment. Decreasing currency value. Low rates of foreign investment. Declining GDP. Stock market crashing. Now lets take a look at the reality of the situation. No unemployment; importing workers from other countries. Increasing currency value and purchasing power. High rates of foreign investment. Increasing GDP. Stock market at all time highs.

Econ 101. You are welcome.

I don't disagree with you, but they probably will need to act to avoid a property bubble.

[rubl]

I am not convinced there is a catastrophe around the corner, but presumably it is always better to have the market under supplied than in an oversupply situation

If there was a catastrophe around the corner there would be high unemployment. Decreasing currency value. Low rates of foreign investment. Declining GDP. Stock market crashing. Now lets take a look at the reality of the situation. No unemployment; importing workers from other countries. Increasing currency value and purchasing power. High rates of foreign investment. Increasing GDP. Stock market at all time highs.

Econ 101. You are welcome.

I don't disagree with you, but they probably will need to act to avoid a property bubble.

1997: low unemployment, artificial high exchange rate, decreasing foreign investment, etc., etc. ... snap with fingers ... CRASH

Conclusion for situation today: all's well, don't worry, nothing to see here, carry on

[wooloomooloo]

Here we go, sign near my place offering 110% home loan.

WP_20130509_002.jpg

And it's true. GH Bank is small Government bank and they're throwing capital around like confetti.

http://www.ghbank.co.th/th/

[chiangmaikelly]

I am not convinced there is a catastrophe around the corner, but presumably it is always better to have the market under supplied than in an oversupply situation

If there was a catastrophe around the corner there would be high unemployment. Decreasing currency value. Low rates of foreign investment. Declining GDP. Stock market crashing. Now lets take a look at the reality of the situation. No unemployment; importing workers from other countries. Increasing currency value and purchasing power. High rates of foreign investment. Increasing GDP. Stock market at all time highs.

Econ 101. You are welcome.

I don't disagree with you, but they probably will need to act to avoid a property bubble.

1997: low unemployment, artificial high exchange rate, decreasing foreign investment, etc., etc. ... snap with fingers ... CRASH

Conclusion for situation today: all's well, don't worry, nothing to see here, carry on

Today the exchange rate is not artificial FACT. Today there is no decreasing foreign investment; foreign investment is increasing FACT. Rubi why would you try to mislead people?

Unless you were not being sarcastic is your post.

Edited May 14, 2013 by chiangmaikelly

[samran]

I am not convinced there is a catastrophe around the corner, but presumably it is always better to have the market under supplied than in an oversupply situation

If there was a catastrophe around the corner there would be high unemployment. Decreasing currency value. Low rates of foreign investment. Declining GDP. Stock market crashing. Now lets take a look at the reality of the situation. No unemployment; importing workers from other countries. Increasing currency value and purchasing power. High rates of foreign investment. Increasing GDP. Stock market at all time highs.

Econ 101. You are welcome.

I don't disagree with you, but they probably will need to act to avoid a property bubble.

1997: low unemployment, artificial high exchange rate, decreasing foreign investment, etc., etc. ... snap with fingers ... CRASH

Conclusion for situation today: all's well, don't worry, nothing to see here, carry on

You conviently forget to add that people were borrowing offshore at vastly lower interest rates and then were caught out then the currenty was forced to float.

There is no massive interst rate differential this time around, indeed Thailand's interest rate is still higher than most of the west, Nor is the BOT selling foreign reserves to defend the stong baht. Indeed, it is quite the opposite, Thailand is drowning in foreign exchange.

But that is fine. Continue running around like a headless chicken. It is fun to watch.

[Thai at Heart]

You conviently forget to add that people were borrowing offshore at vastly lower interest rates and then were caught out then the currenty was forced to float.

There is no massive interst rate differential this time around, indeed Thailand's interest rate is still higher than most of the west, Nor is the BOT selling foreign reserves to defend the stong baht. Indeed, it is quite the opposite, Thailand is drowning in foreign exchange.

But that is fine. Continue running around like a headless chicken. It is fun to watch.

Indeed it was companies and individuals borrowing to avail themselves of the interest spread that was the entire issue. Problem was, the all believed that the 25 to the USD peg would hold forever, so they borrowed at relatively short terms 1 year to 5 year and tried to undertake business (mortgages) which are denominated over 25. Massive fundamental error, particularly when they had a free capital account.

Now, by allowing the exchange rate to be largely set by the market, and not fixed, there is an automatic safety valve to prevent exactly this type of currency implosion.

[iloveny]

I am not convinced there is a catastrophe around the corner, but presumably it is always better to have the market under supplied than in an oversupply situation

If there was a catastrophe around the corner there would be high unemployment. Decreasing currency value. Low rates of foreign investment. Declining GDP. Stock market crashing. Now lets take a look at the reality of the situation. No unemployment; importing workers from other countries. Increasing currency value and purchasing power. High rates of foreign investment. Increasing GDP. Stock market at all time highs.

Econ 101. You are welcome.

As if the thread wasn't bad enough already you post the above. And to put this NPL thing to rest, here is Ireland. NPL's less than 1% in '07 at the height of the housing bubble.

Edited July 25, 2013 by iloveny

[SparklingCascades]

Thailand does not have property bubble but property glut. This is set to worsen over 2013 & 2014. Just ask any R.E. Agent about time taken for a property to sell. Then watch the price movements. In beach side towns studios are selling well and to some extent 1BR condos, the rest move slllloowly, very slowly. The man from Kasikorn Bank says there are 130,000 units unsold each year confirming the property glut.

[iloveny]

Thailand does not have property bubble but property glut. This is set to worsen over 2013 & 2014. Just ask any R.E. Agent about time taken for a property to sell. Then watch the price movements. In beach side towns studios are selling well and to some extent 1BR condos, the rest move slllloowly, very slowly. The man from Kasikorn Bank says there are 130,000 units unsold each year confirming the property glut.

Can you add a source, 130,000 unsold per year for how many years?

[iloveny]

I see, source is just Kbank man's comment, and for 3 years.

Glut's are part and parcel of bubble's, gluts put downward pressure on rents and prices.

[Bof]

Just another real estate pimp with a not so much veiled interest in making sure the charade goes on .

[siampolee]

As has already been stated much the same comments were made prior to the 1997 crash, artificial ( read fraudulent) statistics showed full employment, healthy finances etc etc and all was well for the favoured few..

Then the effluent hit the fan,Those favoured few and other certain prominent people fled the scene in classic Thai style until the statute of limitations concerning their ''business practices'' expired.

Those prominent people have been back here in Thailand for a while now and old habits die hard, the expert gutting of banks and other financial institutions was a long hard art to learn, those practitioners of that art won't have thrown away their dubious talents. Like leopards they don't change their spots,

.

[zydeco]

Do you know? Indeed does anyone really know? The total inventory that the banks still have on their books [written at totally unrealistic 'values'] from the '97 problem? I haven't been to an auction since the first farce I attended a couple of years back. Out of 315 lots only 10 sold. The reason only ten sold was predominantly due to shills from the banks concerned who 'bid' against genuine buyers or simply waved lots through; preventing anyone from bidding. If they sell then their 'assets' have to be written down in their books to their true value - ouch!.

Banks in Thailand aren't allowed (by law) to sell repossessions for less than the outstanding loan.

This is not a 'shill', they are just pointing out the outstanding loan amount which gives the minimum sale price for the property.

Which might explain all the empty houses around me. Either that or there are too many ghosts in them for Thais to buy.