Study Condo Market In Cbd : Crash En Vue !

[cclub75]

I propose you a little exercice : compare the original study, and the paper published in Nation.

That's funny.

Title of the study : Demand for condos in central Bangkok remains strong but fails to keep pace with supply

Title Nation : Condo market heats up in CBD

Read carefully the long version. Here are the facts :

-between 2004 and 2005 : price rose 10 %

-since 2000, prices were up 90 %

-between 2004 and 2005, sales were down (5510 units, from 5740)

-but the slowdown was spectacular in the second semester (1750 units sold only)

-in 2006, 6350 new units will be completed (according to developpers plan)

(the largest number completed in a single year since 1981 !)

-in 2006 we still have a stock of 5300 units still unsold

So to summarize :

-over supply (total of 12160 new units will be completed by 2009)

-big stock unsold (one year of sales in term of number of units)

-prices up (bubble, not real prices, but prices asked by the developpers because they build in the luxury segment)

-drop in number of transactions

A this present situation you add : higher interest rates...

So I don't know what you think, but from my point of view : I call 2006 a nice little crash year !

Nation

http://www.nationmultimedia.com/2006/03/23...ss_20003375.php

Study of Jones Lang Lasalle

http://www.joneslanglasalle.co.th/en-GB/ne...ral_bangkok.htm

[backflip]

Well, cclub, if you've read these forums for any period of time, those who are afraid of the real estate market have been predicting another crash since 2000. It's very funny, reading the posts of TV members who have no knowledge of economics. There won't be a real estate crash this year but, if that conviction allows you to arise every day with a smile on your face, so be it.

[NotaNutter]

I don't know if it's going to crash or not, but there are currently some trends which get me thinking. For example, today in the Bangkok Post classifieds there is a 315m2 condo at Kallista Mansion going for 16.5M. This is only 52,000 per m2. From what I remember Kallista is one of the top grade A condos in a great location, and it's not very old. I also see President Park condos for sale for about 52,000 per m2. From memory I think these prices are as low as they got during the last crash, and as the OP points out there are many more NEW units coming onto the market soon. Add to that rising interest rates, the MRTA/BTS route extensions (making it just as convenient to live outside the CBD), and there seems to be a case for CBD condo prices to remain under pressure for quite some time, especially 2nd hand ones. In other words I guess it's probably a bad idea to buy a new CBD condo just now unless you simply want somewhere to live and don't care about the investment potential.

Oh, another observation is that exactly the same units are for both sale and rent, not just in the Bangkok Post but also on various agents websites. Read into that what you will, but I'm guessing the owners are willing to cut their losses if they can't rent them out soon.

[cclub75]

There won't be a real estate crash this year but, if that conviction allows you to arise every day with a smile on your face, so be it.

Your position is a little... too short i would say, as well as your participation to the debate.

OK, "be it" as you said, if you say "nope no crash". Why not ?

As for the previous years, personally, I didn't speak about a crash.

As for now, I just look at the numbers for CBD. CBD is not Thailand. I aknowledge it's a little market.

But if you believe, like many people just before the Internet burst, that the trees go to the sky and that every year, 5500 people will buy luxury condos at 72 000 THB/sqm, and with 10 % increase of price, fair enough.

[The Skipper]

No doubt, it's a good time to make some low ball offers if looking at real eatate.

Rising interest rates, political problems, the growing popularity of neighboring countries, Thais don't like second hand, the enormous volume of units available.

Most sellers, that bought 10 years ago would be happy to break even and move on I'd guess, selling at 50k/m2.

[samran]

-big stock unsold (one year of sales in term of number of units)

Have to treat this quote with much care. Yes there is a lot of unsold stock about, but most of it is pretty crappy, and no-one will ever buy it.

A good example is my building, quite central, built in the late 90's.

The good rooms have all been purchased, and the good rooms ain't too bad. The bad rooms however, although big on paper (120sqm upwards), are very awkwardly shaped and built, and not very functional. They have been shells for the past 9 years. One place I saw had all the drain pipes cemented into the concrete floor for a kitchen where the lounge should have been. It was all very embarrasing even for the estate agent who showed us around. Other places had 3 bathrooms all next to each other at one end of the condo, and all the bedrooms down the other, with one having no natural light. Kitchens, even by Thai standards, were woeful.

Granted, someone with a bit of imagination might be able to spruce one of these places up, but it would cost them lots, and they'd have to get a huge discount on the 10M Baht plus selling price to make it worth their while.