thicky question. If the Baht is devalued..

[fish fingers]

I bought my condo as a 'lifestyle choice' i.e. to live - unfortunately had to come back to the uk as my dad has cancer.

I chose a 15 yr old condo which is in v well maintained building, just off soi 63 (ekkamai) - so I guess it is reasonably safe as an investment, altho again, that wasn't the main reason for buying

Edited May 25, 2014 by fish fingers

[Berkshire]

I'm not asking about if the baht were to crash, simply if the interim government decides to devalue the baht. I guess that means it will buy less foreign currency? I exchanged at 54.5 to £1, luckily not when it was 44.

Berkshire, I'm thinking a baht 'crash' will mean more baht for our sterling, whereas a devaluation is something else entirely. But seeing as you know everything, please correct me.

Dont worry to much about Berkshire and his angry put down comments. He is really just a angry man because of the way his wife treats him. He in turn takes it out on people here.

I'm not married and I'm not angry. So buffalo, have you ever been right about anything in your life?

[Berkshire]

I'm not asking about if the baht were to crash, simply if the interim government decides to devalue the baht. I guess that means it will buy less foreign currency? I exchanged at 54.5 to £1, luckily not when it was 44.

Berkshire, I'm thinking a baht 'crash' will mean more baht for our sterling, whereas a devaluation is something else entirely. But seeing as you know everything, please correct me.

Fish fingers, you're talking semantics when all that really matters is the end result. A devaluation is a deliberate move by the government which would reduce the value of its currency vs. other currencies. Which begs the question, why would you think that the government was intending to devalue its currency?

[JacChang]

Depends if you are a gambler or a fundamental investor?

If you are living in it yourself, like others have posted, there would not be a difference.

If you are buying to sell it, that is a huge mistake on your part. It's just like buying stocks and hoping to get rid of it when the prices go higher than what you bought. Another thing is the recent devaluation like you stated. The timeframe for properties should be 5-10 years up, would you be worrying about the coming 1-2 years? If you are, you shouldn't have bought it. Your mindset is wrong already, just keep the property for the timeframe I suggested, and you should gain. It's like a stock investor buying stocks and then getting nervous in just 4 days, and wants to get rid of it. Your in the wrong bus.

Devaluation in fact, can work in opposite ways than you imagined. Devaluation of the baht increases the attractiveness of things/properties being sold in Thailand as it becomes relatively cheaper. This will boost demand which can later on increase the price of those apartments/condos. If it originally takes 100,000 USD to buy an apartment, and now that the Thai Baht has devalued by 10%. Using easy math for example purposes, it now takes a foreigner to pay only 90,909USD. Original 3,000,000THB apartment = 100,000 USD at THB/USD 30. Baht devalues 10% becomes THB/USB 33. 3,000,000 THB/33 = 90,909USD

Imagine you always wanted to buy a Toyota Camry that was at 1,400,000 and now it's only 1,260,000 for a limited time due to current situation. You will see a huge increase in demand compared to normal times. Price of properties are increased by the amount of demand wanting the properties and decrease by the amount of supply available in the market. As people grab up these properties at cheap prices, the availability declines, which should try to force the price to go up, as buyers compete with each other to get that condo. Imagine 40 serious buyers with only 20 condos available.

The second point would be, for foreigners to buy our properties, they can't just use the USD. They need to exchange it into THB. So the market we are talking about here is the Forex market. There will be high demand for THB. Those who invest in stocks will understand what I am talking about. Let's say you have people buying USD at 33 32 31 30. Each of those price brackets, only about 500,000THB worth in value for illustration purposes. If a foreigner required 3 million, his transaction of THB would easily move the price from 33 to 30. Of course, the forex market value is so huge, our transactions would be peanuts.

So OP, I suggest waiting a longer timeframe if you are buying to sell. In the meantime, rent it out for 3-5% or more of your purchased price for yearly rent.

If you are living in it, don't worry about it.

[JacChang]

No offense. But the only reason to buy condos here is to live in them.

I just dont see the value in investing right now! Not at rents the condos get rented at.

So it the baht rate is secondary to the fundamentals. Guy you going to lose without baht fluktuation. is the likely scenario.

I would like to counter on that.

Property investments provide a nice stable stream of income that many investors are interested in. Thailand has one of the largest property funds in the world. Yes the world. And at #1 rank.

You have to find the right condos to invest in. Not the cheap ones, not the value ones, not the ones on sale. But the ones with high demand that more citizens are moving into the neighborhood and one which has quality styles in them. You buy it even if it's overpriced and you can expect 5-7% gains from your purchased price for annual rent. Management companies will take care of everything in return you pay them 10% of rent, which could equal to one month of the year's rent paid to them. They literally take care of everything from fixing the toilets to collecting rents, finding customers, etc.

Contrary to many who believe the currency devaluation will influence the property negatively directly. Money is your worst enemy. All money assets such as cash, bonds, fixed deposits, are immediately affected by currency devaluation. Not to mention inflation. Property is an alternative asset influenced by other factors. Gold is another example. I can't explain all the factors affecting property in TV forum. The only true enemy of property prices is when developers create and build more properties. Even as the baht is devalued, the sellers of the properties will demand more baht for the buildings because what the customer is paying is considerately less than before. Which is why many believed these two asset classes are inflation hedged somewhat. Could you ever go back in time to buying that 1baht egg? No. Why? Because of inflation and devaluation. Your 1 baht used to be worth a lot, now it's like a penny. Properties in the long run goes only up. Rent goes only up. CPI prices of goods only goes up. As population goes up, properties will never be useless.

As of current time, money assets produce 2.5-3.5%

Stock dividends produce 3-7%.

Property rentals produce 5-8%

There is money to be made, investors will know which one is the clever choice.

[mjakob007]

some of the variation you see has got to do with the strengthening or sterling and Euro against USD over past 2 years

pls compare GBP/USD vs GBP/THB, its not the same trend.

http://www.xe.com/currencycharts/?from=GBP&to=USD&view=2Y

http://www.xe.com/currencycharts/?from=GBP&to=THB&view=2Y

if you own and condo and want to sell it for the purpose of repatriation, you would be effecetd by the rate of excahnge.

else, you are still staying in the same condo,which is valid at xx thb rent.

now, if the THB slides and stays that way for long, cost of living related to imported goods will climb and have a negative impact on cost of living. in the long long run, not immidiately

[Strangebrew]

Ok if the baht is devalued then if you bought condo a X amount then the same could be bought X amount less in home currency your still going to be paying exchange fees. So if baht drops to 40 To 1 USD as I feel is going to happen that is 8 baht less now. so in USD dollars that will be big drop. But on the plus side I get more Baht to my dollar. The value of your place drops.

[sandyf]

I'm not asking about if the baht were to crash, simply if the interim government decides to devalue the baht. I guess that means it will buy less foreign currency? I exchanged at 54.5 to £1, luckily not when it was 44.

Berkshire, I'm thinking a baht 'crash' will mean more baht for our sterling, whereas a devaluation is something else entirely. But seeing as you know everything, please correct me.

Fish fingers, you're talking semantics when all that really matters is the end result. A devaluation is a deliberate move by the government which would reduce the value of its currency vs. other currencies. Which begs the question, why would you think that the government was intending to devalue its currency?

Last year when the baht hit 44 to the GBP, auto exporters were shouting at the government to halt the strengthening of the baht. Nobody likes devaluation, carries the stigma of incompetence so governments use other means at there disposal. The Central Bank decreased the interest rates which led to further borrowing, increase in the national debt invariably leads to a weakening of the currency. Underhand devaluation. Shortly after the effect of the protests kicked in, so to date there has been an effective devaluation in the order of 18 percent.

Fifteen years ago, when I first came, it was 59 to the pound and we may well end up back at that level.

[kingbuffalo]

I'm not asking about if the baht were to crash, simply if the interim government decides to devalue the baht. I guess that means it will buy less foreign currency? I exchanged at 54.5 to £1, luckily not when it was 44.

Berkshire, I'm thinking a baht 'crash' will mean more baht for our sterling, whereas a devaluation is something else entirely. But seeing as you know everything, please correct me.

Dont worry to much about Berkshire and his angry put down comments. He is really just a angry man because of the way his wife treats him. He in turn takes it out on people here.

I'm not married and I'm not angry. So buffalo, have you ever been right about anything in your life?

Hehe wow your life must have changed Berkshire. I hope its changed for the better and you can find a woman who will be faithful to you next time.

You say your not a angry man but i would have to disagree from looking at most of your posts on here. I would say half of your posts are aimed at trying to put people down.

As for your question to me.. yes you are right i am a loser and have never got anything right in my life. I am under 45 years all but retired and never have to work another day in my life.

What a loser i am. I wish i could be more of a great man like yourself

[lucjoker]

if you want to know what the bht will do in 6 months/1 year........

that is very easy to tell !

Exactly the opposite of what you think now .Wanna bet?

[AnotherOneAmerican]

You purchased when the property price was highest, and the exchange rate was the worst.

How can you not have lost out?

[maximillian]

At the moment the THB is on its highest peak since three month.

No signs of de-valuation.

Wishful thinking for some of us ?

http://www.oanda.com/lang/de/currency/converter/

[AnotherOneAmerican]

At the moment the THB is on its highest peak since three month.

No signs of de-valuation.

Wishful thinking for some of us ?

http://www.oanda.com/lang/de/currency/converter/

What are you on?

The Thai Baht is at it's lowest level for 5 years (Vs EURO, GBP and USD)

[maswov]

You will lose in terms of your home currency and that only matters if you intend to liquidate and send the money back. If the market price for the condo is unchanged than you have neither gained nor lost any baht. The only difference is you would have spent less of your home currency if you had waited.

[thailiketoo]

There you go......

[Berkshire]

I'm not asking about if the baht were to crash, simply if the interim government decides to devalue the baht. I guess that means it will buy less foreign currency? I exchanged at 54.5 to £1, luckily not when it was 44.

Berkshire, I'm thinking a baht 'crash' will mean more baht for our sterling, whereas a devaluation is something else entirely. But seeing as you know everything, please correct me.

Dont worry to much about Berkshire and his angry put down comments. He is really just a angry man because of the way his wife treats him. He in turn takes it out on people here.

I'm not married and I'm not angry. So buffalo, have you ever been right about anything in your life?

What a loser i am. I wish i could be more of a great man like yourself

I admire you for aiming high, buffalo. Keep at it, some day you may become like me...

[kingbuffalo]

I'm not asking about if the baht were to crash, simply if the interim government decides to devalue the baht. I guess that means it will buy less foreign currency? I exchanged at 54.5 to £1, luckily not when it was 44.

Berkshire, I'm thinking a baht 'crash' will mean more baht for our sterling, whereas a devaluation is something else entirely. But seeing as you know everything, please correct me.

Dont worry to much about Berkshire and his angry put down comments. He is really just a angry man because of the way his wife treats him. He in turn takes it out on people here.

I'm not married and I'm not angry. So buffalo, have you ever been right about anything in your life?

What a loser i am. I wish i could be more of a great man like yourself

I admire you for aiming high, buffalo. Keep at it, some day you may become like me...

As soon as i get married and my wife starts cheating on me i will let you know i have got up to your standard of living. I cant wait to join you at the top end of life

[sometimewoodworker]

what I mean is, if the baht is devalued, I take it all my thai assets (property and thai baht in account) will be then worth x amount less against Sterling?

You are making a fundamental mistake by thinking that the movement of the pound against the Bhat is repeated with most other currency's

The pound has strengthened dramatically in the past year, yes

But the Bhat has strengthened against the yen since the coup

This would suggest that any crash or devaluation risk is in your imagination, and based on a two country view.

It is a fundamental error not to take into account a foreign exchange risk if you want to invest in different country's. It is also a mistake to think that just because the exchange rate changes the fundamental investment changes.

If a property investment is good or bad depends on the conditions and time, in the place you invest.

And of course the value of assets in Thai currency against the value £'s has gone down, at the moment over 1 year it is about -20% so if the pound continues to strengthen the relative value will decrease. That is the joy of cross currency investing.

FWIW my investment in the Thai stock market is up by 400% from 2000

Win some loose some, c'est la vie.

[Equalizer]

1 baht will be 1 baht no matter how much it devalues. what is the question ?

Stupid comment

[Greg Nixon]

In my experience to show a decent profit on property, one should own it for 15 years. I have owned three properties one of them was a rental property. I improved it and was very lucky to make $17,000 more than I paid for it in 18 months. In the next ensuing year it returned to its original value but if the owner kept it for 15 years I have no doubt that he tripled his money.

A home should be your first investment because you need somewhere to live and you do not pay rent. Your monthly payment is invested in your property. If you work out the mortgage payments over 20 years you will find you paid three times the original price.

My first home tripled in value in 15 years. My second home doubled in 13 years but 5 more years and it would have quadrupled in price.

So my friend your glass is half full. you have made an investment. If it is your only home relax. If it is recreational property, it is a little more risky.

[thailiketoo]

In my experience to show a decent profit on property, one should own it for 15 years. I have owned three properties one of them was a rental property. I improved it and was very lucky to make $17,000 more than I paid for it in 18 months. In the next ensuing year it returned to its original value but if the owner kept it for 15 years I have no doubt that he tripled his money.

A home should be your first investment because you need somewhere to live and you do not pay rent. Your monthly payment is invested in your property. If you work out the mortgage payments over 20 years you will find you paid three times the original price.

My first home tripled in value in 15 years. My second home doubled in 13 years but 5 more years and it would have quadrupled in price.

So my friend your glass is half full. you have made an investment. If it is your only home relax. If it is recreational property, it is a little more risky.

Thailand can't own home. You may want to re think your advice.

[marios]

Same thing happened in Cyprus. One can see numerous developments half finished and abandoned. Product of our bubble bursting.

Whenever I feel like I'm in danger of being caught up in the Pattaya condo hype I go for a drive along Jomtien Beach Road and on to Na-Jomtien. In doing so I pass several skeletons of large buildings that were never finished during previous crashes, or that were finished and have since gone to rack and ruin. Drive on to Ban Chang and Rayong and there are several more.

I've seen this happen in Ireland when the bubble burst over there. They started to build about 700+ houses in stages over a number of years. The first people moved in as stage 1 was completed. I rented a house in one of these places a while back, it was pretty nice, stage 1 was fully complete. The builders moved onto the next stage.

Then one day work stopped, they just abandoned the place. Half built houses were everywhere. They didn't come back.

This is what happens when the bubble bursts.

[personchester]

1 baht will be 1 baht no matter how much it devalues. what is the question ?

The positive aspect is that due to THB devalue farang's monthly pension will increase via FX

The negative aspect is that due to THB devalue import costs will be more expensive for the public to buy.

[KittenKong]

Imagine you always wanted to buy a Toyota Camry that was at 1,400,000 and now it's only 1,260,000 for a limited time due to current situation. You will see a huge increase in demand compared to normal times. Price of properties are increased by the amount of demand wanting the properties and decrease by the amount of supply available in the market. As people grab up these properties at cheap prices, the availability declines, which should try to force the price to go up, as buyers compete with each other to get that condo. Imagine 40 serious buyers with only 20 condos available.

One would need a particularly powerful imagination to arrive at a scenario like that in Thailand. I see many condos for sale here but few buyers.

[thailiketoo]

Imagine you always wanted to buy a Toyota Camry that was at 1,400,000 and now it's only 1,260,000 for a limited time due to current situation. You will see a huge increase in demand compared to normal times. Price of properties are increased by the amount of demand wanting the properties and decrease by the amount of supply available in the market. As people grab up these properties at cheap prices, the availability declines, which should try to force the price to go up, as buyers compete with each other to get that condo. Imagine 40 serious buyers with only 20 condos available.

One would need a particularly powerful imagination to arrive at a scenario like that in Thailand. I see many condos for sale here but few buyers.

BANGKOK CONDOMINIUM

REPORT

| Q3 2013

COLLIERS INTERNATIONAL |

P.6

LAUNCHES WITH HIGH TAKE-UP RATES IN Q3 2013

Pruksa Real Estate Plc has launched two new condominium projects

in two locations and with different target groups. The Reserve, on

Rama 1 Road and close to the BTS National Stadium station as well as

many shopping malls, was well-received and sold nearly 100% of total of 273 units within one month.

The other new condominium project by Pruksa is Chapter One

the Campus on Phahonyothin Road and nearby Kasetsart

University. All of its 768 units were sold out after the official

launch in August. Many of the units are studio and one-bedroom.

BANGKOK CONDOMINIUM

REPORT

| Q3 2013

COLLIERS INTERNATIONAL |

P.9

FINANCING

FORECAST

HOUSING LOANS FOR PERSONAL CONSUMPTION EXTENDED BY FINANCIAL INSTITUTIONS

Source: Bank of Thailand and Colliers International Thailand Research

Remark: Excludes negligible amounts of financing from other sources; percentage change is comparable QoQ

The growth rate for housing loans in the second quarter of 2013

increased by approximately 2.4% compared to the first quarter. During

the past few months the number of unapproved mortgage loans by

commercial banks increased, but most of them were for buyers in the

in low income group and this directly affected the low-end market.

However, loans to other income groups continued to grow, so housing

loans of all commercial banks and other financial institutions increased.

w.colliers.co.th/images/agency/d7Ti8WerCondominiumQ32013-en.pdf

[i claudius]

As to what the baht will do ,i am always at least 50% right.

[KittenKong]

One would need a particularly powerful imagination to arrive at a scenario like that in Thailand. I see many condos for sale here but few buyers.

BANGKOK CONDOMINIUM

REPORT

| Q3 2013

COLLIERS INTERNATIONAL |

P.6

LAUNCHES WITH HIGH TAKE-UP RATES IN Q3 2013

Ho ho ho. Real estate agents are always good for a laugh, aren't they?

I was talking about re-sales. I think the person I replied to was also. And indeed that appears to be the entire subject of the thread.

[JacChang]

One would need a particularly powerful imagination to arrive at a scenario like that in Thailand. I see many condos for sale here but few buyers.

BANGKOK CONDOMINIUM

REPORT

| Q3 2013

COLLIERS INTERNATIONAL |

P.6

LAUNCHES WITH HIGH TAKE-UP RATES IN Q3 2013

Ho ho ho. Real estate agents are always good for a laugh, aren't they?

I was talking about re-sales. I think the person I replied to was also. And indeed that appears to be the entire subject of the thread.

Not that hard actually, depends on where your market is. I've seen failures from people who complain about how their investment in properties didn't go as they planned. The condos you see, I could probably bet it will continue to have few buyers for years to come. But that's your choice. I wouldn't even personally spend a second considering that location.

Thanks thailiketoo for the source. For those who invest in the SET, the SET provides financial statements of various property developers, and one could easily see the demand. While I'll admit, the demand could be misleading due to the market being an investors game. Most investors have 3-4 properties that they don't live in, but just for investment purposes.

Re-sales can happen with new condos as well. It's very common to see the first investor buying the property at a 10-20% or more discount, then just right before the building is completed, another investor buys it up. When you buy up all availability, the power belongs to you to control the prices.

[fish fingers]

I'm not asking about if the baht were to crash, simply if the interim government decides to devalue the baht. I guess that means it will buy less foreign currency? I exchanged at 54.5 to £1, luckily not when it was 44.

Berkshire, I'm thinking a baht 'crash' will mean more baht for our sterling, whereas a devaluation is something else entirely. But seeing as you know everything, please correct me.

Fish fingers, you're talking semantics when all that really matters is the end result. A devaluation is a deliberate move by the government which would reduce the value of its currency vs. other currencies. Which begs the question, why would you think that the government was intending to devalue its currency?

No not really. Its not an assumption - the government are thinking to devalue the baht, according to various Press reports. Hope that clears up why I posted the question

Why would the government do that? Well, when did that last happen, and why

Edited May 26, 2014 by fish fingers

[ATF]

I'm not asking about if the baht were to crash, simply if the interim government decides to devalue the baht. I guess that means it will buy less foreign currency? I exchanged at 54.5 to £1, luckily not when it was 44.

Berkshire, I'm thinking a baht 'crash' will mean more baht for our sterling, whereas a devaluation is something else entirely. But seeing as you know everything, please correct me.

Fish fingers, you're talking semantics when all that really matters is the end result. A devaluation is a deliberate move by the government which would reduce the value of its currency vs. other currencies. Which begs the question, why would you think that the government was intending to devalue its currency?

No not really. Its not an assumption - the government are thinking to devalue the baht, according to various Press reports. Hope that clears up why I posted the question

Why would the government do that? Well, when did that last happen, and why

The Baht has never been devalued as far as I know. It was originally pegged to the USD @ 25 Baht. George Soros spread rumors of Thai Companies overextended on USD loans in 1997. The Baht then crashed aided by Dr.Thaksin selling massive amounts of Baht By Feb 1998 the Baht bottomed @ 99 to GBP and 56 to USD as I remember.

There is no practical purpose to devalue the Baht other than to increase exports and promote tourism and would be just a quick fix. It would cause massive problems for companies who have loans in foreign currency and cause a collapse of the SET.

The Baht may weaken slightly and even through it is not fully freely traded internationally it is a strong currency. The range for Baht is between 30-40 per USD just as GBP trades 1.50-2.00 per USD inverted. In 1993 the Baht was 22 to GBP.

Once a new government is installed in Thailand the Baht will most probably rise significantly. Rather than devalue the Baht it would be more likely that the Government would reduce interest rates. Thus causing the Baht to trade lower but encouraging people to use their money for business instead of just gaining interest in a savings account. It would also be a boost to the Thai Bond market.

In other words don't worry.