Real Estate Bubble

[cloudhopper]

It may be a haven for Chinese trying to diversify cash assets but the Chinese may well find themselves in financial difficulties also and then CM could really suffer.

The 800 pound gorilla in that room for sure...

[xylophone]

Quote Donnievino: "Is anyone else concerned about the future health of the real estate market in Chiang Mai or elsewhere in Thailand?"

Haven't been to Chiang Mai in quite a few years, however many people have said that the building there is going ahead in leaps and bounds.

I now reside in Patong and as I have said in previous posts, I am concerned about the rate of building going on here, especially with condominiums. In fact one at the end of my road called, "The Park" which is going to contain over 1000 units, seems to have stalled somewhat with very little work going on over the past 2 to 3 months and I did seek feedback on this, but have had none as yet.

There are many smaller buildings/apartment buildings being built around the place, in fact wherever there is a few square metres of ground and I suspect it will end in tears, this especially because many of them are built for sale and there don't seem to be too many takers.

I feel for the everyday Thai working folk who have invested in these (and I know a couple) on the promise of a 40,000 baht return per month for the rent of a shoebox, and for the other people who have had their properties on the market for a few years and cannot sell because there is a glut, with fewer buyers for older places.

There has to be some sort of crash in in Patong, and perhaps the same will occur in Chiang Mai, only time will tell.

[Oscar2]

It may be a haven for Chinese trying to diversify cash assets but the Chinese may well find themselves in financial difficulties also and then CM could really suffer.

The 800 pound gorilla in that room for sure...

from what i've been told by a Thai friend who is a real estate agent, there actually have not been that many condominium purchases by the Chinese. they are avid tourists but full-time residents? unless they are working for one of the Chinese companies who have set-up shop here (and most live in apartments built either on or adjacent to the grounds of the company headquarters), i can't see many being full or even part-time residents. of course some of the rich Chinese may have bought some units to stay in when they visit but i don't think those numbers are very high at all. and as has been said, things could come unglued in the Chinese economy any time now...

[Thighlander]

The Chinese are aggressive buyers in California/Arizona/Nevada; they buy here, too. They even buy in Japan, and are likely the biggest foreign buyers in Oz.

[Donnievino]

General view seems to be market is overheating. When the cooling off occurs, life will go on and our dollars or euros will go farther and it will be a good time to buy.

[alfieconn]

So it's not a true value then ! " Market value is the likely price a property would bring in a fair sale on a "competitive and open market," not some pie in the sky figure !!!!!!!!

Everything sells if it is priced correctly.

Absolutely true. We could undoubtedly unload it at break even price pretty easily. But this is not pie in the sky, we have looked at properties across the street and a couple others nearby which recently sold at a similar SqWah price, and anyone can tell you the property value in CM has risen dramatically in just the past few years. On top of that our property is in the main city so it's pricey compared to elsewhere. Nevertheless, we are getting nibbles at the current price and already had one buyer knocked back by the bank who wouldn't give him the partial loan he required. I believe the property is correctly valued and I'm happy to sit and wait, and even if the value goes down for a while, I can wait.

The only reason we're selling is because we don't want to build yet another block of empty condos. I'd rather let someone else make that mistake. We're growing bananas on the land now, just because it's easier to maintain the land that way, plus we like bananas.

My reply was to you saying

the value has gotten so high that the number of potential buyers is quite limited. We may be stuck with it for very long time..

but now your saying, " Nevertheless, we are getting nibbles at the current price","I believe the property is correctly valued"

[worgeordie]

One thing the price of land will never go down,thats 100% certain,

uhhhh...no.....that is not correct. nothing is ever 100% certain. real estate is cyclical. goes up and then goes down.

Maybe in the West ,but this is Thailand,and the price of land never

comes down.

regards Worgeordie

[Thighlander]

I saw where someone paid the equivalent to 5 million THB per wah for 100 wah, at Manhattan Beach, California....it's residential, too. Gonna tear down the old house.

[Oscar2]

One thing the price of land will never go down,thats 100% certain,

uhhhh...no.....that is not correct. nothing is ever 100% certain. real estate is cyclical. goes up and then goes down.

Maybe in the West ,but this is Thailand,and the price of land never

comes down.

regards Worgeordie

"this is Thailand,and the price of land never comes down."

LOL keep dreaming. never say never....

[T_Dog]

There was a surge of real estate sales in our area when Bangkok flooded. That will likely happen again, although the political situation is different now and that puts buyers on edge.

[evenstevens]

General view seems to be market is overheating.

do feel that the above comment is on the money,and it will correct in due course

one must not forget, that c/mai was comatosed,between 1997/2007 (approx), and the farung invasion has lit a wick from those dates,and the chinns etc etc have followed suit

also the university student population has risen greatly during this period adding more fuel to the market

be very surprised to see a repeat of 97,as this is a very different type of animal

a very nice afternoon to all

[chiang mai]

It's a crazy question, there is no such thing as a single real estate ,market in Chiang Mai, let alone in Thailand, both entities comprise a series of markets. There's the the geographic market which varies greatly between Muang, Hang Dong, Doi Saket and all the other townships which form a part of the greater Chiang Mai market, Doi Saket performs and behaves totally differently to Muang and Watkate.

Then there's the sub markets of the sub 1 mill. condo's, the 1-3 mill condo's, the 3-5 and the 6-9 jobbies, all with different characteristics and we haven't even begun to talk about houses and land.

And when certain posters pop up here and tell us it's a buyers market in CM, they know this because they own a sub 1 million baht condo here that they can't sell, they think they know the CM market, give me a break!

So, which market are we talking about?

Edited August 9, 2014 by chiang mai

[worgeordie]

One thing the price of land will never go down,thats 100% certain,

uhhhh...no.....that is not correct. nothing is ever 100% certain. real estate is cyclical. goes up and then goes down.

Maybe in the West ,but this is Thailand,and the price of land never

comes down.

regards Worgeordie

"this is Thailand,and the price of land never comes down."

LOL keep dreaming. never say never....

I wish it would,but it wont,we bought land 25 years ago 3K sq Wah, next door just sold vacant lot

100 odd sq Wah for 40 K, land is too expensive to buy now (in good area) if it did come down ,like you

think it will LOL,we would sure buy more, how much do you think it could drop by?, and this is based on

you knowing the Thai property market for how long ?

regards Worgeordie

[evenstevens]

It's a crazy question,

So, which market are we talking about?

firstly why is it a crazy question????, the contributors so far(i.m.o) have contributed in a very dilengent manner, giving their two cents worth

secondly the o./p. from my understanding was saying the market in general etc etc

why break up a happy party?????

[chiang mai]

It's a crazy question,

So, which market are we talking about?

firstly why is it a crazy question????, the contributors so far(i.m.o) have contributed in a very dilengent manner, giving their two cents worth

secondly the o./p. from my understanding was saying the market in general etc etc

why break up a happy party?????

You guys party all you want, with my blessing, just be aware that those looking for a blanket answer wont find it, you need to be more specific otherwise you're deluding yourselves. Just as in the UK, there's a whole range of different geographic and price related property sub markets, a Londoner telling folks in Darlington that UK property increased by 15% this year is likely to get laughed out of town or thumped, so it is almost everywhere!

[baywatch82]

City planning is the most important. What will happen on real estate market is very related to the work they do.

There are some things planned that can make Chiang Mai more attractive city and more people will consider to move here :

- second airport - Chiang Mai more connected with the world, direct flights to Europe, USA, Australia ?

- speed rail link between CM and BKK

- more international schools

- improved public transport in CM - monorail ?

- tourist attractions

- city infrastructure

Maybe none of it will ever happen, but can impact real estate market. Just imagine you will have monorail station walking distance from your condo.

Another things to consider is something that is happening right now and will prevent new constructions boom:

- burmise workers limitations to work in thailand

- condo restrictions (number of floors) is some areas of Chiang Mai.

Also please note, that Chiang Mai population is constantly growing. More and more foreigners coming, more and more chinese.

Thai population is very young. You see mostly university-aged people outside. One day they will have to move out from family home and make a family.

To get a loan in Thai bank by a foreigner (and even average Thai) is almost impossible - this is also very important factor.

Some new project around Maya sold out all units is just couple of months, whit studios priced over 2mln. How can you explain that ?

Maybe bubble, but maybe not.

Some people can be very surprised in 5-10 years and can regret they did not purchase property right now.

[iancnx]

I own a couple of units, (a short motocycle ride from Maya) (1x studio and a large one bedroom apartment) in one of the better buildings in the city, and certainly one of the best managed and maintained. Despite lowering the rent substantially in the last 12 months they remain very difficult to rent despite being very well appointed. I am at the point now that as they are so well appointedI dare not lower the rent anymore (and therefore security deposit) as I will be risking uncovered damage to fixtures and fittings. For example in the larger one bedroom unit I have a fully fitted European kitchen in granite with high-end appliances and top quality ceiling to floor cupboards, automatic washing machine, Halogen hob, double door fridge etc. Not to mention wireless internet, flatscreen TV, a study area and dining area.

I don't live in the city so I am very much in the hands of the building manager, so that might well be where I am disadvantaged. I am thinking I have been stupid not putting them in the hands of an agent. Hindsight is a wonderful thing. I think the political situation has undoubtedly had an effect in some way. Would I sell? The smaller unit of the two yes. But I suspect I won't get the price I believe it to be worth. Though I might surprise myself if I got a concrete offer out of the blue. Moving into high season now so lets see what happens.

Edited August 9, 2014 by iancnx

[Donnievino]

I agree that there are many sub markets in Chiang Mai split by geography, price and housing type. But a major correction in the market will drive all segments down but at differing rates. The condo market could hold up a little better because of the higher percentage of foreign buyers. Those markets that have the highest leverage will suffer most. Part of my concern began when I visited several housing developments (non-condo) that we requiring only 50,000 baht down on 3 to 4 million baht properties.

[chiang mai]

I agree that there are many sub markets in Chiang Mai split by geography, price and housing type. But a major correction in the market will drive all segments down but at differing rates. The condo market could hold up a little better because of the higher percentage of foreign buyers. Those markets that have the highest leverage will suffer most. Part of my concern began when I visited several housing developments (non-condo) that we requiring only 50,000 baht down on 3 to 4 million baht properties.

The only major correction I've ever seen in the CM property market in the past ten years was about between one and two years ago when prices suddenly shot upwards by about 30%, I do not expect to see another kind.

[iancnx]

It's a crazy question, there is no such thing as a single real estate ,market in Chiang Mai, let alone in Thailand, both entities comprise a series of markets. There's the the geographic market which varies greatly between Muang, Hang Dong, Doi Saket and all the other townships which form a part of the greater Chiang Mai market, Doi Saket performs and behaves totally differently to Muang and Watkate.

Then there's the sub markets of the sub 1 mill. condo's, the 1-3 mill condo's, the 3-5 and the 6-9 jobbies, all with different characteristics and we haven't even begun to talk about houses and land.

And when certain posters pop up here and tell us it's a buyers market in CM, they know this because they own a sub 1 million baht condo here that they can't sell, they think they know the CM market, give me a break!

So, which market are we talking about?

I totally agree, and the 'different characteristics' play a major part. Location, Building Quality and Condo Management (and therefore the accounts/wealth) being especially pertinent. The market is truly divided into many sub categories.

[sfokevin]

It may be a haven for Chinese trying to diversify cash assets but the Chinese may well find themselves in financial difficulties also and then CM could really suffer.

The 800 pound gorilla in that room for sure...

I don't see the Chinese as ever being big players in the Chiang Mai real estate market... They tend to travel in groups so a big development on the sea side is more their style where they control all the cash flow... And the Thais don't really make individual Chinese welcome in the community...

The real housing market gorilla for all of Thailand is living in Hua Hin...

Edited August 9, 2014 by sfokevin

[iancnx]

It may be a haven for Chinese trying to diversify cash assets but the Chinese may well find themselves in financial difficulties also and then CM could really suffer.

The 800 pound gorilla in that room for sure...

I don't see the Chinese as ever being big players in the Chiang Mai real estate market... They tend to travel in groups so a big development on the sea side is more their style where they control all the cash flow... And the Thais don't really make individual Chinese welcome in the community...

The real housing market gorilla for all of Thailand is living in Hua Hin...

Why Hua Hin?

[evenstevens]

I own a couple of units, (a short motocycle ride from Maya) (1x studio and a large one bedroom apartment) in one of the better buildings in the city, and certainly one of the best managed and maintained. Despite lowering the rent substantially in the last 12 months they remain very difficult to rent despite being very well appointed. I am at the point now that as they are so well appointedI dare not lower the rent anymore (and therefore security deposit) as I will be risking uncovered damage to fixtures and fittings. For example in the larger one bedroom unit I have a fully fitted European kitchen in granite with high-end appliances and top quality ceiling to floor cupboards, automatic washing machine, Halogen hob, double door fridge etc. Not to mention wireless internet, flatscreen TV, a study area and dining area.

I don't live in the city so I am very much in the hands of the building manager, so that might well be where I am disadvantaged. I am thinking I have been stupid not putting them in the hands of an agent. Hindsight is a wonderful thing. I think the political situation has undoubtedly had an effect in some way. Would I sell? The smaller unit of the two yes. But I suspect I won't get the price I believe it to be worth. Though I might surprise myself if I got a concrete offer out of the blue. Moving into high season now so lets see what happens.

never like to see anyone in a tight corner, good luck in the high season

have aquintainces in the same waters, not looking bright for rental investers etc etc with so many condos/moo baans being built at such a alarming rate

but for the renters, c/mai will become a low cost paradise....,if it, is nt already...

[AnotherOneAmerican]

But I'll gladly take the 1997 Thai Baht price of land over the 2014 one and so would you!

But what was my $$ exchange rate then?

I think I would prefer the year 2000 property price and exchange rate.

[chiang mai]

But I'll gladly take the 1997 Thai Baht price of land over the 2014 one and so would you!

But what was my $$ exchange rate then?

I think I would prefer the year 2000 property price and exchange rate.

12/97 = 44.53

1/00 = 37.33

[AnotherOneAmerican]

The Chinese are aggressive buyers in California/Arizona/Nevada; they buy here, too. They even buy in Japan, and are likely the biggest foreign buyers in Oz.

Chinese like to buy land, they can't buy land in Thailand either.

A concrete box suspended in the air is rarely worth buying, unless you intend to live in it.

[wolfmanjack]

I agree that there are many sub markets in Chiang Mai split by geography, price and housing type. But a major correction in the market will drive all segments down but at differing rates. The condo market could hold up a little better because of the higher percentage of foreign buyers. Those markets that have the highest leverage will suffer most. Part of my concern began when I visited several housing developments (non-condo) that we requiring only 50,000 baht down on 3 to 4 million baht properties.

That 50k down is most likely just the amount required to hold the property until you try and get financing from a bank.

I don't know about now but in the past many places had a 5,000 baht deposit and then you made payments for a couple of years just to build up the required down payment the banks required.

[shirtless]

There is no bubble absolutely not , people need to race out and put it all on condos, they are nearly all sold, and us Farang need to buy it now.I think there is a problem to much stock in a dwindling market.

[JesseFrank]

There is no bubble absolutely not , people need to race out and put it all on condos, they are nearly all sold, and us Farang need to buy it now.I think there is a problem to much stock in a dwindling market.

Hope they don't take your advice serious, because if they do one day they will end up shirtless .

[hml367]

But I'll gladly take the 1997 Thai Baht price of land over the 2014 one and so would you!

But what was my $$ exchange rate then?

I think I would prefer the year 2000 property price and exchange rate.

12/97 = 44.53

1/00 = 37.33

What was it in December, 2000?