Is the real estate market slow all over LOS?

[KittenKong]

Nope, multiple units in prime location in view talay 6 . No renters for 6 months straight.

No takers? Then the property is overpriced and/or not being advertised. That's all there is to it.

[OnMyWay2]

Yeah but still slower than usual. Whatever was working before no longer works now.

[swissie]

Currently in Pattaya: In prime locations properties are still changing hands. Outside of that: ASKING-PRICES increase by 10 % a year, but nobody is buying. Real-Estate Agents have cut their staff to a point where only the manager/owner is still present at the office.

Oh BTW, I have just decided to raise the ASKING PRICE of my 15 year old tractor from 200'00 Bht to 2 million.

Cheers.

[trogers]

Currently in Pattaya: In prime locations properties are still changing hands. Outside of that: ASKING-PRICES increase by 10 % a year, but nobody is buying. Real-Estate Agents have cut their staff to a point where only the manager/owner is still present at the office.

Oh BTW, I have just decided to raise the ASKING PRICE of my 15 year old tractor from 200'00 Bht to 2 million.

Cheers.

Perhaps the properties in prime locations are changing hands due mainly to foreclosures...

[Anthony5]

Currently in Pattaya: In prime locations properties are still changing hands. Outside of that: ASKING-PRICES increase by 10 % a year, but nobody is buying. Real-Estate Agents have cut their staff to a point where only the manager/owner is still present at the office.

Oh BTW, I have just decided to raise the ASKING PRICE of my 15 year old tractor from 200'00 Bht to 2 million.

Cheers.

Perhaps the properties in prime locations are changing hands due mainly to foreclosures...

I sounds like you know your world.

If people on this forum only would know how many properties, they drive or walk around every day, belong to the bank.

Thing is that the banks seldom put a sign on the properties they own.

[Robert24]

@Anthony5: banks do not own so many repossessed properties. They tend to package up NPLs and sell them to Asset Managers, Hedge Funds and Investment banks.

[richard_smith237]

Same issues here... Our Condo on Rama IV Bangkok has been on the market for over a year... Its 5 years old for sale for the same price I purchased it for (81,000 baht per Sqm which is locally very competitive with many nearby condo's going for in excess of 120,000 baht/sqm).

I don't mind taking a small hit for a serious offer.. But realistically there are a lot of brand new buildings recently built which prospective buyers like to look at first.

I have my property listed with a number of agents ddproperty etc in addition to bahtandsold, ThaiVisa classifieds.

Agents want 3% which if they help with a quick sale would be fair enough, however, some of the contracts that have been sent to me demand that they are the sole agent (I've rejected these contracts as my Condo is already with a number of agents, they can't all take 3% !)...

Another issue I see... Once the price of a condo exceeds 3 or 4 million baht it excludes a large proportion of those who've graduated have reasonably secure jobs and are looking for a starter place of their own.

Friends who've wished to sell similarly priced / sized Condo's in Bangkok have taken a couple of years to sell... I guess Chiang Mai is very much the same, it takes, time and in many cases a little luck....

Of course, dropping the price is also an option, but no one wants to drop the price of a Condo / house to half of what they paid for it.

[rgs2001uk]

Currently in Pattaya: In prime locations properties are still changing hands. Outside of that: ASKING-PRICES increase by 10 % a year, but nobody is buying. Real-Estate Agents have cut their staff to a point where only the manager/owner is still present at the office.

Oh BTW, I have just decided to raise the ASKING PRICE of my 15 year old tractor from 200'00 Bht to 2 million.

Cheers.

Perhaps the properties in prime locations are changing hands due mainly to foreclosures...

I sounds like you know your world.

If people on this forum only would know how many properties, they drive or walk around every day, belong to the bank.

Thing is that the banks seldom put a sign on the properties they own.

Thing is that the banks seldom put a sign on the properties they own.

I was in The Mall Bang Kapi last week, I walked by a branch of SCB (the purple one, to our non Thai readers), right outside was a bunch of re-possed properties all owned by the bank.

A quick glance revealed, none of them were offered for any sort of discount.

Today I heard about a property that has just been sold in Bang Kapi, 71 t/w, valued at 50k per tw = 3.5 million, second hand house valued at 1 million, total price 4.5 million.

The sad fact is, the OP may well have to accept his house is worth only its land value, even then, it doesnt make it worth my while as an investment.

The knock down costs of the house and the time and money involved to build a new one, means there are probably better bargains elsewhere.

I see many properties that may well be worth what is asked, doesnt mean I have to buy them, its now a buyers market.

The above is for Bkk only.

[Anthony5]

@Anthony5: banks do not own so many repossessed properties. They tend to package up NPLs and sell them to Asset Managers, Hedge Funds and Investment banks.

Maybe it is that way in the US, but different story in Thailand. Here the banks have large amounts of properties on their books, for accounting purposes obviously.

I can lead you to at least 20 properties in my nearby area that belong to the banks for many years already, and where even no attempt is made to bring them to the market.

By the way, I didn't know that Thailand even had hedge funds.

[rgs2001uk]

Same issues here... Our Condo on Rama IV Bangkok has been on the market for over a year... Its 5 years old for sale for the same price I purchased it for (81,000 baht per Sqm which is locally very competitive with many nearby condo's going for in excess of 120,000 baht/sqm).

I don't mind taking a small hit for a serious offer.. But realistically there are a lot of brand new buildings recently built which prospective buyers like to look at first.

I have my property listed with a number of agents ddproperty etc in addition to bahtandsold, ThaiVisa classifieds.

Agents want 3% which if they help with a quick sale would be fair enough, however, some of the contracts that have been sent to me demand that they are the sole agent (I've rejected these contracts as my Condo is already with a number of agents, they can't all take 3% !)...

Another issue I see... Once the price of a condo exceeds 3 or 4 million baht it excludes a large proportion of those who've graduated have reasonably secure jobs and are looking for a starter place of their own.

Friends who've wished to sell similarly priced / sized Condo's in Bangkok have taken a couple of years to sell... I guess Chiang Mai is very much the same, it takes, time and in many cases a little luck....

Of course, dropping the price is also an option, but no one wants to drop the price of a Condo / house to half of what they paid for it.

deleted.

[Robert24]

@Anthony5: banks do not own so many repossessed properties. They tend to package up NPLs and sell them to Asset Managers, Hedge Funds and Investment banks.

Maybe it is that way in the US, but different story in Thailand. Here the banks have large amounts of properties on their books, for accounting purposes obviously.

I can lead you to at least 20 properties in my nearby area that belong to the banks for many years already, and where even no attempt is made to bring them to the market.

By the way, I didn't know that Thailand even had hedge funds.

Selling NPL portfolios may not be as established as in other countries but is certainly happening in Thailand as well. BoT asked Bankgok Commercial Asset Management company in 2008 to act as an intermediary with the structuring and auction process of NPL portfolios of Thai banks. Actually banks sell off NPL portfolios for accounting purposes mainly. You are probably aware that with Basel II and III you need to put a lot of capital on the side for NPL assets as well as property assets. In addition, if I'm not wrong, BoT has set a 2% limit for each bank for NPLs (before banks used to have 6-7% NPLs on their books). So no Thai bank has any interest to sit a long time on NPLs and a lot of properties as it freezes up capital that will stop them from doing other business. Also a repossession of a property in Thailand can take a long time. With minimal legal effort, a defaulter on a mortgage can postpone a repossession of his property by 1.5-2 years easily. So the market of structuring NPLs has boomed a lot and many asset managers/hedge funds/investment banks and institutional investors have decided to enter this new business opportunity. Obviously for them it is a lot more attractive than for a bank as they don't need to put aside capital like a bank and they have significant upside performance potential by buying distressed assets. Sukumvit Asset Management is one of the active participants in this business but there are many others.

hope this adds some color.

[cheeryble]

Good information about Basel Robert.

Also true that banks must have more interest in clearing NPL condos as after a year the interest on outstanding can be 20%.

In fact it can often be in the condo building's interest not to take action but to let the 20% pa add up.

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[chrisandsu]

The moment the banks try to sell the propoties on there books ,the accounts will then be looked at as a loss . Once that happens the banks will collapse and there is not any printing machine this side of the world that can save them .

[A1Str8]

No.

[chrisandsu]

I think the way to be in Thailand is , if you are going to buy ,and your not super wealthy is to buy in a decent area for 1-3 million baht max any more then that for a house in the middle of nowhere is just not worth it . Of course you can talk about build quality but whats going to be there to enjoy it in 50 years your dentures? anymore then that and your rent would never cover the mortgage payments (if you had one) bad finacial decision that you wouldnt even contemplate back in the west would you ? my sister in law was going to buy in bkk untill i pointed this out to her , instead she looked around and rented a really nice and big house fully furnished with cable tv for 8000 baht a month, do the math its plain to see . if you can sell you sell at a loss as others have said they could probably build a lot cheaper then you so why buy your second hand house

[chiang mai]

Anecdotal: we took a drive around a few Moo Bahns yesterday, fairly upmarket places off Canal Road in Hang Dong, from Baanaifun to Home in Park. We were amazed at how little there was for sale yet the for rent signs continue to proliferate. Property in those places, priced between 5 and 9 million, simply not for sale. We've been trying to buy a particular house in one of those places for almost four months and the farang owner wont budge even 100k on 5 million, it's become a game. Also, it looks like a Thai company has got into the renovation game in Ban wan tan, half a dozen houses all painted and refreshed with identical furniture, not worth the 5 mill. asking prices, not with the literally hundreds of rentals in the same area.

[rgs2001uk]

^^^^^,

not so far from the truth, here in Bkk many seem to think they can do the BTL concept.

Cant wait for interest rates to rise, watch the shyt hit the fan.

[Robert24]

@chrisandsu: banks are very proactive about getting distressed assets off their books here. And what they haven't sold, they will value at market prices.

I wouldn't worry so much about the banks here. They tend to be well capitalised and avoid big/complex positions in OTC products that are very difficult to value or sell.

[rgs2001uk]

@chrisandsu: banks are very proactive about getting distressed assets off their books here. And what they haven't sold, they will value at market prices.

I wouldn't worry so much about the banks here. They tend to be well capitalised and avoid big/complex positions in OTC products that are very difficult to value or sell.

they will value at market prices.

Gotta love this quote, what the e f f does it actually mean?

The OP is stuck with a property he cant shift, what is the market price for his area?

Answer, no one knows, I drive a poxy Honda, market value 1 million baht, I could go and buy a BMW for 4 million, to me , not worth the money.

Doesnt mean to say I am wrong or right, some people will pay the price, others wont.

My mrs prefers to do her shopping in the UK, she says she gets better value for money on shoes and make up.

Just because something is priced to sell, doesnt mean someone wants to buy it.

[TheCruncher]

Anecdotal: we took a drive around a few Moo Bahns yesterday, fairly upmarket places off Canal Road in Hang Dong, from Baanaifun to Home in Park. We were amazed at how little there was for sale yet the for rent signs continue to proliferate. Property in those places, priced between 5 and 9 million, simply not for sale. We've been trying to buy a particular house in one of those places for almost four months and the farang owner wont budge even 100k on 5 million, it's become a game. Also, it looks like a Thai company has got into the renovation game in Ban wan tan, half a dozen houses all painted and refreshed with identical furniture, not worth the 5 mill. asking prices, not with the literally hundreds of rentals in the same area.

The reason is because interest rates are almost negligible at the moment, so investors pour money in real estate, as that has worked in past times.

If we look at the US, and some other Western markets, we can see how that works when the market reaches a saturation point.

Drive around in Moo baans that are about 5 years old, and look how many houses are empty and are falling into decay.

Since I'm looking for a rental currently I just the other day drove through a decent clean moo baan in East Pattaya , actually in a popular area as well, which was built about 5 years ago.

The moo baan consist of not more than 80 houses, which are all built on a decent size plot of +150 Tw with communal pool, has decent security and is surrounded with other larger moo baans. The village was finished but there were at least 10 houses completed by the developer and never occupied.

It was obvious from their visual condition outside that they were completed about 5 years ago, and they all had a place mat outside with all the details. They started at 5.1Mb with the most expensive one 6.2Mb, yet there was clearly no interest in them.

I was at first interested to buy one, as that are good prices for that size of house especially in that area, but felt discouraged only because nobody else seemed interested in them. There was only one house for rent in that village, which was probably the smallest in size in the whole village, and they asked 20.000 Baht for it.

So who sets the price? I don't know.

[Robert24]

@chrisandsu: banks are very proactive about getting distressed assets off their books here. And what they haven't sold, they will value at market prices.

I wouldn't worry so much about the banks here. They tend to be well capitalised and avoid big/complex positions in OTC products that are very difficult to value or sell.

they will value at market prices.

Gotta love this quote, what the e f f does it actually mean?

The OP is stuck with a property he cant shift, what is the market price for his area?

Answer, no one knows, I drive a poxy Honda, market value 1 million baht, I could go and buy a BMW for 4 million, to me , not worth the money.

Doesnt mean to say I am wrong or right, some people will pay the price, others wont.

My mrs prefers to do her shopping in the UK, she says she gets better value for money on shoes and make up.

Just because something is priced to sell, doesnt mean someone wants to buy it.

So rgs2001uk: based on your experience, how do Thai banks value properties they have repossessed?

[chrisandsu]

Robert , im guessing they value the property on the value they are owed ..... have you ever looked at the bank owned property web sites? most are priced ridiculously high , where no one in their right mind would even consider buying hence the fact they really dont want to sell , but you can bet your boots if there is any nuggets in there the high up people in the banks are shifting them to relatives .

The banks have been lending to everyone and anyone so to think they have better ethics then the banks in the west is absured . The one question i have is why is land in even the most rural of areas priced so high ? in most instances its worth more then land where i live and you will never get that money back out ! is this the reason thailand is over built where supply is out stripping demand by a long way?

[rgs2001uk]

@chrisandsu: banks are very proactive about getting distressed assets off their books here. And what they haven't sold, they will value at market prices.

I wouldn't worry so much about the banks here. They tend to be well capitalised and avoid big/complex positions in OTC products that are very difficult to value or sell.

they will value at market prices.

Gotta love this quote, what the e f f does it actually mean?

The OP is stuck with a property he cant shift, what is the market price for his area?

Answer, no one knows, I drive a poxy Honda, market value 1 million baht, I could go and buy a BMW for 4 million, to me , not worth the money.

Doesnt mean to say I am wrong or right, some people will pay the price, others wont.

My mrs prefers to do her shopping in the UK, she says she gets better value for money on shoes and make up.

Just because something is priced to sell, doesnt mean someone wants to buy it.

So rgs2001uk: based on your experience, how do Thai banks value properties they have repossessed?

how do Thai banks value properties they have repossessed?

Too be honest, I neither know nor care.

Lets take BAM for example, how do they actually operate?

Do they act as mere agents for the banks taking a %age commission, or do they buy the properties at a knock down price from the banks, then try and sell at "market prices" to make a profit?

I have visited the BAM office in Seacon Square Bkk, have even checked out their website.

I mentioned before about looking at the properties for sale by SCB, in the Mall Bang Kapi branch.

The properties listed IMHO didnt appear to be competitively priced to sell, perhaps they are quite happy to sit on them and wait for the price they want.

I neither know nor care, but contrary to what others have posted elsewhere on other threads, about going to the bank and asking for listings of repos and getting a knockdown price, from what I have observed, it doesnt appear to be the case.

I appreciate YMMV.

Perhaps you could let us know how the banks value repos, do they just drive out the the moo baan and look at the asking prices for other similair style houses?

[Robert24]

thanks chrisandsu and rgs2001uk for your responses.

From my limited experience, I think the following is what happens with mortgage defaults:

1) The bank takes a 20% write off on a mortgage where a debtor has defaulted as a standard procedure. So for example. Someone buys a house for 2 million, gets a 1.5 million mortgage, in such a case the bank would write off 300k and value the mortgage at 1.2 million (i.e. about 60% of the original purchase price) on their books.

2) the bank can then decide to sell the NPL in a package to other investors at a further loss say 30-40% loss, or they can decide to proceed with an auction/legal repossession process. This may well take a long time, specifically if the debtor gets some legal help.

3) If the property is auctioned and sold, the bank will cover the mortgage and if above the valuation write back the respective amount. Any amount above the mortgage would obviously go to the owner of the property.

4) if the auction process isn't successful and the bank wants to repossess the property, then the banks have the option to determine a fair market value for the property. From experience from one bank in Thailand, they would not value the property higher than the outstanding mortgage on their books even if they think it is higher. So in the above case they may write back the 300k written off on the defaulted loan and value the property at 1.5 million.

Obviously valuations of repossessed properties on their balance sheet will differ significantly to the prices they want to sell them in the market. But bear in mind, many of the properties advertised on government auction websites/bank websites may still be in the auction/repossession process and the bank may not be legal owner yet.

[chrisandsu]

valuable information Robert and rgs2001uk, Thai visa can be a valuable tool at times ?

[OnMyWay2]

Imy planning ton buy a condo and yes the offer will be low. Not because im a speculator it's just that I'm careful with dropping that kind of cash on property that possibly cannot be rented or sold.

Only way out may be a fire sale just like you're experiencing now.

I feel much more comfortable paying half the going rate knowing that's what I may end up selling it for.

[rgs2001uk]

thanks chrisandsu and rgs2001uk for your responses.

From my limited experience, I think the following is what happens with mortgage defaults:

1) The bank takes a 20% write off on a mortgage where a debtor has defaulted as a standard procedure. So for example. Someone buys a house for 2 million, gets a 1.5 million mortgage, in such a case the bank would write off 300k and value the mortgage at 1.2 million (i.e. about 60% of the original purchase price) on their books.

2) the bank can then decide to sell the NPL in a package to other investors at a further loss say 30-40% loss, or they can decide to proceed with an auction/legal repossession process. This may well take a long time, specifically if the debtor gets some legal help.

3) If the property is auctioned and sold, the bank will cover the mortgage and if above the valuation write back the respective amount. Any amount above the mortgage would obviously go to the owner of the property.

4) if the auction process isn't successful and the bank wants to repossess the property, then the banks have the option to determine a fair market value for the property. From experience from one bank in Thailand, they would not value the property higher than the outstanding mortgage on their books even if they think it is higher. So in the above case they may write back the 300k written off on the defaulted loan and value the property at 1.5 million.

Obviously valuations of repossessed properties on their balance sheet will differ significantly to the prices they want to sell them in the market. But bear in mind, many of the properties advertised on government auction websites/bank websites may still be in the auction/repossession process and the bank may not be legal owner yet.

many of the properties advertised on government auction websites/bank websites may still be in the auction/repossession process and the bank may not be legal owner yet.

You appear to have an understanding of the system.

Correct me if I am wrong, the bank is the legal owner until such times as the final payment is made, then the chanote will be transferred to the owners name.

Its a bit like looking at car blue books, most of them are owned by the financier and not the person/owner trying to sell me "their" car.

Anyway thanx for dragging me out of my comfort zone, will need to investigate BAM and see if they are listed on the SET, if so i will research their performance and share price, may well be worth a punt, sure beats having the money in a non performing bank account.

[TheCruncher]

thanks chrisandsu and rgs2001uk for your responses.

From my limited experience, I think the following is what happens with mortgage defaults:

1) The bank takes a 20% write off on a mortgage where a debtor has defaulted as a standard procedure. So for example. Someone buys a house for 2 million, gets a 1.5 million mortgage, in such a case the bank would write off 300k and value the mortgage at 1.2 million (i.e. about 60% of the original purchase price) on their books.

2) the bank can then decide to sell the NPL in a package to other investors at a further loss say 30-40% loss, or they can decide to proceed with an auction/legal repossession process. This may well take a long time, specifically if the debtor gets some legal help.

3) If the property is auctioned and sold, the bank will cover the mortgage and if above the valuation write back the respective amount. Any amount above the mortgage would obviously go to the owner of the property.

4) if the auction process isn't successful and the bank wants to repossess the property, then the banks have the option to determine a fair market value for the property. From experience from one bank in Thailand, they would not value the property higher than the outstanding mortgage on their books even if they think it is higher. So in the above case they may write back the 300k written off on the defaulted loan and value the property at 1.5 million.

Obviously valuations of repossessed properties on their balance sheet will differ significantly to the prices they want to sell them in the market. But bear in mind, many of the properties advertised on government auction websites/bank websites may still be in the auction/repossession process and the bank may not be legal owner yet.

many of the properties advertised on government auction websites/bank websites may still be in the auction/repossession process and the bank may not be legal owner yet.

You appear to have an understanding of the system.

Correct me if I am wrong, the bank is the legal owner until such times as the final payment is made, then the chanote will be transferred to the owners name.

Its a bit like looking at car blue books, most of them are owned by the financier and not the person/owner trying to sell me "their" car.

Anyway thanx for dragging me out of my comfort zone, will need to investigate BAM and see if they are listed on the SET, if so i will research their performance and share price, may well be worth a punt, sure beats having the money in a non performing bank account.

The Chanote is from day one in the owners name, the bank is only mentioned on the backside.

Legally a bank can't sell a property as long as the owner hasn't been defaulted by a court.

[jaideeguy]

Most of the potential [hopeful] buyers we have had were either 'real estate tourists' who have little or no real interest in buying...........just dreamers and time wasters.

And the other potential [hopeful] buyers have been low ball investors with insultingly low offers and wanting to add to their stack of chanots and get some rental income for a small investment.

Very few sincere buyers with 'vision' and small baht my property needs with 3 houses and a swimming pool.

[cheeryble]

will need to investigate BAM and see if they are listed on the SET, if so i will research their performance and share price, may well be worth a punt, sure beats having the money in a non performing bank account.

I was thinking the same rgs those who buy debt like this are usually ahead of the game.

I had a look at their (wanting) site.

If you find out how they raise funds rgs do please tell (or PM) thanks.

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