Is the real estate market slow all over LOS?

[trogers]

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.

What you need is then a foreign end user with balls to acquire a Thai landed property. Very few indeed.

[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.

What you need is then a foreign end user with balls to acquire a Thai landed property. Very few indeed.

That's the ideal buyer and there are a couple of them here in our 'off the beaten track' development. There are a few Falang/Thai couples that have bought here like me and my Thai wife was a bit reluctant at first, but now appreciates the nature that surrounds us.

I observe that a lot of the Thai women wear the pants in the relationship and the Falang husband just goes along with what ever the tirak wants.............'yes dear, whatever you want'.

Edited October 13, 2014 by jaideeguy

[chiang mai]

My apologies JD that I didn't do as promised, life has been hectic recently, I will PM today.

[AnotherOneAmerican]

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

But much of the information is incorrect,

after the financial crash of the late 1990s, Thailand changed it's banking laws, for home loans issued after that date, and a repossessed property may not be sold for less than the outstanding loan.

That's the reason there are so many empty properties, sitting derelict in Thailand.

There is no marking down.

Edited October 13, 2014 by AnotherOneAmerican

[Robert24]

@AnotheroneAmerican: so do I understand your comment right, that there is no change in valuation of a loan on a banks book here in Thailand if it goes from performing to non-performing from your point of view? Are you also saying there is no change in RWA capital allocation to such a loan? Not trying to get into an argument but there are certain accounting rules BoT regulated banks need to follow.

maybe there is a misunderstanding: it usually takes a long time for a bank to repossess a property and wholst going through this process the bank is not the legal owner of the property. So if they sell the NPL, they only sell the NPL, obviously not the property. And if the bank decides as part of the auction process to take the property over, then the property belongs 100% to the bank and there is no loan against it.

[AnotherOneAmerican]

@AnotheroneAmerican: so do I understand your comment right, that there is no change in valuation of a loan on a banks book here in Thailand if it goes from performing to non-performing from your point of view? Are you also saying there is no change in RWA capital allocation to such a loan? Not trying to get into an argument but there are certain accounting rules BoT regulated banks need to follow.

maybe there is a misunderstanding: it usually takes a long time for a bank to repossess a property and wholst going through this process the bank is not the legal owner of the property. So if they sell the NPL, they only sell the NPL, obviously not the property. And if the bank decides as part of the auction process to take the property over, then the property belongs 100% to the bank and there is no loan against it.

If a Thai bank repossesses a property with a 1.5MBht loan outstanding.

They cannot then sell that property or value it at less than 1.5MBht.

How hard can that be to understand?

Edited October 14, 2014 by AnotherOneAmerican

[trogers]

@AnotheroneAmerican: so do I understand your comment right, that there is no change in valuation of a loan on a banks book here in Thailand if it goes from performing to non-performing from your point of view? Are you also saying there is no change in RWA capital allocation to such a loan? Not trying to get into an argument but there are certain accounting rules BoT regulated banks need to follow.

maybe there is a misunderstanding: it usually takes a long time for a bank to repossess a property and wholst going through this process the bank is not the legal owner of the property. So if they sell the NPL, they only sell the NPL, obviously not the property. And if the bank decides as part of the auction process to take the property over, then the property belongs 100% to the bank and there is no loan against it.

If a Thai bank repossesses a property with a 1.5MBht loan outstanding.

They cannot then sell that property or value it at less than 1.5MBht.

How hard can that be to understand?

And in a crisis, their books would be filled with toxic NPL converted assets with no way to offload.

[TheCruncher]

@AnotheroneAmerican: so do I understand your comment right, that there is no change in valuation of a loan on a banks book here in Thailand if it goes from performing to non-performing from your point of view? Are you also saying there is no change in RWA capital allocation to such a loan? Not trying to get into an argument but there are certain accounting rules BoT regulated banks need to follow.

maybe there is a misunderstanding: it usually takes a long time for a bank to repossess a property and wholst going through this process the bank is not the legal owner of the property. So if they sell the NPL, they only sell the NPL, obviously not the property. And if the bank decides as part of the auction process to take the property over, then the property belongs 100% to the bank and there is no loan against it.

How they can sell the NPL before they have offloaded the property. Who sets the value of the non-performing part of the loan ?

[chiang mai]

@AnotheroneAmerican: so do I understand your comment right, that there is no change in valuation of a loan on a banks book here in Thailand if it goes from performing to non-performing from your point of view? Are you also saying there is no change in RWA capital allocation to such a loan? Not trying to get into an argument but there are certain accounting rules BoT regulated banks need to follow.

maybe there is a misunderstanding: it usually takes a long time for a bank to repossess a property and wholst going through this process the bank is not the legal owner of the property. So if they sell the NPL, they only sell the NPL, obviously not the property. And if the bank decides as part of the auction process to take the property over, then the property belongs 100% to the bank and there is no loan against it.

How they can sell the NPL before they have offloaded the property. Who sets the value of the non-performing part of the loan ?

Bank lends money to customer secured on property, customer defaults, bank takes ownership of the property, the loan becomes non-performing at that point - the value of the NPL is what was booked when the customer defaulted.

[bkkjames]

One only needs to look through the classifieds on here, plenty of dreamers hoping someone, anyone will rent out their 50 Square meter 2 bed condo on suk for 50 k a month...

[chiang mai]

One only needs to look through the classifieds on here, plenty of dreamers hoping someone, anyone will rent out their 50 Square meter 2 bed condo on suk for 50 k a month...

We have similar in CM currently, 43 sq meter one bed for 25k, I mean, why would you!

[TheCruncher]

@AnotheroneAmerican: so do I understand your comment right, that there is no change in valuation of a loan on a banks book here in Thailand if it goes from performing to non-performing from your point of view? Are you also saying there is no change in RWA capital allocation to such a loan? Not trying to get into an argument but there are certain accounting rules BoT regulated banks need to follow.

maybe there is a misunderstanding: it usually takes a long time for a bank to repossess a property and wholst going through this process the bank is not the legal owner of the property. So if they sell the NPL, they only sell the NPL, obviously not the property. And if the bank decides as part of the auction process to take the property over, then the property belongs 100% to the bank and there is no loan against it.

How they can sell the NPL before they have offloaded the property. Who sets the value of the non-performing part of the loan ?

Bank lends money to customer secured on property, customer defaults, bank takes ownership of the property, the loan becomes non-performing at that point - the value of the NPL is what was booked when the customer defaulted.

So they sell the NPL, according to you the total amount he owns the bank, and keep the property at the same time ?

[Robert24]

@AnotheroneAmerican: so do I understand your comment right, that there is no change in valuation of a loan on a banks book here in Thailand if it goes from performing to non-performing from your point of view? Are you also saying there is no change in RWA capital allocation to such a loan? Not trying to get into an argument but there are certain accounting rules BoT regulated banks need to follow.

maybe there is a misunderstanding: it usually takes a long time for a bank to repossess a property and wholst going through this process the bank is not the legal owner of the property. So if they sell the NPL, they only sell the NPL, obviously not the property. And if the bank decides as part of the auction process to take the property over, then the property belongs 100% to the bank and there is no loan against it.

How they can sell the NPL before they have offloaded the property. Who sets the value of the non-performing part of the loan ?

Bank lends money to customer secured on property, customer defaults, bank takes ownership of the property, the loan becomes non-performing at that point - the value of the NPL is what was booked when the customer defaulted.

So they sell the NPL, according to you the total amount he owns the bank, and keep the property at the same time ?

a loan becomes non-performing when the debtor stops paying the monthly installments (interest/principal). Usually I think the bank classifies a loan as non-performing after 3 months but this is depending on the contract. At that point the legal owner of the property hasn't changed, it just means that the bank can proceed with the legal process of auctioning the property or repossessing the property if there is no buyer. This process usually takes a long time for legal reasons here in Thailand, this being one reason why a lot of banks prefer to sell the NPL to other investors. Whilst the NPL (individual non performing loans or as a package) is being sold, the legal owner of properties won't change. It's just that the owner of the loan (Creditor) is now the investor (i.e. Asset Management company) and not the bank anymore.

The price of an NPL deal between an investor and the bank is individually negotiated. However the BoT has asked the Bangkok Commercial Asset Management company to act as an intermediary for such deals and auctions. From my experience, the price is at least a 30-40% discount of the loan value.

By the way this is a common process in most countries, in Thailand this was established in 2008 by the BoT. Banks worldwide are very keen to sell distressed assets (like NPL) in order to improve their balance sheet/capital situation. Hence why some people are more worried these days about positions in distressed assets held by institutions that are not regulated rather than by banks that are being strictly regulated.

hope this clarifies it.

[Robert24]

@AnotheroneAmerican: so do I understand your comment right, that there is no change in valuation of a loan on a banks book here in Thailand if it goes from performing to non-performing from your point of view? Are you also saying there is no change in RWA capital allocation to such a loan? Not trying to get into an argument but there are certain accounting rules BoT regulated banks need to follow.

maybe there is a misunderstanding: it usually takes a long time for a bank to repossess a property and wholst going through this process the bank is not the legal owner of the property. So if they sell the NPL, they only sell the NPL, obviously not the property. And if the bank decides as part of the auction process to take the property over, then the property belongs 100% to the bank and there is no loan against it.

If a Thai bank repossesses a property with a 1.5MBht loan outstanding.

They cannot then sell that property or value it at less than 1.5MBht.

How hard can that be to understand?

Thanks AnotheroneAmerican for your response.

Apologies if I ask stupid questions but I'm just a small businessman here trying to learn a few things. But I'm glad you are not disputing the fact that banks make write-offs/provisions when a loan becomes non-performing.

As to the banking law you quote that prohibits banks to sell repossessed properties below the prior outstanding loan value, do you have any reference to this? Met with a friend last night who is visiting here who is a branch manager of BAAC bank in Kalasin. We spoke about this and he mentioned that he is not aware of such a law/rule. I guess it doesn't mean such a rule doesn't exist - banks normally tend to try to sell repossessed properties way above the prior loan value - so maybe this just doesn't happen. Do you have any link to this rule/law or any document about it?

many thanks.