What are the chances of thai property market crash?

[rotary]

Anyone loved through Tom yam kung 1997 crash? What was it like?

Great, with the reduction in asking price and counting the currency devaluation my full price over valued condo was bought for less than $20,000. The full price 6 months before was pretty near $70,000 with a condo full of cheap furniture I did not get with the big discount deal.

[KhnomKhnom]

No way......... the real big money is trapped inside Thailand.

The ruling families here have all their money in THB, not a easy convertible money. Also, lots of Thai property owned here.

The economy is not in the hands of the foreigners here, much as they may think the Thai world revolves around them.

I see no reason to worry as long as the ruling families run the tanks. Lets think deeper.

[sandhurstmolonski]

Well I am for one amazed at the asking prices for rentals here in Bangkok. With less and less farangs around, who will rent these condos purchased for investment? AEC hopes prevail for a sudden influx of high spending cambodians?

Go take a gander at the classifieds on here and other english language sites (you know them) for some stellar examples. 50-60 sqm 2 beds for 50,000 baht a month at some fancy sounding new build in the cbd. Who's renting these - certainly ain't the locals.

There will be a market for top top buildings at a premium for those of farang MD status or if the company foots the bill, but that market does have a limit in terms of numbers.

Now I believe here at least they will keep building them and locals mostly will keep buying them off plan with hopes of a profitable flip. I for one would not touch one with a 10 foot pole considering all the changes to Visa requirements and so on. But then again, maybe a correction is in order - and an opportunity for some should prices drop to realistic levels.

Hi ..If you can please give me some example of the great value ( desperate rentals ) , I'm not doubting you by the way , But I have a number

of people that will grab those leases tomorrow . Im not sure its that easy , to get a good cheap rental ..

Or maybe I should say " Value rental " in nice complex . Happy for a lead from anyone who can assist ..even PM me , if you wish .

Thanks Sm

[sandhurstmolonski]

Anyone loved through Tom yam kung 1997 crash? What was it like?

Great, with the reduction in asking price and counting the currency devaluation my full price over valued condo was bought for less than $20,000. The full price 6 months before was pretty near $70,000 with a condo full of cheap furniture I did not get with the big discount deal.

Rotary ..Can you let me know where I can buy one like yours ? .. Many thanks in Advance ..SM .

pm , me if you wish .

[janpharma]

In and around Pattaya are more then 7000 condo's for sale...they are not "sold"...So, the market isn't doing well...

[Nickthegreek]

No way......... the real big money is trapped inside Thailand.

The ruling families here have all their money in THB, not a easy convertible money. Also, lots of Thai property owned here.

The economy is not in the hands of the foreigners here, much as they may think the Thai world revolves around them.

I see no reason to worry as long as the ruling families run the tanks. Lets think deeper.

For Me you ahave abosolutely nailed it and I have said this to Myself very often, sad thing is those of Us that have lived here a while can see the actual wealth in some of these Thai families, I gave up thinking that Thais were all poor years ago, the Chinese Thai porperty Tycoons here in Rayong have so much wealth it beggars belief, then there are those who are now reselling property here in Rayong from the crash of 97 which they bought in auctions from the bank then sat on them..quick lick of paint and 4 million baht OMG..!!

Edited November 9, 2014 by Nickthegreek

[akentryan]

Last number I heard for Pattaya was about 200,000 condo units under construction or approved. A few Russian projects underway. The fall in the ruble makes houses or condos cost about 50% more than a year ago to the Russkies. I would think expectations would have been for a 30-40% share of these units to be targeted there. Can't help an already saturated market. Some may count on Chinese or Indian buyers but I seriously doubt it. Thais, to my knowledge, have not been big buyers in the past except as speculators. I don't see that changing much either. Looks like a drop in demand which means a drop in price accompanied by a drop in rental rates. If the ruble continues its rather rapid downward spiral a serious adjustment may be looming probably after the first of the year - but just for the Pattaya market.

Edited November 9, 2014 by akentryan

[trogers]

No way......... the real big money is trapped inside Thailand.

The ruling families here have all their money in THB, not a easy convertible money. Also, lots of Thai property owned here.

The economy is not in the hands of the foreigners here, much as they may think the Thai world revolves around them.

I see no reason to worry as long as the ruling families run the tanks. Lets think deeper.

For Me you ahave abosolutely nailed it and I have said this to Myself very often, sad thing is those of Us that have lived here a while can see the actual wealth in some of these Thai families, I gave up thinking that Thais were all poor years ago, the Chinese Thai porperty Tycoons here in Rayong have so much wealth it beggars belief, then there are those who are now reselling property here in Rayong from the crash of 97 which they bought in auctions from the bank then sat on them..quick lick of paint and 4 million baht OMG..!!

One does not compare values of properties between one crash and another. You need to use values of properties near a peak and measure the % fall during the downturn.

[trogers]

No way......... the real big money is trapped inside Thailand.

The ruling families here have all their money in THB, not a easy convertible money. Also, lots of Thai property owned here.

The economy is not in the hands of the foreigners here, much as they may think the Thai world revolves around them.

I see no reason to worry as long as the ruling families run the tanks. Lets think deeper.

For Me you ahave abosolutely nailed it and I have said this to Myself very often, sad thing is those of Us that have lived here a while can see the actual wealth in some of these Thai families, I gave up thinking that Thais were all poor years ago, the Chinese Thai porperty Tycoons here in Rayong have so much wealth it beggars belief, then there are those who are now reselling property here in Rayong from the crash of 97 which they bought in auctions from the bank then sat on them..quick lick of paint and 4 million baht OMG..!!

One does not compare values of properties between one crash and another. You need to use values of properties near a peak and measure the % fall during the downturn.

[vincent13]

What are the chances of Christmas?

In most areas of Thailand the prices skyrocketed without any reason other than speculation.

If you see what they ask for Isaan farmland without any proximity to a expanding city and you calculate the annual crop sales you know that noone could afford buying land for farming purposes.

In growing cities there is some demand but apart of Bangkok the demand is not too high.

Many many new condos are being bought by thais so i cannot see a crash

How often ave you seen a crash before it happened?

Bye,

Derk

Yes, I agree about the cost of Isaan farm land, prices are totally unrealistic in many instances and I don't see anyone buying, at least where I live.

The crunch for the land/housing market will come when interest rates rise as they inevitably will.

[In Search of Space]

I'm no expert, but if think the condo market in Pattaya/Jomtien is wide open, thousands of units empty. Would only buy house/land, but not in wife's name !

[Robert24]

No way......... the real big money is trapped inside Thailand.

The ruling families here have all their money in THB, not a easy convertible money. Also, lots of Thai property owned here.

The economy is not in the hands of the foreigners here, much as they may think the Thai world revolves around them.

I see no reason to worry as long as the ruling families run the tanks. Lets think deeper.

This might be a stabilizing factor or not depending on how you look at it. Those wealthy families are often also big shareholders of large corporate organizations that have a lot of debt as well. Not sure if that is going to save you when the market corrects. If you look at the Asian crisis, it was those people that ran fasted to the exit door and converted their local money into hard foreign currencies which indeed triggered the Thai baht to collapse. Not saying this would happen again, the BoT is much better prepared then they used to be 1997.

But agree for now I don't see anything on the horizon that would trigger a market crash. You would need a recession/significant crisis to trigger a market correction.

[timewilltell]

Many many new condos are being bought by thais so i cannot see a crash

Precisely, bought by them but they are not living in them and they are not renting them out either - that is not a good scenario

[Benmart]

But looking at Pattaya, its overbuild. They keep building and very little people buy.

U look at this new projects they empty..

And then 28sqm studio in jomtien cost 50k $, and real value of it is 15k $

In my opinion the bubble is close to burst...

They spend/took loans to build it but not many are sold. And theres many under construction...

Some indicators point to a downturn, such as a dramatic increase personal debt load, significant foreclosures, repossessions and questionable loan and subsidy practices.

That being said, it is purely a quess on my part that the bubble is nearing failure.

[Chris Lawrence]

When the guy in the taxi starts telling you about the gains in property? Then be careful.

Then again the elephant in the room is the General and what affect he and his team have on the market.

Could be a small bump rather than a complete crash; but also need to look at the different markets in Thailand and relevant data to that market place. I would say Pattaya is different to Bangkok and different to Patong etc? What inherent characteristics are changing in these markets and what are they changing. Cost of money, lending ratios, who is buying, what is selling, availability of land for projects, refurbished projects? Money is still cheap in most countries and is the catalyst to fuelling the market.

Just seeing more for sale doesn't mean a crash, however could mean a price drop. So in percentages a crash maybe 20-40%+ drop in price or a price drop could be 5*10%. Developers offering sweeteners might mean the property is attractive to a buyer, but is the developer still maintaining the price of the units? Offering the sweetener but still maintaining price shows the financial backers that the project is viable

The sub-prime mortgage drama that happened in the US has different characteristics to what is happening in Thailand as I understand. That type of crash, putting my neck out won't happen in Thailand. The sub-prime was a perfect storm waiting to happen.

Just my thoughts; but I could be wrong?

[trogers]

Pure and Simple there will be no Thai property crash , Condo's rely on Pre - sales , if the sales are not there the project will not commence .

The term 'Sales' here is just a marketing ploy to deceive bankers and self. The correct phrase is 'booking with a deposit'.

If developers are having successful 'Pre-sales', why do we see large signboards for 'Resales' in their completed projects?

[Jungle Jim]

A big YES! They are over building everywhere. Thousands of hotel rooms sit empty. Less than two years. Greed will be their karma!

Thailand's Bubble Economy Is Heading For A 1997-Style Crash

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/?optimizely=a

Edited November 9, 2014 by Jungle Jim

[Jungle Jim]

Excellent ! Where i live in a small village over the last three years about forty new resorts have been built. Friday night i counted three cars at one hotel, two at another, four at another and a big zero at all the rest. Where i am staying over the last month have rented out two rooms for one night. I can,t wait for the CRASH! Greed will kick them all in the butt. The baht will likely hit 60 to the dollar. I can,t wait.

[Robert2006]

Property values have an inverse reaction to interest rates; low rates produce increases in property values while higher rates produce a lowering of property values. The world is in a low interest rate environment; in the US as an example we are at 40 year lows, 3.875% for a 30 year fixed rate mortgage this Friday, $100,000 only costs $463 a month. Average 30 year rates in the US are around 8% or $729 for $100,000, that’s an increase of 37% when rates get back to normal levels.

All of the world’s central banks are printing money in an effort to keep their interest rates low, stimulate domestic economic activity and to keep their currency values weak to help stimulate their export markets. This low interest rate environment cannot go on forever, sooner or later interest rates will have to be raised, and they will most likely spike for a while and then return to the 30 year average in your country. That is when I believe there has to be a correction in the property market. I don’t believe Thailand will be the only country that will see this correction.

[matman]

Yes the bubble is going to burst, just like it did in Spain with overbuilding and few (relatively) buyers, then like they did in Spain they will have to make the offer of 'Buy one get one free' to get rid of them

[Ulic]

Bubbles are easy to see but it is extremely difficult to predict exactly when they will burst. They invariably go on for

longer than one would think, but when the correction happens things unravel faster than one thinks possible. The one thing

about Thai banks is they don't seem to mind hanging onto assets indefinitely, not taking a write down/loss until they actually

sell that asset.This supports the housing market. It is only the less patient farang whose pockets are not as deep who sell for a

loss. Russians whose currency is declining would make money (in Roubles) if they sold and repatriated there money, but

as the Roubles continues to decline they may not wish to sell there foreign investments. So while I see bubble prices in

relation to income and availability, as long as banks have access to cheap (almost free) money and they continue to keep

under performing assets on the books at inflated prices, I don't see anything bursting. I see the real estate market getting soft

and mushy but not actually bursting. Builders are still making lots of money without prices having to go up.

[JacChang]

Why invest in property when there are property funds easily traded on the SET?

I get 6-9%, have full control of when to enter and exit, have full control over the earnings of each month.

Life is good.

However, you guys are right, the expensive apartments are going to hell. Those that are rented by the so called CEOs. One of the stock funds, goldpf, which is Marriotts apartments I believe, has been having occupancy rates at 50% average, compared to 97% 2 years ago before the protests.

Besides that, office rentals, and business rentals are doing great. My dividends are still coming in and going strong, no surprises there. Hotels and luxury apartments? They are barely at 30-50% of their usual performances since the mayhem.

[USNret]

I'm no expert, but if think the condo market in Pattaya/Jomtien is wide open, thousands of units empty. Would only buy house/land, but not in wife's name !

How do you buy land not in wife's name?

[callaway]

Upcountry will be a different story. I believe the farmers bank is under direction from current governing body to get their debt under control. Many people have been called to the bank to TALK about money they borrowed for land but have yet to pay interest or any off the principal. There is strong talk these loane will be sold to a commercial bank. The commercial bank will not put up with non-payment. Foreclosures will be on the rise rapidly. Either that or fire sale before forclosure. Hanging out for that because like a few more rai soon. At the moment prices are stupid for land but this will bring the prices back to reality. The area I talk of is the north ease around Surin.

[callaway]

Upcountry will be a different story. I believe the farmers bank is under direction from current governing body to get their debt under control. Many people have been called to the bank to TALK about money they borrowed for land but have yet to pay interest or any off the principal. There is strong talk these loans will be sold to a commercial bank. The commercial bank will not put up with non-payment. Foreclosures will be on the rise rapidly. Either that or fire sale before forclosure. Hanging out for that because like a few more rai soon. At the moment prices are stupid for land but this will bring the prices back to reality. The area I talk of is the north east around Surin.

[callaway]

Upcountry will be a different story. I believe the farmers bank is under direction from current governing body to get their debt under control. Many people have been called to the bank to TALK about money they borrowed for land but have yet to pay interest or any off the principal. There is strong talk these loans will be sold to a commercial bank. The commercial bank will not put up with non-payment. Foreclosures will be on the rise rapidly. Either that or fire sale before forclosure. Hanging out for that because like a few more rai soon. At the moment prices are stupid for land but this will bring the prices back to reality. The area I talk of is the north east around Surin.

[Cake Monster]

Pattaya certainly seems to be going through a sharp downturn in the property market from about mid 2013, and still is.

There are an estimated 9,000 + unbought units in the condo market alone, if you believe the official figures, but I personally think this figure is way too low, and there are more likely to be nearer 15,000 units or more, if all the units just outside the actual city limits are to be considered.

For sure the downturn in Tourism is not helping the situation, and the worldwide slowdown in economies will be making its mark, especially from countries like Russia and its states, which account for a large proportion of condo spending in Thailand.

My concern would be the amount of toxic debt that could possibly be on the books for the lending banks, not just for the developements, but for the follow on loans for mortgages.

[ExPratt]

I have a couple of mates in that game , they reckon that so much money has been thrown into the market because since 2008 people don't trust the stock market and if they did the risk wasn't worth the possible gain, banks again were not too dependable and interest rates were/are shit, so it was housing market or gold that people put there spare cash into

The construction going on around Naklua, Wongamart is ridiculous in my opinion, how those condos can be filled I'll never know. When I first went to naklua about 10 years ago there was one high rise condo at Wongamart, no there are about 7. Also low rise shoe boxes all over the place , 1 million for 25sqm

Edited November 10, 2014 by ExPratt

[Daniel Boon]

Wonder how much of this property bubble is financed with black money,

all that corruption and drug money has to go some where.

regards worgeordie

That's an interesting observation ...

I have nothing to support my hypothesis; however, I wonder is there a buy price for Thai and a buy price for non-Thai (the requirement is that over 50% is owned by Thais); if this is the case (a two speed economies in any given country is not new), and given the downturn in tourists to Thailand (leaving aside the reasons), lower demand translates into reduced dividends and poor equity growth.

Despite what all the stock markets try to convey, most countries of economic note are close to if not in recession (which is a poofteenth away from a depression); even if black money (in Australia that's money that tax hasn't been paid on and not necessarily from ill gotten gains) was (emphasis on was), and regardless of non-taxed or 'illegal' activities, the 'Investors' want to make money, not lose it ...

So the real question could be reworded to ask 'now that there appears to be less money to be made in Thailand - and Investors go elsewhere (Laos, Cambodia where ever), will the Thai property market crash'? And the answer to that is Yes, it already is in a state of collapse; and if what I presume is right (about a Thai price and a non-Thai price), then its even worse ...

Is there money to be made in Thailand? most assuredly yes, but don't think for a moment that non-Thais will be first in line.

For those who are happy with growth that keeps just a head of inflation, then there is a market, but it's not in condos ...

[KittenKong]

I have nothing to support my hypothesis; however, I wonder is there a buy price for Thai and a buy price for non-Thai (the requirement is that over 50% is owned by Thais)...

Some developers have official two-tier pricing. Some dont. In popular tourist areas all would probably be more likely to give more discount on units in Thai/company name than in farang name, except in those buildings where the bulk of the buyers are Thai anyway.

There still seems to be a premium for farang name in resales in Pattaya, though of course the best units in buildings there are often in farang name anyway, and the less attractive units will more likely be in the Thai quota.