What are the chances of thai property market crash?

[rayongchelsea]

2 of my neighbours have condos here in rayong, another in Hua Hin and another in jomtien, live in bangkok. ( 10-20 million),

These are not distressed assets. They hardly visit.

These people are not really exceptions to the rule.

But there are no sales, but an increasing number indicating they might sell.

No crash, but no real demand.

Cannot rationalize this market in terms of the west.

You need to go into the juristic office and find out how many are paying their cam fees, that maybe more indicative than whether lights are on or off etc..

As far as I am aware, of the 180 units sold in my complex only 2 have bank loans..

[Strangebrew]

Ok for all the Thai's out there Concept and reality Concept IE: If I buy condo to rent out to farang for X amount of baht my return Should be X amount of baht 5 years down the road. Reality IE: all those condos sold and are now flooding the market trying to find renters for them. Are now money pits with all the fees that have to be paid and fewer Farang's to rent them. I might rent a fully furnished condo for 15,000 Baht a month But it would have to have bathtub in it. At 15 K that is fair market value. Anything more then why rent when I can buy. But Just wait in about 6 months the bubble will burst and Thais will be doing the condo diving. Just look up before passing and condo's. Then there wives will sell cheaper and throw in Boom boom to close deal.

[Strangebrew]

Don't believe me go to Impact can get studio condos all day long at 500,000 Baht now. Rat's and roaches free no extra charge.

[mataleo]

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...

You ask about a property crash in Thailand but only mention Jontiem. That might crash but lots of Thailand has reasonably priced property. Most property in Thailand is under 1 million baht.

Yes, 28 ssm for $50K in Jontiem seems high but people thought the same in London and prices have tripled since they thought it was too high. People are always expecting a crash. It's impossible to time. Instead of crashing, prices could just stagnate. e.g. stay at $50K for the next 20 years until they are reasonable value. They don't have to crash to get back to reasonable value. They can just stay and wait for inflation to catch up.

I think you'll be waiting for a very long time. If in your example the condos are really worth only $15K and the developer sold a few for 50K, then he's probably covered his costs and any unsold units are free to him. So he can hang on forever waiting to sell. He isn't forced to sell, and with so many cash buyers, there are a very limited number of distressed sellers. It's a very different market to the West where most properties are bought with a mortgage.

There was a crash in UK

[mataleo]

Scamish Contract. U pay bank agent cash tea ect. All on printer paper no seal stamp etc....

may b someone can decode it

[Strangebrew]

I bought foreclosed homes in Las Vegas, Put several thousand into them, then leased them out great income and property value going up But then again I own the land, Here no chance for that so bad investment for farangs. What hurts the market is the 49 % vs. 51% ownership rule here. Can buy but can't sell. And the rules changing at the drop of a hat. So as usual Thai's shoot themselves in the foot.

Edited November 10, 2014 by Strangebrew

[KittenKong]

I bought foreclosed homes in Las Vegas, Put several thousand into them, then leased them out great income and property value going up But then again I own the land, Here no chance for that so bad investment for farangs.

When you buy a condo in farang name here you also buy a corresponding proportion of the land the condo is built on (assuming that the building owns the land it is built on, as it should). So even if one day the building was demolished you would still own your percentage of the land.

[worgeordie]

Another serious problem to consider,apart from any crash,

is ,are the utility companies,Electric,Water and garbage

disposal, going to be able to give reliable service to all these

Condos,Houses,Shopping Malls that will be occupied (hopefully),

in the near future.

Now I am sure these companies have a plan to expand services

(this been Thailand )and will not wait until the last minute to

sort the matter out.

regards Worgeordie

[chris2004]

Post #37 made the point but i think there must be a bubble coming soon to Pattaya. A lot of condos must have been targeted at Russians, many of whom must be having problems to complete any purchases. If you look at the gulags being built along 2nd Road Jomtien no one in their right mind except a Russian would buy one of those so i think they will struggle to even get finished. At best there will be thousands of finished condos not sold. Maybe the developers are rich enough that they don't care. Many of the better placed ones are asking 100,000 + baht a sq m. Crazy money for a 3rd world country.

Edited November 12, 2014 by chris2004

[rotary]

I sent a pm to you

[ttthailand]

Don't believe me go to Impact can get studio condos all day long at 500,000 Baht now. Rat's and roaches free no extra charge.

What or who is Impact ? I looked online but not really see any condos for that price selling listed under Impact.

[Jasun]

Don't wait for a crash, it probably won't happen. At least not across the board. Yes there's an over supply, but as most owners are happy to sit on vacant properties, it's not as big an issue as you would expect. Thailand has also trailed behind the region on property price growth, so there's no bubble to be popped either.

[SheungWan]

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...

You ask about a property crash in Thailand but only mention Jontiem. That might crash but lots of Thailand has reasonably priced property. Most property in Thailand is under 1 million baht.

Yes, 28 ssm for $50K in Jontiem seems high but people thought the same in London and prices have tripled since they thought it was too high. People are always expecting a crash. It's impossible to time. Instead of crashing, prices could just stagnate. e.g. stay at $50K for the next 20 years until they are reasonable value. They don't have to crash to get back to reasonable value. They can just stay and wait for inflation to catch up.

I think you'll be waiting for a very long time. If in your example the condos are really worth only $15K and the developer sold a few for 50K, then he's probably covered his costs and any unsold units are free to him. So he can hang on forever waiting to sell. He isn't forced to sell, and with so many cash buyers, there are a very limited number of distressed sellers. It's a very different market to the West where most properties are bought with a mortgage.

There was a crash in UK

But not parts of London. But prices tripled across London? No way. And hey I think a prize is in order for anyone who wants to compare Jomtien to London. Apples and Pairs dear chap.

[Robert24]

one thing that may slow down the property market here or indeed trigger a correction is the planned land/property tax. having read that residential property should be taxed up to 1% p.a. based on the government estimated value and commercial property up to 4% (farmland up to 0.5%).

[Naam]

Ok for all the Thai's out there Concept and reality Concept IE: If I buy condo to rent out to farang for X amount of baht my return Should be X amount of baht 5 years down the road. Reality IE: all those condos sold and are now flooding the market trying to find renters for them. Are now money pits with all the fees that have to be paid and fewer Farang's to rent them. I might rent a fully furnished condo for 15,000 Baht a month But it would have to have bathtub in it. At 15 K that is fair market value. Anything more then why rent when I can buy. But Just wait in about 6 months the bubble will burst and Thais will be doing the condo diving. Just look up before passing and condo's. Then there wives will sell cheaper and throw in Boom boom to close deal.

in about 6 months the bubble will burst

without any doubt! i heard this umpteen dozens of times during the last 10 years, i.e. it will come true in a short time (6 months... give or take a week)

[ldnguy]

I also find it odd that most farangs on here seem to agree that prices are too high for new condos, yet plenty of farangs are buying, ...

Are they necessarily the same ones?

I bought my (used) condo because I like it and I'd seen very few others that I liked. I know it cost perhaps 20-30% more than it's worth, but that's not a huge amount and any loss probably wont be realised till I die anyway, at which time I will care even less than I do now.

But the likelihood of me buying a new condo is more or less zero: the rooms are too small, they are too expensive per sqm (often double what mine cost) and I hate the modern interior designs.

I agree about the small sizes of new condos and is a part of the reason I haven't bought. Haven't really looked at older properties mainly because they don't look too good overall.

[ldnguy]

Yes, 28 ssm for $50K in Jontiem seems high but people thought the same in London and prices have tripled since they thought it was too high.

There is a reason for that. There is no empty land in London, so you can't just build to satisfy demand. You cant even spread outside London because of zoning issues and planning consent. But Jomtien had masses of undeveloped land, much of it on or very near the beach, and any demand could be satisfied just by building more units. And if Jomtien ever gets full you could just carry on building all over Na Jomtien and on to Bang Saray and beyond.

I agree, but my point was that things happen that most people think can't happen. People are always saying property is in a bubble and about to crash, yet it still trundles along. I certainly agree about all the land available in Thailand. They could build decades and still have land spare. But that doesn't mean property prices will crash. They could just stagnate for decades and not fall in price. They seem overpriced to me but that doesn't mean anything. Grossly overvalued property, stock, commodities, etc, can continue to go up in price because bubbles can get super-large.

The new rail link will be heading that way, so there's a reason that prices could go up even more.

[ldnguy]

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...

You ask about a property crash in Thailand but only mention Jontiem. That might crash but lots of Thailand has reasonably priced property. Most property in Thailand is under 1 million baht.

Yes, 28 ssm for $50K in Jontiem seems high but people thought the same in London and prices have tripled since they thought it was too high. People are always expecting a crash. It's impossible to time. Instead of crashing, prices could just stagnate. e.g. stay at $50K for the next 20 years until they are reasonable value. They don't have to crash to get back to reasonable value. They can just stay and wait for inflation to catch up.

I think you'll be waiting for a very long time. If in your example the condos are really worth only $15K and the developer sold a few for 50K, then he's probably covered his costs and any unsold units are free to him. So he can hang on forever waiting to sell. He isn't forced to sell, and with so many cash buyers, there are a very limited number of distressed sellers. It's a very different market to the West where most properties are bought with a mortgage.

Sorry I wouldnt normally write anything, but where do you get the idea that most property in Thailand is under 1 million baht..take Rayong for example, not many Westerners here and property selling like hot cakes, the condo boom here has been amazing for 32sq m 1.2- 1.4 million up....Thais are buying here with no fear of the economy doing anything, I was recently in Khon Kaen and Korat on Holiday and I saw nothing for a million baht there either, the start prices for 3 bed house now seems to be around 3.5 million baht everywhere, whats holding up thses prices god only knows, but Rayong has gone up.just my tuppence worth

Most of Thailand isn't made up of cities like that. Go out into the sticks and see how many properties there are for under 1 million. Even in greater Bangkok area there are thousands upon thousands of properties available for under 1 million baht. I'm not talking about new build condos in city centers. Look at the dilapidated houses that most Thais live in. Look at what the banks are trying to dump. Prices as low as 200K for a house. Plenty of property like that in Thailand.

[ldnguy]

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.

You have a very long wait ahead of you. Your comments just show you up for being very naive as far as currency markets go. There is close to zero chance of you getting 60 baht to the USD any time soon. More chance of getting 20 baht to the USD.

[ldnguy]

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.

The idea that you have full control is an illusion. Of course, you have full control now, as do others who have invested in all sorts of funds. When when crashes come, you often are not free to exit. Funds can be locked and add huge penalties for withdrawal whenever they want. It's at those times that you'll really want to exit but will likely have zero control. 6-9% always comes with some risk. Maybe you can't see it, but it's definitely there.

[ldnguy]

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?

Via a company, a son, a daughter, a friend, etc. There are lost of ways. But if someone doesn't trust their wife you have to wonder why they married her and why they are still with her. I just can't get my head around the fact that so many people are in relationships where they is zero trust. It's very sad. There are so many wonderful and trustworthy women in the world, so why on earth marry an untrustworthy woman? The mind boggles.

[ldnguy]

2 of my neighbours have condos here in rayong, another in Hua Hin and another in jomtien, live in bangkok. ( 10-20 million),

These are not distressed assets. They hardly visit.

These people are not really exceptions to the rule.

But there are no sales, but an increasing number indicating they might sell.

No crash, but no real demand.

Cannot rationalize this market in terms of the west.

You need to go into the juristic office and find out how many are paying their cam fees, that maybe more indicative than whether lights are on or off etc..

As far as I am aware, of the 180 units sold in my complex only 2 have bank loans..

This is also what I find. Many Thais buy these places with cash and visit a few times a year. They buy for the long-term, meaning for their kids and even grandkids and have no intention at all of selling unless they get a silly offer. These will never be distressed sellers. They have stacks of cash and often have multiple properties. This isn't the West where most people have one property and often a mortgage. Thailand has inequality far in excess of the West. Prices could drift down a little if the rich stop buying, but then developers would stop building. I just can't see any trigger for a crash. I still think the market is overpriced, but that doesn't mean anything. I think most farangs don't understand the property market here. They think it's like it is back home, but it's not.

[hhgz]

"I dont want to give any clues to the answer."

If you had the answer, you wouldn't be asking us. Many TVers predicted with absolute certainty that the condo market would crash on August 29th, when new visa requirements were implemented. Similar to the Florida pastor who has predicted the end of the world dozens of times, these TVers soldier on, proselytizing doom.

[OnMyWay2]

Thai People might be buying with cash but developers probably didnt. What happened in the US is the developers overbuilt and eventually ran out of buyers.

Then they couldn't pay the construction loans and started going bankrupt and started pulling the banks down with them. I could see the same thing happening in Thailand even if there's no accompanying property crash there could be a currency crash if the banks and developers need to be bailed out.

[trogers]

Thai People might be buying with cash but developers probably didnt. What happened in the US is the developers overbuilt and eventually ran out of buyers.

Then they couldn't pay the construction loans and started going bankrupt and started pulling the banks down with them. I could see the same thing happening in Thailand even if there's no accompanying property crash there could be a currency crash if the banks and developers need to be bailed out.

Already happening to some no-name developers though not such an impact to their bankers as payouts of construction loans are tied to work progress. The obvious sign is work stoppage of the project.

The bigger boys with access to the capital market for financing may be able to complete construction and then up their budget to market resales and unsold units, for a period of time. If sales is still weak, we see them putting up rental signs.

When I see events mentioned above, the downturn of the property cycle has arrived.

[xylophone]

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?

Via a company, a son, a daughter, a friend, etc. There are lost of ways. But if someone doesn't trust their wife you have to wonder why they married her and why they are still with her. I just can't get my head around the fact that so many people are in relationships where they is zero trust. It's very sad. There are so many wonderful and trustworthy women in the world, so why on earth marry an untrustworthy woman? The mind boggles.

Buying land as you suggest is either illegal or YOU never actually own it.

As for the part about, "There are so many wonderful and trustworthy women in the world, so why on earth marry an untrustworthy woman? The mind boggles".

The mind certainly does!! No-one intentionally marries an untrustworthy woman (do they?) however in LOS there are countless incidents where a seemingly "good" woman rips off the person whose mindset reflects your statement above.......why even today on TV there are two stories re. money being stolen by a "trusted" wife and another farang losing his money when investing in an elephant sanctuary in Chiang Mai.

In a country where corruption is endemic and even children see it as acceptable (recent survey), then it's no surprise that "trust" is not seen here as a priority.

[ldnguy]

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?

Via a company, a son, a daughter, a friend, etc. There are lost of ways. But if someone doesn't trust their wife you have to wonder why they married her and why they are still with her. I just can't get my head around the fact that so many people are in relationships where they is zero trust. It's very sad. There are so many wonderful and trustworthy women in the world, so why on earth marry an untrustworthy woman? The mind boggles.

Buying land as you suggest is either illegal or YOU never actually own it.

As for the part about, "There are so many wonderful and trustworthy women in the world, so why on earth marry an untrustworthy woman? The mind boggles".

The mind certainly does!! No-one intentionally marries an untrustworthy woman (do they?) however in LOS there are countless incidents where a seemingly "good" woman rips off the person whose mindset reflects your statement above.......why even today on TV there are two stories re. money being stolen by a "trusted" wife and another farang losing his money when investing in an elephant sanctuary in Chiang Mai.

In a country where corruption is endemic and even children see it as acceptable (recent survey), then it's no surprise that "trust" is not seen here as a priority.

When I said buy in wife, so or daughter's name, I meant buy for them so that they are the owners. I didn't mean to use them to hold property that's really yours. I think that is part of the difference between the West and Asia. In the West, most people tend to be me, me, me. hey want everything in their own name. In Asia, family seems to be more important and hence a family owning something in their name is still since as a family asset. I don't have children, but if I did I'd happily buy a house in their name and live there myself. When I get married i also inten to buy a house in my wife's name. It will be her house.

Regarding untrustworthy women, of course you could marry someone that you think to be trustworthy and they turn out not to be. But I do think many farangs here marry women that they know to be untrustworthy right from the start. Just read through this forum. Even before they get married they say they will never buy anything in their wife's name. Not much trust there. My parents never thought like that. Some assets were in joint names and some in the name of one of the other. It was normal for them. Even even bought UK property in relatives names just because I wasn't there at the time to sign the documents. Never did i think they'd run off with my assets. Same here. You can never be 100% sure, but you can be pretty close to knowing if someone is trustworthy. If you don't trust them enough to own a property in their name, then why would you marry them in the first place. That's the things I don't get.

Suppose only Brits could own property in UK and suppose I was about to marry a rich non-Brit woman and live together in the UK. Now also suppose she told me that even though we were about to get married she would never trust me enough to buy property in my name, I'd dump here. I just wouldn't want to marry someone I was committing the rest of my life to if she was openly declaring that she'd never fully trust me. I just don't see how a relationship like that can work. How on earth can you have a good relationship if you have so little trust in your wife. I really don't understand them mentality of people that do that. I'd rather not get married.

[ldnguy]

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?

Via a company, a son, a daughter, a friend, etc. There are lost of ways. But if someone doesn't trust their wife you have to wonder why they married her and why they are still with her. I just can't get my head around the fact that so many people are in relationships where they is zero trust. It's very sad. There are so many wonderful and trustworthy women in the world, so why on earth marry an untrustworthy woman? The mind boggles.

Buying land as you suggest is either illegal or YOU never actually own it.

As for the part about, "There are so many wonderful and trustworthy women in the world, so why on earth marry an untrustworthy woman? The mind boggles".

The mind certainly does!! No-one intentionally marries an untrustworthy woman (do they?) however in LOS there are countless incidents where a seemingly "good" woman rips off the person whose mindset reflects your statement above.......why even today on TV there are two stories re. money being stolen by a "trusted" wife and another farang losing his money when investing in an elephant sanctuary in Chiang Mai.

In a country where corruption is endemic and even children see it as acceptable (recent survey), then it's no surprise that "trust" is not seen here as a priority.

But these aren't usually the average women. The nearly all these kinds of cases there is a woman and a bar mentioned. Men wouldn't hang out and marry bar girls at home, so why do they do it here. It should go without saying that these probably aren't the most trustworthy members of society. If you're going to marry a bar girl, then it would probably be wise not to buy a house in here name. I was talking about more traditional relationships. Many single Thai women would love to be in a good relationship and have a nice house to live in. It is what many dream of and they have no intention of ripping of the man. They want to be seen as good people, and ripping off the boyfriend/husband would bring shame on them and their families. It would be a huge loss of face. That's very important here. Maybe not in the bar community, but it matters a lot to the vast majority of Thais. There are plenty of happy farang/Thai marriages where house was bout i wife's name. The wife didn't steal the house, dump the husband. They live happy lives. What you read about is the minority. A happy marriage just isn't newsworthy, because it's so common. It's the uncommon that's newsworthy.

[Senechal]

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.

You have a very long wait ahead of you. Your comments just show you up for being very naive as far as currency markets go. There is close to zero chance of you getting 60 baht to the USD any time soon. More chance of getting 20 baht to the USD.

Well that's perhaps a discussion for another thread, but the likelihood of a baht crash is far higher than you think.

The yen is teetering on collapse now. Abe is cornered and scared. He has zero plan B. The likelihood of a yen collapse is *well* above 50% although probably not in the very near term because the one thing he can do is buy a little more time. (Which is exactly what he'll do). The question then is, do we see another Asian Flu like in 1997. The Asian Contagion started in Thailand but spread swiftly to Malaysia, Taiwan, Korea etc. The dynamic of currency collapses is that they quickly set off competitive debasement in order to preserve trade.

Right now the USD is also ripping higher and will continue to do so as long as oil continues to drop, the Eurozone continues it's recession, and China's hard landing continues. (Yes, the Eurozone is in recession. And yes, China is looking at a worst-case hard landing).

So if you think that a combined yen collapse and soaring USD won't be felt at all here in Thailand I'd sure like to hear your logic. Not to mention that the Thai baht at 20 would collapse Thailand's already disastrous exports, and never be allowed by the BoT.

But ... Since this is a RE thread, one should note that a plunging baht would likely create an inflow of capital investment into real estate. So the price of real estate priced in baht -- particularly urban, foreign quota condominiums -- will likely not collapse in the event of a Thai currency collapse.

My two baht, of course.

Edited November 15, 2014 by Senechal

[Robert24]

@senechal: I think you are exaggerating a bit. Whilst I can follow some of your sentiment, I wouldn't go as far as saying that Abe is cornered. The weakening of the yen is a result of QE from the BOJ and is intended. It brings Japan out of deflation and helps the Japanese economy. You are probably aware that the yen is now around 116 which is still much stronger than 6-7 years ago when it was at 130. So believe me, Abe nor Kuroda feel cornered. They are happy with the outcome of QE. Where this leads in the long run is obviously another topic.

I agree though with you that the ongoing strengthening of the $ and ultimately the reversal of a lot of carry trades will have a negative impact on EM currencies, incl The baht.