Harvest Time & Land Prices

[Manassas]

Let me start by saying I'm an avid gardener, but stay out of the family business of farming rice and know little about it's economics. But I am surprised at what I hear about prices for farm land. We are in a village well outside of CR. I am hearing of locals offering to sell farm land at prices of 200,000 to 400,000B per rai. A few years ago it was 100,000B. I picked up a few rai for 30,000B a few more years ago when it seemed reasonable.

This is rural farm land, not land for subdivisions or business development (although I suspect that is in the minds of many). Our area doesn't have water and we get 1 crop only per season. I did some surfing and If I estimate average yield is roughly 500kg per rai, that's very roughly 5,000B per rai - gross. It seems it would take a couple of generations to even break even on a land purchase! Granted one might do better with alternate crops etc, but I just can't figure out how this can make economic sense.

Can any of the farmers out there explain what is going on with land prices in our area? Or am I way off on gross per rai of a rice farm?

[ChaangNoi]

I have also been watching the price of land as I would like to buy some but the prices are just out of this world. When the prices are 1/5th of what they are now I will be in the market.

[villagefarang]

Your instincts are right on. It would take several generations just to break even on the purchase price, let alone make a profit. Often land is immediately put up as collateral for a lone so people can have a little extra spending money. That can lead to the loss of the land in the end.

It might help to remember, the villagers in our area (Phayamengrai) homesteaded the land a couple generations ago. The benefits they have received from handing down and selling off what was essentially free land has lead to an unrealistic understanding of economics.

The obsession with land is not too far removed from ideas of winning the lottery or other deeply ingrained superstitions. Everyone has heard a story of someone winning the lottery, winning at gambling, or making a killing on land speculation. The problem is they fail to take into account the multitudes who lose.

In our area most people understand they are losing money farming rice, if they include their own labor costs, but tradition leaves them few options other than to supplement that custom of growing your own rice, with jobs in the cities. I doubt you will be able to change anyone's views on this, so you will just have to find your own way to come to terms with it.

[elgordo38]

My g/f bought about 520 sq.metres for 207,000 bahts and she thought it was a real deal. She bought in the spring and this same size is selling now for 276,000 bahts. This is in a village 43 kilometres from Chiang Rai.

[elgordo38]

Maybe prices are high but they are not making any more land but they sure are making lots more people. How does that old song go? "Gotta Have A Home"

[Manassas]

Your instincts are right on. It would take several generations just to break even on the purchase price, let alone make a profit. Often land is immediately put up as collateral for a lone so people can have a little extra spending money. That can lead to the loss of the land in the end.

It might help to remember, the villagers in our area (Phayamengrai) homesteaded the land a couple generations ago. The benefits they have received from handing down and selling off what was essentially free land has lead to an unrealistic understanding of economics.

The obsession with land is not too far removed from ideas of winning the lottery or other deeply ingrained superstitions. Everyone has heard a story of someone winning the lottery, winning at gambling, or making a killing on land speculation. The problem is they fail to take into account the multitudes who lose.

In our area most people understand they are losing money farming rice, if they include their own labor costs, but tradition leaves them few options other than to supplement that custom of growing your own rice, with jobs in the cities. I doubt you will be able to change anyone's views on this, so you will just have to find your own way to come to terms with it.

You're right. My father-in-law loves talking about how he and his brothers homesteaded the place. And too many who inherit the land put it up to secure loans for pickups. But that's not uncommon anywhere.

I really enjoy our little farm and I like the idea of growing our own rice and keeping it in the barn. But I have no illusion that I could make any serious money on it.

From what I hear most land for sale is from people who inherited it and have moved away for city jobs. They want to cash in to put their kids through university of some other good purpose. But I don't know where they get this idea of the value of their farm land. I think the bridge at Chiang Khong fueled a lot of speculation.

I have been interested in acquiring a few more rai, but that is just to sort of square up our plot and to ensure nobody builds anything that would obscure my view from the back yard! But certainly not at these prices. Maybe someday prices will come back to reality.

[villagefarang]

Another thing to remember is that it is rare to have outsiders move into a village without family connections, unlike in big towns or cities. Most of the new house builds will be from local residents who married well or got cheap government loans through their jobs. Villages grow organically but that growth is also offset by death and people moving away for work. Often the ones who come back didn’t do so well in the city and have no other options. It will be interesting to watch what happens to the villages in our area over the next ten years or so.

[Bpuumike]

 

Another thing to remember is that it is rare to have outsiders move into a village without family connections, unlike in big towns or cities. Most of the new house builds will be from local residents who married well or got cheap government loans through their jobs. Villages grow organically but that growth is also offset by death and people moving away for work. Often the ones who come back didn’t do so well in the city and have no other options. It will be interesting to watch what happens to the villages in our area over the next ten years or so.

 

'Outsiders' until a Farang in the family.

I have received several offers to buy land but at silly prices, especially when no access to water and electricity.

Thai greed? Well, it happens in other countries too.

[Ron19]

Another thing to remember is that it is rare to have outsiders move into a village without family connections, unlike in big towns or cities. Most of the new house builds will be from local residents who married well or got cheap government loans through their jobs. Villages grow organically but that growth is also offset by death and people moving away for work. Often the ones who come back didn’t do so well in the city and have no other options. It will be interesting to watch what happens to the villages in our area over the next ten years or so.

( It will be interesting to watch what happens to the villages in our area over the next ten years or so. )

I think this statement applies to most of Thailand in the foreseeable future unfortunately.

[pomchop]

My g/f bought about 520 sq.metres for 207,000 bahts and she thought it was a real deal. She bought in the spring and this same size is selling now for 276,000 bahts. This is in a village 43 kilometres from Chiang Rai.

1 rai = 1600 sq meters

1 rai = .39 acres

2.5 Rai = 1 Acre

so that is about 600,000 baht for one rai 43 kms from CR....WOW that works out to around 1.5 million baht or $47,000 USD for one acre...

For 47 k USD an acre you would have a choice of a LOT of land in the USA and many other places.

Land of course is worth what somebody is willing to pay but I don't think I would be willing to pay that much for rural Thailand land even if they would allow me to own it in my own name.

[DonaldBattles]

I think most people have missed the point. There is expected to be 2 million Chinese across from the Golden Triangle in the new city in Laos. Currently there are about 300,000 there. The new airport and phase one of the industrial complex are under construction. THE LAND PRICES ARE UP BECAUSE THE CHINESE ARE COMING TO TOWN!

The new railroad along with the new highway to Bangkok will also bring more Thais here. The quality of life in Chiang Rai is some of the best in the world. This attracts a lot of middle and upper income Thais to move and retire here along with starting new businesses. Look at the expansion of the Singh Farm for Eco Tourism.

[pomchop]

But can an individual Chinese citizen OWN land in Thailand?

[DonaldBattles]

The Thai land laws are easy to work around for the benefit of those who wish to invest. If you look at the way Chinese people in China live it is next to impossible for security reasons for individuals to live in single family dwellings outside secure compounds. People live in these compounds or in apartments in the city. China middle income has a lot of money to spend they like the idea of living in northern Thailand in a safe countryside. Recently a good friend sold his house and land for 13m to a wealthy young Chinese family. The new city in Lao, the highway, bridge, boats and planes make it easy for the Chinese to get here. Note that Chiang Rai has 3 flights per week to Kunming. Once the new airport in the Lao Special Economic Zone is finished you will find more Chinese coming. The current visa free situation encourages visits. Notice the number of Chinese license plates you can in see in Chiang Rai and listen to the number of Chinese voices you hear in Tops Supermarket.

[pomchop]

Well maybe CR will be like Hawaii was during the Japanese buying craze where a Limo would pull up in front of your house and a rich Japanese guy would get out with a realtor who would offer insane amounts for the property,, all cash, with 30 day closings.

I'll sit by my gate and wait for that rich Chinese guy to pay me four or five times what I paid.....but if he doesn't show up I will be just fine as well.

[villagefarang]

I remember those days in Hawaii but that was condos and houses in a developed tourist destination. I somehow don't see the Chinese doing the same thing with rice paddy far from town. I can't imagine anyone would be willing to pay enough to make me consider leaving this beautiful spot.

[ChaangNoi]

What about houses in such places like Siwalee? Made my land and house, gated community, and to the standards of the west? It is not a whole lot of land as the lots are small but the houses go from 4m to 10m now. When they sell out prices will go up?

[villagefarang]

When talking about gated communities there are just so many variables. If everything goes perfectly you should not lose money but there are lots of ghost towns out there where big ideas crashed and burned. Though things are changing there is still a bigger market for new than there is for used.

[ChaangNoi]

Yes, Land and House is a large operation that is listed on the Thai Stock exchange. I ended up going with them, because of that. They do the best quaility work that I have personally seen as well.

[Rotweiler]

Irrigation land here is currently at 1 Million/rai - going to 1.6 Million/rai if on the main highway.

My g/f bought about 520 sq.metres for 207,000 bahts and she thought it was a real deal. She bought in the spring and this same size is selling now for 276,000 bahts. This is in a village 43 kilometres from Chiang Rai.

1 rai = 1600 sq meters
1 rai = .39 acres

2.5 Rai = 1 Acre


so that is about 600,000 baht for one rai 43 kms from CR....WOW that works out to around 1.5 million baht or $47,000 USD for one acre...

For 47 k USD an acre you would have a choice of a LOT of land in the USA and many other places.

Land of course is worth what somebody is willing to pay but I don't think I would be willing to pay that much for rural Thailand land even if they would allow me to own it in my own name.

[Manassas]

I have seen some lots on the highway going for big prices. But my village and those around here have a lot of empty homes off the highway. The kids have all gone to the city and once the elders have passed away the houses are left shuttered. On the other hand, when the parents/elders still live in the village the kids are sending back money to support them. There is a boom in housing renovations as the kids build new homes for the parents. Some of the kids vaguely plan to retire back to the village after working in the city. Or keep the village home has a backup plan in case they don't make it in the city. But very few seem to have actually returned.

But back to the farming angle. Very few of the young are interested in working the fields. They lease out the land to someone with a tractor and get a small cut of the harvest. Certainly nothing to support the boom in paddy prices.

It will be interesting to see what happens.

[apetley]

We bought some paddy 7 years ago for 65k per rai. Now it is selling for between 200 and 250k bht.

The return on the paddy from rice is dire compared to what you can get from simply putting the money into the bank.

[DonaldBattles]

It would have been great if the government had purchased a lot of automatic planting and harvesting machines in lieu of a big give away of tax payers money to the rice farmers. The keep talking about being competitive farmers but without modern machinery it is not going to happen. Chiang Rai farmers have 2 incomes. The later pays a lot more than rice farming. I don't see the red pill business slowing down around here.

[Manassas]

We bought some paddy 7 years ago for 65k per rai. Now it is selling for between 200 and 250k bht.

The return on the paddy from rice is dire compared to what you can get from simply putting the money into the bank.

I agree. While I wouldn't mind picking up a couple of extra rai, at these prices I'll just leave the money in the bank. I can make more in interest than I could by farming new land!

But I see the sellers short term view. They inherited the land for nothing and if they can make big money they'll sell. If not, they'll just rent it out and collect a bag of rice per rai at harvest time. This will go on until the grandparents and parents are gone and they lose interest in the village.