Developer suspending sales for recently completed condo.

[giibaht]

Here in Chiang Mai, I enquired about sales at a condo project by an established BKK developer. Construction was completed late last year. I was informed by a sales person that sales has been suspended pending ongoing "checks" by the developer, and will reopen for booking in 1-2 months time. Prices is being revised and she couldn't advice me on the current pricing.

I was quite perplexed and asked whether there's any problem, and the reply was that it is a standard procedure for them. I wonder whether that's true? It seems strange to me that a developer would suspend sales for a period of time, but then perhaps I don't know much about market practices here.

[KittenKong]

The building is finished and sales have been suspended?

Walk away fast.

On second thoughts, run away fast.

[giibaht]

The building is finished and sales have been suspended?

Walk away fast.

On second thoughts, run away fast.

Actually, I wonder whether the developer is facing problems transferring units to buyers ie. buyers are walking away from their purchase.

I think it could be that the problem is not project specific per se, but the entire CM condo market. I've been hearing mutterings that too many condo units had been built/launched in CM over the past few years and know of several condo projects still largely unsold although they are completed or near completion date.

[KittenKong]

But why should people pulling out cause the developer to suspend sales? On the contrary one would expect him to be looking for more sales.

Legal transfers dont occur until the building is finished and has been registered as a condo. If something is holding that up I would want to know what it is before getting involved with the building.

[Benjie]

Probably just going to put the price up and doesn't want to sell any at the old price.

[dddave]

There also could be deep internal problems with financial backers clouding title issues.

[AnotherOneAmerican]

Planning permission violation?

Structural problems?

Bank foreclosure on developer?

[giibaht]

This is a well-known, established developer that's listed on SET and I believe they are known for their quality control. So I'm doubtful it's due to amateurish mistakes like construction, approvals or funding issues, although one can't rule this out totally. It's also quite a small project (<300 units) by their standards.

The interesting thing is that the sales person initially told me that the revised prices will be lower than "before", but later backtracked and claimed not to know what's the final pricing. If indeed that's the case, I would guess that they would want to sort out transfers from existing buyers to know how many are actually "sold". No point continuing with sales and cutting prices later as those who bought now would want to back out and demand the new prices. No? Also, I recall one of their executives were quoted in the press alluding to "market problems" in CM condo market late last year. Perhaps this is all wishful thinking on my part

[NCC1701A]

this could be the start...

the Wile E Coyote moment for the Thai condo market...

Edited February 14, 2015 by NCC1701A

[trogers]

As long as you have not booked a unit nor paid any deposit for one, just sit back and relax till the cloud of dust settled.

As you have said, there is a large oversupply in the market. And prices have to fall for stocks to be cleared.

[dean008]

I bought from a well known established SET listed developer in BKK. the Quality is terrible they normally build houses but moved into the condo market 3 or 4 years back. the Quality of the rendering is comical, the Quality of the interiors is deplorable, the Quality of customer services is next to non existant. I don't think I can tell you the name of the developer but if I wanted a Quality house I would build it myself and avoid a set listed developer

I did make enquiries about taking them to court, but an honest solicitor did suggest I would win, but said it is highly unlikely the court would order the builder to cover my legal costs.

Sorry to say but there are few developers you can trust here or elsewhere

This is a well-known, established developer that's listed on SET and I believe they are known for their quality control. So I'm doubtful it's due to amateurish mistakes like construction, approvals or funding issues, although one can't rule this out totally. It's also quite a small project (<300 units) by their standards.

The interesting thing is that the sales person initially told me that the revised prices will be lower than "before", but later backtracked and claimed not to know what's the final pricing. If indeed that's the case, I would guess that they would want to sort out transfers from existing buyers to know how many are actually "sold". No point continuing with sales and cutting prices later as those who bought now would want to back out and demand the new prices. No? Also, I recall one of their executives were quoted in the press alluding to "market problems" in CM condo market late last year. Perhaps this is all wishful thinking on my part

[ezzra]

Or it could be the case that not many/enough units were sold and there is not enough sinking

funds to maintain the everyday running of the building which in this case the builder will have

to fork out the balance from his own pockets, and on a 300 units building that is a mega bucks

right there......

[Pinot]

Don't buy real estate in LOS. There is no reason to. It doesn't make economic sense. Rent.

[giibaht]

I bought from a well known established SET listed developer in BKK. the Quality is terrible they normally build houses but moved into the condo market 3 or 4 years back. the Quality of the rendering is comical, the Quality of the interiors is deplorable, the Quality of customer services is next to non existant. I don't think I can tell you the name of the developer but if I wanted a Quality house I would build it myself and avoid a set listed developer

I did make enquiries about taking them to court, but an honest solicitor did suggest I would win, but said it is highly unlikely the court would order the builder to cover my legal costs.

Sorry to say but there are few developers you can trust here or elsewhere

Actually, I reckon I know who you're referring to.They have a new condo project in CM too

Edited February 15, 2015 by giibaht

[giibaht]

As long as you have not booked a unit nor paid any deposit for one, just sit back and relax till the cloud of dust settled.

As you have said, there is a large oversupply in the market. And prices have to fall for stocks to be cleared.

I often hear that owners here in Thailand will rather sit on their properties than to lower prices. I guess this mainly refer to individual owners for the resales market.

But in the previous property downturn, did developers lower their prices to clear stocks in the primary market? Was it done quietly or they aggressively advertise their discounts? Or will they just convert unsold units for rental instead?

[shirtless]

With all the options available to buyers walk away before you end up losing your money, never buy in LOS

[Anthony5]

As long as you have not booked a unit nor paid any deposit for one, just sit back and relax till the cloud of dust settled.

As you have said, there is a large oversupply in the market. And prices have to fall for stocks to be cleared.

I often hear that owners here in Thailand will rather sit on their properties than to lower prices. I guess this mainly refer to individual owners for the resales market.

But in the previous property downturn, did developers lower their prices to clear stocks in the primary market? Was it done quietly or they aggressively advertise their discounts? Or will they just convert unsold units for rental instead?

I don't think those companies lower the prices, because they build with money from the bank and shareholders, and they just let the company go bankrupt.

I know here in and around Pattaya about thousands of new houses and shophouses from big developers that have never been occupied, some finished over a year ago.

I know two complete villages, from two different established developers and almost next to each other, which are completely finished but at night the only light is that of the security booth. Those 2 villages alone account for over between 500 and 1000 houses.

Around the corner of where I live, along a main highway, they have been building 3 villages for the past 3 years, and now they have ceased work for some time already.

Yet just 500 meters down the road about 3 months ago a new project with 250 houses was started.

I feel something gonna blow in the not so distant future, and the explosion will be heard nationwide.

Edited February 15, 2015 by Anthony5

[lemonjelly]

don't be perplexed...just hang on to your cash and wait for the housing bubble to burst.

[NCC1701A]

it is really crazy the amount of building going on in Hua Hin...

[dddave]

don't be perplexed...just hang on to your cash and wait for the housing bubble to burst.

With interest rates on savings accounts below 2%, many Thais would much rather invest in Condo's than park their money, especially in banks who they have learned not to trust 100%. They are likely to continue buying.

Many landowning rural Thais are seeing their farming income drop because of drought and labor shortages so they are selling large hunks of property and reinvesting in urban real estate.

For the many Mainland Chinese, lower level millionaires (Assets of US$ 5m or less) Bangkok is the only major cosmopolitan city outside of China within a days flight, available to park assets in property. They are priced out of HK and Singapore for the kind of luxury properties they want and KL, Jakarta and HCMC do not particularly welcome Chinese. As I understand it, mainland Chinese are the largest national group buying Bangkok and Chaing Mai condos and Chaing Rai properties.

Don't make the mistake of judging property markets by what expat Westerners are doing...they are no longer the big players.

You might have to wait a very long time for this bubble to burst.

[cheeryble]

Hi Giibaht

well I guess it could be anything including something not quite right about permissions.

This thing about oversupply in the CM market is worth looking at.

There are undoubtedly a lot of units going up.

However the vast majority......80-90%?.....are very small units I think aimed at either students or people with half decent jobs like bank clerks/nurses/etc. These are units with one or two small rooms and are called economy units by the builders.

This leaves a fairly small number of condos which may be competing for the market most of us farang and of course 51% Thai are invested in or interested in, units of a good size with a good location.

Talking about location, of that smaller number of "better" units on the market, many, perhaps much more than half, have been built on the outskirts of town. Not saying there's anything wrong with that, and they're sold so far, but if one owns in a central location and especially a central location which has a great view (rare in the new central units?) it is not really competition as location location location will always hold your investment.

Add to all this the price....and quality.....of the new units.

The small units will look nice for a couple of years if you like narrow corridors, but are made cheaply and sold expensively, about 50-70,000/sqm.

I have a friend owns a unit bought from a developer you'll have heard of that has put several central condo buildings up (mostly crammed in between other buildings I might add) for under three years he's already talking of renovating and upgrading the quality, and it won't be long before the fresh paintwork outside ain't so fresh.

It is almost exclusively laminated furniture and floors and cheap fittings.

I have visited the most expensive condo building showroom for sale of Nimman at about 90,000/sqm and although one would call it a luxury unit and it is attractive on further inspection the fittings are not THAT good they look good but are medium plus quality really.....and again the laminate floor.

The amazing thing is that as far as I see there has been no competitive cutting of prices at all, more the opposite of prices having gone up in the last couple of years. The latest I checked while walking past was the new Casa Condo (perhaps aimed at students?) at the top of Suthep. It's mostly around 62,000/sqm.

(The fact is most of the buildings up already have largely sold......and the market is Thai.....there's a demographic change happening. There's a new generation of "townie" Thais who will not be living on the farm so they will live in a condo.

What will happen to those going up I can't say, but I do know I bought a condo in a good older building from a couple who bought it for their son's four years at CMU. They paid no rent and after he graduated they sold it for more than they bought it. Go figure.)

I compare all the above to the price in a couple of unbeatably located older buildings with great outlook where units renovated to a very high standard indeed, with morgue quality tapware and teak or marble floors and truly quality bathrooms and kitchens still sell (though getting more difficult to buy nowadays) for 45,000/sqm. These I think can go up when people realise that buildings can last more or less forever and the structure must be inspected annually by law to ensure they are kept up. And the more expensive the market becomes the BETTER they will be kept in future and what's more a whole older building can have common areas updated to compete at very little cost considering it's shared so many ways. I think these buildings could see their unit's worth rise by 20-30% if they were willing to spend just a couple of percent on sensible updates as THEY have the locations and the interesting larger units and committees and so on in place and running for years.

If anyone knows if the Chinese will buy into this market let me know.

Doesn't history say they will?

Will Chiangmai be for the Chinese what Spain became for the Brits?....it's about the same short flight and same nice weather and so on. Where else they gong to go?

Edited February 16, 2015 by cheeryble

[trogers]

As long as you have not booked a unit nor paid any deposit for one, just sit back and relax till the cloud of dust settled.

As you have said, there is a large oversupply in the market. And prices have to fall for stocks to be cleared.

I often hear that owners here in Thailand will rather sit on their properties than to lower prices. I guess this mainly refer to individual owners for the resales market.

But in the previous property downturn, did developers lower their prices to clear stocks in the primary market? Was it done quietly or they aggressively advertise their discounts? Or will they just convert unsold units for rental instead?

You need a sufficiently large rental market to convert unsold units for rental. If not, you end up spending more capital and suffer higher depreciation.

[Asiantravel]

Hi Giibaht

well I guess it could be anything including something not quite right about permissions.

This thing about oversupply in the CM market is worth looking at.

There are undoubtedly a lot of units going up.

However the vast majority......80-90%?.....are very small units I think aimed at either students or people with half decent jobs like bank clerks/nurses/etc. These are units with one or two small rooms and are called economy units by the builders.

This leaves a fairly small number of condos which may be competing for the market most of us farang and of course 51% Thai are invested in or interested in, units of a good size with a good location.

Talking about location, of that smaller number of "better" units on the market, many, perhaps much more than half, have been built on the outskirts of town. Not saying there's anything wrong with that, and they're sold so far, but if one owns in a central location and especially a central location which has a great view (rare in the new central units?) it is not really competition as location location location will always hold your investment.

Add to all this the price....and quality.....of the new units.

The small units will look nice for a couple of years if you like narrow corridors, but are made cheaply and sold expensively, about 50-70,000/sqm.

I have a friend owns a unit bought from a developer you'll have heard of that has put several central condo buildings up (mostly crammed in between other buildings I might add) for under three years he's already talking of renovating and upgrading the quality, and it won't be long before the fresh paintwork outside ain't so fresh.

It is almost exclusively laminated furniture and floors and cheap fittings.

I have visited the most expensive condo building showroom for sale of Nimman at about 90,000/sqm and although one would call it a luxury unit and it is attractive on further inspection the fittings are not THAT good they look good but are medium plus quality really.....and again the laminate floor.

The amazing thing is that as far as I see there has been no competitive cutting of prices at all, more the opposite of prices having gone up in the last couple of years. The latest I checked while walking past was the new Casa Condo (perhaps aimed at students?) at the top of Suthep. It's mostly around 62,000/sqm.

(The fact is most of the buildings up already have largely sold......and the market is Thai.....there's a demographic change happening. There's a new generation of "townie" Thais who will not be living on the farm so they will live in a condo.

What will happen to those going up I can't say, but I do know I bought a condo in a good older building from a couple who bought it for their son's four years at CMU. They paid no rent and after he graduated they sold it for more than they bought it. Go figure.)

I compare all the above to the price in a couple of unbeatably located older buildings with great outlook where units renovated to a very high standard indeed, with morgue quality tapware and teak or marble floors and truly quality bathrooms and kitchens still sell (though getting more difficult to buy nowadays) for 45,000/sqm. These I think can go up when people realise that buildings can last more or less forever and the structure must be inspected annually by law to ensure they are kept up. And the more expensive the market becomes the BETTER they will be kept in future and what's more a whole older building can have common areas updated to compete at very little cost considering it's shared so many ways. I think these buildings could see their unit's worth rise by 20-30% if they were willing to spend just a couple of percent on sensible updates as THEY have the locations and the interesting larger units and committees and so on in place and running for years.

If anyone knows if the Chinese will buy into this market let me know.

Doesn't history say they will?

Will Chiangmai be for the Chinese what Spain became for the Brits?....it's about the same short flight and same nice weather and so on. Where else they gong to go?

I have two questions about the theory that the Chinese are going to buy as you suggest.

Firstly what happens when (not if) the credit bubble bursts in China itself and secondly why wouldn't Chinese be investing in the scores of empty developments in their own country in what they call ghost cities?

[giibaht]

There was a BP article "Chinese eyes on condo investment" late last year. The article refers to Chinese developers, and not Chinese individual buyers, looking into launching condo projects in BKK etc.

In any case, one cryptic part of the article was interesting:

"But condo development upcountry generally remains unattractive due to unfavourable markets"

Upcountry meaning Chiang Mai. I wonder what's so unfavourable about CM condo market

[AnotherOneAmerican]

"But condo development upcountry generally remains unattractive due to unfavourable markets"

Upcountry meaning Chiang Mai. I wonder what's so unfavourable about CM condo market

That would be the thousands of built but unsold condos and shopfronts in CM.

Along with no western tourists (the ones that buy the condos)

Don't see ANY Chinese buyers in CM, used to be Koreans, but not lately, they stopped buying when the Thai general stopped their 90 days on entry as many times as they like game.

Fact is, the Junta has killed the foreign condo buyer market dead in its tracks, bubble or not.

[Rancid]

Some interesting thoughts on CM condos here. I am temporarily renting in an old CM condo. Room OK with good views, selling here at 26 - 27K/sqm. Good value compared to the new ones but the well located building needs some money spent.

For those that warn against buying in Thailand that chant has been going for decades.

I get 7 - 8% return on my rental properties, where can you get that in the West? Also has been a good hedge with my home currency depreciating.

Personally I prefer my money in bricks & mortar looking at the world economy & what happened in Cypress.

[Asiantravel]

I am even less convinced now that the Chinese will save the day regarding condo purchases In Thailand after reading this article. I mean surely the Chinese are hardly going to be bullish about overseas property when they see their own homes dropping in value?

China new home prices drop at record pace

http://www.cnbc.com/id/102429356#.

[cheeryble]

Hi Giibaht

well I guess it could be anything including something not quite right about permissions.

This thing about oversupply in the CM market is worth looking at.

There are undoubtedly a lot of units going up.

However the vast majority......80-90%?.....are very small units I think aimed at either students or people with half decent jobs like bank clerks/nurses/etc. These are units with one or two small rooms and are called economy units by the builders.

This leaves a fairly small number of condos which may be competing for the market most of us farang and of course 51% Thai are invested in or interested in, units of a good size with a good location.

Talking about location, of that smaller number of "better" units on the market, many, perhaps much more than half, have been built on the outskirts of town. Not saying there's anything wrong with that, and they're sold so far, but if one owns in a central location and especially a central location which has a great view (rare in the new central units?) it is not really competition as location location location will always hold your investment.

Add to all this the price....and quality.....of the new units.

The small units will look nice for a couple of years if you like narrow corridors, but are made cheaply and sold expensively, about 50-70,000/sqm.

I have a friend owns a unit bought from a developer you'll have heard of that has put several central condo buildings up (mostly crammed in between other buildings I might add) for under three years he's already talking of renovating and upgrading the quality, and it won't be long before the fresh paintwork outside ain't so fresh.

It is almost exclusively laminated furniture and floors and cheap fittings.

I have visited the most expensive condo building showroom for sale of Nimman at about 90,000/sqm and although one would call it a luxury unit and it is attractive on further inspection the fittings are not THAT good they look good but are medium plus quality really.....and again the laminate floor.

The amazing thing is that as far as I see there has been no competitive cutting of prices at all, more the opposite of prices having gone up in the last couple of years. The latest I checked while walking past was the new Casa Condo (perhaps aimed at students?) at the top of Suthep. It's mostly around 62,000/sqm.

(The fact is most of the buildings up already have largely sold......and the market is Thai.....there's a demographic change happening. There's a new generation of "townie" Thais who will not be living on the farm so they will live in a condo.

What will happen to those going up I can't say, but I do know I bought a condo in a good older building from a couple who bought it for their son's four years at CMU. They paid no rent and after he graduated they sold it for more than they bought it. Go figure.)

I compare all the above to the price in a couple of unbeatably located older buildings with great outlook where units renovated to a very high standard indeed, with morgue quality tapware and teak or marble floors and truly quality bathrooms and kitchens still sell (though getting more difficult to buy nowadays) for 45,000/sqm. These I think can go up when people realise that buildings can last more or less forever and the structure must be inspected annually by law to ensure they are kept up. And the more expensive the market becomes the BETTER they will be kept in future and what's more a whole older building can have common areas updated to compete at very little cost considering it's shared so many ways. I think these buildings could see their unit's worth rise by 20-30% if they were willing to spend just a couple of percent on sensible updates as THEY have the locations and the interesting larger units and committees and so on in place and running for years.

If anyone knows if the Chinese will buy into this market let me know.

Doesn't history say they will?

Will Chiangmai be for the Chinese what Spain became for the Brits?....it's about the same short flight and same nice weather and so on. Where else they gong to go?

I have two questions about the theory that the Chinese are going to buy as you suggest.

Firstly what happens when (not if) the credit bubble bursts in China itself and secondly why wouldn't Chinese be investing in the scores of empty developments in their own country in what they call ghost cities?

1. If you can see a suggestion rather than questions in my post please underline :-)

The Chinese are folk who like to own solid assets though, and they've started coming I've never seen so many blue number plates as just recently (is it Chinese New Year? Doesn't matter why, they're coming). The relative number is so small 0.000x% that if it just goes up to say 1/1000 or 1/4000 of the Chinese population visiting Thailand each year the absolute numbers will be make a sea change.

It's possible, but the condos selling now are being aimed almost exclusively at the Thai.....many ads don't even have English.

2. Firstly what happens when (not if) the credit bubble bursts in China?

Cannot comment, but i know the Chinese hoard capital.

3. why wouldn't Chinese be investing in the scores of empty developments in their own country in what they call ghost cities?

Because they;re in an ugly place with an ugly climate.

Sorry have no idea what happened to the font.