Analyzing the Bangkok Condo Market

[ExpatOilWorker]

During the past month I have been condo hunting in Bangkok, looking for a 2 bed room unit since I am marriage and have a kid now. After looking at some 100+ units in about 20 building, the enthusiasm is cooling mainly because I find there is very little value for money in the Bangkok real-estate market.

Price-wise, the market is clearly divided into pre- and post 1997 crises buildings. The newer post crises buildings are less than 10 years old, very nice, but prices around the 10 million mark. Some pre crises units have 20 years old build in furniture and still they want 6 million for a relative small 2 bed room unit.

In trying to understand the high asking price, we also inquired about rental cost for similar units and the average return was always 4-6%, which seems low since there is no guarantee for a paying tenant. Every building seems to have 20-30 empty units up for rent.

I find the Bangkok condo market very static as most high end condos are paid for in full. As owners have no real need to sell, they hold on to some hefty asking prices to maintain a feeling of wealth.

In light of a real-estate correction in Dubai, Ireland, Spain, the US and starting in the rest of Europe, Asia had a good run the last 15 years, but from a buyers point of view the Bangkok condo market could need a 25-30% haircut to be attractive again.

Anybody feel the same or have I been looking in the wrong area of Bangkok?

[giibaht]

In the past few years, property prices had gone up in lots of countries in Asia, not just in Thailand or BKK for that matter. All this thanks to the USD 10 trillion of money printed by leading central banks in the West that flowed to the rest of the world, especially emerging markets. Once the money printing stops, asset prices will come back down to saner levels everywhere.

When I first arrived here in CM a few years back, there were only a handful of newish condos, with the rest of the old condos being relics from the Tom Yum Gung crises era. These new condos were asking about 30-40 K psm then. Now new projects in CM are asking from about 60K psm, and goes up to about 90K psm in prime area of CM (ie. Nimman). BKK-based developers had also rushed in to launch new projects in CM, where previously they were largely absent. By my count, there must be at least over 50 new condos built/launched in the past 3 years, which by CM standard is a whole lot of condos for the market to digest.

While I can't comment on the BKK condo market, certainly here in CM, prices need to come down by similar percentages (20-30%) to be reasonable.

Incidentally, what's the current psm price for condos in prime BKK areas (ie. Sathorn, Rajdamri, Sukhumvit etc)?

[richard_smith237]

OP: What price would you consider value for money?

My Condo on Rama IV (which is up for sale): 74 sqm, 2 Bedroomed (6MB) which works out at 81,081 baht per Sq meter... however, this price per sqm nearly doubles when looking at Condo's on Sukhumvit near BTS stations.

[ExpatOilWorker]

In the past few years, property prices had gone up in lots of countries in Asia, not just in Thailand or BKK for that matter. All this thanks to the USD 10 trillion of money printed by leading central banks in the West that flowed to the rest of the world, especially emerging markets. Once the money printing stops, asset prices will come back down to saner levels everywhere.

When I first arrived here in CM a few years back, there were only a handful of newish condos, with the rest of the old condos being relics from the Tom Yum Gung crises era. These new condos were asking about 30-40 K psm then. Now new projects in CM are asking from about 60K psm, and goes up to about 90K psm in prime area of CM (ie. Nimman). BKK-based developers had also rushed in to launch new projects in CM, where previously they were largely absent. By my count, there must be at least over 50 new condos built/launched in the past 3 years, which by CM standard is a whole lot of condos for the market to digest.

While I can't comment on the BKK condo market, certainly here in CM, prices need to come down by similar percentages (20-30%) to be reasonable.

Incidentally, what's the current psm price for condos in prime BKK areas (ie. Sathorn, Rajdamri, Sukhumvit etc)?

Happy to see we are on the same page.

Most of the lease hold units around Ratchadamri sell for around 100-120,000 Baht/m2, but it is possible to find units around 60,000 Baht/m2 in buildings with less than 20 years lease left. Free hold around Langsuan is a different ball game with prices around 200-300,000 Baht/m2.

Around Sukhumvit all the way out to Ekamai Pre 1997 units sell for around 70,000 Baht/m2, while newer building are somewhere around 100,000 Baht/m2 depending of area.

[ExpatOilWorker]

OP: What price would you consider value for money?

My Condo on Rama IV (which is up for sale): 74 sqm, 2 Bedroomed (6MB) which works out at 81,081 baht per Sq meter... however, this price per sqm nearly doubles when looking at Condo's on Sukhumvit near BTS stations.

Richard, most owners get a little touchy when they are told their unit is overpriced, so bear with me, the is just my personal opinion and somebody with better knowledge of your building and area might find the price acceptable.

To me, you units is a prime example of an overpriced condo with zero value for money. I would guess the unit could rent for 25,000 Baht, giving 3.5% ROI when common fee, agent commission and an empty month is taken out of the equation.

Furthermore it is a low rise building off the beaten farang track on lower Sukhumvit. Low rise buildings often dont have the unit numbers to keep up maintenance 15-20 years down the road when elevators and water pipe need replacement.

It have been for sale for 9 months and had 668 views, so many have apparently considered it, but walked away.

Just my 2 cents, when compared to what I have seen the last 2 months.

[hhgz]

"I find there is very little value for money in the Bangkok real-estate market."

Then you shouldn't buy a condo. It's pretty simple.

[Christie Paul]

No one wants to loose money on real estate - therefore they hang on for grim death - as the economy continues to sag, so will sales, people that need to sell urgently, will sell at greatly reduced prices, further slowing sales of the higher price hold outs.

A lot of BKK real estate is held by folks with deep pockets - they even buy entire floors and sometimes don't even bother to rent them. So there will be significant resistance - but prices will cave. Unless the baht gets a haircut - more like a crew cut - and this won't happen until all and sundry realise that the place is no longer competitive - and that won't happen until there's a long back log of bankruptcies - and the trail of smart money leaving the country becomes a one way freeway. And that sad to say is gaining momentum now.

It will certainly bounce back as Asia has authentic wealth - a burgeoning market and BKK for many is very attractive. But first the West will have to go bust and or a major war.

To me at least, this not look like the time to throw money at real estate here - but in time it could well be.

Edited February 16, 2015 by Christie Paul

[trogers]

"Some pre crises units have 20 years old build in furniture and still they want 6 million for a relative small 2 bed room unit."

Would depend on location. When looking at old condo, I see not what it is, but what it can become. Add cost of total refurbishment to sales price and decide.

[ldnguy]

I generally agree with OP, but I don't see what will bring price down. It's a different market to the West, with many cash buyers who have no need to sell and no need to drop prices. You may find the odd bargain from a distressed seller, but most won't lower their prices. I know landlords that have stacks of condos all bought with cash. They will sell at top price but won't negotiate at all because they simply don't need to. Just somewhere to park their cash.

You could say that oil is not a fair prices because the cartels control it, but nt much you can do about it. Same with property here. It might not be value for money, but that's life. If you want to buy as a home, it's not such a worry of you plan to be there long-term. The alternative is to rent, but that is also not value for money. The question for you should be... which is better for me financially, renting or buying. Rent for 30k a month and that's over 1 million baht every three years. Is it cheaper to just buy even if not such good value. Depends what your money is currently doing. It's different fr everyone. I plan to by i next 1-3 year after I've sold another property in UK. Not selling just yet though.

[ExpatOilWorker]

I generally agree with OP, but I don't see what will bring price down. It's a different market to the West, with many cash buyers who have no need to sell and no need to drop prices. You may find the odd bargain from a distressed seller, but most won't lower their prices. I know landlords that have stacks of condos all bought with cash. They will sell at top price but won't negotiate at all because they simply don't need to. Just somewhere to park their cash.

You could say that oil is not a fair prices because the cartels control it, but nt much you can do about it. Same with property here. It might not be value for money, but that's life. If you want to buy as a home, it's not such a worry of you plan to be there long-term. The alternative is to rent, but that is also not value for money. The question for you should be... which is better for me financially, renting or buying. Rent for 30k a month and that's over 1 million baht every three years. Is it cheaper to just buy even if not such good value. Depends what your money is currently doing. It's different fr everyone. I plan to by i next 1-3 year after I've sold another property in UK. Not selling just yet though.

Sadly enough, I also don't see an imminent adjustment in prices to a more buyer friendly level. What need to happen is one or more of the below:

1. Drop in SET, since the real-estate market is investor driven in Bangkok

2. Stagnation in resident renting foreigners driving down rental prices and over time sales prices. My guess is that 90% of all condos renting for 20,000 baht or more is a foreign tenant.

3. A real-estate crash in China could act as a collective wakeup call and have some of the uber-rich to offload units.

4. Interest rate return to 5-7%. Looking at 30 year bond yields, that will not happen anytime soon.

[rgs2001uk]

^^^^, #1-4 above,

you mentioned earlier, but from a buyers point of view the Bangkok condo market could need a 25-30% haircut to be attractive again.

Would condos become more attractive to you if your currency, lets say $ increaded in value by say 25-30%

What currency are you thinking in dollars or baht?

The Bkk market is doing just fine from a buyers point of view thinking and paying in baht, it appears the ones who dont think this way are farang who tend to think on their own currencys value to the baht.

[ExpatOilWorker]

^^^^, #1-4 above,

you mentioned earlier, but from a buyers point of view the Bangkok condo market could need a 25-30% haircut to be attractive again.

Would condos become more attractive to you if your currency, lets say $ increaded in value by say 25-30%

What currency are you thinking in dollars or baht?

The Bkk market is doing just fine from a buyers point of view thinking and paying in baht, it appears the ones who dont think this way are farang who tend to think on their own currencys value to the baht.

I am thinking in Baht and I am not so sure the Bangkok condo market is doing as good now as it were 3-5 years ago. There seem to be a general disconnect between rental prices and sales prices.

Also there seem to be a fair number of empty units while still more larger project will bring even more units to the market.

[PattayaPhom]

OP: What price would you consider value for money?

My Condo on Rama IV (which is up for sale): 74 sqm, 2 Bedroomed (6MB) which works out at 81,081 baht per Sq meter... however, this price per sqm nearly doubles when looking at Condo's on Sukhumvit near BTS stations.

Richard, most owners get a little touchy when they are told their unit is overpriced, so bear with me, the is just my personal opinion and somebody with better knowledge of your building and area might find the price acceptable.

To me, you units is a prime example of an overpriced condo with zero value for money. I would guess the unit could rent for 25,000 Baht, giving 3.5% ROI when common fee, agent commission and an empty month is taken out of the equation.

Furthermore it is a low rise building off the beaten farang track on lower Sukhumvit. Low rise buildings often dont have the unit numbers to keep up maintenance 15-20 years down the road when elevators and water pipe need replacement.

It have been for sale for 9 months and had 668 views, so many have apparently considered it, but walked away.

Just my 2 cents, when compared to what I have seen the last 2 months.

At least 2 viewings a day for the past 9 months then something is obviously wrong as it wouldn't be the location as people would know that...or are you talking 668 hits on an internet site?...we all know the internet and emailers are 99% dreamers and liars.

[rgs2001uk]

^^^^, #1-4 above,

you mentioned earlier, but from a buyers point of view the Bangkok condo market could need a 25-30% haircut to be attractive again.

Would condos become more attractive to you if your currency, lets say $ increaded in value by say 25-30%

What currency are you thinking in dollars or baht?

The Bkk market is doing just fine from a buyers point of view thinking and paying in baht, it appears the ones who dont think this way are farang who tend to think on their own currencys value to the baht.

I am thinking in Baht and I am not so sure the Bangkok condo market is doing as good now as it were 3-5 years ago. There seem to be a general disconnect between rental prices and sales prices.

Also there seem to be a fair number of empty units while still more larger project will bring even more units to the market.

There seem to be a general disconnect between rental prices and sales prices.

From what I see and can recall, the disconnect you talk of has always existed if viewed from a farang perspective.

5 or 6% is about average, although if you buy cheaper properties in can go up in some caes 10%.

This aint Kansas, something our so called property experts, from Florida, California, Australia or The Uk seem to forget.

I keep hearing about some so called 1% rule, personally from a renters point of view I think its great.

If you are buying a condo to live in fine, if you are looking for an investment try the SET.

[WorkingTourist]

The price-to-rent ratio seems reasonable to me. If you’re living here for only a short time, it’s best to rent, but if you’re staying longer, then buying is the better deal (assuming the market doesn’t collapse).

Purchasing a condo is not an investment per se, and it shouldn’t come with a significant discount compared to renting. You have more freedom when you own the condo and you have placed your money in real estate which tend to follow the general development in salaries, that itself is an advantage over renting, giving you a further 25-30% discount is wishful thinking.

That you can rent the units which are up for sale for 4-6% of their asking price is not a good indicator for a lurking correction; the investor have likely bought a lot of units at a discount, so for them, the rental income is more than a 4-6% ROI.

I think it’s better to look at the typical income of those who these condos are targeted at. Salaries are all over the place, but for a couple with a higher education, it doesn’t seem rare to take home north of 100,000 THB/month, so given the low tax, low interest rate, and lack of property tax, even a 10M condo is not out of reach for such a couple.

Also, prices in Bangkok are still lower than many other Asian capitals, and certainly lower than the major European cities.

[ExpatOilWorker]

^^^^, #1-4 above,

you mentioned earlier, but from a buyers point of view the Bangkok condo market could need a 25-30% haircut to be attractive again.

Would condos become more attractive to you if your currency, lets say $ increaded in value by say 25-30%

What currency are you thinking in dollars or baht?

The Bkk market is doing just fine from a buyers point of view thinking and paying in baht, it appears the ones who dont think this way are farang who tend to think on their own currencys value to the baht.

I am thinking in Baht and I am not so sure the Bangkok condo market is doing as good now as it were 3-5 years ago. There seem to be a general disconnect between rental prices and sales prices.

Also there seem to be a fair number of empty units while still more larger project will bring even more units to the market.

There seem to be a general disconnect between rental prices and sales prices.

From what I see and can recall, the disconnect you talk of has always existed if viewed from a farang perspective.

5 or 6% is about average, although if you buy cheaper properties in can go up in some caes 10%.

This aint Kansas, something our so called property experts, from Florida, California, Australia or The Uk seem to forget.

I keep hearing about some so called 1% rule, personally from a renters point of view I think its great.

If you are buying a condo to live in fine, if you are looking for an investment try the SET.

From the buildings I am familiar with, rental prices have stayed flat for the past 10 years, while sales or rather asking prices pretty much have doubled.

In a way it makes sense, since interest rate was also a lot higher 10 years ago, but I was just shocked with some of the prices asked during my recent search. QE by Central banks wreak havoc with logic and common sense in the market in my view, as a potential buyer stepping into the market.

If you just wish to rent, I totally agree it is a great market with lots of value for money.

[Caprelo]

I think one major factor that is not mentioned, very rich people buy blocks of condos, receiving 4-6% (or more) returned directly into their pocket is not that bad. There is no connection from the land dept to the revenue dept so, have your eggs in a few different baskets does not hurt especially if the cash in your bank account does not match your tax return. Then add the long game their investment pays off. What might not be right for you may be working for others. New buildings with brand name developers are selling out.

[trogers]

^^^^, #1-4 above,

you mentioned earlier, but from a buyers point of view the Bangkok condo market could need a 25-30% haircut to be attractive again.

Would condos become more attractive to you if your currency, lets say $ increaded in value by say 25-30%

What currency are you thinking in dollars or baht?

The Bkk market is doing just fine from a buyers point of view thinking and paying in baht, it appears the ones who dont think this way are farang who tend to think on their own currencys value to the baht.

I am thinking in Baht and I am not so sure the Bangkok condo market is doing as good now as it were 3-5 years ago. There seem to be a general disconnect between rental prices and sales prices.

Also there seem to be a fair number of empty units while still more larger project will bring even more units to the market.

There seem to be a general disconnect between rental prices and sales prices.

From what I see and can recall, the disconnect you talk of has always existed if viewed from a farang perspective.

5 or 6% is about average, although if you buy cheaper properties in can go up in some caes 10%.

This aint Kansas, something our so called property experts, from Florida, California, Australia or The Uk seem to forget.

I keep hearing about some so called 1% rule, personally from a renters point of view I think its great.

If you are buying a condo to live in fine, if you are looking for an investment try the SET.

If you want a market with poor correlation between rental value and sales price, try Singapore and Hong Kong...with gross rental yield at less than 4%.

[ExpatOilWorker]

I think one major factor that is not mentioned, very rich people buy blocks of condos, receiving 4-6% (or more) returned directly into their pocket is not that bad. There is no connection from the land dept to the revenue dept so, have your eggs in a few different baskets does not hurt especially if the cash in your bank account does not match your tax return. Then add the long game their investment pays off. What might not be right for you may be working for others. New buildings with brand name developers are selling out.

....or at least so we are told by the local press, but often they are in bed with the same brand name developers and a lot of the real-estate news is scripted by the industry.

It would be interesting to see the stock price of the publicly traded developers, like Sansiri, Nobel, etc. Anybody able to pull a 5 years chart from the SET website?

The stock market is usually good at sniffing out any crack in a too rosy forecast.

[Caprelo]

I think one major factor that is not mentioned, very rich people buy blocks of condos, receiving 4-6% (or more) returned directly into their pocket is not that bad. There is no connection from the land dept to the revenue dept so, have your eggs in a few different baskets does not hurt especially if the cash in your bank account does not match your tax return. Then add the long game their investment pays off. What might not be right for you may be working for others. New buildings with brand name developers are selling out.

....or at least so we are told by the local press, but often they are in bed with the same brand name developers and a lot of the real-estate news is scripted by the industry.

It would be interesting to see the stock price of the publicly traded developers, like Sansiri, Nobel, etc. Anybody able to pull a 5 years chart from the SET website?

The stock market is usually good at sniffing out any crack in a too rosy forecast.

That last sentence was just an added point.

The main point is many people have to much cash, condos and land have been a good place to put the cash, even if the condo depreciates a bit their asset can be hidden and separate from their other piles of cash. Someone who is in this position is not the same as a sharp investor who is tight with money.

[WorkingTourist]

The main point is many people have to much cash, condos and land have been a good place to put the cash, even if the condo depreciates a bit their asset can be hidden and separate from their other piles of cash. Someone who is in this position is not the same as a sharp investor who is tight with money.

among high earning Chinese, foreign property is considered to be one part of a balanced portfolio

Source: http://www.marketplace.org/topics/world/chinese-companies-look-invest-american-real-estate

I spoke with a real estate agent here in Chiang Mai, and he estimated that roughly half his customers were foreign investors, though I wouldn’t consider him a reliable source, but it’s obvious that a lot of the rentals here in Chiang Mai are owned by people who do not live in Chiang Mai, and it also seems some developers are presenting their projects abroad (as investment opportunities).

Apparently the investors are satisfied with a 6% ROI, because that’s actually a ROI I have seen advertised in sales materials numerous times.

Or maybe some investors are deluded, I have two different sources telling me about people wanting to sell their newly bought condo for 150-200% of what they themselves paid.

[ExpatOilWorker]

I think one major factor that is not mentioned, very rich people buy blocks of condos, receiving 4-6% (or more) returned directly into their pocket is not that bad. There is no connection from the land dept to the revenue dept so, have your eggs in a few different baskets does not hurt especially if the cash in your bank account does not match your tax return. Then add the long game their investment pays off. What might not be right for you may be working for others. New buildings with brand name developers are selling out.

....or at least so we are told by the local press, but often they are in bed with the same brand name developers and a lot of the real-estate news is scripted by the industry.

It would be interesting to see the stock price of the publicly traded developers, like Sansiri, Nobel, etc. Anybody able to pull a 5 years chart from the SET website?

The stock market is usually good at sniffing out any crack in a too rosy forecast.

That last sentence was just an added point.

The main point is many people have to much cash, condos and land have been a good place to put the cash, even if the condo depreciates a bit their asset can be hidden and separate from their other piles of cash. Someone who is in this position is not the same as a sharp investor who is tight with money.

I agree that the Bangkok high end condo market is a big parking lot for cash for the wealthy. BBC just ran a 2 episode program "The rich and us". From London to Dubai, the rich are piling money into real-estate, which in turn then is sold to the rich.

There are signs that the Chinese market has topped, but since the Thai market is very loosely regulated, I think the boom will continue for a few more years before the bubble will pop.

[Caprelo]

I think one major factor that is not mentioned, very rich people buy blocks of condos, receiving 4-6% (or more) returned directly into their pocket is not that bad. There is no connection from the land dept to the revenue dept so, have your eggs in a few different baskets does not hurt especially if the cash in your bank account does not match your tax return. Then add the long game their investment pays off. What might not be right for you may be working for others. New buildings with brand name developers are selling out.

....or at least so we are told by the local press, but often they are in bed with the same brand name developers and a lot of the real-estate news is scripted by the industry.

It would be interesting to see the stock price of the publicly traded developers, like Sansiri, Nobel, etc. Anybody able to pull a 5 years chart from the SET website?

The stock market is usually good at sniffing out any crack in a too rosy forecast.

That last sentence was just an added point.

The main point is many people have to much cash, condos and land have been a good place to put the cash, even if the condo depreciates a bit their asset can be hidden and separate from their other piles of cash. Someone who is in this position is not the same as a sharp investor who is tight with money.

I agree that the Bangkok high end condo market is a big parking lot for cash for the wealthy. BBC just ran a 2 episode program "The rich and us". From London to Dubai, the rich are piling money into real-estate, which in turn then is sold to the rich.

There are signs that the Chinese market has topped, but since the Thai market is very loosely regulated, I think the boom will continue for a few more years before the bubble will pop.

Plus in the global market Bangkok is still a bargain.

[Jasun]

Every time someone says the BKK property market is over supplied and over priced, it goes up price.

[kingalfred]

OP: What price would you consider value for money?

My Condo on Rama IV (which is up for sale): 74 sqm, 2 Bedroomed (6MB) which works out at 81,081 baht per Sq meter... however, this price per sqm nearly doubles when looking at Condo's on Sukhumvit near BTS stations.

6 million? Haha for 74metres? Good luck with that. You be near 4m if you sell.

[WorkingTourist]

I agree that the Bangkok high end condo market is a big parking lot for cash for the wealthy. BBC just ran a 2 episode program "The rich and us". From London to Dubai, the rich are piling money into real-estate, which in turn then is sold to the rich.

I haven’t studied the Bangkok real estate market, but I have been looking for a condo in Chiang Mai for about a year, so I know many of the new developments there, and I wouldn’t characterize it as luxurious developments built for the rich to invest or live in.

Most of what gets built, and I think this is also the case in BKK, are fairly small units (as in, starting around 30 sqm.), and doesn’t scream extravaganza at all. Wooden floors are rare, dishwashers are nearly non existing, and I don’t think they have even heard about double-glazed windows here…

Although some developments are targeting foreigners in their sales materials, I do consider the projects to be more appropriate for the rising middle class.

There are signs that the Chinese market has topped, but since the Thai market is very loosely regulated, I think the boom will continue for a few more years before the bubble will pop.

If there is a bubble and it pops, you can probably get a really cheap 28-35 sqm. condo, but I think the market for a decently sized quality condo is still woefully underserved, which is why I myself am buying this year (have paid the reservation fee). The condo I found is half of the average sqm. price back home, with the quality being above the average.

I subscribe to the theory that a lot of condos are bought by people with deep pockets, so should there be a crash, I am hopeful it won’t affect too much of the overall economy, of course that is not normally how it goes…

[ExpatOilWorker]

The notion that real-estate appreciate over time is somewhat an illusion. Just out of curiosity I have followed my childhood house and yes it just recently sold for 12 times (1,200%) more than when my dad bought it, but when I checked with the bury of statistics, inflation had also been nearly exact 1,200% in the same time period, which of course cover the high inflation years of the late 70 and mid 80.

When correlating for inflation, Thai condos seems to go to a 3-5 years appreciation period, when the building is new on the block and glossy sales material is fresh in the mind. Then there is a flat 5-10 years period and once the building is 15-20 years old prices tend to fall, especially if critical maintenance is lacking behind.

The flood of QE money and low interest rate have in my view artificially kept prices high, at least for now.

[rgs2001uk]

I agree that the Bangkok high end condo market is a big parking lot for cash for the wealthy. BBC just ran a 2 episode program "The rich and us". From London to Dubai, the rich are piling money into real-estate, which in turn then is sold to the rich.

I haven’t studied the Bangkok real estate market, but I have been looking for a condo in Chiang Mai for about a year, so I know many of the new developments there, and I wouldn’t characterize it as luxurious developments built for the rich to invest or live in.

Most of what gets built, and I think this is also the case in BKK, are fairly small units (as in, starting around 30 sqm.), and doesn’t scream extravaganza at all. Wooden floors are rare, dishwashers are nearly non existing, and I don’t think they have even heard about double-glazed windows here…

Although some developments are targeting foreigners in their sales materials, I do consider the projects to be more appropriate for the rising middle class.

There are signs that the Chinese market has topped, but since the Thai market is very loosely regulated, I think the boom will continue for a few more years before the bubble will pop.

If there is a bubble and it pops, you can probably get a really cheap 28-35 sqm. condo, but I think the market for a decently sized quality condo is still woefully underserved, which is why I myself am buying this year (have paid the reservation fee). The condo I found is half of the average sqm. price back home, with the quality being above the average.

I subscribe to the theory that a lot of condos are bought by people with deep pockets, so should there be a crash, I am hopeful it won’t affect too much of the overall economy, of course that is not normally how it goes…

Once you get off the farang Suk/Silom areas, most of what is on offer in Bkk is crap.

Its aimed at the Thai market and what they can afford to pay.

Read the signs as you drive by these places, ready to live in now, live free for 1 year etc etc.

Most are aimed at those who can pay about 7,000 baht per month.

As for the crap furniture/fittings in them, you would be better off buying a shell and outfitting yourself.

[rgs2001uk]

The notion that real-estate appreciate over time is somewhat an illusion. Just out of curiosity I have followed my childhood house and yes it just recently sold for 12 times (1,200%) more than when my dad bought it, but when I checked with the bury of statistics, inflation had also been nearly exact 1,200% in the same time period, which of course cover the high inflation years of the late 70 and mid 80.

When correlating for inflation, Thai condos seems to go to a 3-5 years appreciation period, when the building is new on the block and glossy sales material is fresh in the mind. Then there is a flat 5-10 years period and once the building is 15-20 years old prices tend to fall, especially if critical maintenance is lacking behind.

The flood of QE money and low interest rate have in my view artificially kept prices high, at least for now.

There is a lot of truth in what you say, one thing missing.

I will use the first house I bought as an example (this is in the UK).

The house at the time cost 3 times the average wage, the same house now will cost 7 times the average wage.

In a little under 30 years the house has increased in value to 5 times what I bought it for.

As for trying to understand the Bkk condo market, I wote it off as an exercise in futility a long time ago.

[WorkingTourist]

The notion that real-estate appreciate over time is somewhat an illusion. Just out of curiosity I have followed my childhood house and yes it just recently sold for 12 times (1,200%) more than when my dad bought it, but when I checked with the bury of statistics, inflation had also been nearly exact 1,200% in the same time period, which of course cover the high inflation years of the late 70 and mid 80.

When correlating for inflation, Thai condos seems to go to a 3-5 years appreciation period, when the building is new on the block and glossy sales material is fresh in the mind. Then there is a flat 5-10 years period and once the building is 15-20 years old prices tend to fall, especially if critical maintenance is lacking behind.

The flood of QE money and low interest rate have in my view artificially kept prices high, at least for now.

There is a lot of truth in what you say, one thing missing.

I will use the first house I bought as an example (this is in the UK).

The house at the time cost 3 times the average wage, the same house now will cost 7 times the average wage.

In a little under 30 years the house has increased in value to 5 times what I bought it for.

As for trying to understand the Bkk condo market, I wote it off as an exercise in futility a long time ago.

If housing prices (on average) grow faster than salaries, then eventually most people will live on the street — so it’s probably safe to assume that prices do roughly follow the development in salaries.

There is some volatility based on interest rates (as the effective price for most include the interests), and where in the economic cycle we are (e.g. during a crisis a lot will be on sale), but all in all, unless you buy in a highly attractive area (where demand increase faster than supply), then I wouldn’t consider it an investment.

It’s a good place to park your money without losing them to inflation, and in the long-term it’s cheaper than renting, but if you want to make money in real estate, I think the way to do that is to invest in the development of new projects, as more profit is probably made on the first sale, than any inflation-adjusted value increase the condo sees during the next 10 years…