Condo glut in Chiang Mai

[giibaht]

Bangkok Post has an interesting video report on the condo market in the provinces based on information from the Real Estate Information Center. Chiang Mai is mentioned as one of the provinces where the condo glut is "especially bad":

According to REIC, there were 49 condo projects with total of 6,700 units in CM as of end of 2014, but only 63% (or 4,200 units) were sold. That means another 2,500 units are unsold.

It further reports that some projects completed last year had unit transfers of only 30% despite a sales rate of 80%, although its not clear whether they are referring specifically to CM.

For those looking to buy or rent, bargain hard!

For those looking to sell, good luck!

Edited March 6, 2015 by LivinginKata
BKK post link removed as per forum rules

[NeverSure]

I don't argue that there's a glut, but a total of 2,500 units is a drop in a city with a population of 1.65 million. There has to be something else going on.

[Bung]

They're built for the coming Chinese invasion.

[beau thai]

So this report will discourage more new build condos at least in the short term. The pendulum swings......

[sfokevin]

They're built for the coming Chinese invasion.

I see no evidence that the Chinese are interested in buying real estate in Thailand...

They seem to have no interest in renting and living here long term...

They invade here because it's a cheap tour for a few days...

Those of retirement age have not accumulated any wealth and must rely on thier only child...

And the Thai really don't welcome them...

[MESmith]

There's a glut of everything in Chiang Mai. Condos, housing projects, shopping malls, shop houses, DIY superstores. The list goes on.

Did I miss anything? Oh yes, a severe lack of infrastructure, planning & public transportation. But who cares about those

[bangmai]

They're built for the coming Chinese invasion.

I see no evidence that the Chinese are interested in buying real estate in Thailand...

They seem to have no interest in renting and living here long term...

They invade here because it's a cheap tour for a few days...

Those of retirement age have not accumulated any wealth and must rely on thier only child...

And the Thai really don't welcome them...

I disagree. Chinese have bought real estate EVERYWHERE! You can even find them in areas of Africa.

http://www.cnbc.com/id/102290608#.

the Chines were second only to the Canadians for foreign real estate purchases in Arizona. They are big buyers in Las Vegas, also. They love real estate, just like they like trading stocks, which are both forms of gambling, which they love.

[CMHomeboy78]

There's a glut of everything in Chiang Mai. Condos, housing projects, shopping malls, shop houses, DIY superstores. The list goes on.

Did I miss anything? Oh yes, a severe lack of infrastructure, planning & public transportation. But who cares about those

Agreed... too much of everything at present.

I think the condos and housing projects will eventually find buyers if the population continues to increase. That is, if they are attractive places to live and within commuting distance from the city.

The glut of shop houses is something else. The concrete boxes that serve as residences above the commercial units on the ground floor are undesirable places to live, in most cases. The primary selling point would have to be their potential as shops or businesses.

They make up much of the urban sprawl that encircles Chiang Mai and are an unwelcome change from the rice fields, orchards, and market gardens that they replaced.

[JulieM]

63% already sold seems high to me. I doubt the new units around Nimmen are 63% sold.

[jonwilly]

A friend of mine in the financial business has said for several years that the reason for so much 'Condo Building' is the fact that Bank Interest rates are very low.

If you are Thai family or individual with lots of spare cash then building and renting out Condos is a very attractive investment.

My friend also describes CM as the washing machine of Thailand, dirty money in clean money out.

john

[Beng]

So this report will discourage more new build condos at least in the short term. The pendulum swings......

Hopefully it does.

[khwaibah]

I don't argue that there's a glut, but a total of 2,500 units is a drop in a city with a population of 1.65 million. There has to be something else going on.

There has never been that kind of population in the city, 1.65m to 2 m for the metro area yes but Mueang Chiang Mai 250k to 350k tops and Mueang Chiang Mai is not the 2nd largest city.

[Mousehound]

The asking prices in CM for condos seem very high. I see better value almost every where else in Thailand. I see the same condos on the market for a couple of years - so the sellers are just chancing their arm. But this helps keep prices up. Very low interest rates and oversupply with overpriced and overvalued property point one way - crash. If the Chinese are not scooping up everything they can as it becomes available it is because they don't see the value. They are buying up big time in Australia.

There is no way CM city is 1.65 million. I would say more like half that would be closer to the mark. And I include tourists in that number. My home town was 1.6 million a few years back and fely four times bigger than CM.

[sfokevin]

They're built for the coming Chinese invasion.

I see no evidence that the Chinese are interested in buying real estate in Thailand...

They seem to have no interest in renting and living here long term...

They invade here because it's a cheap tour for a few days...

Those of retirement age have not accumulated any wealth and must rely on thier only child...

And the Thai really don't welcome them...

I disagree. Chinese have bought real estate EVERYWHERE! You can even find them in areas of Africa.

http://www.cnbc.com/id/102290608#.

the Chines were second only to the Canadians for foreign real estate purchases in Arizona. They are big buyers in Las Vegas, also. They love real estate, just like they like trading stocks, which are both forms of gambling, which they love.

I was referring to individual Chinese buying condos... They are not buying here... If they were we would see the streets plastered with those ugly condo for sale signs in Chinese...

[worgeordie]

If I could stand on the roof of my house(cannot afraid of heights) but I would

be able to see at least 6 condo projects been built or recently finished,this is

not in town but in the suburbs,so yes I would say there is a glut,and more

importantly,if these units were all sold and occupied,would the utilities companies

be able to service them with reliable water and electricity supplies?,now I am

sure Thailand been so well at planning for the future will have this all covered

and the will be nothing to worry about

regards Worgeordie

[khwaibah]

If I could stand on the roof of my house(cannot afraid of heights) but I would

be able to see at least 6 condo projects been built or recently finished,this is

not in town but in the suburbs,so yes I would say there is a glut,and more

importantly,if these units were all sold and occupied,would the utilities companies

be able to service them with reliable water and electricity supplies?,now I am

sure Thailand been so well at planning for the future will have this all covered

and the will be nothing to worry about

regards Worgeordie

The "BURBS" rule. Urban sprawl.

[giibaht]

I see the BP link has been removed. For those interested, you can google 'demand is waning for condos', for the 5 March article.

Or read the REIC article http://www.reic.or.th/News/NewsPaper_Detail.aspx?newsid=48840

[giibaht]

63% already sold seems high to me. I doubt the new units around Nimmen are 63% sold.

I wonder how REIC sourced these figures. If they were directly from the developers, with no independent verification against say, the land office, then I wouldn't be surprised if the sales figures are overstated. I've been to condo showrooms, and in quite a few cases, upon further enquiry, units marked as sold were still available. The usual excuse I hear from sales staff is that the buyer pulled out

[WorkingTourist]

A friend of mine in the financial business has said for several years that the reason for so much 'Condo Building' is the fact that Bank Interest rates are very low.

I think your friend is mistaken because as the report says, new condos before 2011 were only in the hundreds but this number soared to the thousands each year from 2012.

If we look at the interest rate for this period, we see that in 2011 it was 3.5%, the highest in the last five years and more than 1% higher than this century’s average of 2.46%.

The market prior to 2011 was probably underserved, but as is often the case, too many acted on this information. Many state the flooding in Bangkok as the catalyst that made the big developers look at building outside Bangkok.

My friend also describes CM as the washing machine of Thailand, dirty money in clean money out.

Are you implying that the developers working in Chiang Mai are involved in money laundering? And does your friend have any actual detail about how such money laundering scheme is supposed to work?

For the records, when money laundering is involved in real estate then it normally works by having a person with dirty money buy a luxurious condo via an anonymous offshore company, this effectively gives them ownership of the condo but without any paper trail linking the condo to them, hence tax authorities or similar can’t question how they can afford the condo, because it’s technically not theirs, and only the doorman knows who’s actually occupying it.

I really doubt the Chiang Mai condo market is driven by this, case in point, the report mentions that the unit transfers for some projects where only 30%, i.e. actual buyers seems to be missing, and I would also assume that people with money to launder would want something a tad more exclusive than what’s offered in Chiang Mai.

[PJcm]

I don't argue that there's a glut, but a total of 2,500 units is a drop in a city with a population of 1.65 million. There has to be something else going on.

There has never been that kind of population in the city, 1.65m to 2 m for the metro area yes but Mueang Chiang Mai 250k to 350k tops and Mueang Chiang Mai is not the 2nd largest city.

Not more than 250K in the city, metro area Chiang Mai another 300K, total metro population not more than 600,000 plus tourists

[bangmai]

There was also a rush to get projects started before the end of 14, as new restrictions went into place. There has been talk of a CM property crash for 5 years+ here on TV. Another post about the buildings with no lights on is overdue, as it has been almost three months. Even with somewhat flat prices; the Europeans, Aussies, Canadians, and Russians, who bought in the last couple of years must be feeling pretty good about it. There is a diversified pool of buyers, just like their import/export business. It appears that Japan is much more important to the Thai economy than China....unless you drive a songtaew on Nimman.

[heybruce]

They're built for the coming Chinese invasion.

I see no evidence that the Chinese are interested in buying real estate in Thailand...

They seem to have no interest in renting and living here long term...

They invade here because it's a cheap tour for a few days...

Those of retirement age have not accumulated any wealth and must rely on thier only child...

And the Thai really don't welcome them...

I disagree. Chinese have bought real estate EVERYWHERE! You can even find them in areas of Africa.

http://www.cnbc.com/id/102290608#.

Chinese with money to spare who don't trust their government (shocking but true, some people don't trust their government!) are trying to invest some of their wealth outside of China. It's a common practice.

[WorkingTourist]

There has been talk of a CM property crash for 5 years+ here on TV.

As quoted from the report above “new condos before 2011 were only in the hundreds but this number soared to the thousands each year from 2012” so it seems unlikely to me that people have been predicting a crash for 5+ years.

Based on the report, 2011 is the year developers started to look to other places than Bangkok, and 2012 is the year where lots of new projects came on the market in Chiang Mai, so it seems that 2013 is about the earliest that a crash could have happened, but that would mean that there was basically zero demand and that the creditors then became (extremely) desperate.

[Asiantravel]

There was also a rush to get projects started before the end of 14, as new restrictions went into place. There has been talk of a CM property crash for 5 years+ here on TV. Another post about the buildings with no lights on is overdue, as it has been almost three months. Even with somewhat flat prices; the Europeans, Aussies, Canadians, and Russians, who bought in the last couple of years must be feeling pretty good about it. There is a diversified pool of buyers, just like their import/export business. It appears that Japan is much more important to the Thai economy than China....unless you drive a songtaew on Nimman.

" There has been talk of a CM property crash for 5 years+"

LOL

Five years ago was only one year after the global financial crisis and the start of furious money printing and QE in USA, China and Japan.

Google the latest comments from the likes of Alan Greenspan and you will see that even he is now predicting this week a major correction is imminent.

[Asiantravel]

They're built for the coming Chinese invasion.

I see no evidence that the Chinese are interested in buying real estate in Thailand...

They seem to have no interest in renting and living here long term...

They invade here because it's a cheap tour for a few days...

Those of retirement age have not accumulated any wealth and must rely on thier only child...

And the Thai really don't welcome them...

I disagree. Chinese have bought real estate EVERYWHERE! You can even find them in areas of Africa.

http://www.cnbc.com/id/102290608#.

That article says “ China has made considerable investments in the fields of infrastructure “and does nothing to prove your case at all. Its primarily about big time investing. It made no mention whatsoever to the average Mr and Mrs Lee or Mr and Mrs Ho being remotely interested in buying a condominium in Thailand?

[Happyman108]

Few reasons that drive up condo sales.......

1. Foreign buyer from China, Singapore and Malaysia due to more retired citizen from neighbouring countries. These buyers are use to living in condo or apartment in their own country.

2. Bangkok buyers as 2nd home especially after the big flood hit bangkok, these buyer prefer condo over landed house due to easier to maintain and to rent out if they can find tenant. Otherwise is perfectly ok for them to use as holiday home whereby they will be here mainly on Songkran and year end holiday.

3. Student from neighbouring cities like Chiangrai etc. They use to rent cheap apartment or some even rent condo, but now their parent prefer to buy condo and save on rental. After the student completed their Uni, either they still live in the condo and get a job or they rent or sell the condo for profit after staying for couple of years.

Although a lot of condo units are build in recent 6-8 years and currently over supply, but new project are slowing down and I believe prices will maintain with slower sales to clear the current stock.

[quidnunc]

There was also a rush to get projects started before the end of 14, as new restrictions went into place. There has been talk of a CM property crash for 5 years+ here on TV. Another post about the buildings with no lights on is overdue, as it has been almost three months. Even with somewhat flat prices; the Europeans, Aussies, Canadians, and Russians, who bought in the last couple of years must be feeling pretty good about it. There is a diversified pool of buyers, just like their import/export business. It appears that Japan is much more important to the Thai economy than China....unless you drive a songtaew on Nimman.

" There has been talk of a CM property crash for 5 years+"

LOL

Five years ago was only one year after the global financial crisis and the start of furious money printing and QE in USA, China and Japan.

Google the latest comments from the likes of Alan Greenspan and you will see that even he is now predicting this week a major correction is imminent.

Alan Greenspan has been saying that for years. Yawn.

[Rancid]

There was also a rush to get projects started before the end of 14, as new restrictions went into place. There has been talk of a CM property crash for 5 years+ here on TV. Another post about the buildings with no lights on is overdue, as it has been almost three months. Even with somewhat flat prices; the Europeans, Aussies, Canadians, and Russians, who bought in the last couple of years must be feeling pretty good about it. There is a diversified pool of buyers, just like their import/export business. It appears that Japan is much more important to the Thai economy than China....unless you drive a songtaew on Nimman.

" There has been talk of a CM property crash for 5 years+"

LOL

Five years ago was only one year after the global financial crisis and the start of furious money printing and QE in USA, China and Japan.

Google the latest comments from the likes of Alan Greenspan and you will see that even he is now predicting this week a major correction is imminent.

Alan Greenspan has been saying that for years. Yawn.

You are right that many have been predicting an economic collapse based on bankrupt govts printing money, the huge derivatives etc etc. They were all wrong, still it is all a putrid ponzi, something has to give at some stage but may not be how we expect. Guess that's why some suggesting war as a good way of resetting the economy and blaming someone else for it, banksters live to steal another day.

Have seen one condo sign with Chinese script so seems some movement that way. Those new shop house developments are also asking a tidy sum, wonder how inflationary all that is.

The older condos don't seem to be seeing any big price increases and many are actually better located. Lack the facilities and look a bit run down though, just like the new ones will eventually.

Edited March 7, 2015 by Rancid

[bangmai]

There has been talk of a CM property crash for 5 years+ here on TV.

As quoted from the report above “new condos before 2011 were only in the hundreds but this number soared to the thousands each year from 2012” so it seems unlikely to me that people have been predicting a crash for 5+ years.

Based on the report, 2011 is the year developers started to look to other places than Bangkok, and 2012 is the year where lots of new projects came on the market in Chiang Mai, so it seems that 2013 is about the earliest that a crash could have happened, but that would mean that there was basically zero demand and that the creditors then became (extremely) desperate.

The article is about new builds only, which are only a part of the overall market. It is evident that buying at the launch and reselling before completion is no longer easy money. But let's see one case of a developer slashing prices. Palm Spring started at 1.7x last year and was able to raise it, to slightly over 2.1x. If I were buying, I would look for someone, who needed to resell in the best location, and try to get a good deal, but I wouldn't spend a year doing it.

[bangmai]

There was also a rush to get projects started before the end of 14, as new restrictions went into place. There has been talk of a CM property crash for 5 years+ here on TV. Another post about the buildings with no lights on is overdue, as it has been almost three months. Even with somewhat flat prices; the Europeans, Aussies, Canadians, and Russians, who bought in the last couple of years must be feeling pretty good about it. There is a diversified pool of buyers, just like their import/export business. It appears that Japan is much more important to the Thai economy than China....unless you drive a songtaew on Nimman.

" There has been talk of a CM property crash for 5 years+"

LOL

Five years ago was only one year after the global financial crisis and the start of furious money printing and QE in USA, China and Japan.

Google the latest comments from the likes of Alan Greenspan and you will see that even he is now predicting this week a major correction is imminent.

Alan Greenspan has been saying that for years. Yawn.

You are right that many have been predicting an economic collapse based on bankrupt govts printing money, the huge derivatives etc etc. They were all wrong, still it is all a putrid ponzi, something has to give at some stage but may not be how we expect. Guess that's why some suggesting war as a good way of resetting the economy and blaming someone else for it, banksters live to steal another day.

Have seen one condo sign with Chinese script so seems some movement that way. Those new shop house developments are also asking a tidy sum, wonder how inflationary all that is.

The older condos don't seem to be seeing any big price increases and many are actually better located. Lack the facilities and look a bit run down though, just like the new ones will eventually.

Something is giving, at the moment it seems to be Europe (and Russia), but I am experienced enough to know that there will be good opportunities for investment there, in the future.