Condo glut in Chiang Mai

[Mapguy]

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.

Is there 1.65M people in CNX??

No. That would be closer to estimating the population of the province, which is quite large. There are statistics posted.

This, of course, does not solve the increasing traffic problem!

[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.

The article is about new builds only, which are only a part of the overall market.

Are you saying that people predicted the Chiang Mai property market would crash before the developers actually started building in CM?

Searching the CM forum for property, crash, and bubble, the earliest I found was from February 2014.

[Sparkles]

The glut of condos is nothing compared with the new, and still empty shop houses,must be 1,000's of them around CM even in the Mae Hia/Samoeng Rd area there are at last a 100.

Throw in the old shop houses that have been empty for years and that's a total overload.

[khwaibah]

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.

The article is about new builds only, which are only a part of the overall market.

Are you saying that people predicted the Chiang Mai property market would crash before the developers actually started building in CM?

Searching the CM forum for property, crash, and bubble, the earliest I found was from February 2014.

Try September 19, 2006.

[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.

The article is about new builds only, which are only a part of the overall market.

Are you saying that people predicted the Chiang Mai property market would crash before the developers actually started building in CM?

Searching the CM forum for property, crash, and bubble, the earliest I found was from February 2014.

http://www.thaivisa.com/forum/topic/295308-new-condo-projects-in-chiang-mai/?hl=condo LOL. Could have been written yesterday; but it was September 2009.

[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.

Alan Greenspan has been saying that for years. Yawn.

More persuasive when you see it in graphic terms in an article from just yesterday

Asia’s housing bubbles look a lot like the U.S. housing bubble did

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/03/06/asias-housing-bubbles-look-a-lot-like-the-u-s-housing-bubble-did/

[giibaht]

Short of a crises of some sort, I don't expect condo prices to crash. That said, I think current asking prices for new projects from 60K bhat psm up is probably priced too high for most CM thais. Prices are likely to stagnate at current levels for sometime, or perhaps correct slightly, until the excess supply is cleared.

I enquired at Sansiri for their newly completed condo in Santitham last month, and was told that sales are suspended for 1-2 months. It seemed rather suspicious and in fact I started a thread on this in the RE forum here

http://www.thaivisa.com/forum/topic/800202-developer-suspending-sales-for-recently-completed-condo/#entry9067572

My guess then (and now) is that they are facing troubles with transfers to owners, with the actual transfer rate much lower than the sales rate, hence the sales ban to sort out matters. The interesting thing is that the sales staff I spoke to initially said the prices when sales re-open will be lower than before, but later she back-tracked and said she doesn't know the new prices. It's quite intriguing. I also wonder how their other 800+ unit condo beside Central Festival is doing. It is also almost complete.

I've yet to hear from them, and I wonder whether any TV member would help to sniff out more info AND report back here

[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.

More persuasive when you see it in graphic terms in an article from just yesterday

Asia’s housing bubbles look a lot like the U.S. housing bubble did

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/03/06/asias-housing-bubbles-look-a-lot-like-the-u-s-housing-bubble-did/

same continent; not much else.

[Johpa]

After the 2011 Bangkok floods it felt like everyone in Bangkok who could afford it was buying property up in Chiang Mai. That generated a condo building spree and my guess is that spree had finally run its course and has temporarily exceeded demand. There may be some Chinese buying in Thailand now, but they know better than to trust the Thai-Chinese. Buying a condo in Thailand has risks. The Chinese who can afford to buy condos outside of China, and can evaluate risk, are buying in the US. My daughter works for a company that manages large upscale condo complexes in the US and in some west coast cities over 50% of the units are being purchased by PRC Chinese.

[cardinalblue]

Good God guys he obviously meant CM province or the CM metro area...

He was using the word city in a general sense to describe the metro. Technically it might even be province numbers since it was exact number...

Tha said I don't have faith in those doing the counting...

CB

[Torrens54]

They're built for the coming Chinese invasion.

No, I think the ones that are already built, have Plumbing.

By all reports, the "Invading Hordes" don't require such Petty Bourgeoisie trappings. They'd rather use the Moat.

[NeverSure]

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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.

Good God guys he obviously meant CM province or the CM metro area...

He was using the word city in a general sense to describe the metro. Technically it might even be province numbers since it was exact number...

Tha said I don't have faith in those doing the counting...

CB

Yes, sorry I meant the province, and I got the number from google.

I was actually questioning the number of units, and wondering who did the math.

It still seems to me that there must be more than that relatively small number of new (and used) units available to keep rent prices so low. I wonder what the real number of vacancies is.

[WinnieTheKhwai]

After the 2011 Bangkok floods it felt like everyone in Bangkok who could afford it was buying property up in Chiang Mai. That generated a condo building spree and my guess is that spree had finally run its course and has temporarily exceeded demand. There may be some Chinese buying in Thailand now, but they know better than to trust the Thai-Chinese. Buying a condo in Thailand has risks. The Chinese who can afford to buy condos outside of China, and can evaluate risk, are buying in the US. My daughter works for a company that manages large upscale condo complexes in the US and in some west coast cities over 50% of the units are being purchased by PRC Chinese.

Many are buying in the US, but don't forget there are a LOT of Chinese people, and Chiang Mai has intrinsic attractions that Chinese people value as much as you and me.

And to those attractions you can add 'proximity': If you buy property in Chiang Mai then you can feasibly drive to it from Southern China. You can't drive to the US. And you're in a similar time zone and just generally closer to friends and family in China. And prices are still lower, the 'price of admission' of having property outside of China is generally lower.

Here is an interesting recent article on China in general: http://www.wsj.com/articles/the-coming-chinese-crack-up-1425659198 The focus of that article is political, but even from a common sense point of view, how attractive is it when living in a gloomy, cold megacity of billions, to have some property in what seems like an oasis in comparison.

I've seen the first big condo billboards with Chinese writing going up. I'll add a picture tomorrow.

[sfokevin]

^^^ Sadly the Chinese are flocking here for the clean air...

[WinnieTheKhwai]

Right. I was talking about the air with some Chinese tourists yesterday (programmer chicks from Beijing), indicating that right now it's pretty clear (for March) so if they want to visit Doi Suthep then it's best to do it sooner rather than later as it can quickly change. Best to pick a day/time when the mountain is clearly visible from town).

They remarked dryly that in Beijing where they're from, they're happy when they can see the road in front of them, pretty much year round.

Also, Beijing wasn't very cold now... 5 Degrees.

If I was Chinese I'd buy property in Chiang Mai today.

Edited March 8, 2015 by WinnieTheKhwai

[WorkingTourist]

If I was Chinese I'd buy property in Chiang Mai today.

Like the rest of us, they can only buy condos.

Personally I think very few of the condos in Chiang Mai are what I would call “vacation homes”, so it would probably be more likely as an investment, according to this article then “among high earning Chinese, foreign property is considered to be one part of a balanced portfolio”.

However, you would expect such high earning Chinese to do some basic research, and like many of us farang, consider the current building boom (and lack of truly luxurious condos) a problem.

I think many of the foreigners who rent out condos here also live in Chiang Mai, that is different from simply investing in rental property that you pay someone else to manage. If you’re after such a setup, you would probably not pick Chiang Mai (unless you have a personal connection to the place and is bullish about its future and the thai baht).

Btw: Bejing is way up north. Travel around in Southern China and you’ll find great nature, temples, weather, and delicious cheap food.

[WinnieTheKhwai]

A friend of my wife is a tour guide; she was with some Chinese people who asked to see condominiums for sale. So she found them one, and to her surprise they didn't just buy a unit, but bought a whole floor. And she made a nice commission on that.

I can see a lot more Chinese buying condos here.

[LivinLOS]

The glut of condos is nothing compared with the new, and still empty shop houses,must be 1,000's of them around CM even in the Mae Hia/Samoeng Rd area there are at last a 100.

Throw in the old shop houses that have been empty for years and that's a total overload.

I am baffled by where they think the people will come from for these moobaans.. I mean theres 10's of 1000s of units going in over in the E and SE of the city.. My moobaan appears to have about a 30% occupancy if lights at night and cars in diveways is any indication.. And yet they just keep building.

As you say the entire middle ring / outer ring and all connecting roads are just putting in shophouse after shop house.. you see 20 build and 3 or 4 have someone actually in them.

[Cheesekraft]

I was dramatically effected by the housing bubble in the USA, and it looks exactly the same here to me. I am waiting for the crash to pick up some nice properties

[khwaibah]

I was dramatically effected by the housing bubble in the USA, and it looks exactly the same here to me. I am waiting for the crash to pick up some nice properties

Prices do not drop as they would in the US. They will let the unit turn to dust before they lower the price.

[LivinLOS]

I was dramatically effected by the housing bubble in the USA, and it looks exactly the same here to me. I am waiting for the crash to pick up some nice properties

Prices do not drop as they would in the US. They will let the unit turn to dust before they lower the price.

While I know "this time it is different" are the 5 most expensive words in investing but..

I think theres a far greater reliance on credit and finance than there has been in the past.. That may well force liquidation on items that would previously simply sit.

[rayongchelsea]

If they didn't materially adjust in baht terms during the asian crisis I doubt there is a big enough factor that will cause a dramatic fall in prices now. Now if the thb were to adjust the demand side would improve dramatically. I wish people would stop comparing the thai real estate market to the west..

[evenstevens]

tried to stitch up a couple deals late 2001, the othey party( thai) would not come to the table at all

and c/mai was comotosed,at least when bartering with thais they respect your final offer and hold no grudges at all

presently there is a over supply of condos,but if you choose the right project, some folding stuff can be made

my interest has cantered along strongly at maerim,perhaps slowly but its in the finishing straight and in the shadows of the winning post

access and all

[CNXBKKMAN]

In the UK we had the self certified mortgages. The ones where the bank doesn't check how much you earn or what you are worth, they believe whatever you write on the form. The person approving the mortgage was on some kind of bonus to lend out as much as they could. I don't believe thai banks lend on this basis. There may never be a USA 2008 type property crash. Prices may stagnate for a decade if things head south. Best chance for a better value property is the THB losing value and the USD GBP or whatever gaining. Everything will look a whole lot cheaper. Farangs will be strutting about buying gold chains, pick up trucks and everything will be right in the world.

[WinnieTheKhwai]

The glut of condos is nothing compared with the new, and still empty shop houses,must be 1,000's of them around CM even in the Mae Hia/Samoeng Rd area there are at last a 100.

Throw in the old shop houses that have been empty for years and that's a total overload.

I am baffled by where they think the people will come from for these moobaans.. I mean theres 10's of 1000s of units going in over in the E and SE of the city.. My moobaan appears to have about a 30% occupancy if lights at night and cars in diveways is any indication.. And yet they just keep building.

As you say the entire middle ring / outer ring and all connecting roads are just putting in shophouse after shop house.. you see 20 build and 3 or 4 have someone actually in them.

Yes.. it is indeed a little puzzling. Also because once you build a block of shophouses and sell one or two units, that land can't be used or sold anymore for something more profitable such as a larger store of some kind.

Older shophouses are actually very good deals because of this, looking at the cost per square wa. (Never mind that you also get the structure on top of it.). Empty land of a similar size goes for a lot more per sq. wa.

[bangmai]

I've said before...buy the old townhouse in a prime location, and have a great payday, when the bulldozer comes. I just watched a lady put four shophouses on 100 wah of very prime land that is worth 100,000 per wah....I would say it cost her 4 million for the buildings....but she may have only added 1-2 million to the value of the property. However, she plans on an income of 100K per month. There is also a 5 story restriction on the land.

[WinnieTheKhwai]

^ That would mean she keeps ownership and rents them out. That does make sense if there are good rents to be collected, compared to not making anything from empty land.

On the downside, from an architectural perspective I'm less happy with them downtown. Fortunately a lot more interesting buildings are also going up. (or existing ones renovated)

[NeverSure]

Prices do not drop as they would in the US. They will let the unit turn to dust before they lower the price.

While I know "this time it is different" are the 5 most expensive words in investing but..

I think theres a far greater reliance on credit and finance than there has been in the past.. That may well force liquidation on items that would previously simply sit.

I don't know. Banks are still sitting on empty properties that were built before 1997 and foreclosed. They keep them to avoid "marking them to market" on their books and showing a loss. If they actually sold them for what they were worth the banks would have to "realize" the loss on their books. Right now they are pretending and no outside auditor has called them on it.

In a world with real banking and outside controls, those properties would have to be marked to market on the books and the loss shown even if the didn't sell them. That causes the banks to go ahead and sell at market to avoid the holding costs. This is one thing that worries me about the property market and also the banks. I don't invest in Thailand and I don't keep a lot of baht in the bank either.

The normalcy bias about Thailand does indeed remind me of the US just before the crash. US banks are audited and they had to mark to market and sell at market and some banks went broke or got bailouts because of it.

Cheers

[WorkingTourist]

I don't know. Banks are still sitting on empty properties that were built before 1997 and foreclosed. They keep them to avoid "marking them to market" on their books and showing a loss. If they actually sold them for what they were worth the banks would have to "realize" the loss on their books. Right now they are pretending and no outside auditor has called them on it.

Lack of property taxes may also play a role. Its almost free to sit on a lot of property, so why sell, if you think the price will be higher in a year

[Cheesekraft]

I was dramatically effected by the housing bubble in the USA, and it looks exactly the same here to me. I am waiting for the crash to pick up some nice properties

Prices do not drop as they would in the US. They will let the unit turn to dust before they lower the price.

absolutely.. but I am hoping after the impending crash of this outrageous bubble, that they will drop prices. I imagine many will be forced to, if they are borrowing from banks, which it does seem like a large amount of them are.