Condos don't appreciate in value

[ExpatForever]

I found an article today which asserts that Thai condos don't appreciate in value. I've been on the fence with regards to buying for a long time now. What do the experts in here think? I agree with many things this guy says but take issue with this one point.

Edited May 20, 2015 by ExpatForever

[cooked]

I'm not an expert but it seems obvious to me that the exponential rise in price for condos that was the case in the past was and is unsustainable. People were buying condos, renting them out and selling them after 5 years with 100% profit, going on to the next purchase. A bubble, no idea when it will collapse.

[KittenKong]

Some do, some dont. It's all down to location.

I know people who have doubled their money by buying a condo here and I know people who have halved it.

As far as risk goes I would say Thailand compares badly with popular places in Europe/UK that have a history going back many decades of being desirable. The other advantage of Europe/UK is that you are much less likely to get ripped-off by crooked agents, lawyers, dealers, building management etc etc

Here it happens all the time.

[Suradit69]

Mine has over 15 years. At least the price has, based on some other re-sales. Obviously the original money paid for the condo might have done better or worse in a more liquid investment, but I also would have to factor in 15 years of "free" rent. I do not intend to ever sell it, so I just look at it as a place to live.

As someone else said, location is important ... as well as maintenance.

Do you really want to buy a condo with price appreciation as an objective? Lots of people in Farang Land went bankrupt trying to flip condos and houses a few years ago. If capital appreciation is important, rent a place and invest your money is something more certain to appreciate ... whatever that might be.

[thrilled]

Do not buy A condo for investment reasons.You should buy one to live in or maybe rent it out.But if you buy A condo now for 3 million and think in 3 years you can sell it for 5 million you need to think twice.Investment property is always

iffy.

[Pinot]

Never buy property in Thailand. Plenty of places to rent. I don't know why anyone would seriously consider buying anything here. Poor construction, poor management, neighbor issues, nothing but problems and you never own it.

Living here in Phuket, everyone I know who owns wants out and the places are falling apart.

I rent a beautiful two bedroom home for 13k/mo. Why would I put a chunk a change on a big potential problem?

[thierryviteau]

Buy over 2 millions today and expect to sell at the same price in 10 years...

[nev]

Buy over 2 millions today and expect to sell at the same price in 10 years...

Agree, most people after 10 years would be happy just to get their money back.

[masuk]

Judging by the condos I've lived in and those I've looked at, there is a distinct lack of maintenance.

Seems strange marketing: instead of a place being cleaned up and repairs made, air cons serviced, mould removed, they're just left "as is".

Many owners seem to think their would-be tenants live in a suitcase, judging by the small amount of storage space.

How can condo owners expect to get top dollar for a place which is all-electric (LPG not permitted) and have one and sometimes two power outlets in the kitchens? They need to get real if they want to attract good tenants and ask for a reasonable rent.

Air conditioners less than 20 years old is also a big plus.

My pet hate is a condo where the microwave is kept on top of the fridge. Boiling hot tom yum anyone!

Edited May 21, 2015 by masuk

[muffy]

_{97 repeats , buyer be aware .}

[shirtless]

I think you really need to buy well if you want to make money most condos sold are overpriced to begin with and the glut of unsold condos does not help.

[Heng]

Anything with a shelf life where at the end of said shelf life you own roughly a square meter of dirt (varies of course, could be more, or much less), has 'appreciation' set against it.

[Fairynuff]

expert opinions????? Haven't seen a post yet that's in any way realistic. My personal experience...bought and sold a number of condos. First one bought for 1.6m sold for 3.3m after 6 yrs. second one bought for 900,000 sold for 3.8m after 10 yrs. tell me that's a bad investment!! Tread carefully, but condos CAN be a good investment

[zaZa9]

^ And the contrary - condos near me sold new for 6 million 8 years ago , now selling for 3,8

One desperate investor sold 2 for 4 million

These are well built , though one pool has never worked AND theres a water leak somewhere forcing owners to truck in water ( for 6 years ! )

But this ones Achilles heel ( and there always seems to be an Achilles heel ) is that the landowner simply wants to own the Body Corp !

And the laws are so weak and unenforced here , that even though what she keeps attempting to do is against the law , she continues to get away with creating mayhem for those she sold to at 6 million when she did the development

Its a very poor investment for all those condo buyers

Im now waiting for somebody to clear fell the steep jungle behind it and see it awash with red mud and see the price of condos there halve again

[Globalist]

This kind of post will only attract "sour-grapes people", i.e. those who are unable to make successful property investments and therefore tell everybody it's a bad idea.

Then again, that may well have been the precise intention of the post.

Does art appreciate in value? Do shares appreciate in value?

Real investors know the answer; some do, others dont. Sound knowledge and experience makes it possible to make good investments over time. Oh, and money of course. :-P

Edited May 21, 2015 by Globalist

[CapeCobra]

I think you really need to buy well if you want to make money most condos sold are overpriced to begin with and the glut of unsold condos does not help.

There a many market factors involved. Due diligence will tell you which condo is overpriced in relation to other projects. At this stage, there seems to be a plethora of condos and houses. Competition is fierce. It is a buyer's market. Select a developer very carefully. What are their chances of survival?

My advice: Stay away from business you may not fully understand. Buy a shirt first.

[1FinickyOne]

Much of it will depend on the price of building materials - it seems they are always building new projects, to the extent of being overbuilt, and people will prefer a new build to a 2nd hand -

[BlueSkyCowboy]

First of all, one has to keep in mind that a foreigner has no rights in Thailand. The lawyers and courts are mostly crooked and prejudiced ( I am not talking about the two Obama's, but they would be a good example, about being crooked lawyers who lost their license).

A friend bought a conco in BKK for 15 Millions and it has been locked up in litigation for 6 yrs. He can not rent it out or live in it. A long, but a sad story

[Pinot]

Just as an aside here, I was trying to get a Visa for my wife to visit America. She flies up to Bangkok, gets a hotel room and goes to the embassy interview. First question: "Do you own property in Thailand?" No, my husband does not want to buy. Visa denied. I have to make a bad financial decision, buying a place here, in order for wife to visit America. Cheesh, screw em.

[smotherb]

Just as an aside here, I was trying to get a Visa for my wife to visit America. She flies up to Bangkok, gets a hotel room and goes to the embassy interview. First question: "Do you own property in Thailand?" No, my husband does not want to buy. Visa denied. I have to make a bad financial decision, buying a place here, in order for wife to visit America. Cheesh, screw em.

My son's ex-girlfriend just received her visa for visiting the States. She is single, 29 years old and quite attractive. However, she is also a university professor and has money as proven by a bank account in excess of B1M. She owns no property; in fact, she still lives with her parents.

This more or less confirms what I was told by a US embassy employee last year; namely, have a verifiable $10k per month of intended stay and show good reason why you will return to Thailand.

[dsbs1945]

Correct Cooked below, your certainly not an expert. Buying a condo and selling after 5 years for 100% profit. Your living in a dream world.

The toughest end of the property market to sell, is the apartment in the 3 to 7 yrs .range. I'm only talking apartments here.

Before you comment I run a Real Estate & Land development company in the Philippines. But I also live in Bangkok.

The market their is exactly the same as Thailand. No one likes to buy apartments in the 3 to 7 yrs range, they all want new.

I have 2 friends wanting to sell their apartments. One in Hua Hinn and one in Cham Am. they both own apartments in the 5/6 year old range.

One's been on the market for 18 months, the other just under year. There has only been one person come to view the apartment in Cham Am

and 3 in Hua Hinn. Meanwhile countless new buildings have been built around where they live. Most are already sold out.

The Cham Am people have dropped there price during that time by 3,000,000 Baht. Still no takers.

Thais do not like buying 2ND hand. It's mainly Farang's. Thais are suspicious people when it comes to buying 2ND hand properties.

The comments below of buy for 2 million and sell in 10 years and get your money back is closer to the mark.

Yes location makes a massive difference. Thong Lo for instance has shown buyers a profit, but no where near what you would think.

Also the comments about maintenance is very accurate. I'm amazed at the lack of attention to older buildings here.

There is a massive glut of 2nd hand apartments for sale in Bangkok. Owners realise that, and decide renting out is better for them.

[zig]

...

Many owners seem to think their would-be tenants live in a suitcase, judging by the small amount of storage space.

....

Indeed, when looking for a place to rent I have had to turn down many units just for this reason. Even many decently sized one- or two bedroom condos come with very little storage space. If I rent then I do not really want to invest in my own furniture and I do not want to live out of boxes.

[dotpoom]

I very recently sold a condo in an excellent location after 10 years owning it....I lost money (about 300,000 Bt.) on the sale price....but the rent I had received from time to time covered that. I consider myself very lucky to have been able to get out the way I did. Also If I calculated it Euro's I most lightly gained in the Sale price. When I bought it the rate was about 50 Baht for the Euro.

[newnative]

Over the years I have owned about 18 condos here and in the USA. Color me restless! I made money on all of them--some a lot, some just a little as I didn't hold them very long. It's always important to do your homework and take your time. Location is always paramount. Pretend you are a Pattaya agent and a buyer comes in and tell you he wants a condo with ocean view, walking distance to the beach, garage parking, nice pool and gym, built in the last 5 years and wants it now. Prefers Pattaya or Jomtien. There's a lot of building going on in Pattaya/Jomtien but not that many condos would fit the bill. Compare that to all the 'theme park' 8 story condos being built far from the ocean and some far from public transportation. By my count there are at least 15 of these huge developments either built, about done, are under construction, or soon to be. Apart from their initial appreciation from pre-construction pricing, I don't see these condos increasing much in value down the road--just too many look-alikes and nothing really to set yours apart. Recognize that there is a price threshold for many condos that contain similar units. For example, the View Talay 5 46-48sqm studio condos have I think a maximum price of around 3.5MB at this time for foreign name. Probably some exceptions to this will be gleefully pointed out to me, but most are around that price or less. When buying, have that maximum current price in mind when you are thinking about any profit to be made--and remember the realtor fees will take 5% of your selling price if you use a realtor. You can make a little money on re-sales but you need to get a real bargain to start with. You might make more money buying a pre-sale condo and riding the price up as it gets built and the prices increase but there are risks. Choose a good builder with a track record and a good location to start with.

If you just live here short-term and don't mind living in someone else's condo, renting is a good option. You can try new places each time you visit. For me, I live here year-round, love living in my own place with my own furniture and art, and like to do fix-ups so I prefer to own. I try to choose wisely but I know going in that my condo may or may not appreciate in value and I accept that. But, I think a condo on a high floor with a killer ocean view, in a nice building, walking distance to the beach, on public transportation, built by a reputable builder, will hopefully at least hold its value. But, hey, when they carry me out feet first what'll I care at that point?

[bazza40]

You would have to be looking at a ten year time frame. Condos at Riverside in Chiang Mai have appreciated about 50% over 6 years. That's an old condo, but built solidly because it was originally intended to be a private hospital. There's a lot of newer condos around which will be cracking up and falling apart in ten years, because they are built with speed and cost in mind. The developers just don't care once they've sold the last unit.

The other problem is pricing - anybody who pays the asking price on a condo apartment is asking to be scammed. Some of the overpriced units have been sitting in the market for years, waiting for a sucker.

I'm firmly on the side of renting. Legal issues,maintenance, bad neighbours, difficulties with resale, compulsory levies etc. etc. don't apply when a renter can simply walk out.

[asdecas]

expert opinions????? Haven't seen a post yet that's in any way realistic. My personal experience...bought and sold a number of condos. First one bought for 1.6m sold for 3.3m after 6 yrs. second one bought for 900,000 sold for 3.8m after 10 yrs. tell me that's a bad investment!! Tread carefully, but condos CAN be a good investment

There are plenty of anecdotal examples on both sides of the fence, just as there are buyers with good judgement and those with bad.

The OP is asking for a generalisation. As with all investments, there are risk/reward factors to be weighed up. The problem is that most people are lazy or ignorant, they do not do thorough due diligence and end up paying the price.

The topic is complex, encompassing such factors as timing in the business cycle, location, exchange risk, political risk, planning law and changes, title deeds, management, liquidity of the market - to name but some.

Edited May 21, 2015 by asdecas

[HerbalEd]

So the article says all condos NEVER appreciate in value. Does that mean that a condo sold twenty years ago has never gone up in price? How absurd ... and pretty silly to believe such.

Maybe I have the only condo in Thailand that has appreciated in value since I purchased it 12 years ago??

[Mudcrab]

So the article says all condos NEVER appreciate in value. Does that mean that a condo sold twenty years ago has never gone up in price? How absurd ... and pretty silly to believe such.

Maybe I have the only condo in Thailand that has appreciated in value since I purchased it 12 years ago??

Price and value aren't the same thing.

The price of the condo may have doubled in 12 years. The price of other similar condos may have doubled also, so the value has not increased.

If you can sell your condo and use that money to buy another one that is much better then the value has appreciated. If you can only buy something similar then the value hasn't changed.

Governments in the west love this as they can tax you on the perceived increase in value when in fact it is only the potential selling price that has increased.

I know people who have been forced to sell their house because of the tax. They bought cheaply in an out of the way place. Then the yuppies turned up...prices went up..the Governments valuation went up... tax went up and they couldn't afford to live there anymore. Fred was 80, his wife 70. Absolutely criminal.

[masuk]

Not wanting to get off-topic, but I'm in a condo in Huay Keaw Rd, and from my eagle's nest I can see 8 condos within 500 metres going up.

Isn't anyone worried about over-supply, or is an invasion from the South expected?

This must affect prices.

[mrfaroukh]

As you notice there is not many Russian coming to Pattaya any more. They were the one nation increased the price of property in Pattaya and may be other places as well. I was in an expat club and I learned that they were around 45000 unsold condo and they were building another 300 000 more. So what to expect? About 3 months back in the first soi when we turn at the red light to Pratumnak road there was a big sign saying Offer for 2 months only selling condo half the price. Actual price 85000 Baht per sqm and they were selling it for 45000 Sqm.

My advise is if you want to live in Thailand and you can not invest your money and get at least 7% benefit then you should buy your condo not for appreciation but for living comfortably and not paying rent. But if you can make money by investing your money then rent a place and pay the rent from your investment.