Will Condo Prices In Bangkok Go Up Or Down?

[westcoastnative]

Opps, my mistake. The poster's doesn't have first have knowledge, rather he's "read" something.

Too, the "we" is ambiguous..."we" as in "the SF area", or "we" as in "the Bangkok area". Perhaps he means...heck, who cares.

Actually, I do have first hand knowledge. I live in the Bay Area and I have for sometime. The reason prices in the SF are so inflated is due to the RE boom we have had in the U.S. due to artifically low interest rates and speculative buying. Another reason San Francisco is so expensive is that it is a truely beautiful city and it's land locked. But the current prices are crazy and people are finally realizing it. But the boom is over and prices are starting to fall and will continue to fall until buyers start to get back in the market.

There are also alot of people who bought their homes with adjustable rate mortgages and when these loans adjust back current rates their payments will double and tripple. Many people will be forced to sell and there won't be any buyers to take the house off their hands. Most of these buyer have no equity in there homes and many will send their keys back to the lender and just walk away.

To the guy that said SF housing is high because salaries are high out here, I disagree. Salaries are high because housing and the cost of living is so high out here that no one will relocate to the SF Bay Area unless they get paid very well. Many companies have realized they can move their offices to other states and get a comparably educated workforce, pay them less and become more profitable.

[DCC]

That was me that mentioned salaries in SF and it is, clearly, a reason people pay high prices there - supply and demand, and demand has to be funded. You are correct that cheap finance has helped fuel price increases (that's a nationwide issue) and that, because of numerous reasons, prices are starting to dip. To say, however, that incomes don't impact home prices is to ignore the fact that housing costs in high income areas are equally high - NYC, Chicago, DC, LA, SF - need I go on? In a strong or soft market, prices have always been higher in these makets.

But the isuue of finaning the condo and occupying it is a major factor - you leverage the purchase and you provide yourself with shelter. In fact loans for non-owner occupied are usually (not sure about LOS) more expensive or unavailable. And to pay cash for a non-liquid investment with operating costs, etc? You should be able to make 10% with a good broker in the west and cash out on demand.

I agree with the comment about land, not improvements, appreciating in the east - again, be careful.

[backflip]

"Actually, I do have first hand knowledge. I live in the Bay Area and I have for sometime. "

So did I, from 1977-2004. You do not have first hand knowledge. You're posting information garnered from other sources. You're roasting old chestnuts, and they are stale.

First hand knowledge would be: "I put my home up for sale last year, and got an offer for X. Unfortunatley, I had to pull my home off the market because of my job. One year later, when I tried to sell my home, my best offer was 30% less!"

"Another reason San Francisco is so expensive is that it is a truely beautiful city and it's land locked."

That is ridiculous! Are you sure you live in San Francisco? The city is not "land-locked...it sits on the SF bay, and the Pacific ocean.

[think_too_mut]

I don't care about SF.

In BKK, my take would be - the recent events and the new visa rules may shrink the market. Perhaps drive some real estate agents to the wall.

But Thais won't lessen their prices. If some of the byers/renters have left, those who are still around would have to bear the cost.

No price reduction unless the Bank of Thailand does something about interest rates.

[ThaiPauly]

As any Realtor will tell you, the main selling point of any property, be it Condo or house is Location, Location, Location.

if you are close the the sky train or underground the more chance your property has of realising a profitable sale.

Bear in mind...its not just us farangs that buy property..The Nippons buy a lot too.. The Condo I am buying is predominantly Nippon in terms of who has bought there.

They demand very high standards...so I have jumped on their gravy train.

I intend to sell my Condo anyway before completion, with the aim of making a profit....watch this space.

I will telll you honestly if I achieve my goal or not

TP

And they are famous for massively overpaying for everything. What I'd do if I were you is grab your deposit back but they won't give it back. They're blowing smoke up your ass as these developers are so famous for. I've had my dealing with them and they tell you anything you want to hear. I don't trust them as far as I can throw one of their cranes. Take your deposit back and report back. You can't possibly fear that you won't be able to get another condo for such a special deal, LOL. That's gotta be the only one like it

Only time will tell, but I will hold my hands up or bow down before you should I be proven wrong,

My world won't come to an end if it does not pan out for me luckily enough

[merlion]

As any Realtor will tell you, the main selling point of any property, be it Condo or house is Location, Location, Location.

if you are close the the sky train or underground the more chance your property has of realising a profitable sale.

Bear in mind...its not just us farangs that buy property..The Nippons buy a lot too.. The Condo I am buying is predominantly Nippon in terms of who has bought there.

They demand very high standards...so I have jumped on their gravy train.

I intend to sell my Condo anyway before completion, with the aim of making a profit....watch this space.

I will telll you honestly if I achieve my goal or not

Thailand isn't coming to an end guys, in fact, if properly administered by the new government, it could actually flourish. So goes for the real estate market.

TP

And they are famous for massively overpaying for everything. What I'd do if I were you is grab your deposit back but they won't give it back. They're blowing smoke up your ass as these developers are so famous for. I've had my dealing with them and they tell you anything you want to hear. I don't trust them as far as I can throw one of their cranes. Take your deposit back and report back. You can't possibly fear that you won't be able to get another condo for such a special deal, LOL. That's gotta be the only one like it

Only time will tell, but I will hold my hands up or bow down before you should I be proven wrong,

My world won't come to an end if it does not pan out for me luckily enough

[DCC]

Land-locked? I think West Coast must have meant water-locked!!!! It does only expand in one dierection and that makes for a very concentrated downtown market, but, regardless, it's funny how downtown areas stay downtown, ha.

[Thai_Help]

I believe the Prices of Condo's Will Increase, I have been studying alot about this myself for the past 3 months and for the past 3 years Property especially in Sukhumvit Bangkok Area have trippled in price in 3 years. If anyone is interested in finding out the facts, i found a very useful article they have on there website here;

The demand for condominiums either for investment or own use continued to increase in the Bangkok CBD and peripheral areas such as Ratchadapisek Road, Paholyothin and outer Sukhumvit Road.

As a result of increasing demand, changing lifestyles among the new generation, rising oil prices and construction costs, the prices of condominiums have been rapidly increasing in Bangkok by 20-50% over the past three years.

The supply of condominiums on the market totaled 43,940 units in the first quarter of 2006. The number of freehold condominiums increased by 1,062 units with eight new condominium projects completed said the survey. Leasehold totals remained the same as in fourth quarter 2005.

The vacancy rate increased slightly among both grade A and grade B condominiums by 2.4% and 1.3% respectively, with the occupancy rate declining slightly from 90.5% in fourth quarter 2005 to 87.9% in this quarter. This was due to the number of new units completed where owners were still decorating units.

Eight freehold projects were completed during the quarter. These included three low-rise projects developed by Sansiri: Sathorn Plus by the Garden on the main Yenakard Road, with 70 units; Sathorn Plus on the Pond in the same area, with 77 units; and The Lanai Sathorn on Yenakard Road Soi II, with 34 units.

Other developments included: Silom Grand Terrace on Soi Saladaeng, developed by Metro Star Property with 240 units; Supalai Oriental Place on Suan Plu, being developed by Supalai with 300 units; and another two projects from Noble Development: Noble 09 Ruamrudee on Ruamrudee Road with 39 units, and Noble Ora on Sukhumvit Soi 55 with 223 units.

The demand for condominiums either for investment or own use continued to increase in the Bangkok CBD and peripheral areas such as Ratchadapisek Road, Paholyothin and outer Sukhumvit Road.

As a result of increasing demand, changing lifestyles among the new generation, rising oil prices and construction costs, the prices of condominiums have been rapidly increasing in Bangkok by 20-50% over the past three years.

The supply of condominiums on the market totaled 43,940 units in the first quarter of 2006. The number of freehold condominiums increased by 1,062 units with eight new condominium projects completed said the survey. Leasehold totals remained the same as in fourth quarter 2005.

The vacancy rate increased slightly among both grade A and grade B condominiums by 2.4% and 1.3% respectively, with the occupancy rate declining slightly from 90.5% in fourth quarter 2005 to 87.9% in this quarter. This was due to the number of new units completed where owners were still decorating units.

Eight freehold projects were completed during the quarter. These included three low-rise projects developed by Sansiri: Sathorn Plus by the Garden on the main Yenakard Road, with 70 units; Sathorn Plus on the Pond in the same area, with 77 units; and The Lanai Sathorn on Yenakard Road Soi II, with 34 units.

Other developments included: Silom Grand Terrace on Soi Saladaeng, developed by Metro Star Property with 240 units; Supalai Oriental Place on Suan Plu, being developed by Supalai with 300 units; and another two projects from Noble Development: Noble 09 Ruamrudee on Ruamrudee Road with 39 units, and Noble Ora on Sukhumvit Soi 55 with 223 units.

Within the next three years, future supply will consist of 75 projects worth 15,400 units. Eight new projects, with 1,751 units, were launched in this quarter; Noble Ambience Sarasin, a low-rise building on Sarasin Road; Noble Ambience Ruamrudee, a high-rise building on Ruamrudee Soi III; VOGUE@Siam, a high-rise building on Petchaburi Road; One Siam, a low-rise building on Rama I; The Clover Thonglor, consisting of five low-rise buildings on Sukhumvit Soi 55/18; Emporio Place, two high-rise condominiums plus one home/office building on Sukhumvit Soi 24; One Thonglor Station, a low-rise building on Sukhumvit Soi 40; and One Sukhumvit 67, a low-rise building on Sukhumvit Soi 67.

The number of occupied freehold condominium units totaled 36,833 units (87.9% of the condominium stock), an increase of 352 units from the previous quarter reported the survey. The number of occupied freehold condominiums increased by approximately 16,399 units, from 20,921 recorded in the previous quarter.

Over the past five years, the number of occupied freehold condominiums increased by approximately 16,399 units to 36,883 units at the end of first quarter 2006, a rise of approximately 76.3%.

The average price for grade A completed condominiums increased in the first quarter of 2006 in all areas, but especially in Sukhumvit. The Sukhumvit area had an average price increase of 14% while Silom/Sathorn and Central Lumpini increased by 5%.

also this is there website if anyone would like to know more

http://www.condobangkok.com

Edited October 1, 2006 by Thai_Help

[buddhafly]

to answer the original question of this thread, i can tell you, that short of another economic crash (which has no reason to happen now), prices absolutely will not go down.

you must understand that when thais set a price for land or property, they envision what they want for it, not neccesarily its acurate market value, and then they will wait for the dream to come true.

this is not a carved elephant in a night market you are negotiating for. all new rules apply.

[backflip]

"Property especially in Sukhumvit Bangkok Area have trippled in price in 3 years."

Thai Help, the joke forum is elsewhere. Thanks for the laugh.

[think_too_mut]

"Property especially in Sukhumvit Bangkok Area have trippled in price in 3 years."

Thai Help, the joke forum is elsewhere. Thanks for the laugh.

He might be right - for the wrong reason.

The prices may have tripled but it's not that a unit sold for 1 mil 3 yrs ago is now fetching 3 mil. It's probably where they were and very likely the units are hardly if at all sellable.

The prices appear to be a snapshot of the current setup and properties live with them for many years or until they start dropping.

Have the prices of units across the river tripled or doubled over last 3 years? I am seeing them on sale for less or same money as when they were built a few years back.

What has happened, IMO, is that better quality (even luxury) places are being built that would have been more expensive had they been built 3 years ago anyway. Then, housing boom in US and UK has also contributed - what gives you a garage there can buy a reasonable brand new place in BKK.

Furthermore, contrary to what Thai Help has found, yesterday I visited a place that was on sale off the plan in May 2003. Units are on sale again - for that exact money or even less. Speculative investors are findng it hard to exact what's due upon completion and are walking away. The building is right on one of BTS stations on Sukhumvit.

If there are some who think that investing in (residential) BKK property would give them what is possible in New York, Sydney or other places in the West, they are dreaming, IMO. Be happy if you don't have to abandon the property later. Or list it with agencies who already have tens of thousands of unsold properties.

[backflip]

"He might be right...I am seeing them on sale for less or same money as when they were built a few years back."

According to you, the price might have increased, stayed the same, or decreased. I cannot argue with that.

[teej]

referring to my interest rate post before... I just checked with SCB bank today and the MLR is 8.25% !!!!!!! +.75 = loans at 9% pa!!!!

re: the back and forth arguments re prices, it's difficult to really judge when you just say "sukhumvit"... sukhumvit has many different sois wherein prices vary greatly... eg. 55 (Thonglor) and 52 (On nut, i think) would fetch totally different prices, Thonglor probably more than double.

[englishoak]

I expect the prices will stay about the same. IMHO they should drop some as they are mostly overpriced. Thais do love "new" not second hand so mabe the madness will continue.

A lot of buildings I see here are very very cheaply done and will not last a decade without serious problems let alone a lifetime. The saying of you get what you pay for is quite true normally, the only problem is that some of the buildings I am talking about are in the 7M + and not the cheaper 2-3M range as you would expect. Any cheaper than 2M is a bargain and you should not complain about anything much.

My home in the UK is already 80 years old and far far better built than most places I see in Thailand and for it's age is still in excellent condition. It's price although a lot higher is also far better value over time. That said i'd only want 40 years or so out of a place in LOS so i'd not throw too much at it anyway. 2-3M would be fine. Much more and I could'nt justify throwing that much away on poor construction that will be lucky to last 20 years let alone 40.

Just be real careful if you buy or construct and remember the labour may be cheap but often it's the materials that people/firms try to save on. I seriously would not expect any property built or purchased In Thailand to last like back home.

Invest in property ? No I think Elvis has left the building on that one this time around. I doubt that the lovely condo you buy now will be in any good shape in 10 years when the next boom arrives. And make no mistake the present boom IS over.

Thaipauly I hope you pass on your condo ASAP and get a good price for it. I would say we're about a year away from a serious global property price readjustment.

[pap]

I believe the Prices of Condo's Will Increase, I have been studying alot about this myself for the past 3 months and for the past 3 years Property especially in Sukhumvit Bangkok Area have trippled in price in 3 years. If anyone is interested in finding out the facts, i found a very useful article they have on there website here;

The demand for condominiums either for investment or own use continued to increase in the Bangkok CBD and peripheral areas such as Ratchadapisek Road, Paholyothin and outer Sukhumvit Road.

As a result of increasing demand, changing lifestyles among the new generation, rising oil prices and construction costs, the prices of condominiums have been rapidly increasing in Bangkok by 20-50% over the past three years.

The supply of condominiums on the market totaled 43,940 units in the first quarter of 2006. The number of freehold condominiums increased by 1,062 units with eight new condominium projects completed said the survey. Leasehold totals remained the same as in fourth quarter 2005.

The vacancy rate increased slightly among both grade A and grade B condominiums by 2.4% and 1.3% respectively, with the occupancy rate declining slightly from 90.5% in fourth quarter 2005 to 87.9% in this quarter. This was due to the number of new units completed where owners were still decorating units.

Eight freehold projects were completed during the quarter. These included three low-rise projects developed by Sansiri: Sathorn Plus by the Garden on the main Yenakard Road, with 70 units; Sathorn Plus on the Pond in the same area, with 77 units; and The Lanai Sathorn on Yenakard Road Soi II, with 34 units.

Other developments included: Silom Grand Terrace on Soi Saladaeng, developed by Metro Star Property with 240 units; Supalai Oriental Place on Suan Plu, being developed by Supalai with 300 units; and another two projects from Noble Development: Noble 09 Ruamrudee on Ruamrudee Road with 39 units, and Noble Ora on Sukhumvit Soi 55 with 223 units.

The demand for condominiums either for investment or own use continued to increase in the Bangkok CBD and peripheral areas such as Ratchadapisek Road, Paholyothin and outer Sukhumvit Road.

As a result of increasing demand, changing lifestyles among the new generation, rising oil prices and construction costs, the prices of condominiums have been rapidly increasing in Bangkok by 20-50% over the past three years.

The supply of condominiums on the market totaled 43,940 units in the first quarter of 2006. The number of freehold condominiums increased by 1,062 units with eight new condominium projects completed said the survey. Leasehold totals remained the same as in fourth quarter 2005.

The vacancy rate increased slightly among both grade A and grade B condominiums by 2.4% and 1.3% respectively, with the occupancy rate declining slightly from 90.5% in fourth quarter 2005 to 87.9% in this quarter. This was due to the number of new units completed where owners were still decorating units.

Eight freehold projects were completed during the quarter. These included three low-rise projects developed by Sansiri: Sathorn Plus by the Garden on the main Yenakard Road, with 70 units; Sathorn Plus on the Pond in the same area, with 77 units; and The Lanai Sathorn on Yenakard Road Soi II, with 34 units.

Other developments included: Silom Grand Terrace on Soi Saladaeng, developed by Metro Star Property with 240 units; Supalai Oriental Place on Suan Plu, being developed by Supalai with 300 units; and another two projects from Noble Development: Noble 09 Ruamrudee on Ruamrudee Road with 39 units, and Noble Ora on Sukhumvit Soi 55 with 223 units.

Within the next three years, future supply will consist of 75 projects worth 15,400 units. Eight new projects, with 1,751 units, were launched in this quarter; Noble Ambience Sarasin, a low-rise building on Sarasin Road; Noble Ambience Ruamrudee, a high-rise building on Ruamrudee Soi III; VOGUE@Siam, a high-rise building on Petchaburi Road; One Siam, a low-rise building on Rama I; The Clover Thonglor, consisting of five low-rise buildings on Sukhumvit Soi 55/18; Emporio Place, two high-rise condominiums plus one home/office building on Sukhumvit Soi 24; One Thonglor Station, a low-rise building on Sukhumvit Soi 40; and One Sukhumvit 67, a low-rise building on Sukhumvit Soi 67.

The number of occupied freehold condominium units totaled 36,833 units (87.9% of the condominium stock), an increase of 352 units from the previous quarter reported the survey. The number of occupied freehold condominiums increased by approximately 16,399 units, from 20,921 recorded in the previous quarter.

Over the past five years, the number of occupied freehold condominiums increased by approximately 16,399 units to 36,883 units at the end of first quarter 2006, a rise of approximately 76.3%.

The average price for grade A completed condominiums increased in the first quarter of 2006 in all areas, but especially in Sukhumvit. The Sukhumvit area had an average price increase of 14% while Silom/Sathorn and Central Lumpini increased by 5%.

also this is there website if anyone would like to know more

http://www.condobangkok.com

I don't quit agree. I think long term it will go up but short term as in 5 years and under there will be a decrease in values. It will be minimal as long as the Financial markets are ok simply because Thais ....and everyone else are loathe to sell at a loss. Also global property markets are currently in a stagnant mode except in the US where they are starting a downward Trend. This is not true of all areas or nations. Just most. Business tenants are a lag indicator which is why slight increases are still being seen in this area.

Also a large number of condo's are coming on the market as well as a large number of corporate rentals that will compete with those condos for rental.

There is also the fact that in many foreign markets Condos are competed for by all groups. Thais current preference seems to be a house over a condo. That removes one of the drivers for price increases along with a multitude of obstacles to foreign ownership of condos. (most of which are not insurmountable) Since Thais are not as big a part of the equation for markets to continue to increase you would need a much greater percentage of foreigners coming in to absorb that. (with current sentiment this appears unlikely.)

The only places today (other than Phuket over the last couple of years) that you see this kind of growth for competitions of easily owned property is India. I am not Knocking India but my preference is without a doubt Thailand. I just do not expect the increases investors would get there compared to here.

[thaihome]

...There is also the fact that in many foreign markets Condos are competed for by all groups. Thais current preference seems to be a house over a condo. That removes one of the drivers for price increases along with a multitude of obstacles to foreign ownership of condos. (most of which are not insurmountable) Since Thais are not as big a part of the equation for markets to continue to increase you would need a much greater percentage of foreigners coming in to absorb that. (with current sentiment this appears unlikely.)

...

Interesting that you don't see Thais as a driver for condo ownership in the capital of their own country. I can only comment on one of the recently opened developments listed in the earlier very good analysis, which is it is 100% sold out, with occupancy at about 50% now about 4 months after opening and out of the 150 or so occupied units there are 4 farangs (not counting me, as it is in wife's name).

We are having our first general meeting shortly, will be interesting to see the demographics of the owners.

TH

[backflip]

"Interesting that you don't see Thais as a driver for condo ownership in the capital of their own country. I can only comment on one of the recently opened developments listed in the earlier very good analysis, which is it is 100% sold out..."

I don't understand what you are trying to say. Since the building is 100% sold out, who bought the condos - at least 51% are owned by Thais.

[pap]

...There is also the fact that in many foreign markets Condos are competed for by all groups. Thais current preference seems to be a house over a condo. That removes one of the drivers for price increases along with a multitude of obstacles to foreign ownership of condos. (most of which are not insurmountable) Since Thais are not as big a part of the equation for markets to continue to increase you would need a much greater percentage of foreigners coming in to absorb that. (with current sentiment this appears unlikely.)

...

Interesting that you don't see Thais as a driver for condo ownership in the capital of their own country. I can only comment on one of the recently opened developments listed in the earlier very good analysis, which is it is 100% sold out, with occupancy at about 50% now about 4 months after opening and out of the 150 or so occupied units there are 4 farangs (not counting me, as it is in wife's name).

We are having our first general meeting shortly, will be interesting to see the demographics of the owners.

TH

I do see Thais as a driver for the condo prices. This was not quit properly stated. "REMOVE one of the drivers" Should have been "REDUCE one of the drivers" I see foreigners, not just Farangs (Japanese, Chinese) as competition that will drive the prices higher down the road. This is based on the assumption that Thais will not be changing their attitudes on condo ownership short term. They prefer homes that are new. This does not mean they do not want to own them. It simply means most Thais would prefer a new house.

Foreigners must compete for the 49% since ownership of other property types can be difficult at best. That 49% will drive prices more than the other 51% because it is by its nature a more competitive section. Once exceeding 51% foriegn variables do not come into play. Thais can choose condos or homes. Money goes further in buying a home. Were this wide open and everyone was competing for all of the same property types then you would not need to segment this out. You may notice this in the disconnect between a home price and a condo price. The differential is much greater than in countries where either type of property can be owned. You can get pretty nice houses around the same range as condo's. Thais also will choose a wider area to own all property types.

If you reduce a segment of buyers, "foreigners", you shrink the pool of overall competition. The prices will go down with supply levels going up.

I am a condo owner. I hope I am wrong and the prices continue to go up.

I would be curious as to if you have bought your condo in what would be considered a foreigner area or a Thai area. There are some pockets that many Foreigners limit themselves to when looking. Longer term expats range of areas are generally much larger.

If this all seems like Gibberish I am not surprised because I am only clicking on about 1 cylinder today.

Cheers.

[think_too_mut]

"Interesting that you don't see Thais as a driver for condo ownership in the capital of their own country. I can only comment on one of the recently opened developments listed in the earlier very good analysis, which is it is 100% sold out..."

I don't understand what you are trying to say. Since the building is 100% sold out, who bought the condos - at least 51% are owned by Thais.

384 condos in my building, 20 farang owned. So, the "at least 51%" Thai ownership has been far exceeded, making foreign ownership almost irelevant for anything.

[think_too_mut]

"He might be right...I am seeing them on sale for less or same money as when they were built a few years back."

According to you, the price might have increased, stayed the same, or decreased. I cannot argue with that.

You might have missed the point I was trying to make: "The prices appear to be a snapshot of the current setup/quality and properties live with them for many years or until they start dropping.".

A project, started 3 years ago was, then, a bit expensive. Their prices have not moved up since.

Another project, nearby, a high quality one, far superior to the first one, came out to market a year later with the prices double or even triple of the first one. Their prices are still where they were 2 years ago - check Nusasiri project at Ekkamai, for example.

Edited October 7, 2006 by think_too_mut

[ding]

That is ridiculous! Are you sure you live in San Francisco? The city is not "land-locked...it sits on the SF bay, and the Pacific ocean.

He is saying that the city can't sprawl out, it is limited by bodies of water.

Anyway, George's recent post citing what I was theorizing needs debunking by those 38% here thinking prices wll drop. I include BKK because a nation's prime city has the highest prices. Coldwel Banker Richard Ellis has it covered like a blanket it seems.

<A real estate expert's reaction to the new military government and future prospects for owning property in the land of smiles.>

LINK to thread aticle

(edited because I am a spelltard)

Edited October 16, 2006 by ding

[dave111223]

This poll translated:

29 - Rent property in BKK

21 - Own a small condo in BKK

19 - Own a medium size condo in BKK

3 - Own a large condo in BKK

5 - Are idiots

Threads like this seem are so pointless, as everyones 'advise' is just totally biased by their current situation.

[samtam]

Surely this debate is affected by supply and demand. There is no worthwhile analysis of this scenario by any of the brokers in town, depite their published research which suggests that they have done their homework thoroughly. My grade A building is 12 years old. It is excellently well-maintained and managed. It is well-located in CBD. It has 20% vacancy. It has 15% of units for rent. I bet this is not an unusual profile. Quite simply: supply is far outstripping demand. Whether that supply is older condos, or newly built and whether these sectors have specific impacts is a debateable topic. But I suspect the Thai way of buying and never selling their properties completely distorts the demand supply chain. But it underlies what I believe....there is too much supply.

[thedude]

Surely this debate is affected by supply and demand. There is no worthwhile analysis of this scenario by any of the brokers in town, depite their published research which suggests that they have done their homework thoroughly. My grade A building is 12 years old. It is excellently well-maintained and managed. It is well-located in CBD. It has 20% vacancy. It has 15% of units for rent. I bet this is not an unusual profile. Quite simply: supply is far outstripping demand. Whether that supply is older condos, or newly built and whether these sectors have specific impacts is a debateable topic. But I suspect the Thai way of buying and never selling their properties completely distorts the demand supply chain. But it underlies what I believe....there is too much supply.

you shouldn't confuse occupancy with supply although they are related. 80% occupancy for a 12 year old building actually sounds pretty good. given that many thai buyers just hold on to their condos like trophies, i'd say the acceptable rate for full occupancy in this city is probably around 80-85%. we have something like 50,000 net growth pa in expat visa issues, given that a fair proportion of that probably translates to bangkok city rental demand, and that downtown net annual supply is only around 8,000 units or so, i'd say occupancy levels in bangkok should continue to remain strong in the coming few years.

[Old Man River]

Surely this debate is affected by supply and demand. There is no worthwhile analysis of this scenario by any of the brokers in town, depite their published research which suggests that they have done their homework thoroughly. My grade A building is 12 years old. It is excellently well-maintained and managed. It is well-located in CBD. It has 20% vacancy. It has 15% of units for rent. I bet this is not an unusual profile. Quite simply: supply is far outstripping demand. Whether that supply is older condos, or newly built and whether these sectors have specific impacts is a debateable topic. But I suspect the Thai way of buying and never selling their properties completely distorts the demand supply chain. But it underlies what I believe....there is too much supply.

you shouldn't confuse occupancy with supply although they are related. 80% occupancy for a 12 year old building actually sounds pretty good. given that many thai buyers just hold on to their condos like trophies, i'd say the acceptable rate for full occupancy in this city is probably around 80-85%. we have something like 50,000 net growth pa in expat visa issues, given that a fair proportion of that probably translates to bangkok city rental demand, and that downtown net annual supply is only around 8,000 units or so, i'd say occupancy levels in bangkok should continue to remain strong in the coming few years.

The Dude, does the 8,000 units or so of net annual supply take into account the large amount of product coming on the market next year? I hope so, as I have bought one of these units. While not a Thai, the wife is, so I am sure we will go into the group that holds on to it like a trophy.

[thedude]

Surely this debate is affected by supply and demand. There is no worthwhile analysis of this scenario by any of the brokers in town, depite their published research which suggests that they have done their homework thoroughly. My grade A building is 12 years old. It is excellently well-maintained and managed. It is well-located in CBD. It has 20% vacancy. It has 15% of units for rent. I bet this is not an unusual profile. Quite simply: supply is far outstripping demand. Whether that supply is older condos, or newly built and whether these sectors have specific impacts is a debateable topic. But I suspect the Thai way of buying and never selling their properties completely distorts the demand supply chain. But it underlies what I believe....there is too much supply.

you shouldn't confuse occupancy with supply although they are related. 80% occupancy for a 12 year old building actually sounds pretty good. given that many thai buyers just hold on to their condos like trophies, i'd say the acceptable rate for full occupancy in this city is probably around 80-85%. we have something like 50,000 net growth pa in expat visa issues, given that a fair proportion of that probably translates to bangkok city rental demand, and that downtown net annual supply is only around 8,000 units or so, i'd say occupancy levels in bangkok should continue to remain strong in the coming few years.

The Dude, does the 8,000 units or so of net annual supply take into account the large amount of product coming on the market next year? I hope so, as I have bought one of these units. While not a Thai, the wife is, so I am sure we will go into the group that holds on to it like a trophy.

by net annual supply i actually mean physically completed units added to the total condo stock each year. actually checking back at CBRE market stats the number is closer to 6,000 and not 8,000, sorry. according to the same source, there are about 17,000 units from 81 projects representing future supply still at various stages of development in the city. these units should all be added to the stock of completed supply over the next 3 years (up to 2009), which means an average of about 6,000 plus units per year in the near future too. downtown condo occupancy is actually averaging at 87.6%, so its actually quite healthy and reflective of occupancy demand from the net annual expat arrivals i was mentioning before.

the level of occupancy in the city is an important determinant on whether the upcoming supply is sustainable or not, because rental demand drives condo purchases to a certain extent. other factors driving demand include the prevailing interest rates which at the moment looks to be set for some softening and hence also boding well for near term demand. foreign demand is also influenced by the relative yields and capital values in regional markets, so the picture is much more complicated than most people think.

there is a tendency for many to be sceptical about the thai market, not least because there are some dubious characters out there talking up the market. but the fundamentals speak for themselves, numbers dont lie. i'm not saying things are terribly rosy, but facts support a continued growth picture going forward for the next few years. i don't think prices will double in the next 3 years as they have in the past 3 years, but 10-20% price upside is not an unrealistic assumption.

[Old Man River]

Surely this debate is affected by supply and demand. There is no worthwhile analysis of this scenario by any of the brokers in town, depite their published research which suggests that they have done their homework thoroughly. My grade A building is 12 years old. It is excellently well-maintained and managed. It is well-located in CBD. It has 20% vacancy. It has 15% of units for rent. I bet this is not an unusual profile. Quite simply: supply is far outstripping demand. Whether that supply is older condos, or newly built and whether these sectors have specific impacts is a debateable topic. But I suspect the Thai way of buying and never selling their properties completely distorts the demand supply chain. But it underlies what I believe....there is too much supply.

you shouldn't confuse occupancy with supply although they are related. 80% occupancy for a 12 year old building actually sounds pretty good. given that many thai buyers just hold on to their condos like trophies, i'd say the acceptable rate for full occupancy in this city is probably around 80-85%. we have something like 50,000 net growth pa in expat visa issues, given that a fair proportion of that probably translates to bangkok city rental demand, and that downtown net annual supply is only around 8,000 units or so, i'd say occupancy levels in bangkok should continue to remain strong in the coming few years.

The Dude, does the 8,000 units or so of net annual supply take into account the large amount of product coming on the market next year? I hope so, as I have bought one of these units. While not a Thai, the wife is, so I am sure we will go into the group that holds on to it like a trophy.

by net annual supply i actually mean physically completed units added to the total condo stock each year. actually checking back at CBRE market stats the number is closer to 6,000 and not 8,000, sorry. according to the same source, there are about 17,000 units from 81 projects representing future supply still at various stages of development in the city. these units should all be added to the stock of completed supply over the next 3 years (up to 2009), which means an average of about 6,000 plus units per year in the near future too. downtown condo occupancy is actually averaging at 87.6%, so its actually quite healthy and reflective of occupancy demand from the net annual expat arrivals i was mentioning before.

the level of occupancy in the city is an important determinant on whether the upcoming supply is sustainable or not, because rental demand drives condo purchases to a certain extent. other factors driving demand include the prevailing interest rates which at the moment looks to be set for some softening and hence also boding well for near term demand. foreign demand is also influenced by the relative yields and capital values in regional markets, so the picture is much more complicated than most people think.

there is a tendency for many to be sceptical about the thai market, not least because there are some dubious characters out there talking up the market. but the fundamentals speak for themselves, numbers dont lie. i'm not saying things are terribly rosy, but facts support a continued growth picture going forward for the next few years. i don't think prices will double in the next 3 years as they have in the past 3 years, but 10-20% price upside is not an unrealistic assumption.

Thanks for this analysis. It was what I wanted to hear. Hopefully the Thai government does not end up completely alienating the Singaporeans, as I know they (Capital Land) are a big investor in Bangkok.

[merlion]

Surely this debate is affected by supply and demand. There is no worthwhile analysis of this scenario by any of the brokers in town, depite their published research which suggests that they have done their homework thoroughly. My grade A building is 12 years old. It is excellently well-maintained and managed. It is well-located in CBD. It has 20% vacancy. It has 15% of units for rent. I bet this is not an unusual profile. Quite simply: supply is far outstripping demand. Whether that supply is older condos, or newly built and whether these sectors have specific impacts is a debateable topic. But I suspect the Thai way of buying and never selling their properties completely distorts the demand supply chain. But it underlies what I believe....there is too much supply.

you shouldn't confuse occupancy with supply although they are related. 80% occupancy for a 12 year old building actually sounds pretty good. given that many thai buyers just hold on to their condos like trophies, i'd say the acceptable rate for full occupancy in this city is probably around 80-85%. we have something like 50,000 net growth pa in expat visa issues, given that a fair proportion of that probably translates to bangkok city rental demand, and that downtown net annual supply is only around 8,000 units or so, i'd say occupancy levels in bangkok should continue to remain strong in the coming few years.

The Dude, does the 8,000 units or so of net annual supply take into account the large amount of product coming on the market next year? I hope so, as I have bought one of these units. While not a Thai, the wife is, so I am sure we will go into the group that holds on to it like a trophy.

by net annual supply i actually mean physically completed units added to the total condo stock each year. actually checking back at CBRE market stats the number is closer to 6,000 and not 8,000, sorry. according to the same source, there are about 17,000 units from 81 projects representing future supply still at various stages of development in the city. these units should all be added to the stock of completed supply over the next 3 years (up to 2009), which means an average of about 6,000 plus units per year in the near future too. downtown condo occupancy is actually averaging at 87.6%, so its actually quite healthy and reflective of occupancy demand from the net annual expat arrivals i was mentioning before.

the level of occupancy in the city is an important determinant on whether the upcoming supply is sustainable or not, because rental demand drives condo purchases to a certain extent. other factors driving demand include the prevailing interest rates which at the moment looks to be set for some softening and hence also boding well for near term demand. foreign demand is also influenced by the relative yields and capital values in regional markets, so the picture is much more complicated than most people think.

there is a tendency for many to be sceptical about the thai market, not least because there are some dubious characters out there talking up the market. but the fundamentals speak for themselves, numbers dont lie. i'm not saying things are terribly rosy, but facts support a continued growth picture going forward for the next few years. i don't think prices will double in the next 3 years as they have in the past 3 years, but 10-20% price upside is not an unrealistic assumption.

Thanks for this analysis. It was what I wanted to hear. Hopefully the Thai government does not end up completely alienating the Singaporeans, as I know they (Capital Land) are a big investor in Bangkok.

It would not be rational of the Thai government to alienate or victimise potential investors be it Singaporeans or any other nationalities just because of an investment gone. Suffice to say,investments by foreign MNCs are most always welcome by any sensible governments around the world - as these inflow of money will definitely boost the economic figure of the recipient country. Rest assured that the Thai government is imo, a wise and dedicated institution that will steer the country to a higher level of growth in the coming years.

[ding]

Some very valuable posts there. Thanks for that.

I try not to see BKK as a world class city but just can't. It's rough and wild, but wonderbread and cheeze whiz aren't for everybody. The US babyboomers are more and more willing to seek other countries to retire to. Bangkok has quality, economical health care.

I thought of Argentina and Multi National Corporations when I saw this;

Suffice to say,investments by foreign MNCs are most always welcome by any sensible governments around the world - as these inflow of money will definitely boost the economic figure of the recipient country.

I had to read it twice before I saw the word "most".

Thailand would do well to not build walls to foreign ownership. Many will get their beaks wet if it is easy to invest in Thailand, even small condo owners who happen to buy in a good location and who wait for the rich baby Huey to come have a seat.

And out before the bubble pops!

[samtam]

Surely this debate is affected by supply and demand. There is no worthwhile analysis of this scenario by any of the brokers in town, depite their published research which suggests that they have done their homework thoroughly. My grade A building is 12 years old. It is excellently well-maintained and managed. It is well-located in CBD. It has 20% vacancy. It has 15% of units for rent. I bet this is not an unusual profile. Quite simply: supply is far outstripping demand. Whether that supply is older condos, or newly built and whether these sectors have specific impacts is a debateable topic. But I suspect the Thai way of buying and never selling their properties completely distorts the demand supply chain. But it underlies what I believe....there is too much supply.

you shouldn't confuse occupancy with supply although they are related. 80% occupancy for a 12 year old building actually sounds pretty good. given that many thai buyers just hold on to their condos like trophies, i'd say the acceptable rate for full occupancy in this city is probably around 80-85%. we have something like 50,000 net growth pa in expat visa issues, given that a fair proportion of that probably translates to bangkok city rental demand, and that downtown net annual supply is only around 8,000 units or so, i'd say occupancy levels in bangkok should continue to remain strong in the coming few years.

Your point taken about occupancy and vacancy; I incorrectly referred to a vacancy of 20% in my condo building. I should have referred to occupancy, which correlates almost exactly with the number of units available for rent. Perhaps more importantly the characteristics of the Thai market are very different from those say in Hong Kong, whereby a benchmark is established for a building/area on a (HKD psf)/baht per sq m basis. Obviously this does not apply here at all, and I estimate that older condos sell at about 50% less psm than newer ones. At least that's what I'm seeing at the moment. Also, the resale market is largely (entirely?) to foreigners, and not to Thais, and this demand is unpredictable, and very small I would imagine. (I'm reacting to a number of comments earlier that there is no resale market here; I think there is, and it's only to foreigners.) I don't know whether there is any effect on surrounding older properties when there is an obvious increase in pricing of new condos in the same area; my earlier comments suggest there is not, or not much. Largely because there is no specific "residential" area. However, if generally the cost of living and general asset values rise in Bangkok, it would be correct to assume that all assets will rise, providing they are halfway decent, and in the case of property, in the right location. I would imagine this takes place over a a fairly long period - of say 5-10 years.