Supply of Condo units exceeding Effective Demand?

[trogers]

To many armchair experts.....gibberish talk on over supply in just about every city in the world, do you really think the developers are so hungry for the $ and out of touch with reality?

Come on guys get real...these guys don't start building until x% amount is sold off the plan which means they will cover costs plus holding of unsold condos.

Most new condos actually increase in value in BKK i know a few women who bought and later flipped them and they did it easy enough, and the hot deals someone gets is probably from some foreign guy who payed to much to start with.

You are mistaken here. Bookings of newly launched condo projects do not equate with actual nor effective demand.

Like you have mentioned about flipping by a few women you know, bookings also include a certain amount of speculators.

To reduce speculation, and problems during title transfer, Raimon Land had recently announced jacking deposits for their projects to 40% of selling prices.

you are sure, that this 40% they do because of speculators, or to make more money?

Because if 40% is paid upfront, then they have a hugh amount which they can use for other things. So a WIN WIN situation.

If I am a buyer facing a 40% deposit payment, I would demand that this amount be paid in stages following the construction of the building structure.

Then, I am at least confident that my money is used to finance actual construction of my unit, and not the Ferrari of some executive.

[Chewbacka]

Price you can rent for one year X 10 and that should be the selling price. Anything over is too much.

If anyone wants to rent a condo for 10 years, please PM me. I'll buy it and rent it to you and make nice return on my money . You can even choose the condo you want.....

Yes, I agree with the majority of posters on here that buying condos is a scam, renting is the by far the best option......

since you seem to be investing in condos ,

how do value them when buying compared to the rent you get ?

I know you need to make money on your investment and have $$$ to make repairs

A 6-7% net return on new condos in pretty decent. On some selected older condos an immediate 8 - 10% return in year one is possible. What really matters though is how the returns perform in years 1 to 5 (you can sell a condo after 5 years with no Special Business Tax (SBT) incurred). If you are getting 10% net return a year from a condo after a few years that has a nice capital gain then you are in a good place. After year 5 you can sell and cash if you want.

I have condo investments myself and my company works with property investors who have done very well investing in condos in Phuket in the last 10 years.

[Chewbacka]

the only way to make money on a condo is to live inside.

I don't think people will make some money by renting to someone else. there are just to many fees(tax, maintenance, ...) and in Thailand they prefer to keep your money in their pocket than fixing things. some don't even clean trash for weeks, you get rats, lift are broken, and stinky smell along corridor.

seems to me these building are built cheap with very cheap material. windows and doors look of low quality.

many building are depressive, especially the one with 4 buildings that are build in a form of a square and swimming pool in the middle with no sun. look like US federal jails.

some have reported to see cracks and fissure in walls in new building . Thailand is a wet country, water will attack your building 10 times faster than in farang land.

Pretty much any new building with plastered walls/ceilings will develop fissures, you generally fix this after the materials/ground have settled and it is nothing to be concerned about.

As for broken lifts, rat infestation, and not being able to make money on buying a condo; Thailand does have more than budget condos located in ghetto areas.

There is a new trend in Phuket (and I am not sure if it stretches to the rest of Thailand) of international hotel brands managing the condominium building when its completed and effectively running it as a hotel. Investors are basically buying a hotel room which they can stay in 4 weeks a a year "for free" and receive 5-8% net return on their investment (sometimes guaranteed).

When you compare this type of property investment to other asset classes such as bonds or stocks, it is clear that you get a fun factor from your investment as well a decent return. When was the last time your bond gave you a 4 weeks of relaxation by a beach....?!?!?!

[BKKdreaming]

..................Investors are basically buying a hotel room which they can stay in 4 weeks a a year "for free" and receive 5-8% net return on their investment (sometimes guaranteed)....................

I would be real happy with that deal if I invested US$ or Euros and got 5-8% back ,

But if they convert to Thai Baht and pay you the return in Thai Baht you have no idea where the exchange rate will be ,

And what happens when you want to sell ?

Basically sounds too good to be true ....

[trogers]

..................Investors are basically buying a hotel room which they can stay in 4 weeks a a year "for free" and receive 5-8% net return on their investment (sometimes guaranteed)....................

I would be real happy with that deal if I invested US$ or Euros and got 5-8% back ,

But if they convert to Thai Baht and pay you the return in Thai Baht you have no idea where the exchange rate will be ,

And what happens when you want to sell ?

Basically sounds too good to be true ....

Currency rates also have their cycles, like real estate. Should you want to invest internationally, you need to consider both cycles and how they relate together.

Best to buy when both are near their lowest points. And the reverse is true.

[WorkingTourist]

There is a new trend in Phuket (and I am not sure if it stretches to the rest of Thailand) of international hotel brands managing the condominium building when its completed and effectively running it as a hotel. Investors are basically buying a hotel room which they can stay in 4 weeks a a year "for free" and receive 5-8% net return on their investment (sometimes guaranteed).

When you compare this type of property investment to other asset classes such as bonds or stocks, it is clear that you get a fun factor from your investment as well a decent return. When was the last time your bond gave you a 4 weeks of relaxation by a beach....?!?!?!

There is no such guarantee. Some may guarantee it for the first year or so, but you’re indirectly paying for that in the purchase price.

Anantara is also building a condo here in Chiang Mai where they can manage renting out the place for you on a daily basis. But the sqm. price is roughly twice of what a comparable condo costs here.

If it was such a good deal, the hotels would keep the units, but it’s a better deal for them, to sell them at an inflated price and let you take all the risk and even have you pay them a regular maintenance fee after the unit has been sold.

[robertthebruce]

Yesterday in ''Bangkok'' ''Asoke'' 2 Bedroom 2 Bathroom condos starting at 26 Million Baht ?? which to be honest is expensive....

but thats what the sign says...

[trogers]

Yesterday in ''Bangkok'' ''Asoke'' 2 Bedroom 2 Bathroom condos starting at 26 Million Baht ?? which to be honest is expensive....

but thats what the sign says...

????

[HampiK]

Yesterday in ''Bangkok'' ''Asoke'' 2 Bedroom 2 Bathroom condos starting at 26 Million Baht ?? which to be honest is expensive....

but thats what the sign says...

There are quite some places where you can easily find condos for 50 - 100 million baht in Bangkok. OK, if they start with 26 million means I not even have to go look there..

But who knows... If i had 1 billion baht maybe I would buy one of this (Don't know, because i not have that much ).

[coulson]

the only way to make money on a condo is to live inside.

I don't think people will make some money by renting to someone else. there are just to many fees(tax, maintenance, ...) and in Thailand they prefer to keep your money in their pocket than fixing things. some don't even clean trash for weeks, you get rats, lift are broken, and stinky smell along corridor.

seems to me these building are built cheap with very cheap material. windows and doors look of low quality.

many building are depressive, especially the one with 4 buildings that are build in a form of a square and swimming pool in the middle with no sun. look like US federal jails.

some have reported to see cracks and fissure in walls in new building . Thailand is a wet country, water will attack your building 10 times faster than in farang land.

Is the water falling from the sky different in Thailand than *farangland*? The premature cosmetic cracks due to wrong choice of finishes and their expansion exposed to heat and repeated rain is an easy fix, but if left unattended not even worth worrying about. What you should worry about is what you cannot see.

FYI those commi blocks with a shaded central pool area are tried and tested brick sh1t houses that will stand the test of time. Nothing beats a swim in the hot season, out of direct sunlight. Sometimes there is method to the madness.....

Agree with you, buying is for saving on rent and not expecting to be making any....depending on where you buy of course

[Chewbacka]

There is a new trend in Phuket (and I am not sure if it stretches to the rest of Thailand) of international hotel brands managing the condominium building when its completed and effectively running it as a hotel. Investors are basically buying a hotel room which they can stay in 4 weeks a a year "for free" and receive 5-8% net return on their investment (sometimes guaranteed).

When you compare this type of property investment to other asset classes such as bonds or stocks, it is clear that you get a fun factor from your investment as well a decent return. When was the last time your bond gave you a 4 weeks of relaxation by a beach....?!?!?!

There is no such guarantee. Some may guarantee it for the first year or so, but you’re indirectly paying for that in the purchase price.

Anantara is also building a condo here in Chiang Mai where they can manage renting out the place for you on a daily basis. But the sqm. price is roughly twice of what a comparable condo costs here.

If it was such a good deal, the hotels would keep the units, but it’s a better deal for them, to sell them at an inflated price and let you take all the risk and even have you pay them a regular maintenance fee after the unit has been sold.

I do agree that some developers that offer a rental guarantee that do not have a plan in place for the rental management are effectively building part of what they will have to pay back in guaranteed returns into the purchase price.

Hotel brands managing condos is a relatively new thing and we will more of it in the coming months and years in Phuket. Certainly a trend has been started and I know of handful of developers that are currently in talks with well known hotel brands. Some developers are already part of hotel groups so they have the rental management side covered already.

The rental guarantees in Phuket are 6% - 7% for the first three years but investors can choose whether to take the guarantee or take returns from the rental pool where projected returns are actually higher.

But as with all these things, the proof will be in the pudding.

[Chewbacka]

..................Investors are basically buying a hotel room which they can stay in 4 weeks a a year "for free" and receive 5-8% net return on their investment (sometimes guaranteed)....................

I would be real happy with that deal if I invested US$ or Euros and got 5-8% back ,

But if they convert to Thai Baht and pay you the return in Thai Baht you have no idea where the exchange rate will be ,

And what happens when you want to sell ?

Basically sounds too good to be true ....

In my experience, investors that purchase condos for investment in a good location with a sea view and / or close to a beach that has decent facilities from a reputable developer have little issues when they want to re-sell and can make a nice capital gain as well as healthy returns in the form of rental income. All this takes a bit of research and local market knowledge though.

I always recommend to clients that they hold onto their units for at least five years in order to realise some returns plus capital and also avoid the 3.3% Specific Business Tax.

Of course, when you sell you will receive the funds in THB but it is up to you if and when you wish to repatriate those funds so you can time the exchange rate if necessary.

[VIPinthailand]

There is a new trend in Phuket (and I am not sure if it stretches to the rest of Thailand) of international hotel brands managing the condominium building when its completed and effectively running it as a hotel. Investors are basically buying a hotel room which they can stay in 4 weeks a a year "for free" and receive 5-8% net return on their investment (sometimes guaranteed).

When you compare this type of property investment to other asset classes such as bonds or stocks, it is clear that you get a fun factor from your investment as well a decent return. When was the last time your bond gave you a 4 weeks of relaxation by a beach....?!?!?!

There is no such guarantee. Some may guarantee it for the first year or so, but you’re indirectly paying for that in the purchase price.

Anantara is also building a condo here in Chiang Mai where they can manage renting out the place for you on a daily basis. But the sqm. price is roughly twice of what a comparable condo costs here.

If it was such a good deal, the hotels would keep the units, but it’s a better deal for them, to sell them at an inflated price and let you take all the risk and even have you pay them a regular maintenance fee after the unit has been sold.

I do agree that some developers that offer a rental guarantee that do not have a plan in place for the rental management are effectively building part of what they will have to pay back in guaranteed returns into the purchase price.

Hotel brands managing condos is a relatively new thing and we will more of it in the coming months and years in Phuket. Certainly a trend has been started and I know of handful of developers that are currently in talks with well known hotel brands. Some developers are already part of hotel groups so they have the rental management side covered already.

The rental guarantees in Phuket are 6% - 7% for the first three years but investors can choose whether to take the guarantee or take returns from the rental pool where projected returns are actually higher.

But as with all these things, the proof will be in the pudding.

what is hotel brand management? can I buy an hotel room? and let the hotel manage it for me ?

[WorkingTourist]

what is hotel brand management? can I buy an hotel room? and let the hotel manage it for me ?

It’s more like a serviced apartment.

It would normally be a freestanding building, either with staff in the lobby to deal with “customers” or having the hotel just next to the building, and using the hotel’s lobby.

The staff will handle everything related to renting out your apartment, but there are also regular buildings where the staff in the lobby can handle this, so you’re probably mainly buying into a brand.

[chrisandsu]

the only way to make money on a condo is to live inside.

I don't think people will make some money by renting to someone else. there are just to many fees(tax, maintenance, ...) and in Thailand they prefer to keep your money in their pocket than fixing things. some don't even clean trash for weeks, you get rats, lift are broken, and stinky smell along corridor.

seems to me these building are built cheap with very cheap material. windows and doors look of low quality.

many building are depressive, especially the one with 4 buildings that are build in a form of a square and swimming pool in the middle with no sun. look like US federal jails.

some have reported to see cracks and fissure in walls in new building . Thailand is a wet country, water will attack your building 10 times faster than in farang land.

Pretty much any new building with plastered walls/ceilings will develop fissures, you generally fix this after the materials/ground have settled and it is nothing to be concerned about.

As for broken lifts, rat infestation, and not being able to make money on buying a condo; Thailand does have more than budget condos located in ghetto areas.

There is a new trend in Phuket (and I am not sure if it stretches to the rest of Thailand) of international hotel brands managing the condominium building when its completed and effectively running it as a hotel. Investors are basically buying a hotel room which they can stay in 4 weeks a a year "for free" and receive 5-8% net return on their investment (sometimes guaranteed).

When you compare this type of property investment to other asset classes such as bonds or stocks, it is clear that you get a fun factor from your investment as well a decent return. When was the last time your bond gave you a 4 weeks of relaxation by a beach....?!?!?!

Is that not called a time share? sounds like the costa del sol has finally hit Phuket .

[trogers]

the only way to make money on a condo is to live inside.

I don't think people will make some money by renting to someone else. there are just to many fees(tax, maintenance, ...) and in Thailand they prefer to keep your money in their pocket than fixing things. some don't even clean trash for weeks, you get rats, lift are broken, and stinky smell along corridor.

seems to me these building are built cheap with very cheap material. windows and doors look of low quality.

many building are depressive, especially the one with 4 buildings that are build in a form of a square and swimming pool in the middle with no sun. look like US federal jails.

some have reported to see cracks and fissure in walls in new building . Thailand is a wet country, water will attack your building 10 times faster than in farang land.

Pretty much any new building with plastered walls/ceilings will develop fissures, you generally fix this after the materials/ground have settled and it is nothing to be concerned about.

As for broken lifts, rat infestation, and not being able to make money on buying a condo; Thailand does have more than budget condos located in ghetto areas.

There is a new trend in Phuket (and I am not sure if it stretches to the rest of Thailand) of international hotel brands managing the condominium building when its completed and effectively running it as a hotel. Investors are basically buying a hotel room which they can stay in 4 weeks a a year "for free" and receive 5-8% net return on their investment (sometimes guaranteed).

When you compare this type of property investment to other asset classes such as bonds or stocks, it is clear that you get a fun factor from your investment as well a decent return. When was the last time your bond gave you a 4 weeks of relaxation by a beach....?!?!?!

Is that not called a time share? sounds like the costa del sol has finally hit Phuket .

As long as one's name is not on a title deed, such investment is not on real property. More like making unsecured loans to some business venture for a promise.

[chrisandsu]

Looks like repackaged BS to me . You get 4 weeks in the sun all for the price of an overinflated market value of a condo ! As you said a time share you don't own and for most cases you won't own the condo either . Sucker born every minute (not you todgers)

[Mencken]

Any sort of roi that is guaranteed must be based on some ridiculous price that you paid for the dump. So 6-7% on something you over paid 100% on, sure I bet you can.

It's like auto loans at 0%. All you need do is purchase the car at msrp lol.

Yes, TIME SHARE and wow if condos were not already sketchy enough.

10x not gonna happen in Thailand. I'll bite at 12.5x

Edited October 24, 2015 by Mencken

[theguyfromanotherforum]

VIP may be a frugal expat, but he talks a lot of sense.

Duffy Duck is talking total nonsense as usual.

Mind you, I own a condo shoebox on a prime location in Toronto which is already one of the most expensive real estate markets in the world. I compare my quality built, well managed box that is 15 years old to these newly built Bangkok condos that look like absolute crap after 2 years. They are also being sold for something like 5 million for 34 square meters

Now, I don't doubt for a second that many speculators make decent money reselling units. I have bought a contract 2 years ago on a mid range condo (which I wanted to keep), but sold it for a 30,000 profit after I read many complaints about the builder. When I bought a contract there was this one guy buying 10 units in this building. All he had to do was book a room (3000 baht each room) and then sign a contract 30 days later which was 10,000 per unit. Then every month he would pay 6,000 baht until the condo was built and a final transfer was due. This is not a lot of money you need to speculate. Since the condo was in a very good location and was sold out pretty quickly he could not possibly lose any money and had 2 years to sell his 10 units. Low risk, high reward. If I was able to sell my contract for 30,000 baht profit (I didn't want to negotiate too much), he probably made 300,000 baht for half days work.

Doesn't change the fact Bangkok condos are overpriced garbage.