Land prices do thais know something we don't

[Amsterdam]

Hello all,

I am confused about the land prices. My wife was approached to see if she wanted to sell some land and they where willing to pay 250.000 per rai. My wife said no and asked 300.000 and it looks like they are settling at about 280.000.

The land is not interesting. it is paddy on a dirt road no electricity and about a kilometer away from a village. There is nothing there and any rice produced on it is depending on the rain gods.

How do they think they are going to make back their investment? I know these prices are common but I just don't get it. I remember thinking that my wife was crazy 8 years ago when she purchased it for a 10th of what they are willing to pay today.

Do Thais know something we don't about the value of land? why are the land prices going up so much?

Cheers

Amsterdam

[ExpatOilWorker]

Who are the buyers?

There are people in Thailand that have "easy" access to money and need to park it somewhere, preferable far away from a bank. Found money is easy spend.

[Amsterdam]

Just local farmer guy. Land prices in general are on the up. I just used my wife's land as an example.

[lovelomsak]

I donot think getting their investment back works into the picture. Local farmers just want land to grow food. They just pay the going price.they get their investment back when they sell. But more than likely will keep for a very long time.

[elgordo38]

They are not making any more? My g/f bought a plot up by Chiang Rai about a year and half ago. It has doubled in value. She would not sell it for double. Maybe the posters wife was smart get out while the gittins good. There are a lot of bubbles in the world today and here hi-so's are dabbling in real estate like never before. Crazy yes in my mind. I will be cremated as a 6X6 piece to dig a hole in is getting expensive.

[ksamuiguy]

Getting rid of Cash, putting into asset, in the bank it can be traced.

Interesting all demonation NEW notes have are now in circulation!

[nithisa78]

not one good answer.

[off road pat]

Some people are well placed to know if a road or important construction will be build there in the future....

I remember a place on Koh Samui were there was only a dirt road. all over sudden the land around that road was bought....?

A year later the dirt road was a concrete road and the land prices multiplied by 10....

Food for taught....

Best regards, Off Road Pat

[overherebc]

I think one of the differences is that in Thailand the house itself is not looked on as the valuable part. It's purely the land that matters. Go back a long way and the fathers land was split between the sons , doesn't happen so much now as the bits get smaller with every generation.

The only way a lot of people in Thailand can get richer is by getting land and hanging on to it for years, also a good way to borrow from the bank is to have a lot of land.

Rumours of a new railway or other upgrade in transport services can spur increases in land prices so buy the land and hope that the area will get better is a common way of thinking here.

Alien to us as we generally look at the house as the investment not the land so we improve the house looking for a better price when selling.

i don't think they know something we don't. They just look at things in a different way.

[1FinickyOne]

I think there is a long history here [everywhere?] of rising prices for land - they are thinking future and even with a short term bubble burst by the time the kids are elderly, their grandkids will be happy to have such an amazing inheritance…. or they can bank it at 1.6%

What may not look valuable now might eventually be connected to town water and electric and be a build-able lot. I have watched that progression in my village over the last dozen years.

[GarryP]

I have been looking at land prices in a small town about 80 kms from the provincial capital in a central northeastern province and the prices were ridiculous. The prices were quoted to Thais and no one was aware that a foreigner was involved, so that does not account for any mark up. The prices were higher than I paid in a suburb of Bangkok. Even my girlfriend was horrified by the prices and said we had best forget it. It seems in that particular town prices have risen as a local investor was willing to pay anything to get her hands on some property. Other prospective sellers then marked up their land with buildings accordingly and are not willing to come down.

[SOUTHERNSTAR]

People buying land is making a rational decision. At present investing money into the stock and bond market can be suicide. If you put it into a fix term investment you will get +- 3% before inflation. Thus investing in land makes sense as it is a tangible asset that have a good chance of increasing in value at a faster rate than inflation. If you do your homework and buy in the correct area you should double your money in 3 to 5 years.

[tom21]

I have been looking at land prices in a small town about 80 kms from the provincial capital in a central northeastern province and the prices were ridiculous. The prices were quoted to Thais and no one was aware that a foreigner was involved, so that does not account for any mark up. The prices were higher than I paid in a suburb of Bangkok. Even my girlfriend was horrified by the prices and said we had best forget it. It seems in that particular town prices have risen as a local investor was willing to pay anything to get her hands on some property. Other prospective sellers then marked up their land with buildings accordingly and are not willing to come down.

that seems to be normal here. they will loose face if they sell it cheaper and would prefer to have the bank foreclose than sell it cheaper

[Suradit69]

Getting rid of Cash, putting into asset, in the bank it can be traced.

Interesting all demonation NEW notes have are now in circulation!

New notes are introduced by replacing old damaged notes turned in by commercial banks, which is why so many old notes remain in circulation for quite some time and the new notes only gradually become more commonly seen. They don't just dump a load of new notes into the fray and hope for the best. Currency in circulation may increase over time but it is regulated. One of the reasons Thailand, and other countries, are reluctant to introduce higher denomination notes is that it makes things easier for those involved in money laundering or major drug deals.

The reason banks and currency exchanges are willing to accept damaged Thai notes is because they know they can be exchanged for new notes through the central banks. They don't accept damaged foreign currency because the only thing they can do with it is sell it to another customer who is unlikely to accept torn or dirty money.

In terms of real estate, Thais and other Asians, at least those without urgent need of cash, seem more prepared to be patient about holding on to land, houses or condos until the market price reaches their expectations. Farang, as exemplified following the 2007-2008 melt down in the US, are often in a rush to dump real estate at fire sale prices on the assumption that taking a 20% or 50% loss immediately is better than waiting for a longer term return to higher prices ... or else they are so heavily in debt on the deal, they just walk away and let the bank repossess it and take the loss (or have their nanny state governments bail them out).

Obviously the O/P's Thai wife sensibly was prepared to wait 8 years for a substantial gain on her initial purchase.

[chiang mai]

Asset prices are rising everywhere, low interest rates means people look for alternate investments and land is a good longer term bet, Thai's know that.

[somo]

There seems to be no free market price for land or any rational for some inflated prices. From a business point of view the return from rice production is so small that the land is only worth 15-20k/rai so the OP's wife is getting an excellent price. The extra price is just pure speculation.

There also seems to be a strange but solid belief that prices will never go down so in the absence of a free market they will not. Selling at high prices may become impossible in the future but the owners seem happy to hang on to the land thinking it is a valuable asset. They just don't get that unsellable assets are overpriced. Supply and demand just doesn't work here it seems or is turned on it's head. I bit like the mentality that says when trade is slow raising prices will make up the shortfall in income.

Amazing Thailand.

[csabo]

Who are the buyers?

Exxon/Mobil

[lostinisaan]

Some people are well placed to know if a road or important construction will be build there in the future....

I remember a place on Koh Samui were there was only a dirt road. all over sudden the land around that road was bought....?

A year later the dirt road was a concrete road and the land prices multiplied by 10....

Food for taught....

Best regards, Off Road Pat

A good example might be the Big-C in Sisaket. Built on land that was once bought for almost nothing and then sold for a lot of cash.

Same goes for most places in cities because they're expanding.

Who knows, there might be some oil under my wife's soil in the village? How deep do I have to go?.......

[Ulic]

The thing is land is not worth what someone says it is, land is worth what someone will pay

you for it. If she bought in for 28k a rai 10 years ago, and is selling it for 280k a rai now, good

for her. Buy low sell high comes to mind. That all said the price of housing/land is also tied

to what people earn/can afford. As far as I am concerned if the average family cannot afford

the average home then the market is probably overheated. (like most western countries).

You saw what happened in the USA, and I suppose it can happen elsewhere as well.

Not saying it will, just saying. That said if something is bought and paid for in cash and there is

no need to sell. It never looses value until sold(if sold at a loss). Maybe the family buying

has a new "family sponsor" and the money is burning a whole in there pocket. They

want to put there daughters new husbands money to work in Thailand.

[bazza40]

They are not making any more? My g/f bought a plot up by Chiang Rai about a year and half ago. It has doubled in value. She would not sell it for double. Maybe the posters wife was smart get out while the gittins good. There are a lot of bubbles in the world today and here hi-so's are dabbling in real estate like never before. Crazy yes in my mind. I will be cremated as a 6X6 piece to dig a hole in is getting expensive.

Land prices are rising in a village between Chiang Rai and Phan as well. A standard house block which was 50K baht two years ago is now 150K.

So, you are six feet wide as well as tall?

[maingmoom]

I have been looking at land prices in a small town about 80 kms from the provincial capital in a central northeastern province and the prices were ridiculous. The prices were quoted to Thais and no one was aware that a foreigner was involved, so that does not account for any mark up. The prices were higher than I paid in a suburb of Bangkok. Even my girlfriend was horrified by the prices and said we had best forget it. It seems in that particular town prices have risen as a local investor was willing to pay anything to get her hands on some property. Other prospective sellers then marked up their land with buildings accordingly and are not willing to come down.

that seems to be normal here. they will loose face if they sell it cheaper and would prefer to have the bank foreclose than sell it cheaper

And having the bank repossess it is not loosing face ?

[flyingdoc]

Rumours or confirmed reports of better road or rail connections, will always cause a marked uplift in real estate prices. In Pak Chong, the now confirmed plans for a new Expressway and

entry / exit points are helping raise nearby land prices considerably.

[The Deerhunter]

I think there is a long history here [everywhere?] of rising prices for land - they are thinking future and even with a short term bubble burst by the time the kids are elderly, their grandkids will be happy to have such an amazing inheritance…. or they can bank it at 1.6%

What may not look valuable now might eventually be connected to town water and electric and be a build-able lot. I have watched that progression in my village over the last dozen years.

With the bank deposit rate less than 2%, buy land. It is never as low as 2% a year and you know were your money is. P.S. Don't buy gold. Things have changed in the last few years and the annual Asian cycles are not working the same any more.

[chilli42]

Based on my 25 years here and being well instructed by my Thai wife .... whether in Nakon Nowhere or Bangkok, the belief is:

1. Land prices always go up (have to agree, I have never seen it go down in Thailand)

2. Therefore land is a secure investment

3. In addition, you can make rental money from land: rent, lease, build and rent

4. You pay tax on none of this even when you sell it at a profit

5. If everything goes to hell in a hand-basket, you can live on the land, you can produce food on the land.

6. Did I mention that land prices ALWAYS GO UP and that it's a secure investment?

Perhaps some of this belief is driven by collective insanity ... but you can say the same for paper money and it REALLY does have no value other than the value we collectively agree it has.

Following the formula above, my wife and many others I know have made themselves very rich. So yes, they do know something we don't ... it's the belief in the ever increasing value of land. I guess the experience your wife has had would confirm the validity of the above.

[Minnehaha]

The amount of wealth and money that the rich have here in Thailand skews everything dramatically.

1. Rich and connected people (incl civil servants, military, police) have info that others do not. Sometimes it is timing. Everybody knows when the road or BTS will be built but not when, etc.

2. If you look at the largest prime real estate owner in the Kingdom you will see a class of people associated with it in various ways - name, business connections, schools, etc. The vast majority of rich people here do nothing but play around with their money. They deal in land and real estate rather than financial investments for many reasons pointed about above. Hide it, park it, no land tax and probably not one soon! NO PROPERTY TAX !!! You can sit on a piece of land in downtown Bangkok for decades and watch it increase in value. And it costs you NOTHING.

3. The growing middle class are following the pattern of the Rich and are copying the model with condos. But this has much higher risks (and returns) and can be done with less capital. The people who buy off plan at 4 Seasons and then sell it before completion can make 25% or more return on 3 MB in 3 years. This kind of speculation keeps the stupid condo market expensive, but really so many stupid things affect condo prices.

The Thais (certain ones) absolutely do know things we do not. What do you think will happen when the big change comes? They know things Thais don't know. And can do things others cannot. When you are above the law you can sell satellites or drive your Ferrari into a policeman and always buy your way out.

How can any taxes change or justice be served when the law is controlled by the Rich?

[Minnehaha]

I have been looking at land prices in a small town about 80 kms from the provincial capital in a central northeastern province and the prices were ridiculous. The prices were quoted to Thais and no one was aware that a foreigner was involved, so that does not account for any mark up. The prices were higher than I paid in a suburb of Bangkok. Even my girlfriend was horrified by the prices and said we had best forget it. It seems in that particular town prices have risen as a local investor was willing to pay anything to get her hands on some property. Other prospective sellers then marked up their land with buildings accordingly and are not willing to come down.

that seems to be normal here. they will loose face if they sell it cheaper and would prefer to have the bank foreclose than sell it cheaper

And having the bank repossess it is not loosing face ?

if the loan is paid off ... whats the problem with parking money in an asset that is very likely to increase. NO PROPERTY TAX ! if Thailand ever put in place this tax things would change. Except of course for the large land owner s who pays no tax at all

[slipperylobster]

Outside Udon, land prices are high....300 thousand on up. Some now want 600,000. My wife and I have listened to the local lore/gossip....and found out that the majority of the properties up for sale (by the owners) have been pawned. Interest on their loans are very high....and many are looking for buyers to pay off the pawned loan. That means a buyer would bring in the "money lender"...and "the current owner/pawnee", to the bank. All loans would be paid off before the chanote is issued. So the true land price is way lower than what the seller is asking...but they would still be on the hook for the interest. Therefore...it's much higher than my wife would want to pay. She truly cannot find a seller that has Possession of their Chanote. Sometimes, there are two loans out on the properties...one to the bank (years old) for which they pay a minimum of 5ooo baht a month to avoid foreclosure.....and one to some kind of money lender (at obscene interest). The buyer is absorbing all that.

**per rai

[chicowoodduck]

Geez, seems everyone is the expert when dealing with land, banks,money, etc., etc. And most likely rich beyond imagination....at least in their own minds....I think it is all smoke coming out their arse.....trust no one, research the shit out of any money project and expect the worst and hope for the best...:-)

[tom21]

I have been looking at land prices in a small town about 80 kms from the provincial capital in a central northeastern province and the prices were ridiculous. The prices were quoted to Thais and no one was aware that a foreigner was involved, so that does not account for any mark up. The prices were higher than I paid in a suburb of Bangkok. Even my girlfriend was horrified by the prices and said we had best forget it. It seems in that particular town prices have risen as a local investor was willing to pay anything to get her hands on some property. Other prospective sellers then marked up their land with buildings accordingly and are not willing to come down.

that seems to be normal here. they will loose face if they sell it cheaper and would prefer to have the bank foreclose than sell it cheaper

And having the bank repossess it is not loosing face ?

not the way thais think. even when the banks foreclose they still think they own it

[TPI]

The amount of wealth and money that the rich have here in Thailand skews everything dramatically.

1. Rich and connected people (incl civil servants, military, police) have info that others do not. Sometimes it is timing. Everybody knows when the road or BTS will be built but not when, etc.

2. If you look at the largest prime real estate owner in the Kingdom you will see a class of people associated with it in various ways - name, business connections, schools, etc. The vast majority of rich people here do nothing but play around with their money. They deal in land and real estate rather than financial investments for many reasons pointed about above. Hide it, park it, no land tax and probably not one soon! NO PROPERTY TAX !!! You can sit on a piece of land in downtown Bangkok for decades and watch it increase in value. And it costs you NOTHING.

3. The growing middle class are following the pattern of the Rich and are copying the model with condos. But this has much higher risks (and returns) and can be done with less capital. The people who buy off plan at 4 Seasons and then sell it before completion can make 25% or more return on 3 MB in 3 years. This kind of speculation keeps the stupid condo market expensive, but really so many stupid things affect condo prices.

The Thais (certain ones) absolutely do know things we do not. What do you think will happen when the big change comes? They know things Thais don't know. And can do things others cannot. When you are above the law you can sell satellites or drive your Ferrari into a policeman and always buy your way out.

How can any taxes change or justice be served when the law is controlled by the Rich?

I think you may need to move to Melbourne soon, you are telling people things that "connected" people would rather "ordinary" people shouldn't know!!