Phuket property glut?

[xylophone]

3 hours ago, thaistocks said:

Ha, yet the Thai Baht has been among the worlds strongest currency (Bloomberg says so), increasing nearly15% vs. both the US$ and Swiss Franc, and less so against the EU.  Hence compared to major global currencies rents here have in fact increased, even if not in Baht terms. Also beware there are few renters' rights here so you can leave anytime as well as get kicked out anytime if a more desirable renter comes along.

Well I live here and spend in Baht so no problem for me. Also my rent here is 2 to 3 times cheaper than in my home country, so on to a winner IMO.

 

I'd rather rent a property from which I can move at any time, or move if noisy neighbours, or just leave the country at the drop of a hat with no financial loss. Of course if I own something here I can be affected by illegal Thai nominee set-ups, noisy neighbour which I can do nothing about, increasing body corp fees or corruption thereof, poor construction problems, maintenance costs, and poor resale prices/options making it difficult to sell..........seems to me like renting is the way to go!!

 

Oops almost forget that one can be "built out" at any time with no comeback as has happened to a few friends who own properties here

Edited April 26, 2018 by xylophone

[Mysterion]

On 05/01/2016 at 5:54 PM, Mr Wonderful said:

I buy at the best price possible, either presale to secure the best units or leftover units in the buildings I am in after they are completed.

Wise strategy.

 

I find that most new offplan developments are now selling for 3x or more of the price of completed units(3-10 years old) in nearby locations. Thats why i would prefer to focus on existing properties rather than new developments.

 

However, if I had special “insider” access to choice/unique pre-sale units(the ones with priceless views) or get offered fire sale prices on leftover units, that would be worthy of serious consideration.

 

On 05/01/2016 at 5:54 PM, Mr Wonderful said:

Foreign quota freehold condos in luxury buildings are solid here. You kind of get what you pay for but even a 4M baht condo built by a reputable developer can avoid your rental bill and give you some capital appreciation, if you are lucky. For cashflow returns, luxury condos are hard to beat here.

Bingo!

 

There are some great high-yielding deals out there if you look for them. 

 

Ultimately, the phuket market will grow and appreciate over time, as there is really nothing like it in all of Asia. 

 

That being said, to sleep well at night:

- don't put all your eggs in one basket(diversify countries, asset classes etc)

- unless you have a super-good “insider” deal on a very unique unit, dont consider buying any offplan units in phuket now, as resales are much better value

- stick with foreign freehold units

- be sure to have a reasonable expectation of a sustainable high-rental yield before buying

- just like any holiday destination market, liquidity is less than a major western city, and therefore be prepared to have longer selling times Phuket. A high rental yield would help greatly if it takes time to sell.

 

Ps- they need to fix the sewage problems on the west coast. Either they do it soon voluntarily, or they wait ten years and  they get forced to do it like what is happening now in Boracay Philippines.

 

Edited April 27, 2018 by Mysterion

[xylophone]

Quote: "Foreign quota freehold condos in luxury buildings are solid here".

 

As my friends found out when they paid 18 million baht for their freehold luxury condo (Penthouse) with a great sea view and when they came to sell it 2/3 years later the best offer they could get was 11 million baht.

 

Many more examples like this to be had on this and similar forums and threads, not to mention those that sellers have not been able to move in years.

 

 

 

 

[NamKangMan]

 

I would be very interested to see some accurate "Days on Market" or "Time on Market" figures here, not to mention the loss, or gain, on the sold properties.

 

I think this information would be quite a shock to some, and laughable to others. 

[Swimman]

17 minutes ago, NamKangMan said:

 

I would be very interested to see some accurate "Days on Market" or "Time on Market" figures here, not to mention the loss, or gain, on the sold properties.

 

I think this information would be quite a shock to some, and laughable to others. 

A house near to us has been on the market for 4+ years - I suspect there are many others.

[xylophone]

1 hour ago, Swimman said:

A house near to us has been on the market for 4+ years - I suspect there are many others.

As regards properties for sale, these are just a few of the ones for sale by folks I know and it doesn't paint a pretty picture:-

 

– – Large four-bedroom house with swimming pool on the market for three years plus.

 

– – Two bedroom townhouse on the market for three years, with price reduction..

 

– – Two bedroom townhouse on the market for three years, with price reduction.

 

– – Two bedroom townhouse bought for 5.25m, now on the market for 4.25 million, for two years.

 

– – Two bedroom townhouse on the market for five years, with slight price reduction.

 

– – Two bedroom townhouse on the market for five years with price reduction.

 

– – One-bedroom 62 sqm apartment bought for 2.4 million baht and on the market for three years, sold for 1.55 million.

 

– – Three bedroom apartment on the market for three years. No offers, so have withdrawn from sale.

 

– – Two bedroom townhouse on the market for four years with price reduction.

 

– – Three bedroom townhouse on the market for three years. Negotiable price. No offers.

 

– – One-bedroom 62 square meter apartment in central Patong on the market for six years, with price reduction.

 

– – Two bedroom apartment in central Patong bought for 7 million baht. On the market for 1.5 years, sold for 6 million.

 

Many others like this in Patong and quite a few with for sale signs in an older development in central Patong, many for a long time.

 

[Mysterion]

7 hours ago, Swimman said:

A house near to us has been on the market for 4+ years - I suspect there are many others.

What area of island is that? 

 

Is someone living in the house long term or on short term rentals?

[Swimman]

1 minute ago, Mysterion said:

What area of island is that? 

 

Is someone living in the house long term or on short term rentals?

During the time the house has been on the market it has (to the best of my knowledge) been let twice for approx 6month. 

[Mysterion]

7 hours ago, NamKangMan said:

 

I would be very interested to see some accurate "Days on Market" or "Time on Market" figures here, not to mention the loss, or gain, on the sold properties.

 

I think this information would be quite a shock to some, and laughable to others. 

Goodluck with getting that info.

 

Not aware of any developing economy that has sofisticated analytics like what is offered in some parts of the “developed” world.

 

Keep in mind that liquidity is always a higher risk in a market that is mainly a “holiday destination”.

 

In addition, as Phuket condos are a very open international buyers market, it would be impossible to know true losses or gains unless you know the buyers actual base currency used to purchase the baht to buy the property.

 

As an example, russian sellers made absolute fortunes just based on the ruble devaluation the last couple of years, even if they sell at a baht loss.

 

 

 

 

 

 

[Mysterion]

5 minutes ago, Swimman said:

During the time the house has been on the market it has (to the best of my knowledge) been let twice for approx 6month. 

Owner is thai individual or a thai corporate structure(foreign buyer)?

 

What location?

[Swimman]

The owner is a local Thai person --- I have no intention of revealing my whereabouts on this forum.

[Mysterion]

13 minutes ago, Swimman said:

The owner is a local Thai person --- I have no intention of revealing my whereabouts on this forum.

Just wanting to know if location is prime near west coast beaches or not? 

 

The thai owners are obviously comfortable, for whatever reason, to just hold onto the house which is mostly vacant. If they really wanted/needed to sell/lease it, they would lower the price until a buyer/renter is found.

 

Landed house sales are very messy in Phuket, as some folks try to sell their landed properties for farang type prices(hoping to get a farang to setup a company and buy it), yet the market is supposed to be only for thais. As such, you get massive disconnects in dreams vs reality.

 

This is especially a problem outside prime coastal locations. Farangs usually dont want to take a high risk to setup a company and pay big bucks to buy a house in subprime location, and the thais wont touch it either. Thus a stalemate.

Edited April 28, 2018 by Mysterion

[xylophone]

1 hour ago, Mysterion said:

The thai owners are obviously comfortable, for whatever reason, to just hold onto the house which is mostly vacant.

None of the houses and apts in my post are "owned" by Thais........or should I say that none of the Thais on the documents have a say in the selling thereof.

 

And some Thai families bought these places (in Patong) so not just aimed at the farang market. Also I managed to sell one to a Thai lady.......so the prices were not unrealistic for Thais.

 

Bottom line is that there is a property glut and it is so obvious. The new build condos with "special returns" are moving just because of these special conditions, whereas the older properties are languishing and have been for years.

[midas]

21 minutes ago, xylophone said:

None of the houses and apts in my post are "owned" by Thais........or should I say that none of the Thais on the documents have a say in the selling thereof.

 

And some Thai families bought these places (in Patong) so not just aimed at the farang market. Also I managed to sell one to a Thai lady.......so the prices were not unrealistic for Thais.

 

Bottom line is that there is a property glut and it is so obvious. The new build condos with "special returns" are moving just because of these special conditions, whereas the older properties are languishing and have been for years.

 

But they generally only last 3 to 5 years. What happens after that?

[Mysterion]

1 hour ago, xylophone said:

Bottom line is that there is a property glut and it is so obvious. The new build condos with "special returns" are moving just because of these special conditions, whereas the older properties are languishing and have been for years.

Thanks for your opinion on this:

 

I honestly wish there was a “glut” as you say, as I am always interested in deals on good quality freehold condos in good locations.

 

Unfortunately, from the evidence i have seen, most of the good condos in good locations are still very expensive, and prices have not gone down over the last several years that i have been watching them.

 

Even new off-plan developments continue to ask sky high-prices, so they don't  provide any evidence of a “glut”  either.

 

Of course, there will always be situations where sellers have overpaid to begin with , combined with a bad location(dirty far backstreets/alleys of patong or next to a pig farm etc)/thai design(most farang and even many younger thai prefer contemporary western kitchens and baths)/bad maintenance /owning a landed and dated thai style house that was bought at a thai price years ago and then expecting to sell it now in an illegal corporate structure for the same price as a new contemporary pool-villa. All of this leads to disappointment/stubbornness/stalemates if wanting to sell later.

 

Can you please provide provide specific evidence of widespread fire-sale prices on condos and/or houses across the island? That would be useful and proper evidence of the “glut” anecdotes you mentioned.

 

You may also consider pasting link(s) to fire-sale house/condo listings.

 

 

 

 

Edited April 28, 2018 by Mysterion

[IsaanFam]

One thing I noticed is the dropping prices for land. I saw an offer for around 8mb per rai at a location where the asking price was around 12-14 mb / rai some years ago.

[macahoom]

2 hours ago, IsaanFam said:

One thing I noticed is the dropping prices for land. I saw an offer for around 8mb per rai at a location where the asking price was around 12-14 mb / rai some years ago.

 

This surprises me.

 

I thought land in Phuket was continuing to rise at a steady rate.

Edited April 28, 2018 by macahoom

[xylophone]

16 hours ago, Mysterion said:

Thanks for your opinion on this:

 

I honestly wish there was a “glut” as you say, as I am always interested in deals on good quality freehold condos in good locations.

 

Unfortunately, from the evidence i have seen, most of the good condos in good locations are still very expensive, and prices have not gone down over the last several years that i have been watching them.

 

Even new off-plan developments continue to ask sky high-prices, so they don't  provide any evidence of a “glut”  either.

 

Of course, there will always be situations where sellers have overpaid to begin with , combined with a bad location(dirty far backstreets/alleys of patong or next to a pig farm etc)/thai design(most farang and even many younger thai prefer contemporary western kitchens and baths)/bad maintenance /owning a landed and dated thai style house that was bought at a thai price years ago and then expecting to sell it now in an illegal corporate structure for the same price as a new contemporary pool-villa. All of this leads to disappointment/stubbornness/stalemates if wanting to sell later.

 

Can you please provide provide specific evidence of widespread fire-sale prices on condos and/or houses across the island? That would be useful and proper evidence of the “glut” anecdotes you mentioned.

 

You may also consider pasting link(s) to fire-sale house/condo listings.

 

 

 

 

First of all I would like to direct your attention to the heading of this thread which is, "Phuket property glut" and more specifically (as most have been commenting on) a property glut in Patong.

 

You seem to be focusing on condos, suggesting that there is not a glut, whereas myself and other posters have pointed out that they know of property for sale which has been on the market for years and not moved. So property is what the focus is upon.

 

You also seem to have a low opinion of some of the houses for sale, many of which I posted, whereby you denigrate some of the developments, however there are some nice developments, all with Western-style kitchens and fit outs, in such places as, "Kasemsarp 2", "Thrufy Village", "Aroonpat", etc, and these are not Thai style houses on dirty backstreet alleys of Patong, or next to pig farms, and some are very nice residences indeed.

 

So your quote about "owning a landed and dated Thai style house bought at a Thai style price years ago" is totally incorrect and the houses on these estates were all of a similar price by the developers and marketers (Real Estate agents), so overpriced or not, that was the price that one had to pay, so to say now that they were overpriced is very unprofessional because it casts a bad light on the property/real estate industry, i.e. willing to sell the houses at that price, and also later on willing to denigrate them and suggesting a discount for the sake of the sale!

 

In addition you mentioned "fire sale" something which I never mentioned, apart from the poor friends of mine whose 18 million baht penthouse apartment could only fetch 11 million baht and it was only two or three years old. It wasn't a fire sale per se, it was just all that they could get in a market where there is a glut.

 

As you know, the real estate industry likes to advertise properties for sale at a higher price so that they are seen to be pleasing the owners, and of course they get a higher commission, so those that you see on websites here bear no relation to what the final price will actually be (as you obviously know). So using those as a benchmark for a "good property investment" is a nonsense.

 

For example, in the Phuket Villa development a friend paid just over 7 million baht and although the original sale prices are still quoted, they were only able to get 6 million baht on a realistic market resale. Furthermore, apartments which were touted as being able to pull in 35,000 baht per month rent are now being rented to folks I know for 18,000 baht and 22,000 baht per month. The reason being, because there are too many out there available in competition, i.e. a glut.

 

Another one would be condos in "The Art", one of which a friend bought for 7.7 million baht and when he went to sell it two years ago, the best offer he could get was 6 million baht.

 

Another example would be "The Deck", where these are marketed as good investment opportunities," the quoted return on a 42 square meter apartment being 48,000 baht per month", however a friend has rented one for 25,000 baht per month, because the owner is desperate, and many others are un-rented...........a good investment?

 

As I said I never mentioned firesale prices, just that people who bought property here, in the main, are suffering with regards to resale prices, or even resale opportunities, which to me suggests too many properties on the market.

 

However if you want to do your own homework and investigate owners of condos/apartments in the likes of Phuket Villa, Patong Loft, The Art, The Deck, etc who would like to sell, and I stress that it is no use looking on real estate property website because the prices are inflated, however direct contact with the owner will give you the "bargains" that you so desire and you will find that they are prepared to accept a lower price because there is a poor market for them.

 

Do your own homework and you will find the houses I listed in my previous post, as surely that's what someone has to do who wants to earn a living selling real estate, which I don't.

 

So the idea that property investment here is a good option, certainly in my opinion and that of many, many others apart from real estate touts, and the occasional lucky person, certainly looks very shaky.

Edited April 29, 2018 by xylophone

[LivinginKata]

14 hours ago, macahoom said:

 

This surprises me.

 

I thought land in Phuket was continuing to rise at a steady rate.

 

Given that the seller is offering unbuilt on land at a sensible price then I would expect land price to rise by a small % year on year. Trouble is many sellers do not offer at a sensible price, price much much higher than any  buyer will pay, then if need money then sell at the 'regular' price. 

[Mysterion]

1 hour ago, xylophone said:

First of all I would like to direct your attention to the heading of this thread which is, "Phuket property glut" and more specifically (as most have been commenting on) a property glut in Patong.

 

You seem to be focusing on condos, suggesting that there is not a glut, whereas myself and other posters have pointed out that they know of property for sale which has been on the market for years and not moved. So property is what the focus is upon.

 

You also seem to have a low opinion of some of the houses for sale, many of which I posted, whereby you denigrate some of the developments, however there are some nice developments, all with Western-style kitchens and fit outs, in such places as, "Kasemsarp 2", "Thrufy Village", "Aroonpat", etc, and these are not Thai style houses on dirty backstreet alleys of Patong, or next to pig farms, and some are very nice residences indeed.

 

So your quote about "owning a landed and dated Thai style house bought at a Thai style price years ago" is totally incorrect and the houses on these estates were all of a similar price by the developers and marketers (Real Estate agents), so overpriced or not, that was the price that one had to pay, so to say now that they were overpriced is very unprofessional because it casts a bad light on the property/real estate industry, i.e. willing to sell the houses at that price, and also later on willing to denigrate them and suggesting a discount for the sake of the sale!

 

In addition you mentioned "fire sale" something which I never mentioned, apart from the poor friends of mine whose 18 million baht penthouse apartment could only fetch 11 million baht and it was only two or three years old. It wasn't a fire sale per se, it was just all that they could get in a market where there is a glut.

 

As you know, the real estate industry likes to advertise properties for sale at a higher price so that they are seen to be pleasing the owners, and of course they get a higher commission, so those that you see on websites here bear no relation to what the final price will actually be (as you obviously know). So using those as a benchmark for a "good property investment" is a nonsense.

 

For example, in the Phuket Villa development a friend paid just over 7 million baht and although the original sale prices are still quoted, they were only able to get 6 million baht on a realistic market resale. Furthermore, apartments which were touted as being able to pull in 35,000 baht per month rent are now being rented to folks I know for 18,000 baht and 22,000 baht per month. The reason being, because there are too many out there available in competition, i.e. a glut.

 

Another one would be condos in "The Art", one of which a friend bought for 7.7 million baht and when he went to sell it two years ago, the best offer he could get was 6 million baht.

 

Another example would be "The Deck", where these are marketed as good investment opportunities," the quoted return on a 42 square meter apartment being 48,000 baht per month", however a friend has rented one for 25,000 baht per month, because the owner is desperate, and many others are un-rented...........a good investment?

 

As I said I never mentioned firesale prices, just that people who bought property here, in the main, are suffering with regards to resale prices, or even resale opportunities, which to me suggests too many properties on the market.

 

However if you want to do your own homework and investigate owners of condos/apartments in the likes of Phuket Villa, Patong Loft, The Art, The Deck, etc who would like to sell, and I stress that it is no use looking on real estate property website because the prices are inflated, however direct contact with the owner will give you the "bargains" that you so desire and you will find that they are prepared to accept a lower price because there is a poor market for them.

 

Do your own homework and you will find the houses I listed in my previous post, as surely that's what someone has to do who wants to earn a living selling real estate, which I don't.

 

So the idea that property investment here is a good option, certainly in my opinion and that of many, many others apart from real estate touts, and the occasional lucky person, certainly looks very shaky.

Thanks again for your opinions Xylophone. 

 

You are dancing around the questions, so i will try to get this on track again....

 

You (and the other three or four “usual suspects” on this thread) still have not provided any real evidence of a widespread “glut”. 

 

Your personal examples of a few unfortunate anecdotes are interesting to read, but they dont support the idea of a widespread “glut.”

 

If your personal acquaintances have truly good quality properties in truly good locations, and they didn't overpay to begin with, they should be able to lease them short/long term, or sell them at some point, for a reasonable yield/price. 

 

Back to the facts....

 

Developer offplan prices remain very very high, which is more than likely not evidence of a “glut” . Are you aware of any developers slashing prices?

 

A rational party would also want to see bargains in the resale market to know there is truly a “glut”. Nobody on the thread has pointed out any real examples of widespread price cutting on quality properties in truly good locations.

 

We all know there is bargaining room on the property sales listed on websites. High quality properties in prime locations typically have around 5%-15%  bargaining room on average. Thats normal, and not evidence of a “glut” for good quality/location properties.

 

Please be careful not to confuse the differential of short-term rental prices with long-term, or low season prices to high season prices, for obvious reasons.

 

Cheers

 

 

 

 

 

 

[Mysterion]

2 hours ago, LivinginKata said:

 

Given that the seller is offering unbuilt on land at a sensible price then I would expect land price to rise by a small % year on year. Trouble is many sellers do not offer at a sensible price, price much much higher than any  buyer will pay, then if need money then sell at the 'regular' price. 

Indeed.

 

There are many sellers who are comfortable  just holding their properties and will list them at very inflated prices hoping to “catch a big fish.”

 

Ultimately, land prices will continue to rise in Phuket.

 

Only a significant prolonged economic crash and/or prolonged decrease in the tourist numbers could change that trajectory:

 

 

 

 

Edited April 29, 2018 by Mysterion

[xylophone]

1 hour ago, Mysterion said:

You are dancing around the questions

Well, I could very well say the same about you, because you are using terms like "quality properties in truly good locations" and so on, both of which are very subjective, so your answer proves nothing.

 

2 hours ago, Mysterion said:

You (and the other three or four “usual suspects” on this thread) still have not provided any real evidence of a widespread “glut”. 

I believe another poster suggested that there were over 1000 properties on the market and he had done some research to that effect. Of course you could quite easily point out that they were not "quality properties in truly good locations", so again an answer which proves nothing.

 

2 hours ago, Mysterion said:

Are you aware of any developers slashing prices?

Developers have a breakeven point and once that is reached, they don't worry unduly about it, so they don't slash prices, knowing that a few more will sell and their profit is secured. Once their number is reached and the bank covenant is met, they can then move to the next phase/development.

 

The only people that have to slash prices are the poor suckers that bought them in the first place, when they want to resell, realising that the market for resale properties, even average or good ones, is extremely poor.

 

2 hours ago, Mysterion said:

Nobody on the thread has pointed out any real examples of widespread price cutting on quality properties in truly good locations.

Now this is where your words, "quality properties in truly good locations" come into play, (and dancing around the answers) because quality properties in truly good locations will sell anywhere, even in a stagnant market or in a glut.

 

They are not the type of market which the everyday buyer here gets into, and the type of market that people are talking about here when they mention the glut, are the everyday condo/apartment/townhouse and not the high end properties, as you well know

 

Please be careful not to confuse the two, especially as your example is not a true reflection of the market here.

 

2 hours ago, Mysterion said:

Please be careful not to confuse the differential of short-term rental prices with long-term, or low season prices to high season prices, for obvious reasons.

No confusion exists on my part unless you are trying to bring in the extremely short term rental (daily/weekly) prices, but there again renting out for less than 30 days is illegal in many places, so I'm sure you wouldn't have done that.

 

The prices I quoted were standard for the apartments on the market and were quoted in the marketing of those apartments, obviously in order to sell them, however the reality is very different.

 

2 hours ago, Mysterion said:

A rational party would also want to see bargains in the resale market to know there is truly a “glut”. Nobody on the thread has pointed out any real examples of widespread price cutting on quality properties in truly good locations

Another play on words, "rational".

 

I pointed out to you that if you approached the actual sellers and not the agents, you would find that there are "bargains" out there, and all of the ones I quoted have had price reductions. All of them bar a couple have for sale signs on them if you would care to look.

 

However none of them would fit your criteria of "quality properties in truly good locations", mainly because it is not reflective of the market here, as I said, and anyway your statement is subjective.

 

The rational folk are those who see the average to good apartment/condo/townhouse that is on the market and has been for years and realise that there is a glut.

 

Those parties who are not "rational" prefer to use an argument in which they focus on properties which are not reflective of the market, thereby hoping to prove that argument, but unfortunately it falls flat for the very reason that it does not represent the market that most folks here are in – – that is irrational.

 

[Mysterion]

54 minutes ago, xylophone said:

Well, I could very well say the same about you, because you are using terms like "quality properties in truly good locations" and so on, both of which are very subjective, so your answer proves nothing.

 

I believe another poster suggested that there were over 1000 properties on the market and he had done some research to that effect. Of course you could quite easily point out that they were not "quality properties in truly good locations", so again an answer which proves nothing.

 

Developers have a breakeven point and once that is reached, they don't worry unduly about it, so they don't slash prices, knowing that a few more will sell and their profit is secured. Once their number is reached and the bank covenant is met, they can then move to the next phase/development.

 

The only people that have to slash prices are the poor suckers that bought them in the first place, when they want to resell, realising that the market for resale properties, even average or good ones, is extremely poor.

 

Now this is where your words, "quality properties in truly good locations" come into play, (and dancing around the answers) because quality properties in truly good locations will sell anywhere, even in a stagnant market or in a glut.

 

They are not the type of market which the everyday buyer here gets into, and the type of market that people are talking about here when they mention the glut, are the everyday condo/apartment/townhouse and not the high end properties, as you well know

 

Please be careful not to confuse the two, especially as your example is not a true reflection of the market here.

 

No confusion exists on my part unless you are trying to bring in the extremely short term rental (daily/weekly) prices, but there again renting out for less than 30 days is illegal in many places, so I'm sure you wouldn't have done that.

 

The prices I quoted were standard for the apartments on the market and were quoted in the marketing of those apartments, obviously in order to sell them, however the reality is very different.

 

Another play on words, "rational".

 

I pointed out to you that if you approached the actual sellers and not the agents, you would find that there are "bargains" out there, and all of the ones I quoted have had price reductions. All of them bar a couple have for sale signs on them if you would care to look.

 

However none of them would fit your criteria of "quality properties in truly good locations", mainly because it is not reflective of the market here, as I said, and anyway your statement is subjective.

 

The rational folk are those who see the average to good apartment/condo/townhouse that is on the market and has been for years and realise that there is a glut.

 

Those parties who are not "rational" prefer to use an argument in which they focus on properties which are not reflective of the market, thereby hoping to prove that argument, but unfortunately it falls flat for the very reason that it does not represent the market that most folks here are in – – that is irrational.

 

Thank you for clarifying your thoughts.

 

I am pleased you also recognize that developers are not cutting prices, and you also recognize that the good quality existing properties in good locations are doing well.

 

I would agree with you that lower quality properties in sub-prime locations are stagnant if not in “glut”. Lots of questionable stuff has been built in poor locations over the years with the erroneous hope that “if we build it, they will come”.

 

As such, it appears we both recognize that there is not an island-wide “glut” in phuket property, but there are issues in some lower quality properties in sub-prime locations.

 

Cheers :-)

 

 

 

 

 

[xylophone]

12 hours ago, Mysterion said:

Thank you for clarifying your thoughts.

 

I am pleased you also recognize that developers are not cutting prices, and you also recognize that the good quality existing properties in good locations are doing well.

 

I would agree with you that lower quality properties in sub-prime locations are stagnant if not in “glut”. Lots of questionable stuff has been built in poor locations over the years with the erroneous hope that “if we build it, they will come”.

 

As such, it appears we both recognize that there is not an island-wide “glut” in phuket property, but there are issues in some lower quality properties in sub-prime locations.

 

Cheers :-)

 

 

 

 

 

I have to say that you are a very clever wordsmith, so therefore I will award you a chocolate fish for effort.

 

You changed your position a couple of posts back from there not being a property glut, to one where you suggested that to prove this, high quality properties in good quality locations were still selling. Whereas I and others, were commenting on the fact that there were many unsold properties here, many which have remained unsold for years and that indicated that there was a property glut across the board.

 

Your stance that because high quality properties in high quality locations are selling, then there is not a property glut, is like suggesting that because during the GFC, sales of Rolls-Royce cars increased every year (except one) there could not be a global financial crisis!!

 

So you can see how wrong it is to pick out a very specific and small part of the market and apply it to the larger market in general.

 

So although we are closer, inasmuch as high quality properties in high quality locations will sell, as is the case with many other high quality products in times of uncertainty, it is not a general reflection of the market.

 

The main thing I take issue with is the fact that you consistently refer to "lower quality" properties in "poor/backstreet/pig farm" locations, when in fact many of these properties, and indeed the ones I quoted, are nothing like that – – in fact they are the average, everyday property that represent the majority of the market here.

 

I think you can stick with your position that because high quality properties in high quality locations are selling, that there is no property glut in that particular part of the market, however this does not reflect the overall market here.

 

Whereas I will stand by my position that in the larger market and in general, there is a property glut.

 

 

[thaistocks]

Lots of good comments here on this topic along with lots of negative nonsense, as usual. For what its worth I do agree with the statement "I would agree with you that lower quality properties in sub-prime locations are stagnant if not in “glut”. Lots of questionable stuff has been built in poor locations over the years with the erroneous hope that “if we build it, they will come"  Right on. This in fact hits the nail by the hammer. 

 

Over many years so many expats have come here with their savings/capital and because they mostly have poor investment education/experience/savvy,  hence they just built a nice house (or a nie houe, as some Thai's would say).  Deducing its the best investment for their capital and one they can enjoy.  Reality is, hey have no clue about financial investments alternatives and because they have no understanding on that, think all such are manipulated and crooked.  Not least, Thai stocks for example can in fact totally legally be held in a foreign name and repatriation out of Thailand is all but assured (or no foreign money would ever invest here in that asset class again). 

During this same period, say the last decade, the SET index has more then doubled, the Thai Baht has nicely appreciated...-and besides had they built a truly special place  (not just another vanilla nie houe with walls around it) they would have done relatively well, even in otherwise an oversupplied Phuket "me too" housing market.  As pointed out in a previous post, a well chosen Condo building right on the park  (no, not on the beach) has appreciated over 50% in value since opening 4 years ago.  So lets not confuse brains -with poor investment choices on just an average property investment.

 

Also, unlike many places in the world, the Phuket housing market is not financially over-leveraged (i.e. little bank loans) which means sellers are not forced to walk away, or so called forced sold out,  and this is likely the biggest reasons why we not see a glut (however one wants to define it) resulting in an across the board price dumping.  This is rarely mentioned, but Phuket real estate is barely bank mortgaged...so owners can hold on if they want.

[xylophone]

25 minutes ago, thaistocks said:

Lots of good comments here on this topic along with lots of negative nonsense, as usual. For what its worth I do agree with the statement "I would agree with you that lower quality properties in sub-prime locations are stagnant if not in “glut”. Lots of questionable stuff has been built in poor locations over the years with the erroneous hope that “if we build it, they will come"  Right on. This in fact hits the nail by the hammer. 

 

Over many years so many expats have come here with their savings/capital and because they mostly have poor investment education/experience/savvy,  hence they just built a nice house (or a nie houe, as some Thai's would say).  Deducing its the best investment for their capital and one they can enjoy.  Reality is, hey have no clue about financial investments alternatives and because they have no understanding on that, think all such are manipulated and crooked.  Not least, Thai stocks for example can in fact totally legally be held in a foreign name and repatriation out of Thailand is all but assured (or no foreign money would ever invest here in that asset class again). 

During this same period, say the last decade, the SET index has more then doubled, the Thai Baht has nicely appreciated...-and besides had they built a truly special place  (not just another vanilla nie houe with walls around it) they would have done relatively well, even in otherwise an oversupplied Phuket "me too" housing market.  As pointed out in a previous post, a well chosen Condo building right on the park  (no, not on the beach) has appreciated over 50% in value since opening 4 years ago.  So lets not confuse brains -with poor investment choices on just an average property investment.

 

Also, unlike many places in the world, the Phuket housing market is not financially over-leveraged (i.e. little bank loans) which means sellers are not forced to walk away, or so called forced sold out,  and this is likely the biggest reasons why we not see a glut (however one wants to define it) resulting in an across the board price dumping.  This is rarely mentioned, but Phuket real estate is barely bank mortgaged...so owners can hold on if they want.

You also make some good points, however you do have your own barrow to push, as the saying goes.

 

And yes, some questionable stuff may have been built, however lots of everyday average to good stuff has also been built, and nevertheless all of them constitute the property market as such.

 

You mention Thai stocks, as in your avatar, however one has to realise that so many folks have never been exposed to the share market other than through reading a newspaper and they are not knowledgeable and are scared of it.
Whereas bricks and mortar, especially in Western countries, has always been seen to be "safe", hence the reason for their investment.

 

And I agree with your last paragraph as it is very relevant, because apart from those houses which you see in mortgagee sales in the banks, which are from Thais in the main, most farangs pay cash so there is no outside/institutional pressure on them to sell, therefore few fire sales.

[thaistocks]

 

Right on xylophone.   that is the “curse of the century”: a total-gross lack of financial investment education by our educators which have all but ignored this...  Go figure why?  Or, It then also leaves the door open to take advantage of folks which have no clue around this.

Some years ago I offered to give free financial investor classes at Thailand’s most expensive boarding school here  (BIS), which educate young aspiring people, many from well to do families. Surely in their own lives this will be an issue again and again; yet nobody there seems interested in addressing this dire short coming.   Realize, as humans we tend to not like (and then bad-mouth) what we don’t know.   PS. I was just stating facts regarding the Thai SET, not promoting anything.  To be clear,  in the past 2 years investing in the SET has mostly not been rewarding except for a few largest capitalized stock picks.  One reason is the very inept approach by the brokerage industry.

 

[xylophone]

48 minutes ago, thaistocks said:

 

Right on xylophone.   that is the “curse of the century”: a total-gross lack of financial investment education by our educators which have all but ignored this...  Go figure why?  Or, It then also leaves the door open to take advantage of folks which have no clue around this.

 

Some years ago I offered to give free financial investor classes at Thailand’s most expensive boarding school here  (BIS), which educate young aspiring people, many from well to do families. Surely in their own lives this will be an issue again and again; yet nobody there seems interested in addressing this dire short coming.   Realize, as humans we tend to not like (and then bad-mouth) what we don’t know.   PS. I was just stating facts regarding the Thai SET, not promoting anything.  To be clear,  in the past 2 years investing in the SET has mostly not been rewarding except for a few largest capitalized stock picks.  One reason is the very inept approach by the brokerage industry.

 

 

Off topic a little I know, but it does tie in with the property market and investing in general.

 

I totally agree with your sentiments regarding a total lack of financial investment education, however this is just about worldwide I'm afraid, and in my opinion it should be taught in schools, so your offer to teach here should have been snapped up without any hesitation whatsoever.

 

As I said it is worldwide in general and even when you try to educate folks about the sharemarket and the need to be able to spend time in the market, not timing, all this goes out of the window when their share portfolio drops a little.

 

I started and ran an investment division for a major bank and realised early on in the piece that the everyday client, and even the wealthy ones, knew very little about the pros and cons of investing in the sharemarket so I and my associate put together what we called, "The Investment Guide" and it stepped would-be investors through a process – – a paint by numbers approach we called it. However it was simple, easy to understand and covered all of the basics.

 

Investors were walked through this and had to sign off on at least eight occasions as to the fact that they had understood what they were doing and all of the potential upside and downsides.

 

Of course everything went well when sharemarkets were rising, however when we had a few glitches, the number of people on the phone to my investment advisers was amazing and I used to get the very wealthy clients phoning me direct with exactly the same questions and fears, so the fact that they were wealthy meant nothing as regards their sharemarket investment knowledge.

 

One of the easiest explanations would be to ask them what their original time horizon was and then very often point out that they had set down a 10 year time horizon (for example) and only three or five years into it were wanting to "pull out" because of market fluctuations. Luckily using this approach helped them to see that they were panicking unnecessarily.

 

The old adage that investors (and the markets) are driven by "fear and greed" becomes very obvious when dealing with relatively uneducated investors.

 

To finish, there are many experts involved in the financial planning/financial advice field in New Zealand who advocate financial markets/education being taught in schools and it can only be for the better, so let's hope it takes place not only there, but in markets further afield.

 

Back on topic.........as I said previously, many/most farangs feel comfortable with something they can/touch/feel so here many will get into the property market because of that, and it can be a lot cheaper than back in their home country, but they become disappointed when they are unable to sell it, even if it is an ok property, and even at a discount.

 

PS. I will put a caveat on aspects above inasmuch as when one gets older, diversification away from stocks/shares to a more balanced portfolio, suitable to age and risk profile, is wise. 

[Patong2]

Xylophone, Mysterion and Thaistocks,

thanks for the contributions to this thread.

 

Very interesting and thought provoking and well argued on all sides.

 

You should all take a bow.

[Mysterion]

8 hours ago, xylophone said:

in fact they are the average, everyday property that represent the majority of the market here.

This is unfortunately the major error that holiday market buyers make. They buy/build  an “average everyday” property. As such, they need to be prepared to hold it or rationalize their expected sales price. Most astute buyers will focus on buying something they feel is above “average”.

 

8 hours ago, xylophone said:

in general, there is a property glut.

Generalizations tend to be very blunt instruments for any uninformed investors that may be following this thread. It would be more helpful for you to avoid blanket statements denigrating an entire market.

 

8 hours ago, xylophone said:

You changed your position a couple of posts back

Please dont be silly. I have always maintained that there is not a general overall glut in Phuket. Indeed, there are always pockets of greater weakness/strength in ea diverse market such as phuket.

 

8 hours ago, xylophone said:

Whereas I will stand by my position that in the larger market and in general, there is a property glut.

You are contradicting yourself with that statement. However,, within your overall argument you have thankfully changed your tune to acknowledge that anything above “average everyday” property is not in a glut, and by definition recognizing that there  is no “general” glut in the market. 

 

Bottom line for anyone looking to invest in phuket property... focus on above-average(foreign freehold ideally) location, location, location, price/yield and quality. Avoid the “average everyday” properties unless you can buy them for fire sale prices.

 

Cheers :-)