Phuket property glut?

[madmax2]

People selling land here think a sea view land is from the top of a 3 storey building or a glimpse of land up a street usually over other buildings and businesses

Sea view land to me is where you sit in your house and look out the window and have a uninterrupted view of the sea which cannot be built out

There was a sea view block advertised at Nai Harn beach, unbelievably overpriced and from what i have read being sold with a fake title dead to the property   

[xylophone]

On 16/10/2017 at 9:50 AM, thaistocks said:

This is important because if there ever is a global crisis of some sort people's property are all but paid for in Phuket,  no need for bail outs or forced sales.

That is, unless of course the global crisis put pressure on cash resources and cash flow so that these Phuket homeowners are in need of funds so decide to sell their property for the gain they always thought they were going to make.

 

Then of course all the other factors come into play; the fact that the 90 year lease they thought they had is fiction; the fact that they don't actually own the property and land which they thought they did so have difficulty selling it; bad publicity about the illegality of Thai nominee companies, and of course the fact that there are many empty properties here and some which have been on the market for years, and those that are selling have been sold for far, far less then the asking price.

 

Recent examples from friends are a 62/64 m² one-bedroom apartment which the owner had difficulty selling and eventually settled for 1.55 million baht after almost 2 years on the market. Other friends purchased a new penthouse apartment with a great sea view for 18 million baht (this was almost 3 years ago) and despite trying to sell it through many agents for about a year, eventually settled for 11 million baht – – one huge loss over a short time span.

 

Sure there are properties selling, like those in Patong which advertise a 7 or 10% return for 15 years, and which many Chinese seem to favour, and IMO the proverbial will hit the fan when this little scheme falls over or fails to materialise in the way in which it promises, which is quite easy to see.

 

A place where there are many condos, apartments and houses for sale and have been for years, along with the fact that there are many empty/derelict shells creating an eyesore, to me does not seem a suitable place to invest in property.

[sebastion]

That is, unless of course the global crisis put pressure on cash resources and cash flow so that these Phuket homeowners are in need of funds so decide to sell their property for the gain they always thought they were going to make.
 
Then of course all the other factors come into play; the fact that the 90 year lease they thought they had is fiction; the fact that they don't actually own the property and land which they thought they did so have difficulty selling it; bad publicity about the illegality of Thai nominee companies, and of course the fact that there are many empty properties here and some which have been on the market for years, and those that are selling have been sold for far, far less then the asking price.
 
Recent examples from friends are a 62/64 m² one-bedroom apartment which the owner had difficulty selling and eventually settled for 1.55 million baht after almost 2 years on the market. Other friends purchased a new penthouse apartment with a great sea view for 18 million baht (this was almost 3 years ago) and despite trying to sell it through many agents for about a year, eventually settled for 11 million baht – – one huge loss over a short time span.
 
Sure there are properties selling, like those in Patong which advertise a 7 or 10% return for 15 years, and which many Chinese seem to favour, and IMO the proverbial will hit the fan when this little scheme falls over or fails to materialise in the way in which it promises, which is quite easy to see.
 
A place where there are many condos, apartments and houses for sale and have been for years, along with the fact that there are many empty/derelict shells creating an eyesore, to me does not seem a suitable place to invest in property.

All depends on the property.
Condos are always the hardest to resale so I'm not surprised at people taking losses on those. Strata fees get out of control and sinking funds go missing.
A sea view villa are the easiest to move. There is always buyers for unique properties with sea view.
I used to work for movenpick and gave it up to try my hand at real estate.
Best move I've made.
If anyone has a sea view villa from Rawai, naiharn, Kata or Karon will never have an issue selling.
I have a list of buyers wanting villas with sea view in these areas and their isn't enough supply, especially Kata.
No view = no sale.

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[thaistocks]

Agree with the just last post. No view, no sale.  But sea views can/is overrated...for sure vacationers want/adore ocean views. Long term residents (property buyers) can be bored with that over time even while they don't know this at the outset.  Lots of astute physiological studies have been done (mostly in the US) on what most people actually treasure most in views,  it's a valley with a lake and trees, a variety of green and beyond. Only a stale blue sea with blue horizon view is overrated in the long run, along with the more salty humid air...not least the nerdy touristy environment.

 

If you take the annual real estate taxes saved and invest this in a long say 5% annual return ETF fund (the SET has over many crisis average yieled almost 10% over say 20-25 years) at the end of 30 years, or 90 as the previous post mentions, you got compounded most of your money back, and then some, even if the lease at the end just expires.  Hence, from a pure finance/rational perspective its actually a wash and not the negative so many perceive at first look.

[xylophone]

4 hours ago, sebastion said:

A sea view villa are the easiest to move.

Agree that there are properties that will be easier to move............but how do you get round the fact that the buyer can never legally own the land upon which it sits; how do you explain this to them?

[tangerinehouse]

On ‎15‎.‎10‎.‎2017 at 9:53 AM, AJBangkok said:

Actually Mr Thaistocks (if it's the guy I think it is ) has been around since the early 90's marketing a strategy of buying small cap high dividend yield Thai companies to international investors. It's been an incredibly successfull strategy and in terms of percentage return I would not be surprised if he isn't the the most successful fund manager in the history of the Thai stock market (in percentage return not absolute quantum) If he followed his own advice which I think he did then he's probably richer than anyone posting on this board. It doesn't mean he is a property expert but he does understand economics and markets. Why he"s choosing to make a post like this baffles me. Maybe he's retired and misses the action 

May you want to take an look to the longer Term Charts of his Stock Tips : TTCL, DEMCO, CHO, STPI, ILINK, BJCHI  DCON,EA,  To name an few ,usually down at least  between 40-70% . In the same Time the Market go up just shy to an All Time High.... Fun Fact: The Stocks that performe well in the Market was Banks and Mega Caps like cpall and BH  and the Index ETF like TDEX. This Big Caps he never liked....

 

[thaistocks]

Also,  ha..was maximum bullish on PPS at the end of year 2016, PPS almost doubled in price by late September '17, plus a 20% stock dividend paid last May '17.  Its true that of late smaller cap stocks have overall under-performed the SET which seems abandoned by the so many retail investors, not least due to in general inept Thai broker behavior.

[thaistocks]

PTTGC (100), one of the largest cap stocks here,  was much touted since last September some 35% ago, all along -and up.  It by a factor of just about 5 times, beat the SET index rise, since it started its ascent later last year.

[thaistocks]

The far more interesting question -nobody seems to ask- is why have smaller and mid cap stocks broadly so outperformed the SET index, over say the past couple of years?   In the past individual investors (which often invest in those here) would make up 60 to 75% of the average daily trading volume...no more as it dropped for some time already below 50%.  Any business which saw its core customer base shrink like this would be more then alarmed.  Yet the SET and indirectly the brokers here go on as if nothing is wrong.  To be fair, there were other periods in the distant past where smaller/mid cap stocks diverged from the SET -and visa versa.  This time however its more pronounced then ever and deserves dire concern, nowhere expressed nor addressed.

[sebastion]

Agree that there are properties that will be easier to move............but how do you get round the fact that the buyer can never legally own the land upon which it sits; how do you explain this to them?

Im late to this reply. Sorry i just saw it.
Chinese investors much prefer to hold a property in a company name than individual name. Weird i know.
They like to keep their investments as invisible as possible. From other Chinese and their government.
I had one guy who asked me to keep some apartments in my name as he wanted it assets hidden and his name not attached whatsoever. I declined and he ended up putting foreign freehold apartments into a company with some Thai lawyer nominee.
Go figure.

Just remember, the black economy is 10 fold the size of the real economy.
Plenty of cashed up Chinese looking to hide it outside China.

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[xylophone]

49 minutes ago, sebastion said:

Im late to this reply. Sorry i just saw it.
Chinese investors much prefer to hold a property in a company name than individual name. Weird i know.
They like to keep their investments as invisible as possible. From other Chinese and their government.
I had one guy who asked me to keep some apartments in my name as he wanted it assets hidden and his name not attached whatsoever. I declined and he ended up putting foreign freehold apartments into a company with some Thai lawyer nominee.
Go figure.

Just remember, the black economy is 10 fold the size of the real economy.
Plenty of cashed up Chinese looking to hide it outside China.

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Thanks for the reply............

 

I was referring to the post which stated that Villas etc were the easiest to move. Condos etc have no problems with because no land involved. But using a Thai nominee company set up for ownership of Villas and other property which includes land is illegal.......do they know that, and the fact they could lose it all if Govt legislation is fully enforced?

 

 

[thaistocks]

Sorry for the bad typo in my previous posting which said:"

"The far more interesting question -nobody seems to ask- is why have smaller and mid cap stocks broadly so outperformed the SET index, over say the past couple of years? " 

 

It should have stated:  he far more interesting question -nobody seems to ask- is why have smaller and mid cap stocks broadly so under-performed the SET index, over say the past couple of years?

[thaistocks]

Yes. The Chinese are coming en-masse, and this will only get more pronounced and can go on for many years.  There are some very high class individuals with plenty of money willing to open companies or other ways to own assets here.  Its in part what will dent the nay-sayers that claim property prices are long peaked in Phuket.

[xylophone]

41 minutes ago, thaistocks said:

There are some very high class individuals with plenty of money willing to open companies or other ways to own assets here.

On the other hand, if the Thai Govt decides to enforce its long promised crackdown on Thai Nominee companies, there could be a lot of cheap assets available, so....................

[sebastion]

Thanks for the reply............
 
I was referring to the post which stated that Villas etc were the easiest to move. Condos etc have no problems with because no land involved. But using a Thai nominee company set up for ownership of Villas and other property which includes land is illegal.......do they know that, and the fact they could lose it all if Govt legislation is fully enforced?
 
 

There is too much money at stake to enforce this law. They might do to some shady individuals but they wont crash the economy.
Trillions upon trillions of baht held this way.
Saudis own huge 2000 -3000 rai plots for agriculture in the north. So do the Chinese.
High end property market would disappear leaving Thai companies to collapse.
Chinese are very switched on when it comes to buying here. Not many I've come across that haven't done their homework on Thai property. They know they can't own land but they don't want it in their name anyway.
They like to hide their wealth so it can't be tracked by anyone.
Reminds me of the guy who bought 12 x 1 bedroom units at one time spending 1 million USD and exclusively renting them out to Chinese in China via their social media Weibo (Chinese facebook)
The return on that was about 800 USD a night for that guy all via his iPhone. If he rented them all out that is.
He will get his money back in about 3 to 4 years and its all cash. He even had the opportunity to hold these in foreign freehold and refused it. He wanted anonymity.

They aren't phased by the nominee loophole at all.
They see it as oppotunity.



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[Psimbo]

I like the way that the Gazette, or whatever it calls itself now is always promoting a booming market ( I realise they get advertising revenues from it) yet at the same time quotes over 8000 properties available! In Kamala alone there are loads of empty units, with more on the way. I get a feeling a lot of these projects are washing money. I noticed that one complex at the north end of Patong Beach, just after Graceland that never seemed to have been used has been demolished.

[watcharacters]

5 minutes ago, Psimbo said:

I like the way that the Gazette, or whatever it calls itself now is always promoting a booming market ( I realise they get advertising revenues from it) yet at the same time quotes over 8000 properties available! In Kamala alone there are loads of empty units, with more on the way. I get a feeling a lot of these projects are washing money. I noticed that one complex at the north end of Patong Beach, just after Graceland that never seemed to have been used has been demolished.

 

 

As long as the bank is  happy everyone else should be happy???

?

 

[xylophone]

52 minutes ago, sebastion said:

There is too much money at stake to enforce this law. They might do to some shady individuals but they wont crash the economy.
Trillions upon trillions of baht held this way.
Saudis own huge 2000 -3000 rai plots for agriculture in the north. So do the Chinese.

Whist I appreciate your candour Sebastion, ever thought that many of these big overseas investors do so through joint venture partnerships which are legal?

 

The economy won't crash if the Govt cracks down on the illegally owned assets through Thai nominee companies by the every day foreigner........

[sebastion]

Whist I appreciate your candour Sebastion, ever thought that many of these big overseas investors do so through joint venture partnerships which are legal?
 
The economy won't crash if the Govt cracks down on the illegally owned assets through Thai nominee companies by the every day foreigner........

Well you seem to know everything. Why even ask me when you know already?

As i said. Lots of big investors who want anonymity. They use this channel as do some Thais who launder/hide money.
I'm sure you'll find the men in uniform also like anonymity.
I guess you knew that too.

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[xylophone]

10 hours ago, sebastion said:

Well you seem to know everything. Why even ask me when you know already?

As i said. Lots of big investors who want anonymity. They use this channel as do some Thais who launder/hide money.
I'm sure you'll find the men in uniform also like anonymity.
I guess you knew that too.

Sent from my SM-G955F using Tapatalk
 

I was really referring to a post by you which said that villas with sea view are easiest to move and my point being, do you tell them that the structure they are about to enter into (Thai nominee company) is against the law and could result in them losing their money/property?

 

If you do that and they still go ahead, then you have at least made them aware of the potential danger in what they are doing, so it is on their heads..........that's all, nothing sinister in my question!

[phuketrichard]

13 hours ago, Psimbo said:

I like the way that the Gazette, or whatever it calls itself now is always promoting a booming market ( I realise they get advertising revenues from it) yet at the same time quotes over 8000 properties available! In Kamala alone there are loads of empty units, with more on the way. I get a feeling a lot of these projects are washing money. I noticed that one complex at the north end of Patong Beach, just after Graceland that never seemed to have been used has been demolished.

LOL:

regarding Kamala, (bit of topic),  the new development next to the Novotel at the Northern end. Two beach clubs pumping out music from 11am to 2am. Who in their right minds will buy a condo/house /villa nearby??
there so many places empty, yet they keep building...

[Peterw42]

A shop-house may be empty or appear unoccupied for numerous reasons. My wife and her brother own 3 shop-houses, for anyone driving past they would appear unoccupied etc. My wife stores her stock for her market stalls in one, brother stores stock for his business in another and 3rd is rented to another business as a workshop (the shutter remains closed) the rooms upstairs are casually rented to Thai friends and acquaintances. 

 

The same for Condos, just because there is no towels drying on the balcony, doesn't mean its unsold, unoccupied or unused. I have an empty condo next to me, owned by a sweet old Thai lady who keeps it empty to give to her grand children one day. Condo across  the hall is owned by an old Italian guy who literally visits for one month each year.

 

Unless you are the owner, developer or work at the land office, people have no idea the status of a condo block or row of shop-houses. 

 

 

[NamKangMan]

1 hour ago, Peterw42 said:

A shop-house may be empty or appear unoccupied for numerous reasons. My wife and her brother own 3 shop-houses, for anyone driving past they would appear unoccupied etc. My wife stores her stock for her market stalls in one, brother stores stock for his business in another and 3rd is rented to another business as a workshop (the shutter remains closed) the rooms upstairs are casually rented to Thai friends and acquaintances. 

 

The same for Condos, just because there is no towels drying on the balcony, doesn't mean its unsold, unoccupied or unused. I have an empty condo next to me, owned by a sweet old Thai lady who keeps it empty to give to her grand children one day. Condo across  the hall is owned by an old Italian guy who literally visits for one month each year.

 

Unless you are the owner, developer or work at the land office, people have no idea the status of a condo block or row of shop-houses. 

 

 

 

When you regularly look at a condo block, at various times of the evening, over a period of several months, both in high season and low season, and only ever see lights on in 10% to 20% of the condos, then you have a breakfast, lunch, or dinner across the road, and notice no "traffic" coming and going from the block, then you have a look in the car park and see very little vehicles, then you have a look at the swimming pool and lobby, and see very little people, it's fair to say the condo block has a low occupancy rate.

 

Then, you have a look online and see multiple advertisements of condos for sale in that same block, which have been online for years, yes - years, I  think it's fair to say they are not selling.

 

Now, apply the above to the many condo blocks on Phuket, coupled with the fact that they are still building more, and more, and more, than I think it's fair to say there is a "glut." 

 

"people have no idea the status of a condo block or row of shop-houses" - obviously someone, or a Thai Company, owns these condos.  The question is, are they "for sale" and if so, why aren't they selling. 

 

There are thousands on the market, more coming onto the market, and more being built.  It's simple "supply and demand" economics.  The more supply, the less demand, and the lower the prices. 

 

I would suggest that many of the properties that are for sale here, and have been for years, are listed at what the owner paid for the property, but with an oversupply, these prices can no longer be realized, thus, the owner can't offload the property without taking a hit.  

[thaistocks]

For years in the 1990's they said the same thing about the many shop-houses existing and yet ever being more built in Phuket; yet 10-20 years later many have increased in value 5 to 10 times.  In Phuket town many shop houses have soared in value, vs. before expert foreigners told us it was a boring town. Its not so much about yes/no the property mkt. stalled here for long, or if it has just become far more selective.

 

Also proper foreign ownership is easy in Thai stocks and there are many funds or blue chips which pay good dividends. Repatriation in ones' name is also assured, obviously, or nobody would invest here again.  :)

 

[thaistocks]

This Condo project as an example, well off the beaches, but next to Phuket Town biggest and expanding municipal park, more then doubled in value since its start just some 3-4 years ago.  http://www.sugarpalmresidence.com/

[Justfine]

High baht

Ruined beaches

Mad traffic

Tropical diseases

Rude locals

Expensive prices

Uncertain political issues

 

Can see why

 

[Psimbo]

3 hours ago, phuketrichard said:

LOL:

regarding Kamala, (bit of topic),  the new development next to the Novotel at the Northern end. Two beach clubs pumping out music from 11am to 2am. Who in their right minds will buy a condo/house /villa nearby??
there so many places empty, yet they keep building...

........... and Oceana on 'Mayden Corner-' fark walking up there with a gut full of beer!

 

Personally I think Phuket is overpriced and the second hand market is stagnant- they days of an investment property here are just in the eyes of the developers promising returns. Where I live (rent) there are now 6 occupied units out of about 50 and thankfully it will be like that again until next high season. 

 

Long may the 'boom' continue.

[NamKangMan]

3 hours ago, Psimbo said:

........... and Oceana on 'Mayden Corner-' fark walking up there with a gut full of beer!

 

Personally I think Phuket is overpriced and the second hand market is stagnant- they days of an investment property here are just in the eyes of the developers promising returns. Where I live (rent) there are now 6 occupied units out of about 50 and thankfully it will be like that again until next high season. 

 

Long may the 'boom' continue.

 

"Long may the 'boom' continue." - well said.

 

I haven't seen a rent increase in nearly 3 years.  Phuket is a renters paradise, and I can move at any time, and for any reason, and I haven't lost a baht. 

 

The old saying of "rent is dead money" is not true, in relation to Phuket. 

 

In fact, the money I could have used to buy here, invested elsewhere, earns more than the rent, so, in a way, I am living here rent free, and with no risk . 

 

Keep building, I say. 

[xylophone]

1 hour ago, NamKangMan said:

I haven't seen a rent increase in nearly 3 years.

I haven't had one in 5 years and I know of a couple of farangs who are paying 18 baht pm for 55 sqm condos in the heart of Patong, but the advertised price was 30k...........renters market to be sure. 

[thaistocks]

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.