this is what is also behind the facade of the Pattaya condominium market?

[Asiantravel]

Here is a very interesting article about the possible imminent collapse of the condominium market in Miami in the USA which is a much more transparent property market than here in Thailand. I wonder how much of what is described here is going on in a very similar way here in Pattaya? In Miami they are talking about a 468 months supply at the current sales rate. That would be 39 years’ supply!!

I’ve always maintained potential purchasers of condominiums in Pattaya are blindfolded when it comes to deciding what is real value because no one knows the true supply situation here (except Colliers International in their recent report claim there are at least 15 to 20,000 empty condos on the market). And there isn’t even a decent independent source of comparable sales data as they have in USA as described in this paragraph in the article

Quote

it will spread from there: These losses are establishing a down-trend in the “comparable sales” data – the Holy Grail by which the industry values properties – which will depress future asking and sales prices further.

 Whiff of Panic in Miami’s Condo Market

 

http://wolfstreet.com/2016/11/14/whiff-of-panic-in-miami-dade-condo-market-preconstruction-condos/

[JSixpack]

I'm glad somebody has finally called attention to a possible Pattaya condo glut and suggested they may be overpriced.

[Jingthing]

Nice try.

Totally different markets.

Yes, I agree no good research tools here like in the U.S. which has amazing tools, but bottom line, if people are willing to pay certain prices, there's the value.

Overpriced? If it's overpriced, nobody will buy it. 

Here as anywhere many people put condos on market with prices they don't expect to get. It would be very rare to sell quickly like that. In the vast majority of cases, people will eventually cave to levels that people will buy at. 

It's valid to think the prices many people are willing to buy at don't really reflect a good value. I would probably agree with that. But the solution to that is again not to buy unless you can locate a distress sale, which of course is probably not that hard.

Edited November 16, 2016 by Jingthing

[fforest1]

Whether condos are overpriced is always up for debate..

Whether the condo market is overbuilt for current needs is not up

for debate...The condo market in Pattaya has huge overhead supply... 

[Pattaya46]

15 minutes ago, fforest1 said:

Whether the condo market is overbuilt for current needs is not up for debate...

 

It is up for debate IMHO, because there is no "one" condos market.

- If you talk about these 30 sqm shoeboxes, yes I agree there are way too many of them being built and they must be now very difficult to sell (for a correct price)

- If you talk about decent condos 3 times this size, they don't seem to have the same problem. I continue to see them sold at correct price (for the seller ;))

[moonseeker]

I am looking for a large condo in good location. Min. 180sqm. I have not come across any huge real discounts or emergency sales in 6 months. The only real discount ever offered was for a 220 sqm shell-unit in a Russian building which I would have bought if there were any people living there. But they could not show me any details about admin, committee etc. etc. 30% off the published price for quick sale.

So if anybody knows of a great unit with great discount up to 8 Mio Baht, please PM me.  Thanks.  MS>

Edited November 16, 2016 by moonseeker

[Asiantravel]

3 hours ago, Jingthing said:

Nice try.

Totally different markets.

Yes, I agree no good research tools here like in the U.S. which has amazing tools, but bottom line, if people are willing to pay certain prices, there's the value.

Overpriced? If it's overpriced, nobody will buy it. 

Here as anywhere many people put condos on market with prices they don't expect to get. It would be very rare to sell quickly like that. In the vast majority of cases, people will eventually cave to levels that people will buy at. 

It's valid to think the prices many people are willing to buy at don't really reflect a good value. I would probably agree with that. But the solution to that is again not to buy unless you can locate a distress sale, which of course is probably not that hard.

 

 

 I  disagree with you because how does the average buyer go about determining whether a property is overpriced or not? How much due diligence and research does the average buyer carry out before agreeing terms ? When you say “if people are willing to pay certain prices, there's the value “ - would they still have agreed to pay a certain price if they really knew the seriousness of the oversupply in Pattaya? where are the buyers for15 to 20,000 vacant condominiums going to come from and particularly in a deflationary economic global environment?

In USA, Australia and the UK its common to get an independent appraiser or valuer to give you at least some background advice regarding market values before you buy because often there is some kind of loan involved and usually the loan itself relies on whether the valuer or appraiser gives the green light. Nobody does that kind of thing here and at best is a buyer might ask around a few brokers or agents. How many agents or brokers in Pattaya would even be aware of  15 to 20,000 vacant units and the implication on future values and even if they were aware do you honestly think they would volunteer such information? I mean Pattaya agents are hardly going to give you the true state of the market if it is likely to put you off purchasing a property.

So you are dealing with fairly uninformed buyers who not surprisingly will pay higher prices than informed buyers would.

[Jingthing]

I agree. It's very messy but all it means is that to have a better idea of value you need to shop around a lot and also talk to several people in the business because while most won't be helpful maybe one will.

[JB300]

I am looking for a large condo in good location. Min. 180sqm. I have not come across any huge real discounts or emergency sales in 6 months. The only real discount ever offered was for a 220 sqm shell-unit in a Russian building which I would have bought if there were any people living there. But they could not show me any details about admin, committee etc. etc. 30% off the published price for quick sale.

So if anybody knows of a great unit with great discount up to 8 Mio Baht, please PM me.  Thanks.  MS>

180sqm is pretty big for a Condo, so I'm not surprised you're having problems locating one or (rightly or wrongly) getting one for 8Million.

Have you considered buying a number of smaller ones & knocking them into 1?

Edit: Out of curiosity I had a quick look on hipflat & there might be a couple on there that fit your criteria https://www.hipflat.co.th/en/search/sale/condo_y/TH.CB_r1/TH.CB.TY_r2/7000000,10000000_p/any_b/150,250_a/any_w/any_o/any_i/100.874692,12.921155_c/14_z/list_v

[Peterw42]

Anything is worth what someone will pay for it. Whatever a condo sells for is the market price. Asking prices can be unrealistic, but thats not the market or the value of a condo. Real estate, shares or bananas, the price someone buys/sells it for is the price. Nothing is over priced if someone is willing to buy it. 

Basic laws of supply and demand apply,

More condos than buyers, prices go down.

More buyers than condos, prices go up.

 

[Asiantravel]

29 minutes ago, Peterw42 said:

Anything is worth what someone will pay for it. Whatever a condo sells for is the market price. Asking prices can be unrealistic, but thats not the market or the value of a condo. Real estate, shares or bananas, the price someone buys/sells it for is the price. Nothing is over priced if someone is willing to buy it. 

Basic laws of supply and demand apply,

More condos than buyers, prices go down.

More buyers than condos, prices go up.

 

 

" More condos than buyers, prices go down.. "

 

not necessarily because the developers can heavily discount and disguise the true state of the market by adopting gimmicks and thereby preserve the face value (as opposed to true value) of sold condominiums

a good example of this is Tachaya Praphibulsathaporn, sales and marketing director at A.D. Houses Co says company had adopted a "buy one, get one free" campaign for three condo projects  

 

Edited November 16, 2016 by Asiantravel

[Peterw42]

1 minute ago, Asiantravel said:

 

" More buyers than condos, prices go up. "

 

not necessarily because the developers can heavily discount and disguise the true state of the market by adopting gimmicks and thereby preserve the face value (as opposed to true value) of sold condominiums

a good example of this is Tachaya Praphibulsathaporn, sales and marketing director at A.D. Houses Co says company had adopted a "buy one, get one free" campaign for three condo projects  

 

 

If someone creates a false price, and someone is willing to pay the false price, its no longer a false price, it "is " the price.

Look at the share market, the price a stock is trading at is the quoted price. Look at the spread and there will be people asking more or offering less. 

Yes, in Thailand the actual selling price is sometimes hard to find, but that more a buyer beware situation.

Buy one, get one free. the same as buy 2 condos and get 50% off each one, or they are willing to sell one condo at half the current asking price.

[swissie]

A quick refresher course maybe ?

- 5 minutes before the R/E crash in the US, there were still plenty of frenzied buyers around, thinking "the price is right".

- In the final stages of a stock market bubble, there are always plenty of buyers left, thinking "the price is right".

In hindsight, "the Johnnie-Come-Lately's" within a market-cycle, will be called "THE BAGHOLDERS".
Cheers.

[KittenKong]

What is behind the facade of the Pattaya condominium market?

 

Smoke and mirrors.

 

[KittenKong]

1 hour ago, moonseeker said:

I am looking for a large condo in good location. Min. 180sqm. I have not come across any huge real discounts or emergency sales in 6 months. The only real discount ever offered was for a 220 sqm shell-unit in a Russian building which I would have bought if there were any people living there. But they could not show me any details about admin, committee etc. etc. 30% off the published price for quick sale.

 

Your description is a bit vague. What is a "good" location? How many bedrooms do you want in those 180sqm? 8MB will get you 180sqm in several fairly decent buildings that I can think of, though the layout may not be want you want.

 

As for your shell in a Russian building with no inhabitants, no committee and no admin, that sounds very odd indeed.

[Anthony5]

43 minutes ago, Asiantravel said:

 

" More condos than buyers, prices go down.. "

 

not necessarily because the developers can heavily discount and disguise the true state of the market by adopting gimmicks and thereby preserve the face value (as opposed to true value) of sold condominiums

a good example of this is Tachaya Praphibulsathaporn, sales and marketing director at A.D. Houses Co says company had adopted a "buy one, get one free" campaign for three condo projects  

 

 

I recall that the Lumpini condo on Jomtien second road, is it called Lumpini beach or something, has the billboards for a similar promotion for months already.

[smedly]

the problem here is that people generally compare prices to their home market which is a highly flawed way of thinking - This is Thailand

 

If people were exposed to the actual construction cost of their nice new 4m baht condo only then would they realise just how badly the had been fleeced

[moonseeker]

9 hours ago, JB300 said:

180sqm is pretty big for a Condo, so I'm not surprised you're having problems locating one or (rightly or wrongly) getting one for 8Million.

Have you considered buying a number of smaller ones & knocking them into 1?

Edit: Out of curiosity I had a quick look on hipflat & there might be a couple on there that fit your criteria https://www.hipflat.co.th/en/search/sale/condo_y/TH.CB_r1/TH.CB.TY_r2/7000000,10000000_p/any_b/150,250_a/any_w/any_o/any_i/100.874692,12.921155_c/14_z/list_v

Thanks JB. Yes, I have bought a few single units and doubled them in the past and also the opposite, cut down a big one into studios. I am looking for a large unit, with very high ceilings, as isolated as possible from the rest of building / condos, something like a large meeting room, they used to have all these extra rooms in older buildings, that often are empty and unused. Then I want to build and remodel an industrial type large open plan condo with all kinds of ideas incorporated. Thank you for the link. MS>

Edited November 17, 2016 by moonseeker

[KittenKong]

53 minutes ago, moonseeker said:

I am looking for a large unit, with very high ceilings, as isolated as possible from the rest of building / condos, something like a large meeting room, they used to have all these extra rooms in older buildings, that often are empty and unused. Then I want to build and remodel an industrial type large open plan condo with all kinds of ideas incorporated.

 

You still dont say where, and what do you mean by "very high" ceilings? 3m, 5m, more? And are you at all interested in views, floor levels, facilities in the building, common fees?

 

The large meeting rooms that you mention would normally be common areas without their own chanote and so by definition not for residential use or for individual sale.

[Henryford]

Part of a condo's value is down to the wealth of the buyer. When i bought my condo the Pound was at 71 to the baht and the price seemed very reasonable (certainly compared to the UK at the time). Now if i was buying with the Pound at 43 it would be a different matter. But of course condo values don't vary with exchange rates.

[sharecropper]

There was a decent article (read: actually admitted there was an oversupply) in the paper whose name we dare not mention, headed "Excess supply, tepid demand dent sales in Pattaya" this week. It said there were 17,000 unsold condos in Pattaya. 

[Asiantravel]

15 hours ago, Peterw42 said:

 

If someone creates a false price, and someone is willing to pay the false price, its no longer a false price, it "is " the price.

Look at the share market, the price a stock is trading at is the quoted price. Look at the spread and there will be people asking more or offering less. 

Yes, in Thailand the actual selling price is sometimes hard to find, but that more a buyer beware situation.

Buy one, get one free. the same as buy 2 condos and get 50% off each one, or they are willing to sell one condo at half the current asking price.

 

 

You are entirely wrong.

Surely you are not trying to imply that the inastute actions of one uninformed buyer who  pays through the nose then sets the tone for the entire market?    You have to be joking surely and it’s preposterous. If a real estate appraiser based his or her opinion of the entire market on the sale evidence from  a single comparable sale and it was eventually found that comparable provided a very distorted perspective of the  real market which subsequently caused financial loss to someone, that real estate appraiser would be in court very swiftly being sued for professional negligence.

 

What is also preposterous is you trying to equate the amount of knowledge the average person has regarding activity in the real estate market compared to the real-time information provided in the stock market.it's chalk and cheese.

 

And the significance of buy one get one free is that do you honestly believe developers and real estate agents and brokers will then tell the next average sucker who is considering buying something in the adjoining condominium building that the the price was  discounted by 50%? No chance and particularly if the sales contract included a nondisclosure clause. And this is how they are artificially inflated price continues to prop up  prices in a very artificial market   There is no database of values in Thailand as there is in Western countries and everyone is kept in the dark as to what terms are actually agreed.

Edited November 17, 2016 by Asiantravel

[Peterw42]

31 minutes ago, Asiantravel said:

 

 

You are entirely wrong.

Surely you are not trying to imply that the inastute actions of one uninformed buyer who  pays through the nose then sets the tone for the entire market?    You have to be joking surely and it’s preposterous. If a real estate appraiser based his or her opinion of the entire market on the sale evidence from  a single comparable sale and it was eventually found that comparable provided a very distorted perspective of the  real market which subsequently caused financial loss to someone, that real estate appraiser would be in court very swiftly being sued for professional negligence.

What is also preposterous is you trying to equate the amount of knowledge the average person has regarding activity in the real estate market compared to the real-time information provided in the stock market.it's chalk and cheese. By th

And the significance of buy one get one free is that do you honestly believe developers and real estate agents and brokers will then tell the next average sucker they discounted the price by 50%? No chance and particularly if the sales contract included a nondisclosure clause. And this is how they are artificially inflated price continues to prop up  prices in a very artificial market   There is no database of values in Thailand as there is in Western countries and everyone is kept in the dark as to what terms are actually agreed.

 

 

Let me put it this way. A condo block has 100 condos for sale, some developer stock, some resale etc. The developer is doing all the smoke and mirrors and managing to sell a couple of condos at an artificial price of 15 million each, at the other end someone has managed to find a reseller who is about to go broke, and managed to buy a condo for 5 million. There is a price in the middle of say 10 million were buyers would be happy to buy and sellers happy to sell, but there are no sales. 

 

What is the price of a condo in that block ???

 

You cant say 5 million as that was a one off (limited supply), you cant say were supply meets demand at 10 million, as there are no sales (demand but no supply), if the only sales are developer sales at 15 million (limited demand, lots of supply), isnt that the price ? 

 

Yes its artificial but its still were buyer and seller are meeting. Albeit at a low volume.

 

I dont know how you would appraise that market.

 

I take all the pricing with a grain of salt, I'm usually the guy running around offering 5 million.

[Asiantravel]

55 minutes ago, Peterw42 said:

 

 

Let me put it this way. A condo block has 100 condos for sale, some developer stock, some resale etc. The developer is doing all the smoke and mirrors and managing to sell a couple of condos at an artificial price of 15 million each, at the other end someone has managed to find a reseller who is about to go broke, and managed to buy a condo for 5 million. There is a price in the middle of say 10 million were buyers would be happy to buy and sellers happy to sell, but there are no sales. 

 

What is the price of a condo in that block ???

 

You cant say 5 million as that was a one off (limited supply), you cant say were supply meets demand at 10 million, as there are no sales (demand but no supply), if the only sales are developer sales at 15 million (limited demand, lots of supply), isnt that the price ? 

 

Yes its artificial but its still were buyer and seller are meeting. Albeit at a low volume.

 

I dont know how you would appraise that market.

 

I take all the pricing with a grain of salt, I'm usually the guy running around offering 5 million.

 

 

“What is the price of a condo in that block ???”

 

 

OK say for example a bank was asking this question prior to issuing a loan on one of those condominiums.  I don’t believe their decision would be based solely on trying to decipher whether 15, 10 or 5 million is representative of the “ market as a whole “ (not just in that block but the entire city)without checking how these figures looked with relation to condominium sales in other developments close by.

 

They would simultaneously compare activity in adjoining condominium buildings in the same street or if there went any then in the same suburb.

 

If the 15 million sales price for the two condos you mention stuck out like a sore thumb when compared to values in other adjoining buildings I would suggest they would be dismissed as not being representative of the market and being an aberration that occurred for whatever reason.

The same regarding the 5 million sale in that if it looked too cheap compared to sales prices being agreed in other buildings it would be classed as not representative of market value.

 

This is the point I am making regarding huge differences regarding  the Thailand market. There are all kinds of checks and balances in western property markets and far more transparent and reliable property databases which clearly show real prices paid and where special deals were made but didn't reflect the market as a whole. there is no source of reliable information like that here in Thailand.

 

But in the past people have never really worried much about all this because in the end there was always this expectation that if you bought a condominium off the plan in Pattaya you would always be able to flip it on at a profit. so in the past people didn't care about these kinds of issues.

 

but with 17,000 empty condominiums now on the market I would submit that things have changed for a very long time.

[smedly]

2 hours ago, Asiantravel said:

 

 

You are entirely wrong.

Surely you are not trying to imply that the inastute actions of one uninformed buyer who  pays through the nose then sets the tone for the entire market?    You have to be joking surely and it’s preposterous. If a real estate appraiser based his or her opinion of the entire market on the sale evidence from  a single comparable sale and it was eventually found that comparable provided a very distorted perspective of the  real market which subsequently caused financial loss to someone, that real estate appraiser would be in court very swiftly being sued for professional negligence.

 

What is also preposterous is you trying to equate the amount of knowledge the average person has regarding activity in the real estate market compared to the real-time information provided in the stock market.it's chalk and cheese.

 

And the significance of buy one get one free is that do you honestly believe developers and real estate agents and brokers will then tell the next average sucker who is considering buying something in the adjoining condominium building that the the price was  discounted by 50%? No chance and particularly if the sales contract included a nondisclosure clause. And this is how they are artificially inflated price continues to prop up  prices in a very artificial market   There is no database of values in Thailand as there is in Western countries and everyone is kept in the dark as to what terms are actually agreed.

I actually agree with him to an extent

 

what happens is you have farangs that come here strapped with cash and the first place they do their research is with realters who effectively make this highly inflated market - so what they see is the highly inflated prices everywhere and believe them to be correct, coupled with the fact that they then do a comparison to prices back home and think they are getting a bargain - the part they are not exposed to is the actual construction cost which is a fraction of what it is back home which results in profit margins upwards of 400%

[Peterw42]

14 minutes ago, Asiantravel said:

This is the point I am making regarding huge differences regarding  the Thailand market. There are all kinds of checks and balances in western property markets and far more transparent and reliable property databases which clearly show real prices paid and where special deals were made but didn't reflect the market as a whole. there is no source of reliable information like that here in Thailand.

 

Yes, that is the state of the market. There is no data to inform buyers or sellers that they are way outside the ball park.

 

[smedly]

2 hours ago, Peterw42 said:

 

 

Let me put it this way. A condo block has 100 condos for sale, some developer stock, some resale etc. The developer is doing all the smoke and mirrors and managing to sell a couple of condos at an artificial price of 15 million each, at the other end someone has managed to find a reseller who is about to go broke, and managed to buy a condo for 5 million. There is a price in the middle of say 10 million were buyers would be happy to buy and sellers happy to sell, but there are no sales. 

 

What is the price of a condo in that block ???

 

You cant say 5 million as that was a one off (limited supply), you cant say were supply meets demand at 10 million, as there are no sales (demand but no supply), if the only sales are developer sales at 15 million (limited demand, lots of supply), isnt that the price ? 

 

Yes its artificial but its still were buyer and seller are meeting. Albeit at a low volume.

 

I dont know how you would appraise that market.

 

I take all the pricing with a grain of salt, I'm usually the guy running around offering 5 million.

thee correct price is when the construction company admits they built the condo for 2m baht and then sells for 4m

[JB300]

There is some data on Hipflat that includes sale/rent prices for previous properties in the building & nearby area though I've no idea how accurate this is.

Be interesting to hear real life experiences of people who have bought / sold & compare their experiences to it.

[Jingthing]

Look, there is no doubt at all that the market here is radically different than the incredibly transparent USA market.

 

But as mentioned you could have bought a condo at the top of the last bubble there and legitimately bought it at "market" price.

 

Basically, as said before, you have to do a log of leg work yourself as a buyer to gain confidence that what you are offering is within the range of the current market price here. That doesn't mean it will turn out to be a "good deal" or "worth it" in the long run, but knowing that in advance isn't really possible. 

[JSixpack]

1 hour ago, smedly said:

. . .  the part they are not exposed to is the actual construction cost which is a fraction of what it is back home which results in profit margins upwards of 400%

 
It's a common naive misconception that the price should be determined solely by construction costs. There are many other costs as well. And our members think that, of course, profits should be some comfortably small percentage over costs. They've fixed that at, say, 10%. :) It should be determined by the law in the nanny state, eh. Hence complaints about prices of everything from haircuts to beer. Constant worries about prices suggest the complainant doesn't really have the money needed to live here and should remedy that problem one way or the other.

 

I might point out that the price is also distorted by the foreign/Thai quota. They aren't going to sell so many in the Thai quota and may have to discount those they do sell. And they aren't going to sell all the foreign quota any time soon either, though a higher percentage no doubt. That implies higher prices of projected sales to cover all the costs and profit.

Edited November 17, 2016 by JSixpack