It's official - Thai real estate bubble pops.

[KittenKong]

1 hour ago, scubascuba3 said:

Increasing foreign quota will allow Thais to sell their condos to foreigners, prices will increase for thai condos and reduce for foreign condos but more importantly the market gets more liquid

 

Thais apparently dont see any advantage in having a liquid or transparent property market.

[trogers]

1 hour ago, KittenKong said:

 

As I mentioned, the quota has already been increased to well above 49% during a financial crisis. So I see no reason why it should not happen again if the need arises.

I don't remember that the foreign quota for condos has ever exceeded 49%.

 

Maybe the % increase were for distressed companies?

[KittenKong]

1 hour ago, trogers said:

I don't remember that the foreign quota for condos has ever exceeded 49%.

 

Maybe the % increase were for distressed companies?

 

See about half-way down this page: http://www.homeconnectthailand.com/real-estate-news/the-condominium-conundrum/

 

And the downside is discussed here: https://www.thaivisa.com/forum/topic/956157-condo-transfer-problems-at-pattaya-land-office/

 

[trogers]

3 hours ago, KittenKong said:

 

See about half-way down this page: http://www.homeconnectthailand.com/real-estate-news/the-condominium-conundrum/

 

And the downside is discussed here: https://www.thaivisa.com/forum/topic/956157-condo-transfer-problems-at-pattaya-land-office/

 

The hush hush way this issue was and is being handled points to one thing. In the mind of the Thais, the govt of that period has sold Thailand to foreigners.

 

That's the reason why there is no published and advertised list of these said condo projects, and why there is a downside for the foreign buyers.

 

It is also a reason why Thaksin could not push for buyers of his Elite cards to own landed properties as originally marketed.

[Propellerhead]

Increasing foreign quota will allow Thais to sell their condos to foreigners, prices will increase for thai condos and reduce for foreign condos but more importantly the market gets more liquid

Looks good at first glance on paper. But how many of these properties purchased in this hypothetical newly expanded and liquid market will be owner occupied and how many will be put up for rental? Factor in the new inventory coming onto the market over the next 12 to 18 months and I think you're going to see tremendous downward pressure on rental rates. The 6% yields that are currently being promised aren't going to be there. Prices are going to fall. I wouldn't be a buyer in this environment. I wouldn't even sign a one year lease.


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[scubascuba3]

Looks good at first glance on paper. But how many of these properties purchased in this hypothetical newly expanded and liquid market will be owner occupied and how many will be put up for rental? Factor in the new inventory coming onto the market over the next 12 to 18 months and I think you're going to see tremendous downward pressure on rental rates. The 6% yields that are currently being promised aren't going to be there. Prices are going to fall. I wouldn't be a buyer in this environment. I wouldn't even sign a one year lease.


Sent from my iPhone using Thailand Forum - Thaivisa mobile app

I wouldn't believe rental yields being promised. Its just a carrot. If the foreign quota isn't increased I'd expect prices to continue to fall, Thais not being able to get mortgages so not able to sell to other Thais, eventually banks will start repossessing Thai condos who can't pay their mortgage as their condos aren't rented. Plus issue with Thais not paying maintenance will increase.

The above is a generalisation but its generally correct.

[KittenKong]

4 hours ago, Propellerhead said:

Factor in the new inventory coming onto the market over the next 12 to 18 months and I think you're going to see tremendous downward pressure on rental rates.

 

Already happened. Asking rental prices in my building are down 20-30% on last year.

[KittenKong]

1 hour ago, scubascuba3 said:

I wouldn't believe rental yields being promised.

 

In Thailand one should never believe any sort of promise or advertising. Only believe what you have in your hand.

[funandsuninbangkok]

11 minutes ago, KittenKong said:

 

Already happened. Asking rental prices in my building are down 20-30% on last year.

And since property values are based on rents achieved(in rational countries anyway) what should we expect to happen to condo prices?

 

timber!

[trogers]

5 hours ago, KittenKong said:

 

Already happened. Asking rental prices in my building are down 20-30% on last year.

About right. I still see it happening on Facebook advertising.

 

Buyers of condo units would first believe that their asking rents should be at least 6% of their purchase prices.

 

After a year of no response, reality sinks in that actual rental yield is 3-4% ...?

[inThailand]

With most Thais swimming in debt, unsold property inventories not shrinking, banks tightening their lending practices, and about zero percent of Chinese and few falangs buying, selling prices and rental rates have no where to go, but down. Its been a trend already for about 4 years, and the near future doesn't look brighter.

[ozmeldo]

On 7/24/2017 at 0:53 PM, trogers said:

No shortage of beaches in this country. There is a 20-year old ghost housing and condo project with its private riverfront. You would pass it by when crossing the Bang Prakong river along Bangna-trad.

 

What is in shortage are mountaintops with frost during year end.

While no shortage of beaches, there is a huge shortage of decent, reasonably priced condos with water views. Especially excluding Pattaya, Phuket and Hua Hin/Cha Am.

[trogers]

55 minutes ago, ozmeldo said:

While no shortage of beaches, there is a huge shortage of decent, reasonably priced condos with water views. Especially excluding Pattaya, Phuket and Hua Hin/Cha Am.

Don't forget, any developer has to worry about selling that 51% Thai quota, while foreigners would only think about a seaview unit.

[funandsuninbangkok]

4 hours ago, ozmeldo said:

While no shortage of beaches, there is a huge shortage of decent, reasonably priced condos with water views. Especially excluding Pattaya, Phuket and Hua Hin/Cha Am.

But with the advent of airbnb and the masses of new beach hotels on Agoda, why would anyone buy?

[scubascuba3]

But with the advent of airbnb and the masses of new beach hotels on Agoda, why would anyone buy?

I think anyone over a certain age its not worth buying, maybe 65+, if young enough it will pay for itself in 15/20 years then you live rent free.

Its still cheaper to buy than rent in Pattaya but that assumes the condo doesn't fall into disrepair and maintenance fees don't get too high. Selling could be difficult

[funandsuninbangkok]

1 hour ago, scubascuba3 said:

I think anyone over a certain age its not worth buying, maybe 65+, if young enough it will pay for itself in 15/20 years then you live rent free.

Its still cheaper to buy than rent in Pattaya but that assumes the condo doesn't fall into disrepair and maintenance fees don't get too high. Selling could be difficult

Why would you assume good maintenance?

 

also, when you say cheaper to buy, opportunity costs included?

 

stock market is up 300% in 10 years. Pattaya property?

[scubascuba3]

Why would you assume good maintenance?
 
also, when you say cheaper to buy, opportunity costs included?
 
stock market is up 300% in 10 years. Pattaya property?

Some condo blocks seemed to be well maintained, so need to choose carefully. Yes I've had great stock market returns, but will that continue, probably not, also there may be a correction. So opportunity cost is theoretical and as they say past performance is not an indicator of future performance.

[midas]

On 8/25/2017 at 0:50 AM, funandsuninbangkok said:

And since property values are based on rents achieved(in rational countries anyway) what should we expect to happen to condo prices?

 

timber!

Plus you have only got 15 years to amortise your investment -in Bangkok at least

 

 

 Bangkok Is Sinking and May Be Underwater in 15 Years, Study Says

 

https://weather.com/science/environment/news/bangkok-sinking-subsidence-warming-15-years

[ozmeldo]

22 hours ago, trogers said:

Don't forget, any developer has to worry about selling that 51% Thai quota, while foreigners would only think about a seaview unit.

It's a good point, I just don't see decent property (land) for building. 

 

19 hours ago, funandsuninbangkok said:

But with the advent of airbnb and the masses of new beach hotels on Agoda, why would anyone buy?

Because you want to live there, not just holiday.

18 hours ago, scubascuba3 said:

I think anyone over a certain age its not worth buying, maybe 65+, if young enough it will pay for itself in 15/20 years then you live rent free.

Its still cheaper to buy than rent in Pattaya but that assumes the condo doesn't fall into disrepair and maintenance fees don't get too high. Selling could be difficult

Agreed. Only reason I'm even considering buying is that the wife will have it when I'm gone. It will have to be an absolute bargain at that. Condos so shabby just a few years new.

 

The politics here just gets more sketchy by the day. We'd go back to U.S.if healthcare was fixed.

[trogers]

2 hours ago, ozmeldo said:

It's a good point, I just don't see decent property (land) for building. 

 

Because you want to live there, not just holiday.

Agreed. Only reason I'm even considering buying is that the wife will have it when I'm gone. It will have to be an absolute bargain at that. Condos so shabby just a few years new.

 

The politics here just gets more sketchy by the day. We'd go back to U.S.if healthcare was fixed.

All condos will get old.

 

If you are thinking of getting one to stay, and then leave it to wife later, choose one in an old project with a good location and reasonable maintenance track record.

 

The latter points to co-owners who do care for their units and will maintain the project for years to come.

[cheeryble]

On August 26, 2017 at 0:56 PM, funandsuninbangkok said:

 

 

also, when you say cheaper to buy, opportunity costs included?

 

stock market is up 300% in 10 years. Pattaya property?

They HAPPEN to be recovered and more from the biggest crash since the great depression.

Very bad......worse......things could still have happened ten years ago......if not the price wouldn't have been discounted so low.

Are you suggesting markets only rise?

If you think you can call the future of the markets please tell us and we'll decide whether you're a unique phenomenon or not..

[funandsuninbangkok]

2 hours ago, cheeryble said:

They HAPPEN to be recovered and more from the biggest crash since the great depression.

Very bad......worse......things could still have happened ten years ago......if not the price wouldn't have been discounted so low.

Are you suggesting markets only rise?

If you think you can call the future of the markets please tell us and we'll decide whether you're a unique phenomenon or not..

Umm,

 

I'm  saying US stocks and REITs are a better investment than Thai condos. 

 

Both go up and down in price but stocks have far better return long term and you don't need to throw families into the street when the don't pay the rent. No unblocking toilets either

 

i know some think buying condos is fun but it's really a depreciating asset here. Might as well by yourself a boat.  

[cheeryble]

Umm,  

I'm  saying US stocks and REITs are a better investment than Thai condos. 

 

 

 

You mentioned REITs a couple of times.

Let's have a look at three typical ones.

I did not cherry pick they were the only three I looked at:

AGNC, RSO, AND VER

Ouch, ouch, and Jesus H Ouch.....

 

 

 

Sent from my iPad using Thailand Forum - Thaivisa mobile app

 

[ExpatOilWorker]

On 8/26/2017 at 10:58 AM, scubascuba3 said:

I think anyone over a certain age its not worth buying, maybe 65+, if young enough it will pay for itself in 15/20 years then you live rent free.

Its still cheaper to buy than rent in Pattaya but that assumes the condo doesn't fall into disrepair and maintenance fees don't get too high. Selling could be difficult

One aspect of the Thai condo market that is often overlooked is the durability of high-rise buildings. How long will they last until the wrecking ball is called in?

We don't really know since none of the buildings are old enough yet, but there are some indicators that 40-50 years is a good ball park number.

Lots of buildings were complete around 1990-97 and they are most likely half way through their lifespan.

One indication is the Bank Of Ayutthaya  building at Wireless road. It was 38 years old when they knocked it down. One of the first early days high rise building to go.

 

[cheeryble]

2 hours ago, ExpatOilWorker said:

One aspect of the Thai condo market that is often overlooked is the durability of high-rise buildings. How long will they last until the wrecking ball is called in?

We don't really know since none of the buildings are old enough yet, but there are some indicators that 40-50 years is a good ball park number.

Lots of buildings were complete around 1990-97 and they are most likely half way through their lifespan.

One indication is the Bank Of Ayutthaya  building at Wireless road. It was 38 years old when they knocked it down. One of the first early days high rise building to go.

 

Hi ExpatOW

 

There is no age limit for buildings......it's only a matter of repairs done in a timely manner.

Look at the classic cities in Europe........London, Paris, Vienna.......the mansion flats there get more and more desirable. They are usually in better condition than they have ever been in their century plus life.

Yet the condos built here have a great advantage. 

Example. They have metal window frames. In my condo I am amazed .....the windows have had all but no attention but they still slide smoothly after 25 years and believe it or not the rubber sealing strip is still resilient and a fingernail pushed into it will rebound quickly. Window frames nowadays can of course be cheaply replaced.

Example. Maybe most people might think most about the structure of the building.

Good news is unlike the big thick old walls in Europe, reinforced concrete framing shows immediately if there is any water ingress. Its a rare event but if any water gets into a crack to reach the rebar, the rebar begins to rust and expands.......pushing the concrete out in cracks called spalling. It is very visible ....you can't miss it......which is good as you get early warning to fix. Condos in Thailand have to be surveyed officially and a report written yearly......this is the longest you will wait for the warning to be public but normally a handyman or resident is going to notice it quickly. BTW even when rebar has been affected by water it can look terribly rusty but in fact the rust is usually a very thin layer and a scrape with a pocket knife will show.......even after many years.....that there is shiny strong metal just beneath the surface,

Generally speaking even major repairs like roof or lift are shared so may ways it works out very economical, and after 25 years you can trust the foundations much more than a new building.

I don't know about the Bank you speak of but buildings do get demolished for commercial or re-development reasons. A day may come when the building you live in is more central, and it is commercially advantageous to knock it down and rebuild three times higher. If so residents would be approached with the proposition which if they accept may make them a lot of money and they still get a condo in the new building as well if they want.

[scubascuba3]

Hi ExpatOW
 
There is no age limit for buildings......it's only a matter of repairs done in a timely manner.
Look at the classic cities in Europe........London, Paris, Vienna.......the mansion flats there get more and more desirable. They are usually in better condition than they have ever been in their century plus life.
Yet the condos built here have a great advantage. 
Example. They have metal window frames. In my condo I am amazed .....the windows have had all but no attention but they still slide smoothly after 25 years and believe it or not the rubber sealing strip is still resilient and a fingernail pushed into it will rebound quickly. Window frames nowadays can of course be cheaply replaced.
Example. Maybe most people might think most about the structure of the building.
Good news is unlike the big thick old walls in Europe, reinforced concrete framing shows immediately if there is any water ingress. Its a rare event but if any water gets into a crack to reach the rebar, the rebar begins to rust and expands.......pushing the concrete out in cracks called spalling. It is very visible ....you can't miss it......which is good as you get early warning to fix. Condos in Thailand have to be surveyed officially and a report written yearly......this is the longest you will wait for the warning to be public but normally a handyman or resident is going to notice it quickly. BTW even when rebar has been affected by water it can look terribly rusty but in fact the rust is usually a very thin layer and a scrape with a pocket knife will show.......even after many years.....that there is shiny strong metal just beneath the surface,
Generally speaking even major repairs like roof or lift are shared so may ways it works out very economical, and after 25 years you can trust the foundations much more than a new building.
I don't know about the Bank you speak of but buildings do get demolished for commercial or re-development reasons. A day may come when the building you live in is more central, and it is commercially advantageous to knock it down and rebuild three times higher. If so residents would be approached with the proposition which if they accept may make them a lot of money and they still get a condo in the new building as well if they want.

Out of interest are you a builder or architect or something? People do often re peddle the story of condos not lasting in Thailand.

[ExpatOilWorker]

50 minutes ago, cheeryble said:

Hi ExpatOW

 

There is no age limit for buildings......it's only a matter of repairs done in a timely manner.

Look at the classic cities in Europe........London, Paris, Vienna.......the mansion flats there get more and more desirable. They are usually in better condition than they have ever been in their century plus life.

Yet the condos built here have a great advantage. 

Example. They have metal window frames. In my condo I am amazed .....the windows have had all but no attention but they still slide smoothly after 25 years and believe it or not the rubber sealing strip is still resilient and a fingernail pushed into it will rebound quickly. Window frames nowadays can of course be cheaply replaced.

Example. Maybe most people might think most about the structure of the building.

Good news is unlike the big thick old walls in Europe, reinforced concrete framing shows immediately if there is any water ingress. Its a rare event but if any water gets into a crack to reach the rebar, the rebar begins to rust and expands.......pushing the concrete out in cracks called spalling. It is very visible ....you can't miss it......which is good as you get early warning to fix. Condos in Thailand have to be surveyed officially and a report written yearly......this is the longest you will wait for the warning to be public but normally a handyman or resident is going to notice it quickly. BTW even when rebar has been affected by water it can look terribly rusty but in fact the rust is usually a very thin layer and a scrape with a pocket knife will show.......even after many years.....that there is shiny strong metal just beneath the surface,

Generally speaking even major repairs like roof or lift are shared so may ways it works out very economical, and after 25 years you can trust the foundations much more than a new building.

I don't know about the Bank you speak of but buildings do get demolished for commercial or re-development reasons. A day may come when the building you live in is more central, and it is commercially advantageous to knock it down and rebuild three times higher. If so residents would be approached with the proposition which if they accept may make them a lot of money and they still get a condo in the new building as well if they want.

I think the dynamics of a building life cycle is totally different from heavily regulated markets like London and Paris.

 

I have been involved in 3 different buildings all completed in the early to mid '90. If you walk in from the street they all look very nice and well kept, but over the years they have had some spectacular maintenance issues. In one the 8" main water pipe burst so water was pouring down the elevator shaft.

Lots of small water leak between units as steel pipe are starting to corrode. A tiny leak can slowly water saturate a wall several floors down. Even water coming up through the floor in one unit.

On the more smelly side of the scale, sewage water flowing back and flood the entire unit.

 

As building start to get older the demographic of the people staying there also change and some units are simply just left empty. The common fees start to fall, elevators get shut down outside peak hours and a slow downward spiral starts.

 

Some building will of course get renovated from the inside out, but beyond 50 years others are better off knocked to the ground.

[funandsuninbangkok]

11 hours ago, cheeryble said:

 

You mentioned REITs a couple of times.

Let's have a look at three typical ones.

I did not cherry pick they were the only three I looked at:

AGNC, RSO, AND VER

Ouch, ouch, and Jesus H Ouch.....

 

 

 

Sent from my iPad using Thailand Forum - Thaivisa mobile app

 

Well Sir,

 

you certainly know know how to pick them!  Based on your skill, I would recommend you stay away. You seem to have the inverse Golden Touch!  I can't imagine how your Thai portfolio has done!

 

for those still interested here's more info in how to make money on real estate without getting your hands dirty 

 

http://www.investopedia.com/ask/answers/060415/what-average-annual-return-typical-long-term-investment-real-estate-sector.asp

 

[cheeryble]

12 minutes ago, funandsuninbangkok said:

Well Sir,

 

you certainly know know how to pick them!  Based on your skill, I would recommend you stay away. You seem to have the inverse Golden Touch!  I can't imagine how your Thai portfolio has done!

 

for those still interested here's more info in how to make money on real estate without getting your hands dirty 

 

http://www.investopedia.com/ask/answers/060415/what-average-annual-return-typical-long-term-investment-real-estate-sector.asp

 

 

I used to sit behind four screens a long time ago and hated it, prefer the quiet life.

Thanks for the figures.

I think as an expert you should be careful to warn newbies about REITs.

Even after all these years a couple of things come to mind.

They are leveraged which makes them much more volatile.

They need to be monitored scrupulously.

The money you (if you do) earn is subject to inflation whereas property generally follows inflation plus a bit on top.

How much drawdown can a sane person stand? The examples I gave.....which I think mirrored the sector in general....... plummeted so drastically after 2013 when interest rates threatened to rise again it would be a bloodbath.......or accept your losses and fret and guess when to re-enter......and probably get it wrong.

Rather clean a toilet (luckily I don't have to)

[trogers]

6 hours ago, ExpatOilWorker said:

One aspect of the Thai condo market that is often overlooked is the durability of high-rise buildings. How long will they last until the wrecking ball is called in?

We don't really know since none of the buildings are old enough yet, but there are some indicators that 40-50 years is a good ball park number.

Lots of buildings were complete around 1990-97 and they are most likely half way through their lifespan.

One indication is the Bank Of Ayutthaya  building at Wireless road. It was 38 years old when they knocked it down. One of the first early days high rise building to go.

 

The oldest high-rise hotels built in the 70s are Dusit and Indra. Similarly, the oldest office building is the UOB HQ.

 

And the oldest condo building completed near end 70s is Premier Condominium, where I have 2 units.

 

The structures would still be standing for another 5 decades, and they would be demolished only because of the very high increases in land values and building density that rezoning allowed. Not because their structures are failing.