If Thais don't like 2nd hand property, isn't 2nd hand property a buyer's market?

[TingTawng]

 

• Thais love buying NEW property
• Thais don't really like second-hand property
• Ergo, surely the 2nd hand market for property is a buyer's market?

 

Furthermore, isn't it a lie that a condo is a good investment? Sure, you might make some rent off it (though rents have flatlined in BKK for 10 years), but you're surely losing money on the actual condo value itself (IF you can sell it!). I've seen a few ads claiming that their apartment values are predicted to rise X% a year, but....when you sell it, it's 2nd hand (to state the obvious).  Surely as a seller of a 2nd hand condo (i.e. you're not a developer), you're looking at a smaller pool of buyers, who are already going to use the reputation of 2nd hand properties against you? Especially when "new" is what everyone wants, and there's always new condos being built.   Is it because of the low build quality as to why 2nd hand properties seem to be a lot less disireable? Do old apartments cost a lot to maintain compared to new ones, hence their lower value?

 

I understand that location is very important, and maybe in absolute prime locations, a 2nd hand condo might even compete with price to a new one, but what of middling locations?

 

I ask these questions as I'm looking to buy, but I don't see the point in paying an unnecessary premium because a condo is new if build quality isn't so vital (and if it is, what are we suggesting here - that condos have a shelf-life and really don't expect a block of flats to last more than 40 years or so?). 

 

OR, is it that new condos have leapt in value so much, it's not that 2nd hand properties go DOWN in value, they just go up at a much slower rate than new properties (but still beat inflation)?

 

Sorry if some of these questions are obvious, not got any experience with buying condos in Thailand.

[Peterw42]

Yes, you are right about 2nd hand. But unfortunately the normal rules of supply and demand, new verses old, investment and return dont always apply in Thailand. What the seller thinks its worth, what it is worth and what the buyer thinks its worth are often 3 very different figures. Forget what you know about real estate buying, values, perceived values etc. forget about what it is worth, may be worth, should be worth.

Find something you like and make a low offer.

I realise you are trying to make an informed decision, but in Thailand its smoke and mirrors, the normal rules just dont seem to apply.

I usually rely on rental return as an indication of inherent value, if a property gets a return of better than the same money in the bank, thats its value. 

Edited June 19, 2017 by Peterw42

[trogers]

First, location. Is that location popular with working foreigners? Not those on short-term visas doing border runs.

 

This is where you establish a rental income and compare it with its price.

 

Nowhere does it say that renters only go for new projects.

 

I only purchase old units, refurbish them and rent out. Five units since 2007-8. Compared to today's prices, I got them at half the price for double the area, but my rents are at 60-70% of the new ones.

 

So, who faces more vacancy periods, new or old?

 

The keyword here is Refurbish.

[KittenKong]

15 minutes ago, trogers said:

First, location. Is that location popular with working foreigners? Not those on short-term visas doing border runs.

 

This may apply in Bangkok but it certainly would not in, say, Pattaya. Working foreigners are as common here as hookers with a heart of gold. Non-working resident foreigners are common though, and indeed I form part of that group.

[trogers]

Just now, KittenKong said:

 

This may apply in Bangkok but it certainly would not in, say, Pattaya. Working foreigners are as common here as hookers with a heart of gold. Non-working resident foreigners are common though, and indeed I form part of that group.

That group of non-working resident foreigners is pretty small, compared to the supply...

 

I wouldn't touch properties in tourist areas with their high and low seasons.

[KittenKong]

1 hour ago, TingTawng said:

• Thais love buying NEW property
• Thais don't really like second-hand property
• Ergo, surely the 2nd hand market for property is a buyer's market?

 

Some Thais like buying shiny new things and are easily swayed by bling. Some farangs think the same way.

 

Some Thais have an insane aversion to old property in case it may be haunted. Most farangs dont care about such things.

 

Apart from that I dont think that one can say anything much about the relative desirability of old and new, except in as much as new buildings tend to have smaller rooms and smaller units, and generally less in the way of common/open area and land. New buildings also tend to be finished with cheaper materials that look good but may not last long.

[KittenKong]

3 minutes ago, trogers said:

That group of non-working resident foreigners is pretty small, compared to the supply...

 

I wouldn't touch properties in tourist areas with their high and low seasons.

 

What difference does high and low season make if you want to live in your condo?

 

I know hundreds of non-working farangs who live here more or less permanently, and the area in and around Pattaya abounds with them. I know only a handful of farangs who work here. I suspect that Bangkok is the opposite.

[trogers]

16 minutes ago, KittenKong said:

 

What difference does high and low season make if you want to live in your condo?

 

I know hundreds of non-working farangs who live here more or less permanently, and the area in and around Pattaya abounds with them. I know only a handful of farangs who work here. I suspect that Bangkok is the opposite.

I am looking through an investor's perspective.

 

But even people who buy for self-occupation would have to ask the same questions that are in the minds of prospective buyers, when it is time to sell.

[TingTawng]

Thanks for the replies.  I realise this is a general question and "it depends on the location" is probably the answer, but is a condo in Thailand a reasonable store of wealth for someone who's a bit nervous about only holding cash in the bank? Or should you only seriously think of a condo if you are planning to either rent it out or live in it pretty much full-time? I'm going to be living in Thailand full-time, though already have a property I'm living in (family home in Thailand, married to a Thai, wife is the owner of the property) - I do think it might be a good idea to convert some of my cash into a tangible asset as a bit of a hedge against fiat currency.

Edited June 19, 2017 by TingTawng

[Khun Jean]

I like older condos. 10 years or older.

If they are in good shape and maintenance is in order i trust them more then a newly build.

My older condos give a return of 10%, new ones will struggle a lot to get that.

I do this for more then 10 years and never had any problems with occupancy.

In the meantime the price more then doubled. Which is not of that much importance to me. It just keeps up with inflation so that when i want to sell and buy another i do not have to add much from savings. 

After ten years it is also time to slowly roll over some of them and that will be an ongoing process from now on.

 

I am off the opinion that cash on the bank is the worst. I prefer real estate, gold, silver, stocks, tools.

Edited June 19, 2017 by Khun Jean

[KittenKong]

1 hour ago, TingTawng said:

Or should you only seriously think of a condo if you are planning to either rent it out or live in it pretty much full-time?

 

If you are going to the trouble and expense of buying a condo that you dont intend to live in then it makes sense to me to rent it out. Otherwise it's just dead.

 

[KittenKong]

2 hours ago, trogers said:

But even people who buy for self-occupation would have to ask the same questions that are in the minds of prospective buyers, when it is time to sell.

 

I dont consider high and low seasons at all. I simply bought in a town in which I want to live.

 

And would you consider resorts on the south coast of England as bad investments? Those all have high and low seasons too yet they are amongst the places in which UK property has seen the greatest gains in value. Indeed some of the most expensive places in the whole of the UK are in holiday resorts.

[TingTawng]

30 minutes ago, KittenKong said:

 

If you are going to the trouble and expense of buying a condo that you dont intend to live in then it makes sense to me to rent it out. Otherwise it's just dead.

 

Good point - maybe I should look into buy to let...

Edited June 19, 2017 by TingTawng

[trogers]

28 minutes ago, KittenKong said:

 

I dont consider high and low seasons at all. I simply bought in a town in which I want to live.

 

And would you consider resorts on the south coast of England as bad investments? Those all have high and low seasons too yet they are amongst the places in which UK property has seen the greatest gains in value. Indeed some of the most expensive places in the whole of the UK are in holiday resorts.

Not many warm resorts in the UK for summer, whereas, the whole coastal areas of Thailand is still sunny during winter.

 

So, the reverse would be true for Thailand. Value is at resort areas with frost during winter. Thus, the rush up the hills of Petchabun...

Edited June 19, 2017 by trogers

[observer90210]

what about pool villas in sea side resort developpments?

Edited June 19, 2017 by observer90210

[trogers]

1 hour ago, observer90210 said:

what about pool villas in sea side resort developpments?

Through Thai nominees or 30-year leases?

[observer90210]

4 minutes ago, trogers said:

Through Thai nominees or 30-year leases?

oh definately on 30-year renewable leases!!!

[funandsuninbangkok]

Condos in Bangkok depreciate

 

Put your money in some other investment and rent here

 

you will be able to move when you need to and will have access to your money when you need it

 

you will also make more money

[trogers]

10 minutes ago, observer90210 said:

oh definately on 30-year renewable leases!!!

Renewable? Sure?

[jadee]

My advice to the OP TingTawng is to check out property sites largely used by Thais to get a good sense of the market. Sites such as Prakard are a good way of finding out what people are charging in a particular block for rent and/or what they are asking for. Your point about 2nd hand being a buyers market has some merit; you can always make a low offer on a place you like and see whether the owner is interested. 
When looking at Prakard, you click on the development and then the rent/sell page. If the first page has posts that are over a year old, you're probably looking at some desperate sellers and an indication of a place that won't be in demand. There are some prime developments where posts don't stay on the front page for 30 minutes, they're that popular. 

[howard ashoul]

Yes, they love 1st hand houses and hates 2nd. Personal experience.

 

They might justify it by that ghost of past owners lives there or gave you some simlilar crap. Real reasson ussualy is, that after first owner that property will start falling apart. Level of maitanance, unqualified workers, trying to save on everything when building a house. It just ads up.

 

In our village on the main street was build a house. First renter stayed there about 5years. I came as a 2nd renter. The state of this house is completely horrendous after this 5 years. The roof is leaking so bad, that ceilings in the bathroom literally fell down. 20% of ceramic tiles in bathroom just simply felt off own on their own. Balcony is leaking. 2nd floor toilet is leaking through ceilings to 1st floor bathroom. Frame of door in living room simply felt on the ground. Its basically falling all apart. 

 

Im not the owner, but if I was and I was trying to put this house together, it would be cheaper just start from the scratch.

 

2nd hand properies sounds good only if you're not familiar with thai standars... 

 

 

[catman20]

17 hours ago, trogers said:

First, location. Is that location popular with working foreigners? Not those on short-term visas doing border runs.

 

This is where you establish a rental income and compare it with its price.

 

Nowhere does it say that renters only go for new projects.

 

I only purchase old units, refurbish them and rent out. Five units since 2007-8. Compared to today's prices, I got them at half the price for double the area, but my rents are at 60-70% of the new ones.

 

So, who faces more vacancy periods, new or old?

 

The keyword here is Refurbish.

In condos surley refurbishing may be the way to go BUT you have to be sure you have bought in a good well maintaned building.

[Muzarella]

It is a very good market...if they are foreclosed properties in need of some cosmetic improvement, and.if you get them from a bank for 1/2 of what they are asking for.  Very many around.

[trogers]

6 minutes ago, Muzarella said:

It is a very good market...if they are foreclosed properties in need of some cosmetic improvement, and.if you get them from a bank for 1/2 of what they are asking for.  Very many around.

Two important considerations besides the price. Location that is popular with tenants and the community that is living in the project.

[trogers]

44 minutes ago, catman20 said:

In condos surley refurbishing may be the way to go BUT you have to be sure you have bought in a good well maintaned building.

An old building may not even be well maintained in the first instance, but can be upgraded by the co-owners, if they are shown the way.

 

I remember buying into the 30+ year old project in 2007. Unrefurbished 2-bedroom units were renting out at Bt25k while 3-bedroom units at Bt30-32k. Up the Soi, 2-bedrooms are going for Bt60k for newly built, but 40% smaller in floor area.

 

I refurbished and rent out my 2-bedroom at Bt45k, to the surprised of owners of the 3-bedrooms that I can collect even more than them.

 

We have received support from co-owners for 5 years running now in upgrading the building.

 

Numerous units have been refurbished since and rents are in the range of Bt45-60k.

[Farang99]

If it is true that Thais do not like to buy second hand - WHY are the prices of second hand cars so high - far higher than the equivalent age/mileage would fetch in the UK.

Edited June 20, 2017 by Farang99

[whaleboneman]

1 hour ago, Farang99 said:

If it is true that Thais do not like to buy second hand - WHY are the prices of second hand cars so high - far higher than the equivalent age/mileage would fetch in the UK.

The prices are so high but the cars don't seem to sell. Look at all the tents full everywhere. And they don't seem to want to bargain much.

[trogers]

1 hour ago, whaleboneman said:

The prices are so high but the cars don't seem to sell. Look at all the tents full everywhere. And they don't seem to want to bargain much.

Banks are not interested in financing old, but very keen on new; for both condos and cars.

[1FinickyOne]

The biggest potential problem is that your asset may not be easily liquid. If you buy a diverse portfolio of mutual funds you can sell everything tomorrow. A difficult to sell asset in a crazy market with no real market forces does not entice me. If you plan to live there then the equation changes. 

[Minnehaha]

21 hours ago, Peterw42 said:

Yes, you are right about 2nd hand. But unfortunately the normal rules of supply and demand, new verses old, investment and return dont always apply in Thailand. What the seller thinks its worth, what it is worth and what the buyer thinks its worth are often 3 very different figures. Forget what you know about real estate buying, values, perceived values etc. forget about what it is worth, may be worth, should be worth.

Find something you like and make a low offer.

I realise you are trying to make an informed decision, but in Thailand its smoke and mirrors, the normal rules just dont seem to apply.

I usually rely on rental return as an indication of inherent value, if a property gets a return of better than the same money in the bank, thats its value. 

I would not add much to this very nicely articulated post. And we are in the industry and other industries here for decades. 

The normal rules do not exactly apply. But it is not a complete black box. 

 

Additionally, the following post highlights refurbishing..... and this is an excellent way to improve the value of ones condo, assuming other variables are accounted for. It does not cost much to do if done carefully and controlled using a good contractor and buying quality materials. It can transform a unit over short time and stand out in the building.