Terrorism, Etc. Will Effect Real Estate?

[The Skipper]

It's one thing after another around here.

Aids, sars, bird flu, tsunamis, coups & Juntas, restrictions with nominee Cos., early closings at bars, piss tests, terrorism, VISA restrictions including no investment VISA, constantly changing rules and various interpretations by individual officers, double pricing, general tourist ripoff schemes, discrimination, airport hassels, Mark Karr, rampant development lack of infrastructure and taxi mafias in the resorts.

How will the real estate market hold up?

[backflip]

"rampant development lack of infrastructure"

Put down the beer, and push yourself away from the keyboard. Thank you.

[HenryB]

It's one thing after another around here.

Aids, sars, bird flu, tsunamis, coups & Juntas, restrictions with nominee Cos., early closings at bars, piss tests, terrorism, VISA restrictions including no investment VISA, constantly changing rules and various interpretations by individual officers, double pricing, general tourist ripoff schemes, discrimination, airport hassels, Mark Karr, rampant development lack of infrastructure and taxi mafias in the resorts.

How will the real estate market hold up?

Ask a real estate salesman and he will be glad to tell you how.

[The Skipper]

5000 empty condos and dozens more projects in planning or in construction with zero improvements to the access, sidewalks etc.

[johnnyk]

5000 empty condos and dozens more projects in planning or in construction with zero improvements to the access, sidewalks etc.

So what?

Get used to it.

Its Thailand, you are not Thai.

Your opinion is not valid.

Enjoy what you can or go home.

[IMA_FARANG]

It's one thing after another around here.

Aids, sars, bird flu, tsunamis, coups & Juntas, restrictions with nominee Cos., early closings at bars, piss tests, terrorism, VISA restrictions including no investment VISA, constantly changing rules and various interpretations by individual officers, double pricing, general tourist ripoff schemes, discrimination, airport hassels, Mark Karr, rampant development lack of infrastructure and taxi mafias in the resorts.

How will the real estate market hold up?

I can only wish that Thailand real estate (and most especially Condo prices) should takea 25 to 30 percent drop in the next two years.

Unfortunately, I doubt that will happen. The buyers will be there and the demand won't drop that much. So I don't expect any big dip in prices.

Still, one can hope.

All Capital comes to the marketplace with the blood of the workers on its hands

Karl Marx

Edited January 1, 2007 by IMA_FARANG

[Moonfruit]

5000 empty condos and dozens more projects in planning or in construction with zero improvements to the access, sidewalks etc.

So what?

Get used to it.

Its Thailand, you are not Thai.

Your opinion is not valid.

Enjoy what you can or go home.

?? I guess that with this being an expat forum for those residing in Thailand, all opinions are therefor not valid?

As for Backflips comment, maybe it should have been you that put down the beer!

[The Skipper]

5000 empty condos and dozens more projects in planning or in construction with zero improvements to the access, sidewalks etc.

So what?

Get used to it.

Its Thailand, you are not Thai.

Your opinion is not valid.

Enjoy what you can or go home.

I was attempting to raise a discussion about real estate investment.

Was not trolling for moronic comments.

[LaoPo]

How will the real estate market hold up?

If a hundred people were thinking of buying real estate in Thailand in the past few months.....

...........at least 50 of them will think twice after all what's happened.

2006 wasn't a real fun year for LOS, was it ?

"How will the real estate market hold up?"...time will tell.

For me: I will never invest any money (real estate) in Thailand, it's like being on the stock market......

"no guarantee for the future"

RENT !

LP

[dsfbrit]

... stray rabid dogs ...

These things cannot help the Real Estate market can they.

Sadly its just bad news after bad news at the moment.

Fox commentators came up with the following analysis of last nights sad events (right or wrong this was the message to the World about Thailand).

' ... the junta in Thailand has taken control and it looks like this is event is to do with the overthrow of the previous PM. Thailand is looking increasingly shaky at the moment...'

Same sort of thing on BBC News, who at least thought it may be Muslems and not Thaksin supporters only. They added though that '..Thailand/Bangkok used to be considered one of the safest and most stable places in the region -not any more though'.

Right or wrong it does not make good press for Tourism nor Housing etc... even those who owned condos in their own name in Bangkok may now feel a little less confident about the (short term?) future.

An interesting year ahead methinks.

I still love it here and would never leave - so lets hope it gets better.

By the way, anyone know when the New legislation will be presented relating to land ownership. It was supposed to be written within 60 days - that was about 60 days ago???

Edited January 1, 2007 by dsfbrit

[johnnyk]

5000 empty condos and dozens more projects in planning or in construction with zero improvements to the access, sidewalks etc.

So what?

Get used to it.

Its Thailand, you are not Thai.

Your opinion is not valid.

Enjoy what you can or go home.

I was attempting to raise a discussion about real estate investment.

Was not trolling for moronic comments.

Moronic comment:

As long as Thais feel comfy with the economy and interest rates don't rise much beyond current levels the market will continue.

Events as mentioned will deter many falang but falang don't drive the market.

Have a happy...

Edited January 1, 2007 by johnnyk

[DrFisher]

Well, still better than Philadelphia the way I see it, in any event I'm not dodging bullets and crack heads in the street.

[ray23]

Just a thought most who come here are not really looking for investments, they are chasing dreams. Reality has very little to do with decesions made while in that mode. How many times have you heard boy this is cheap, in X country it would be. The reality your not in X country and paying four times a much for the true value of property, is not a good investment. But it happens everyday.

[womble]

Yes certain sections of the property market will be affected. Prices won't drop though, they never do in Thailand.

Unless they are owned by foriegners, extremely desperate thai's that don't mind losing face.

[Nawtilus]

Do you know how many thais are buying high priced real estate these days ?? Plenty.

iF YOU WANT TO BUY THE 900K APARTMENT AND LIVE THAI STYLE, YOU CAN, YOU HAVE BOTH CHOICES HERE, JUST DONT EXPECT MUCH FOR IT....ooops sorry wrong key....I know a thai guy who paid 24million for a single shophouse, I know another thai girl who paid 4mil for a small condo....but they were all in the popular areas, so if that is what you want, then pay for it.

I have also found houses and shophouses for 800k to 1.5mil, but if you want to live in upper kumbukter west....then you get the privilige of low priced real estate.

Do you really think foreigners are driving the Thai real estate market all alone ?? maybe in Phuket, but I am talking Bkk and the rest of thailand as a whole.

[dsfbrit]

Do you really think foreigners are driving the Thai real estate market all alone ?? maybe in Phuket, but I am talking Bkk and the rest of thailand as a whole.

Around where I live in Pattaya - there is no one driving the real estate market for houses - it is well and truly parked.

[thaihome]

It's one thing after another around here.

Aids, sars, bird flu, tsunamis, coups & Juntas, restrictions with nominee Cos., early closings at bars, piss tests, terrorism, VISA restrictions including no investment VISA, constantly changing rules and various interpretations by individual officers, double pricing, general tourist ripoff schemes, discrimination, airport hassels, Mark Karr, rampant development lack of infrastructure and taxi mafias in the resorts.

How will the real estate market hold up?

As your list of issues goes back some 3 years, has any of them impacted prices yet? I note a certain slant towards farang issues as well, do you think (as asked earlier) that farangs drive poeprty prices in Bangkok?

TH

[oxymoron]

Do you know how many thais are buying high priced real estate these days ?? Plenty.

iF YOU WANT TO BUY THE 900K APARTMENT AND LIVE THAI STYLE, YOU CAN, YOU HAVE BOTH CHOICES HERE, JUST DONT EXPECT MUCH FOR IT....ooops sorry wrong key....I know a thai guy who paid 24million for a single shophouse, I know another thai girl who paid 4mil for a small condo....but they were all in the popular areas, so if that is what you want, then pay for it.

I have also found houses and shophouses for 800k to 1.5mil, but if you want to live in upper kumbukter west....then you get the privilige of low priced real estate.

Do you really think foreigners are driving the Thai real estate market all alone ?? maybe in Phuket, but I am talking Bkk and the rest of thailand as a whole.

Real Estate (although most people do not see it ) is just another product or commodity. It does not always hold its price ask those people in the Western areas of Sydney or those that have the flash condos in Melbourne or Sydney they have seen 15 -20% of what they paid go up in smoke in the last 18 months. Similarly from what I read in Florida and some other parts of the USA.

What makes it vary so much?

Investment driving prices to absurd levels

A stable and growing economy with a GDP around 4%

Low interest rates

High and well paid employment

Peoples confidence in all of the above, to name but a few

at the moment all of the above are looking very shaky here, not a farang opinion but that of a Thai relation of ours up from Bangkok for the new year.

[Nawtilus]

And Oz has a huge different range of effects on it than Los has, no bombs, no coups etc etc the list goes on.

The reason some real estate does not perform and loses 15-20% as you say, is that they have paid huge prices for it in the first place probably in an inflated market.

But are those same properties 15 or 20% lower in value than when originally purchased, me thinks not.

[quiksilva]

Property transactions therefore will most probably stagnate in the first quarter of the year. Beyond that in a market as opaque as this one, only god can know.

I think that purchases from foreign buyers will almost certainly dry up in H1 07. There is just far too much political risk at the moment.

Foreigners (and the Thai middle class) are rapidly losing confidence in the new government's capability to run the country, (exactly what the perpertators wanted IMHO) and we, skittish foreigners, need more stability for us to invest here.

So will all this political upheaval finally end in the summer with general elections as our overlords have promised? Only time will tell, but lets hope so!

Lets face it, on the whole (forget about the little things that bug us) foreigners want to love this country, and when the political upheaval finally settles down I am sure that foreign demand will return.

For the Thai sector consider that according to a report in the Bangkok Post there is almost full employment in Thailand. It said that a German research house found that unemployment levels were just 1.6%, the lowest in the world (maybe thats why its hard to find good staff..). So demand for real estate from the Thais should not be overlooked, especially since as a result of all this upheaval HSBC announced yesterday that they expect the central bank to cave in and drop policy rates by 50 Bp to 4.5% in Q1 07, which would certainly prop up the Thai sector of the property market.

However, here is my biggest concern and a caveat to all that I have said above:

The amendment to the Foreign Business Act which dfsbrit mentioned is due out soon. This will install new parameters governing the operations of firms with foreign shareholders. It is widely expected that foreign businesses will be defined as firms which have foreigners controlling more than 50% of the voting rights in a company. Many suggest that the new policy will order firms to empower their local partners and restructure their firms within 24 months.

Now forget, for the moment the impact this will have on people who brought houses, and how the anticipation of fees is already forming drool in lawyers's mouthes.

Think about the impact it will have to foreign companies operating here. Honestly, how many would be happy to cede control of their firm to their local partners? How many of those 14,000 firms, said to be affected by this new ruling, will decide to call it quits on Thailand?

I personally think that this, especially in the wake of all this other bad news, could be even bigger than the capital controls gaff.

and Dfsbrit you are right, I think its due out very soon.

Its another case of hope for the best but prepare for the worst.

[pansted00]

Do you know if this will apply also to BOI promoted Companies?

Property transactions therefore will most probably stagnate in the first quarter of the year. Beyond that in a market as opaque as this one, only god can know.

I think that purchases from foreign buyers will almost certainly dry up in H1 07. There is just far too much political risk at the moment.

Foreigners (and the Thai middle class) are rapidly losing confidence in the new government's capability to run the country, (exactly what the perpertators wanted IMHO) and we, skittish foreigners, need more stability for us to invest here.

So will all this political upheaval finally end in the summer with general elections as our overlords have promised? Only time will tell, but lets hope so!

Lets face it, on the whole (forget about the little things that bug us) foreigners want to love this country, and when the political upheaval finally settles down I am sure that foreign demand will return.

For the Thai sector consider that according to a report in the Bangkok Post there is almost full employment in Thailand. It said that a German research house found that unemployment levels were just 1.6%, the lowest in the world (maybe thats why its hard to find good staff..). So demand for real estate from the Thais should not be overlooked, especially since as a result of all this upheaval HSBC announced yesterday that they expect the central bank to cave in and drop policy rates by 50 Bp to 4.5% in Q1 07, which would certainly prop up the Thai sector of the property market.

However, here is my biggest concern and a caveat to all that I have said above:

The amendment to the Foreign Business Act which dfsbrit mentioned is due out soon. This will install new parameters governing the operations of firms with foreign shareholders. It is widely expected that foreign businesses will be defined as firms which have foreigners controlling more than 50% of the voting rights in a company. Many suggest that the new policy will order firms to empower their local partners and restructure their firms within 24 months.

Now forget, for the moment the impact this will have on people who brought houses, and how the anticipation of fees is already forming drool in lawyers's mouthes.

Think about the impact it will have to foreign companies operating here. Honestly, how many would be happy to cede control of their firm to their local partners? How many of those 14,000 firms, said to be affected by this new ruling, will decide to call it quits on Thailand?

I personally think that this, especially in the wake of all this other bad news, could be even bigger than the capital controls gaff.

and Dfsbrit you are right, I think its due out very soon.

Its another case of hope for the best but prepare for the worst.

[quiksilva]

I dont want to hijack the thread but it affects all firms who have registered themselves as Thai company's (51:49% shareholding structure) but in actuality their local partners have invested very little if anything in the business and have little to no voting rights in the firm.

This includes cases where your lawyers hold say 5 %, the local partners 46%, and the foreign firms 49%, because crucially this time they are looking at voting rights and management control. Under this revision the Thai partners in these businesses would be classified as nominees and the affected firms would need to either register as a foreign business or restructure their business within a certain timeframe, possibly depending on your size.

However, if you are registered as a foreign firm already there should be very little impact.

What I have reported above is what I have learned from some well connected contacts. But please bear in mind that nobody knows exactly what the amendments will be until they are officially announced.

Edited January 3, 2007 by quiksilva

[samtam]

I tend to agree with quiksilva's assessment. The property market is pretty nervy as it is, so rather than a crash, there will be a drop off in transactions. If someone wants to buy, and someone is desperate to sell, then there will be some bargains. But Bangkok's condo market isn't a short term investment, so in time, as asset prices rise, so too will property. (By "in time", I mean 5 years.)

[thedude]

I dont want to hijack the thread but it affects all firms who have registered themselves as Thai company's (51:49% shareholding structure) but in actuality their local partners have invested very little if anything in the business and have little to no voting rights in the firm.

This includes cases where your lawyers hold say 5 %, the local partners 46%, and the foreign firms 49%, because crucially this time they are looking at voting rights and management control. Under this revision the Thai partners in these businesses would be classified as nominees and the affected firms would need to either register as a foreign business or restructure their business within a certain timeframe, possibly depending on your size.

However, if you are registered as a foreign firm already there should be very little impact.

What I have reported above is what I have learned from some well connected contacts. But please bear in mind that nobody knows exactly what the amendments will be until they are officially announced.

good posts, quiksilva.

some politician, i think it was Korn from the Democrat Party, made a good point recently that if these changes to the foreign biz act actually do go through, foreign cos. will need to dilute their shareholding to reflect their actual allowed voting rights (assuming of course that they choose to stay invested while not having majority control). the problem then emerges on how so much capital is going to be raised locally by Thais to buy over the controlling stake in these companies. many of these foreign cos are among the largest capitalised in the country. we will have another crisis in hand if insufficient locally sourced capital is raised to buy over the controlling interest in these thousands of cos.

furthermore, many of these companies are in highly competitive industries that need to expand or lose out to global competition, expansion that constantly requires huge capital injection, where is the majority local equity coming from? there will be no free lunches here.

there were cards that had to be played in the past that were necessary to make Thailand an attractive place for investment. if you remove one of those key cards, the rest of the deck may fall. i fear the present administration has failed to consider the practical and commercial impact of the proposed changes to the law.

Edited January 4, 2007 by thedude

[quiksilva]

Agreed its really quite scary. There's a well written editorial on this topic in the Bangkok Post today:

Govt must help attract investors

On Tuesday, cabinet will make another historic move when it approves the much anticipated amendments to the Foreign Business Act (1999), a move that will likely decide the future of this country's reform process. In a world where globalisation is the name of the game, the steps taken by the cabinet will be a litmus test of what is in store for investors in this country. Thailand, which already faces stiff competition for investment dollars from China, India and Vietnam, has to get its act together if it is to remain ''the destination'' for investors, a title it has maintained for decades.

Moves by the interim government of Prime Minister Surayud Chulanont to amend the laws could be counter-productive to the country's investment climate, as placing restrictions in an environment where other countries are lifting them could only worsen the situation for the country.

Under the proposals set forth by a 10-member committee set up by the Ministry of Commerce, it is expected that foreign-owned companies which currently use a nominee structure would be given the option to dilute their shareholdings over a certain period. The timeframe for doing so has not been determined.

Among the options given is to allow the companies that are on ''List 3'' to operate as is, and all they need to do is register with the ministry, but new companies that apply would need to follow the new regulations.

List 3 in the FBA covers services such as construction, law and accounting. Foreign companies would still be banned from ''List 1'' sectors, which include media, rice farming, forestry and sectors linked to national security, as well as ''List 2'' sectors which involve culture and handicrafts.

Also on the plan is to use voting rights as one of the ways to determine if the company is owned by foreign shareholders or not. The 1999 FBA places restrictions on foreign ownership of 43 different types of business activity grouped into three categories. The restrictions imposed depend on the category in which the business is listed.

The practice of nominee structuring in Thailand has been so prevalent it was taken as the norm to have nominees and multinational companies have used this structure to have a greater say in their operations in Thailand.

But the sale of Shin Corp to Singapore's Temasek Holdings on Jan 23, 2006 by the family of ousted premier Thaksin Shinawatra prompted authorities to re-think their policies, and political pressure after the military coup to prosecute has further eroded investor confidence.

Although politically it is understandable that the interim government may want to make Shin Corp a scapegoat, a more practical approach would mean that other companies, which by some estimates range around 14,000, should also be prosecuted, since selective implementation is not the ''justice for all'' that Prime Minister Surayud has promised.

Having some kind of restrictions on the more sensitive sectors such as agriculture may make sense if the government wants to protect the rural population and seek their vote, but to have restrictions placed on more capital-intensive industries is likely to hurt the country in the long run. Foreign direct investment, which reached $8 billion in the first 10 months of 2006, could soon dry up and put further pressure on the country's strained economy if the authorities take the wrong step this time around. With 2006 being a year full of political uncertainty followed by a coup (which is normally considered bad among foreign investors), a professing of self-sufficiency economy, a placement of capital controls and, to top it all, a series of bomb blasts in the normally tranquil city and persistent rumours of a counter-coup have already eroded the confidence of most foreign investors. The government is now required to do something right that would place Thailand back on the path of economic growth and make it an attractive destination to invest in. If this chance is missed, the impact will be felt not only by foreign investors but by the locals as well.

Edited January 5, 2007 by quiksilva