Another Bangkok property bubble in the making?

[JJsushi]

I have noticed a large number of condo/townhouse developments springing up in Bkk recently. I have also noticed the numerous advertisements and writeups in the local Thai press concerning these developments selling well coupled with the government tax rebates.

What strikes me as odd is that almost all of the developments are in the 4million-15million baht range. Is there that serious of a demand from middle to upper middle class Thais/expats to warrant these numerous projects? What is the secondary market like for these properties. Can they be easily sold for the value paid plus capital appreciation?

Everything I see is for new builds. Are developers creating another property bubble? The interesting thing is that the companies doing the development are mostly the same ones that went bust in 1997.

 

What I am not seeing is the 1mm-3mm baht projects that would seem more realistic to the Thai property buyer. Does this range not exist in todays economy? I woud think that this is where demand should be given that you can rent a decent 2 bedroom apartment for 12,000-25,000bt a month. Heck 6000bt will get you an airconditioned studio apartment.

 

I have been considering buying something for the long term but the costs of the new devolpments plus the monthly maintenace fees just don't seem to add up in my book. Esecially when I cannot find a liquid secondary market to assess relative value. I guess I will keep paying the US$100 per month for my crash pad.

 

Any opinions from savvy Thai real estate guys?

[Guest]

JJSushi

 

Bangkok property market has been very overpriced for the last 4 years, IMO.!

 

There was a house/condo expo 2 weeks ago out at Mueng Thong Thani!

 

From what I saw there was a very wide crosssection of places available. From your 600,000 Baht houses (Goverment sponsored) , to your 1-3 million baht house and all the way out to 32 Million Baht place on Sukhumvit Soi 31 & 38! Again, this was all first hand places!

 

My feeling is that Thai's will generally always overprice property. From what I have seen there is very rarely value for money in a Thai place! There is only 1 place I have seen that I felt was value for money. The place was a condominum project on the Chao Praya River, where a condo with 115sq mt, on the the 15th floor overlooking the olympic size (and condition) pool and in the distance you looked over the Chao Praya River and onto Sky Baiyoke tower and Bangkok. The place was 4 million baht! It was expensive, but in my opinion value for money (other facilities available that were not mentioned)! I did not buy this place due to intense pressure from the missus as she felt it was overpriced! Now she also regrets not buying the place as she has seen the woeful market offerings!

 

In my opinion, the property is and will continue to always be overpriced!

 

SB.

 

[Guest]

The experts are saying... You haven't seen anything yet! Wait till next year, prices should be 25- 30% higher. It's all supply and demand.

 

Property this weekend in Pattaya was flying off the shelves of developers.

 

Thais are pouring money into the real estate market as the interest rate return is so low.

 

If prices do ever come down, Thais will never sell, its impossible for them. The initial investment is not like the Western World like 10%... it's more like 60% or higher is needed.

 

 

 

[legover]

 

 

for most farangs this should be a moot point but some insist on pressing ahead viewing things through their bg tinted glasses in spite of the dangers. purchasing real estate with so much bias and discrimination is pretty dodgy unless you see it as a gift to a family and are prepared to write the whole cost off. RE prices are indeed rising in certain areas and only those with good timing & inside information will profit before the aftermath rising interest rates will bring. They?ve been declining since 1982, 21 years. high deposits simply reflect how much riskier it is in TL. Another bubble for sure.

 

Some points to consider, Thais don?t buy used property as people do in the US/UK

Who will you sell your used condo/house to? Even if Asia?s economy booms over the next hundred years there will be periodic crashes. Condos suffer during these crashes, other unit owners stop paying maintenance & security & you can get landed with their bill, utilities can get cut off and you?re on the 20th floor of your riverside condo unit. Condo buildings can be raised for redevelopment, and it?s happened, leaving your right to own that piece of air in the sky above the land without any value. renting can be an easier solution then you can move on at will if the need arises. thai-chinese own most of the property & land way out into the suburbs ringing the city. I?d feel at a disadvantage trying to compete with them.

 

[Guest]

Who will you sell your used condo/house to?

 

It seems the price of expensive real estate is just the land you are getting. The cost of the structure is basically nil compared to the land value. This is because Thai houses are made of cheap materials using cheap labor in my observation. If in fact Thai's won't buy second hand, shouldn't cost too much to have a bunch of isaan boys yank out a house and drop on a new one (based on what little I know).

 

[legover]

??It seems the price of expensive real estate is just the land you are getting.

 

Think you?re just about right there.

 

another point on long leases, what you have here is a fixed rent for the duration of the lease plus the added cost of loss of 30 years? interest on the capital (this alone doubles the price) and zero at the end. my understanding on title rights to land through thai or foreign company formation is that they're outlawed. they'll take your money and register the owner but you may have no case if it ever goes to court & you become separated from your company if judged to be illegal. very iffy.

 

[Crash999]

I was mulling over buying a place for quite a while. The rationale being that I wanted to live a bit away from Sukhumvit, have a place that I could decorate in my own style, and possibly rent out in the future, and a place that would be a good long-term investment.

 

Then I started looking at the costs.

 

The rental return on the places in comparison to their asking prices is terrible. It's so bad that some ads proudly proclaim a 5% rental return (not incl. maintenance fees) as if that's something wonderful. Would be moot if future capital appreciation looked good- but buildings will keep going up as long as it's profitable to do so. No physical limits to development ala Tokyo, NYC, Hong Kong, etc.

 

Then there are the miscellaneous hassles of being a farang and trying to get things fixed and done correctly.

 

And then there's the biggest wildcard- owning property in a country whose political stability in the future is not certain. Sure, the laws now state that I can own it outright, but there have already been precedents for retroactive changes laws, at the expense of foreigners.

 

So now I'm looking at a used car- a (probably) much worse investment, but more fun. =) ::

 

Cheers!

[whosyourdaddy]

Yes Western economics certainly does not apply here does it!!

 

I thought of the same.. 200x rent /bay ration, problems with future employment and wanting to live near work and the childrens school etc. But on the same time I think about retirement and how nice it would be do have some future family security that a house brings. I dont think that Condos are an option. So many problems with one bad manager ruining a building!!!

 

So I am thinking about land now. Saw a nice piece of land, large enough for a house on sukumvit 97 area , about 1 KM from the main road for 1.8 million. Could easily be subdivided into 3 townhouses!

[legover]

 

 

whose name on the title?

 

 

 

 

[whosyourdaddy]

my families' name actually