Invasion of the Real Estate Agents

[Gadfly]

Has anyone else noticed the dramatic increase in efforts to market new condo projects in Thailand. For example:

 

1. I earlier posted about two BGs (or purportedly former BGs) turned property brokers. I have now met three. But let's start with the 'partner' of one of the original two, since she called me today asking why I missed an alleged "appointment" to see a condo. I never made an appointment, but she was insistent that I had, insisted that I immediately come see the condo (lower Sukhumvit), said that it was a bargins and I would regret... (yada yada...) and then said she would make sure that X (name of BG) would make it worth my while. She even got X on th line. I was tired, had errands to run and didn't go, and this resulted in a serious of imploring and telephone calls and SMS messages on my night phone.

 

2. I went to Emporium to run my errands. As I walked out of the BTS station, I was handed a brochure for another condo project. But not before noticing a fancy mock-up of yet another condo project in the station.

 

3. I ultimately switched phones since I was getting annoyed by the constant calls and SMSs. I had three messages. Guess what? All three were on three other condo projects.

 

4. After leaving Emporium and arriving at my home BTS station (not saying where), another petite girl in uniform hands me another brochure for another condo project and asks me to complete a "marketing survey." I politely decline, but notice two other Farangs did fill out the survey. These two other Farangs were carrying heavy backpacks, looked to be in their mid-20s and on their first trip to Thailand. But that didn't stop the marketing girl from having them take the survey. I overheard her, in return, directing them to a nearby budget guesthouse (presumably where they intended to stay until they saved up enough to to buy a condo here :smirk: ), so she must have known these two were not in the market.

 

5. I check my work and personal email accounts. A total of seven email messages promoting condos (all but six on my work account).

 

All of this in less than a three hour period. I am not even the market for a condo. I never gave my business card to any real estate agents, but I am listed in some of directories of the local chambers.

 

Do I smell desperation?

[Faustian]

Yes I think you do....the shit should be logically hitting the fan soon. Prices are ridiculously inflated and a correction is overdue...

 

Maybe when all the con artists start to make losses perhaps some reasonable purchases will be available.

[khunsanuk]

Hi,

 

"A total of seven email messages promoting condos (all but six on my work account)."

 

Uh... so that would be 1 on your work account

 

Sanuk!

 

[Neo]

Though I read sentiments that indicate otherwise, the impression I get on the ground is the condo market is booming. New condos are going up all over the place, advertising is plastered everywhere, and the asking prices are higher than ever before. I don't sense any desperation even though I would welcome a major crash.

 

[Gadfly]

Many condo projects that were started a few years back (bear in mind the long lead time for condos projects) only finished last year. Meanwhile the supply continues to increse with new projects finishing all of the time. You can see it all over town.

 

I see the dramatic increase in advertising for condos (and other forms of marketing for condos) as indicators of increased supply rather than indicators of increased demand. If demand was really high relative to supply, a developer would not need to spend money on marketing girls, fancy mock-ups and bill boards.

 

Asking prices are going up, but I really don't know if sellers are getting those asking prices. I also know of several examples of a condo projects that were allegedly "sold out" over a year ago that now advertises that they have units available - the La Raffine. Same with the the Millennium.

 

I am not trying to and don't intend to predict what any market will do. (I just don't think that is ever possible, which is why I see posts about my allegedly predicting anything about any market or economy as a fundamental indicator that a poster has missed my point.) But it is impossible not to notice the dramatic increase in marketing efforts and supply - at the same time.

 

I guess the practical advice here is this: if you are buying a condo here, bargain hard, because the market may be softer than the broker claims. Point to the dozen other projects that are probably going up a stone's throw away from any project you are looking at.

 

Since I am not in the market, I just intend to sit back and watch the fireworks. And add a few new senders to my junk mail list. It is, however, very interesting to watch all of this unfold.

 

KS - My post was confusing; what I meant to say is this: out of seven emails, one in my personal account (?), and six in my work account. (I went back and took a look, and I must be getting DS in my old age - you are right - that part of the post is totally confusing.)

[bibblies]

.. and then said she would make sure that X (name of BG) would make it worth my while...

 

Sex for condos? :thumbup:

 

I've always thought the condo market was overheated (all through the up phase too though )

 

You say you're not in the market but I seem to remember you have another pad. The question is, are you tempted to sell that? Are you that convinced it's a top?

[Gadfly]

I do have a second place, but somehow I suspect I would end paying much more for the sex if it was "free" for buying a condo - even if prices were reasonable (which they certainly aren't).

[drogon]

I will ask my new Thai relation as she works for the one of the biggest property development company in Thailand.

 

From what I understand: The offer for "expensive"

(read: Out of reach for most Thais) condos is surging but demand is going down...

 

Of course it needs solid data to be confirmed but could it be that many property developments will stop?

[Hardy641]

A couple of weeks ago the Nation had 2 articles that couldnâ??t be more contradictive. The first swas about the plot land opposite BTS Nana having been sold for the record price of over 1,000,000 THB per sqw. The other referred to constantly growing oversupply of new condominiums with 50,000 new units being soon completed. According to the article 50% of them wonâ??t find a buyer.

 

The Thai property market always has been a mystery to me. The signs of a looming crisis due to oversupply are written on the walls everywhere. On the other hand didnâ??t this huge oversupply exist all the time? In the last 12 years I could just walk into any condominium and could choose between all kind of units for rent. On top in most condos I lived over the years around 30% of the units were all the time empty; the majority never been decorated and furnished - just pure investments. Still prices went up constantly since 2001 and have since then more than doubled.

 

However, I just wonder whether owners will be able to really realize their profits. I doubt with all the new projects being or being shortly completed, they will able to sell those older units at such high prices. Who will buy these old assets?

 

When renting a place I always estimate the rent to be 1% of the selling price. This basic formula works fine in many places but so in Bangkok. I always found condos I could for 0.3or even less than the selling price. Either my rent is a way too low or the buying price is a way too highâ?¦..

 

To me this is a clear indicator of a market which isnâ??t regulated by supply and demand.

 

[Gadfly]

Hardy,

 

Part of the problem in Thailand is captive lenders. Basically, the developer is often a member of the same family group (or same person) as the owner of the bank that funds the development. Thailand's financial sector is highly restricted. Standard Asian Godfather business model: build your wealth on the basis of a government concession or license that keeps competitors out of your market.

 

There are more foreign players now, but there has been considerable pressure by the Chinese-Thai families that control most banks in Thailand to place more restrictions on foreign banks. They'll talk in terms of protecting the national interest, but the real reason is that they simply don't want more competition.

 

Without competition, or with reduced competition, they can continue with the same bad practices that contributed so heavily to the 1997 financial crisis - loaning to cronies. From a developer's perspective, if you don't have to pay back the bank that funded your project, there is only an upside in building more projects. It's not quite that extreme, but less has changed since the reforms following 1997 crisis than many realize.