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BANGKOK 20 April 2019 01:42
Brunolem

Real Estate Madness in the Land of Smiles

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7 minutes ago, AtoZ said:

I saw this 240+ MM THB homes on Facebook - they advertise heavily

 

Seriously why would someone with such money buy in dirty Bangkok instead of any world class city where you can also expect to get ROI by renting.

In Hong Kong now, if you wish to buy residential property you can add on the property price 15% tax plus another 15% for not having a HK ID. So that's 30% extra. Singapore similar. The attraction of BKK will be the lower tax plus lower entry price point. Does that knock out the pitfalls of buying in Thailand? No. But it does explain why the market still continues. 

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19 hours ago, johng said:

I think/read that for many of the derelict buildings the banks keep them on the books so as not to show a loss..not sure how it works

The bank will lend out 1 mio. to a condo buyer, the condo buyer will default on their loan, the bank confiscates the condo which, at the time of the loan, was valued at 1 mio.

 

Maybe at the time of the default, the condo is only worth 500,000 baht, so the bank can either sell it immediately at this reduced price, and take a loss, or they can keep the condo until the market recovers.

 

Unless the bank is in need of liquidity, it would make the most sense to wait until the market recovers, as markets normally recover within a few years, and there is no property tax in Thailand, so it costs basically nothing to wait.

 

The problem is when you have buildings where majority of owners have defaulted, and no-one is left to take care of the building, so while the bank waits for the market to recover, the building is deteriorating.

 

Today the condo may be worth more than 1 mio., because the market has recovered, but because the building has not been maintained, it is practically unsellable, as no-one wants to live there.

 

The best way out of such situation is to sell all units to an investor who can fix up the building and then resell the renovated units, but unless it’s a single bank holding all (or a majority of) the units, it can be a logistic challenge to track down owners and negotiate a price.

 

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50 minutes ago, lkn said:

Maybe at the time of the default, the condo is only worth 500,000 baht, so the bank can either sell it immediately at this reduced price, and take a loss, or they can keep the condo until the market recovers.

 

I don't believe foreclosures are allowed to be sold for less than the outstanding amount.

A rule introduced to stop banks overvaluing property and lending too much.

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On 3/20/2019 at 2:01 PM, SheungWan said:

In Hong Kong now, if you wish to buy residential property you can add on the property price 15% tax plus another 15% for not having a HK ID. So that's 30% extra. Singapore similar. The attraction of BKK will be the lower tax plus lower entry price point. Does that knock out the pitfalls of buying in Thailand? No. But it does explain why the market still continues. 

Bangkok is not Singapore or HK. These two cities are together with NY and London the financial centres of the world. Which means thousands of people on very high salaries.

 

Bangkok is what? Corruption centre with handful of billionaire families owning everything.

 

The 240M house would have to rent for 800,000 THB a month to get laughable 4% return before expenses and tax.

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9 minutes ago, AtoZ said:

Bangkok is not Singapore or HK. These two cities are together with NY and London the financial centres of the world. Which means thousands of people on very high salaries.

 

Bangkok is what? Corruption centre with handful of billionaire families owning everything.

 

The 240M house would have to rent for 800,000 THB a month to get laughable 4% return before expenses and tax.

Prices are also a fraction of those other 2. The buying frenzy is happening for a reason..Unfortunately for renters that do like Bangkok  its now out of reach for most in desirable areas eg around Asoke. Im ecstatic I bought there before The Chinese discovered it.

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12 minutes ago, madmen said:

Prices are also a fraction of those other 2. The buying frenzy is happening for a reason..Unfortunately for renters that do like Bangkok  its now out of reach for most in desirable areas eg around Asoke. Im ecstatic I bought there before The Chinese discovered it.

That’s the same in any country . Where I live is pretty much unaffordable for most younger people now . I bought my house 12 years ago for what I thought at the time was expensive .... well I could never afford it now . Appreciation on a property is pretty much worthless unless you want to move to a cheaper area . It’s all about luck . There is very little skill in deciding to take the plunge in buying any property . Location will cost you more and if you are very lucky will appreciate more . It’s that simple .

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26 minutes ago, AtoZ said:

Bangkok is not Singapore or HK. These two cities are together with NY and London the financial centres of the world. Which means thousands of people on very high salaries.

Bangkok is what? Corruption centre with handful of billionaire families owning everything.

The 240M house would have to rent for 800,000 THB a month to get laughable 4% return before expenses and tax.

Bangkok has its own (much smaller) financial centre, but this story is about Chinese investing overseas and considering options. If one considers that the entry price in HK is about 20m baht now, then the possibility of acquiring a property in the centre of BKK at less than half that (plus even cheaper in Pattaya) makes sense to them.

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20 minutes ago, madmen said:

Prices are also a fraction of those other 2. The buying frenzy is happening for a reason..Unfortunately for renters that do like Bangkok  its now out of reach for most in desirable areas eg around Asoke. Im ecstatic I bought there before The Chinese discovered it.

Not really, there are heaps of condos in Asok with low rents. In many buildings the asking rent prices are lower than 5 years ago.

 

It's only the new condos with sky high asking prices.

 

If you put the money in dividends ETFs you would be way better off.

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26 minutes ago, AtoZ said:

Bangkok is not Singapore or HK. These two cities are together with NY and London the financial centres of the world. Which means thousands of people on very high salaries.

Bangkok is what? Corruption centre with handful of billionaire families owning everything.

The 240M house would have to rent for 800,000 THB a month to get laughable 4% return before expenses and tax.

Bangkok has its own (much smaller) financial centre, but this story is about Chinese investing overseas and considering options. If one considers that the entry price in HK is about 20m baht now, then the possibility of acquiring a property in the centre of BKK at less than half that (plus even cheaper in Pattaya) makes sense to them.

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1 minute ago, SheungWan said:

Bangkok has its own (much smaller) financial centre, but this story is about Chinese investing overseas and considering options. If one considers that the entry price in HK is about 20m baht now, then the possibility of acquiring a property in the centre of BKK at less than half that (plus even cheaper in Pattaya) makes sense to them.

Maybe try to read what this thread is about - nobody is talking about 10M properties in centre of BKK

 

The thread is about 65 - 240 million THB properties in middle of nowhere.

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6 minutes ago, chrisandsu said:

That’s the same in any country . Where I live is pretty much unaffordable for most younger people now . I bought my house 12 years ago for what I thought at the time was expensive .... well I could never afford it now . Appreciation on a property is pretty much worthless unless you want to move to a cheaper area . It’s all about luck . There is very little skill in deciding to take the plunge in buying any property . Location will cost you more and if you are very lucky will appreciate more . It’s that simple .

I will disagree that there is little skill, though I would rather use the word judgment in relation to property. Sometimes the prices in a central area just seem under-priced when FX considerations are also thrown in, so one goes for it even with friends and acquaintances doubting your decision: "what do you want to do that for?" and so on. 

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6 minutes ago, AtoZ said:

Maybe try to read what this thread is about - nobody is talking about 10M properties in centre of BKK

The thread is about 65 - 240 million THB properties in middle of nowhere.

The thread might have started with an extreme example, but the discussion has shifted towards overseas Chinese investing in Thailand property, particularly BKK. There is a similar influx kicking off in Pattaya. Its an interesting counterpoint to the usual background noise of 'don't buy anything' and 'leave Thailand!' Unless one wants to say that the Chinese are all mad.

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6 minutes ago, SheungWan said:

The thread might have started with an extreme example, but the discussion has shifted towards overseas Chinese investing in Thailand property, particularly BKK. There is a similar influx kicking off in Pattaya. Its an interesting counterpoint to the usual background noise of 'don't buy anything' and 'leave Thailand!' Unless one wants to say that the Chinese are all mad.

Sure, the Chinese money is huge. They often don't care about return, they want to get the money out of China where it can be taken away from them in a moment. Not to mention huge part is money laundering and criminals - like they uncovered in Canada that several billions $ was from drug operations.

 

Will it last though?

 

Look at Australia currently, those who bough property in the past 2-3 years committed financial suicide.

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On 3/14/2019 at 9:32 PM, madmen said:

Prices range from 1 million to 4.5 million USA dollars !!! and its a red light area where your first greeting after the lift down to Sukhumvit could be a grab by the nuts from a lady boy.

That may actually be a big draw for some .......

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