Fears that the condo bubble is about to burst in Bangkok - especially if foreigners pull out

[3NUMBAS]

On 8/1/2019 at 5:23 AM, Mikisteel said:

Who was about in 97?

 

What kind of bargains we talking about? If that property crash happened in bok does it spread nationwide?

yep unfinished condos were evrywhere ..then they were patched up a few years later

[Caine]

On 8/1/2019 at 5:53 AM, ezzra said:

Foreigners buying i.e. westernes, are not the biggest buyers, Chinese, Indian and Malaysians are the people with the money, i have bought a 3 bedder condo in a middle of Sukhumvit back in 2001 when the build quality was still good, still living in it hassle free and the price gone up 5 forlds... 

Dream on.

[Caine]

Don’t know about BKK, but in Pattaya they can’t give them away, main reason is who wants to live amongst 60% Thai occupancy who refuse to pay the maintenance fees. 

[madmen]

_zzzzzzzz another bubble burst thread.
Yawn wake me up when it actually pops in the meantime happy collecting 45k rent [emoji16]

[ThomasThBKK]

 

3 hours ago, ExpatOilWorker said:

It is interesting to see that some of the most financially stressed countries, Argentina, Turkey and South Africa, are at the bottom of the list with lowest debt, while Japan with the unbeatable Yen and Norway with their $1 trillion sovereign fund are on top of the list.

It is from 2015. Any chance you have the same chart from 2019?

 

Turkey, Argentina and co have super high inflation. Turkey has like 14% per year, Argentina more, their local debt is simply not worth anything anymore and that's why it's so low.

One of the reasons the yen is safe heaven currency is actually japans debt, japanese are hoarding banknotes and stashing them in safes since decades.

[observer90210]

Foreigners will definetely pull out..but for another kind of blasts that shook BKK.

[luckyluke]

4 hours ago, madmen said:

in the meantime happy collecting 45k rent

That's the spirit. 

Some aren't happy with 45000, as they expected to get at least 50000.

[Ron jeremy]

4 hours ago, Caine said:

Don’t know about BKK, but in Pattaya they can’t give them away, main reason is who wants to live amongst 60% Thai occupancy who refuse to pay the maintenance fees. 

The Falange in 9 karat condo!

[PingRoundTheWorld]

On 8/1/2019 at 7:36 PM, Inn Between said:

even with a condo bubble, I expect the Thais will dig their heels in and stick to their high prices.

Many Thais have bought those condos with loans, expecting the monthly rental income to help or completely pay off those loans every month. If the units sit empty and there's no monthly income - many of them would be forced to sell or the bank will foreclose. I'm not sure what the banks would do with a massive inventory of unsellable properties though, not sure if (and if they can) sell at a discount.

[PingRoundTheWorld]

8 hours ago, ExpatOilWorker said:

It is interesting to see that some of the most financially stressed countries, Argentina, Turkey and South Africa, are at the bottom of the list with lowest debt, while Japan with the unbeatable Yen and Norway with their $1 trillion sovereign fund are on top of the list.

It is from 2015. Any chance you have the same chart from 2019?

Makes perfect sense that heavy borrowers thrived in an era of low interest rates. Borrowing at low rates to develop infrastructure is a great strategy - to a point. Japan specifically wasted a lot of that money on social programs and needless development - for example local governments would be given a budget every year, if they spent less than the budget they would be given LESS budget next year, but if they spent the entire budget they would be given MORE next year - so every year around the end of the year you see massive construction and "renovation" of roads and other infrastructure that was perfectly fine. Instead of keeping that money for future developments that are actually needed they would piss it away any way they can.

 

Japan will be the first to crash and burn if interest rates rise significantly. Their debt is essentially unpayable, and if servicing that debt gets more expensive it'll put massive pressure on the Japanese economy. Add to that a shrinking workforce who will have to shoulder more and more tax burden to support more retirees, and it's hard to be optimistic about the future of the country. In other countries you could bring in foreign workforce to compensate for the shrinking young population, but Japanese are too xenophobic to allow that to happen on the massive scale required, not to mention language barriers make it impossible for foreigners to replace Japanese in many fields. They are hoping robots and automation will resolve these issues, but I'm skeptical it'll happen in time.

 

In the short term growing tourism is definitely helping the Japanese economy, just like it helped Thailand until now, but I suspect that will peak in Japan after the 2020 Olympics, and it likely already peaked in Thailand last year.

[donnacha]

On 8/1/2019 at 5:23 AM, Mikisteel said:

Who was about in 97?

 

What kind of bargains we talking about? If that property crash happened in bok does it spread nationwide?

There were surprisingly few bargains.

Thai owners were determined not to "lose face" by selling for less than they paid, even if they really needed the money, they preferred to just sit on their investment. I came across many peak-reminiscent prices, recited with a straight face, long after the market had very clearly collapsed.

[PingRoundTheWorld]

5 hours ago, ThomasThBKK said:

One of the reasons the yen is safe heaven currency is actually japans debt, japanese are hoarding banknotes and stashing them in safes since decades.

That has been the case in earlier decades, but changing rapidly apparently. Currently close to 90% of Japanese Government Bonds are being purchased by the central bank with essentially "monopoly" money - they're creating money out of thin air. Might be a good way to encourage limited inflation ("growth") in the short-term, but will eventually impact Japan as a "safe haven" - even the Japanese are turning into foreign investments for the first time in decades: https://www.bloomberg.com/news/articles/2019-07-28/years-of-living-dangerously-japan-s-low-yield-warning-to-world

[MRToMRT]

"Agency for Real Estate Affairs" is a pseudo political outfit, best known for its media campaigns for the support dam building in Nakon Sawan national parks. I don't doubt there's a bubble but this "agency" is little more than someones political mouthpiece.

[Inn Between]

4 hours ago, PingRoundTheWorld said:

Many Thais have bought those condos with loans, expecting the monthly rental income to help or completely pay off those loans every month. If the units sit empty and there's no monthly income - many of them would be forced to sell or the bank will foreclose. I'm not sure what the banks would do with a massive inventory of unsellable properties though, not sure if (and if they can) sell at a discount.

From what i remember, this goes back to me mentioning some deserted shop-houses, and what you said reminded me that I think they been foreclosed on, but the banks weren't selling at prices that seemed to reflect an obviously flat market in that area. I guess these buildings were build in expectation that wealth would increase as always and be used by Thais from or servicing a rich BKK market....until the '97 currency crisis.

 

That's my recollection of the situation, and I just remember it striking me odd that the banks were sticking to their guns for their price instead of dropping and dumping, but I suppose the buildings themselves, although 4-stories tall, aren't where the real value is. It's probably the land. 

 

But condos are different, so I guess we'll only see what the Thai owners actually do when or if the "condo bubble" really begins. I think it's inevitable.

 

[Mac98]

Step one: build one million cheaply made condos and sell them at inflated prices to foreigners who plan to get rich renting them out on Airbnb.

Step two: Outlaw short-term rentals of condos.

Step three: Buy back these same condos from sobbing foreigners at huge discounts.

Step four: Legalize short-term rentals of condos.

[Olmate]

47 minutes ago, Mac98 said:

Step one: build one million cheaply made condos and sell them at inflated prices to foreigners who plan to get rich renting them out on Airbnb.

Step two: Outlaw short-term rentals of condos.

Step three: Buy back these same condos from sobbing foreigners at huge discounts.

Step four: Legalize short-term rentals of condos.

Then step 5: Rent to Indians,Africans?

[Clay2]

On 8/1/2019 at 12:40 PM, userabcd said:

Do you have evidence?

Could this be similar to Mexico?  I have been living there off and on for 10 years.  I see so many vacant homes and condos, yet construction continues.  Natives I talked to say it is mostly money laundering.  Building something with the drug money or burn it in the fireplace.  Just saying....

 

[natway09]

Interesting post.

I have been looking to buy where I live & no sign of any owner having a fire sale yet.

 

[MRToMRT]

1 hour ago, natway09 said:

Interesting post.

I have been looking to buy where I live & no sign of any owner having a fire sale yet.

 

Probably will not be one if the aftermath of the 1997 bubble is anything to go by. Back then prices only reduced (for foreign currency buyers) because the baht was devalued. Property prices in baht did not really move.

[Gumballl]

I recall my situation. I bought a condo (approx 162 sqm); it fell in value (after I purchased it in 2009), but I decided to keep it. The condo was close to good schools for my daughters, my wife can walk to work, there's a gym nearby, and there's a fantastic "watering hole" within walking distance. Now the property is worth more than what I paid. Oh, and this is in the US.

 

The moral of this anecdote is that Thai condo owners will hold on to their properties with a Kung Foo grip. It does not matter if prices sink tomorrow; they will hold onto the property (which is most likely already paid off). They will continue to believe that 'tomorrow' it will be worth more and will bring good fortune, regardless of the economic environment. Unlike foreigners, the Thai will not cut their losses at the slightest hint of an economic downturn; after all, they cannot just uproot like a foreigner and go elsewhere.

 

Many of the posts in this thread are being made by those who think too much of their importance. The smart foreigner will hold onto their property (-ies), and wait for the economy to stabilize. After all, regardless of economic circumstance, the property will still be there, and will still be usable, whether to live in or to rent out.

[ExpatOilWorker]

2 hours ago, Gumballl said:

I recall my situation. I bought a condo (approx 162 sqm); it fell in value (after I purchased it in 2009), but I decided to keep it. The condo was close to good schools for my daughters, my wife can walk to work, there's a gym nearby, and there's a fantastic "watering hole" within walking distance. Now the property is worth more than what I paid. Oh, and this is in the US.

 

The moral of this anecdote is that Thai condo owners will hold on to their properties with a Kung Foo grip. It does not matter if prices sink tomorrow; they will hold onto the property (which is most likely already paid off). They will continue to believe that 'tomorrow' it will be worth more and will bring good fortune, regardless of the economic environment. Unlike foreigners, the Thai will not cut their losses at the slightest hint of an economic downturn; after all, they cannot just uproot like a foreigner and go elsewhere.

 

Many of the posts in this thread are being made by those who think too much of their importance. The smart foreigner will hold onto their property (-ies), and wait for the economy to stabilize. After all, regardless of economic circumstance, the property will still be there, and will still be usable, whether to live in or to rent out.

I will say mortgages are a big part of the 12.6 trillion bath household debt, so somebody most be borrowing to buy their property.

What is more alarming is the NPL for mortgages are on an upward trend.

 

[ThePioneer]

7 minutes ago, ExpatOilWorker said:

I will say mortgages are a big part of the 12.6 trillion bath household debt, so somebody most be borrowing to buy their property.

What is more alarming is the NPL for mortgages are on an upward trend.

 

 

I live near a recent development from a big renowned developer.

 

The village consists of 280 houses, starting at 6 million, and is located on one of the biggest industrial routes in east Thailand.

 

I have been told more than a year ago by a real estate agent that the village is completely sold out.

 

I pass there at least 5 times a day, and very rarely see a car entering or exiting.

 

About 10 km down the road is Ampio, builds by one of the biggest developers in Thailand.

 

https://www.sukniwate.com/project-detail.php?typeid=บ้าน&areaid=แอมพิโอ&pid=แอมพิโอ-พัทยา&lan=en

 

They have been building it for about 7 - 8 years and it completely finished now.

 

Since it is build in a valley you can overlook the whole village from the main road, and there is not a single house occupied.

 

I can name you other projects that are same, building for a decade already or completely finished, and not a single occupant.

[Pilotman]

11 hours ago, Clay2 said:

Could this be similar to Mexico?  I have been living there off and on for 10 years.  I see so many vacant homes and condos, yet construction continues.  Natives I talked to say it is mostly money laundering.  Building something with the drug money or burn it in the fireplace.  Just saying....

 

Correct. 

[marcusarelus]

12 minutes ago, Pilotman said:

Correct. 

6 Pages of new condo's.  I know why they are being built so does everyone else who is in that business.

http://pattayarealty.com/property/development/?PAGEN_1=5

[Fex Bluse]

On 8/1/2019 at 11:28 AM, Henryford said:

I can't imagine why any foreigner is paying 100,000 baht + a sqm with the current exchange rates. A small condo in Bangkok for $300,000 !!

Many Chinese are happy to for the purposes of getting illicit money out of China.

 

Now the Chinese government is actually trying to strictly control capital from leaving China which means alot of the Chinese buying will dry up immediately.

[Fex Bluse]

On 8/2/2019 at 11:12 PM, Caine said:

Don’t know about BKK, but in Pattaya they can’t give them away, main reason is who wants to live amongst 60% Thai occupancy who refuse to pay the maintenance fees. 

Yes! In my experience, every single building my family has lived in, the Thai owners argue incessantly with the building management trying to avoid maintenance fees. 

 

New buildings quickly fall into disrepair. Management companies are swapped for worse and worse ones. 

 

People here seem to be unable to understand shared responsibilities of building ownership. 

[ThomasThBKK]

6 Pages of new condo's.  I know why they are being built so does everyone else who is in that business.
http://pattayarealty.com/property/development/?PAGEN_1=5

Money laundering? [emoji848]

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[ThomasThBKK]

 

I live near a recent development from a big renowned developer.

 

The village consists of 280 houses, starting at 6 million, and is located on one of the biggest industrial routes in east Thailand.

 

I have been told more than a year ago by a real estate agent that the village is completely sold out.

 

I pass there at least 5 times a day, and very rarely see a car entering or exiting.

 

About 10 km down the road is Ampio, builds by one of the biggest developers in Thailand.

 

https://www.sukniwate.com/project-detail.php?typeid=บ้าน&areaid=แอมพิโอ&pid=แอมพิโอ-พัทยา&lan=en

 

They have been building it for about 7 - 8 years and it completely finished now.

 

Since it is build in a valley you can overlook the whole village from the main road, and there is not a single house occupied.

 

I can name you other projects that are same, building for a decade already or completely finished, and not a single occupant.

It's the exact same in bangkok.

The new condos in my street are all unoccupied but claim to be sold.

It's one of the, if not the most expensive street in bangkok and thus thailand.

 

I still don't [emoji817] % know what's going on but something is fishy with the market here.

I am monitoring this street since years and only the last 3 or so years it's like this, before that all condos sold out and are occupied, the old condos are better ones, really decent ones actually for a way better price per sqm. Just generally more luxurious too...

Land prices must be absolutely extreme here, i think the new condos are nearly exclusively hold for purposes that do not include living.

 

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[Ron jeremy]

Thailand has been a refuge for criminals, organized crime, bike gangs, and money laundering for decades. It's one big washing machine.

[geoffbezoz]

1 minute ago, Ron jeremy said:

Thailand has been a refuge for criminals, organized crime, bike gangs, and money laundering for decades. It's one big washing machine.

Thailand has its faults for sure but when it comes to money laundering there are a few other countries who have perfected it yet hides it under the cloak of "financial services" sectors. I think the "Panama papers" and "Wikileaks" have identified the issues in many instances.  For sure property investment is a good tool to launder money, perhaps just easier in Thailand owing to it's still love of cash money and when you have billions in cash from say drug dealing then it is so easy to buy a condo in Thailand.