Jump to content

Isaan Building Boom


Toknarok

Recommended Posts

  • Replies 81
  • Created
  • Last Reply

Top Posters In This Topic

Buriram building boom because thats where the Govt are going to build the Nuclear Power Station.

The thought of Thai government money funding building a nuclear power station with workers from Buriram is enough to make me want to live on the other side of the world.

Half will be skimmed and the rest will be substandard with local rice farmers cobbling it together.

Have you ever witnessed Thai building work and the total lack of skills?

There is,as far as I know, nothing behind this strange rumour. Solar power investment? yes.Corruption turned up there already.

Something is going on, at least in Buriram.

Just did a quick check on the internet and found something that is quite puzzling, to me at least.

Best Western Hotels has opened in Buriram, now this hotel chain is worldwide and have 13 in Thailand Mostly Bangkok and beach resorts and Buriram.

Amari Hotels Resorts & Spas is another one, having locations in Bangkok and the beach resorts and Buriram.

Corporations don't build hotels because a city has a race track or a football team, the upcoming race is a 4- day event and even if the football team is winning today and drawing fans that might change tomorrow. The hotels must be looking at something that will be bringing them customers for the long term. What?

Best Western is a name you can pay to put on your hotel if it meets certain criteria. You not only have to have certain amenities, but you have to pay to be audited for how you operate. It is a way that a private owner can use a well known name that people trust.

So the investment is made by a private party who then petitions Best Western for the right to use (and pay for) the name. There are some differences from a franchise, but in some ways it is similar.

So the investment, and the decision to invest, weren't made by Best Western.

Edited by NeverSure
  • Like 1
Link to comment
Share on other sites

Really interesting thread, I was thinking exactly the same thing about those shops/condo combo units that now line the road as you head South out of the city towards Prakhon Chai. They really make the size of the city feel much bigger as they extend the urban area along the side of the road very far out, way beyond the football ground.

I personally, and sadly, think the area is heading for a huge crash. As someone who got burnt in both the Irish and Spanish property crashes I see too many similarities to ignore. Everything just reeks of a bubble that is set to burst. Ultimately, when all is said in done, underneath the credit fueled binge on new houses and hotels, and new malls to meet the needs of the extra money such construction is creating, there is no substantial increase in real industry or wealth creation to justify all this.

There are no new factories, no new offices and the current "government" is less likely to provide public jobs or enterprise zones to the region. Buriram is still one of the 10 poorest regions in Thailand. Eventually it will reach a dizzy height and look down to see nothing supporting it below and collapse.

I was in the Best Western Hotel last month and whilst the restaurant seemed to have a few regular expats and well off locals, the hotel was empty. There was about 20 staff at any given time and in our week there we saw about half a dozen other guests who invariably were like us. (Farrang/Thai couples/families visiting family) Add in the Amari and other hotels and you wonder what all these rooms are necessary for!

Maybe this could be a blessing in the long term, as it will put property back to realistic levels locals can afford and reset the local economy. Buriram has some strategic benefits. Good transport links (direct line to BKK and Laos border and an airport), good infrastructure (road to same locations is decent), educated workforce in comparison to nearby areas (due to the big University), lots of available land for development that isn`t prone to flooding and lots of available housing for workers relocating. As someone mentioned above as the ASEAN grows in importance this area will increase in importance being on a main route into Laos and bordering Cambodia.

If Newin was half the philanthropist he likes to portray he would invest the money into sustainable money making enterprises. He could subsidise new factories/office or set up a science park or something. In reality he`s a crook on an ego trip looking to set up projects that keep his profile high ahead of any future move back into politics. It annoys me no one ever questions where his wealth comes from and why all his money is black, and why he doesn`t appear on any rich lists despite clearly being a billionaire!

Head just south of Korat to Pak Thong Chai, even the locals wont buy houses there, they are all built on a flood plain.

Ask your mrs about, nam teum Korat, flood plain Korat.

  • Like 1
Link to comment
Share on other sites

Well I'm glad that those of you who live in the Buriram area are so pleased about the football stadium, race track. swanky hotels etc. but if you lived in the Province away from Buriram itself you might have a very different opinion. The roads generally are in an appalling condition,Chidchop may have improved the roads around the city in order to service his playthings, but have a look further afield.

For example just 2 kms from my house is a patch of road that has always given problems. Maybe an underground stream or something causes the problem. It's never been properly fixed for 25 years. Two weeks ago a team of 4 blokes came withe a few shovels, picks ans a load of bitumen . The buggered about for a week, basically did nothing, filled the holes with bitumen and gravel and tamped it down with hand tools. Came past today, almost all of it broken up with holes deeper than when they first started.

Blaming Newin for the condition of rural roads that come under the jurisdiction of the local amphur is way off the mark.

Most of these roads in our area are referred to as 'soi corruption' because the amount creamed off results in 60% of a proper job being done.

You could always go back to driving on red roads.

Link to comment
Share on other sites

Really interesting thread, I was thinking exactly the same thing about those shops/condo combo units that now line the road as you head South out of the city towards Prakhon Chai. They really make the size of the city feel much bigger as they extend the urban area along the side of the road very far out, way beyond the football ground.

I personally, and sadly, think the area is heading for a huge crash. As someone who got burnt in both the Irish and Spanish property crashes I see too many similarities to ignore. Everything just reeks of a bubble that is set to burst. Ultimately, when all is said in done, underneath the credit fueled binge on new houses and hotels, and new malls to meet the needs of the extra money such construction is creating, there is no substantial increase in real industry or wealth creation to justify all this.

There are no new factories, no new offices and the current "government" is less likely to provide public jobs or enterprise zones to the region. Buriram is still one of the 10 poorest regions in Thailand. Eventually it will reach a dizzy height and look down to see nothing supporting it below and collapse.

I was in the Best Western Hotel last month and whilst the restaurant seemed to have a few regular expats and well off locals, the hotel was empty. There was about 20 staff at any given time and in our week there we saw about half a dozen other guests who invariably were like us. (Farrang/Thai couples/families visiting family) Add in the Amari and other hotels and you wonder what all these rooms are necessary for!

Maybe this could be a blessing in the long term, as it will put property back to realistic levels locals can afford and reset the local economy. Buriram has some strategic benefits. Good transport links (direct line to BKK and Laos border and an airport), good infrastructure (road to same locations is decent), educated workforce in comparison to nearby areas (due to the big University), lots of available land for development that isn`t prone to flooding and lots of available housing for workers relocating. As someone mentioned above as the ASEAN grows in importance this area will increase in importance being on a main route into Laos and bordering Cambodia.

If Newin was half the philanthropist he likes to portray he would invest the money into sustainable money making enterprises. He could subsidise new factories/office or set up a science park or something. In reality he`s a crook on an ego trip looking to set up projects that keep his profile high ahead of any future move back into politics. It annoys me no one ever questions where his wealth comes from and why all his money is black, and why he doesn`t appear on any rich lists despite clearly being a billionaire!

I understand your thinking and I made the same western-style conclusions 7 years ago. Growth in Buriram province is not new - but it accelerated in the last 2/3 years.

Anyone who thinks that Newin is a fool is making a serious error of judgement. That guy j(and his family) have their heads screwed on. I also doubt he will return to politics any time soon.

I was in the Amari last month and it had even less customers than the Best Western. I think a long-term view is taken to Return on Investment and if you assume that capital will appreciate every year then that investment will always show a return. Many empty shophouses are a fall-out of the rush to build pre-1996 when the belief was that many people in Hong Kong were going to be kicked out and wanted to invest/live in Thailand. Why the heck some Thais thought that the Hong Kong people would find a row of 3 shops on the Ban Kruat to Lahansai appealing is beyond me! Still empty.

I no longer believe that there will be a crash. The Thailand economy - as flimsy as it looks on paper - has been extremely resilient. Even the coup hasn't seen us Brits scrambling to transfer money over at 80 Baht to the Pound! Hanging in at just over 50 is probably as good as it gets. Are any Americans still predicting 40 Baht to the Dollar? The Aussies are certainly staying quiet.

There are actually far more new factories (and places producing/servicing things) than you might imagine. There are several on the 219 to Prakhonchai and even more along the 24. I am not familiar with what has happened north of the city.

A couple of factors need to be borne in mind - the main one is that the Thais can exist on thin air. When they have nothing the Thai's ability to subsist is second to none. When they have money they generally spend it. The amount of 'black' money from village loans etc is a concern because that underpins probably half of the rural Thais - future planning for repayment of capital is not something that features prominently in Thai thinking! Money is clearly being generated in Buriram (and/or being sent home to Buriram) and the population has grown. That population needs supporting/servicing and a host of Thai businesses from noodle shops to karaoke have been spawned.

The Farang factor is minimal but the growth in expat businesses has also mirrored the general growth.

We cannot view money spent on land/property/business as an investment. What gets spent by Farangs in Thailand generally stays in Thailand. Different for the Thais they can can take an investment view and if someone 'loses' by having a 3m Baht shophouse repossessed there will someone in Bangkok. Chiang Mai or China that will pick it up for 2m Baht. Voluntary sales are somewhat different and I have only ever seen unrealistic, inflated prices for independent sales. Also, the attitude that says if we can't sell it for 1m this year we will advertise it for 1.25m next because Bangkok prices have gone up 25%!

Many businesses are not financially driven and shophouse economics often extend no further than the principles of a Mon and Pop store.

Edited by Jip99
Link to comment
Share on other sites

Anyone who thinks that Newin is a fool is making a serious error of judgement. That guy j(and his family) have their heads screwed on.

I didn`t say Newin was a fool, I said he`s a crook and there`s a big difference. As it happens I think he`s a very talented crook. The billions of baht he spends stuff on is solely to fuel his ego and could be better spent elsewhere. I would love to see broken down where his wealth comes from, but as I say he isn`t even on any rich lists yet can build stadiums, race tracks and pay footballer wages of 2 million baht a month out of his own pocket!

I no longer believe that there will be a crash. The Thailand economy - as flimsy as it looks on paper - has been extremely resilient. Even the coup hasn't seen us Brits scrambling to transfer money over at 80 Baht to the Pound! Hanging in at just over 50 is probably as good as it gets. Are any Americans still predicting 40 Baht to the Dollar? The Aussies are certainly staying quiet.

I personally don`t think Thailands economy is flimsy on paper in any shape or form, and not sure why anyone would suggest so, and the strength of the baht isn`t the issue here. In reality the fundamentals of the Thai economy all point to strength actually - maturing government bonds, sound monetary and macroeconomic policies (even by the previous government contrary to what seems to be the TVF view based solely on the rice scheme) and a balance of trade that is neutral. The only worrying trend is the increase in household debt.

However the fundamentals of the Irish economy were also (incredibly) strong pre 2008 and that didn`t stop the arse falling out of a credit driven bubble. Ultimately the wave of construction you see across Buriram is (by and large) financed by loans that are unlikely to ever be paid back. As you rightly say "future planning for repayment of capital is not something that features prominently in Thai thinking!" I think it`s inevitable a correction will happen to the property market in areas such as Buriram sooner rather than later. This could well be induced by an event I can`t mention or perhaps later in time.

In my Mrs locale much of the extra wealth in recent times came from rubber and a new factory to process it is the only new factory I have seen. As we all know this has also gone tits up in recent months so it`s back to rice or remittance from family in Bangkok/Pattaya for many.

It`s a great wee city and I`m loving seeing it flourish and maybe I`m wrong, who knows! I just think it`s got a long way to go to being a sustainable balanced economy, free from poverty. wai2.gif

Link to comment
Share on other sites

I had a similar discussion about 3 years ago as to when the crash would happen and I cautioned that these bubbles can go on for a long long time.

They normally need an event of some kind to prick them. Land prices in Isaan are clearly ridiculous but have been for at least 3 or 4 years during which time they have just become even more ridiculous.

They may well continue upwards for quite a while. However land is not a liquid asset so banks don't tend to forclose on loans as there is no way they will get there money back once the shit hits the fan.

It is only if the banks themselves get into trouble will the effects be seen and with some creative accounting that scenario is I think some way off.
Link to comment
Share on other sites

Anyone who thinks that Newin is a fool is making a serious error of judgement. That guy j(and his family) have their heads screwed on.

I didn`t say Newin was a fool, I said he`s a crook and there`s a big difference. As it happens I think he`s a very talented crook. The billions of baht he spends stuff on is solely to fuel his ego and could be better spent elsewhere. I would love to see broken down where his wealth comes from, but as I say he isn`t even on any rich lists yet can build stadiums, race tracks and pay footballer wages of 2 million baht a month out of his own pocket!

I no longer believe that there will be a crash. The Thailand economy - as flimsy as it looks on paper - has been extremely resilient. Even the coup hasn't seen us Brits scrambling to transfer money over at 80 Baht to the Pound! Hanging in at just over 50 is probably as good as it gets. Are any Americans still predicting 40 Baht to the Dollar? The Aussies are certainly staying quiet.

I personally don`t think Thailands economy is flimsy on paper in any shape or form, and not sure why anyone would suggest so, and the strength of the baht isn`t the issue here. In reality the fundamentals of the Thai economy all point to strength actually - maturing government bonds, sound monetary and macroeconomic policies (even by the previous government contrary to what seems to be the TVF view based solely on the rice scheme) and a balance of trade that is neutral. The only worrying trend is the increase in household debt.

However the fundamentals of the Irish economy were also (incredibly) strong pre 2008 and that didn`t stop the arse falling out of a credit driven bubble. Ultimately the wave of construction you see across Buriram is (by and large) financed by loans that are unlikely to ever be paid back. As you rightly say "future planning for repayment of capital is not something that features prominently in Thai thinking!" I think it`s inevitable a correction will happen to the property market in areas such as Buriram sooner rather than later. This could well be induced by an event I can`t mention or perhaps later in time.

In my Mrs locale much of the extra wealth in recent times came from rubber and a new factory to process it is the only new factory I have seen. As we all know this has also gone tits up in recent months so it`s back to rice or remittance from family in Bangkok/Pattaya for many.

It`s a great wee city and I`m loving seeing it flourish and maybe I`m wrong, who knows! I just think it`s got a long way to go to being a sustainable balanced economy, free from poverty. wai2.gif

I doubt it will ever be free from poverty. Too many 'haves' have a vested interested in the 'have nots' staying where they are.

I remain unconvinced that the Thai economic fundamentals are sound - I certainly wouldn't believe any figures coming out from (previous) government.

The borrowed money (or rather the ability to pay it back) - both visible and village loans - remains a concern, although I accept that there have been cash purchases from Chinese Thai community.

Edited by Jip99
Link to comment
Share on other sites

I remain unconvinced that the Thai economic fundamentals are sound - I certainly wouldn't believe any figures coming out from (previous) government.

You don`t need to look at their figures, (just as you don`t look at what the current dictatorship says as being objective) you look at what the likes of Moodys say https://www.moodys.com/research/Moodys-affirms-Thailands-Baa1-sovereign-rating-outlook-stable--PR_300291 and what the international markets and analysts say.

Everyone obsesses over the rice scheme (which was a disaster) but in reality the previous government presided over a stable and successful export driven economy. 2013 actuals

GDP per capita (PPP basis, US$): 9,875 (2013 Actual) (also known as Per Capita Income)

Real GDP growth (% change): 2.9% (2013 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 1.7% (2013 Actual)

Gen. Gov. Financial Balance/GDP: -2% (2013 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: -0.7% (2013 Actual) (also known as External Balance)

External debt/GDP: 36.1% (2013 Actual)

To an extent the above argues against my prediction of a crash, and if I`m honest it`s not something I am sure about either. However after years of high growth and stability I think more turbulent times are ahead because of a certain event which will in turn lead to the the high volume of risky loans in Issan to turn toxic, and ultimately borrowers will default on.

Link to comment
Share on other sites

Mr. Pichai the owner of Ruangsangthai Hardware asked me to post his comment on the Buriram Building Boom from his local perspective:

"My family has been providing house building materials, water tanks, booster pumps, water filtration systems to private homes, resorts, government buildings, sports facilities, hospitals, student housing, University buildings, farming operations and no end the two story, three story and four story "shop houses" that are located in and around Buriram Province. Quite often it is a local family who have had land in their name for many years and they are taking a chance at being a developer. For some this has worked out well, for other families not as well. I have invited all of the prominent local Buriram Architects, Buriram Businessmen and businesswomen who develop housing estates, commercial buildings, resorts, hotels and small factories to attend the first ever Buriram Home Building Expo on Wednesday October 15th to be held inside Ruangsangthai Builders Merchants Hardware Store located across Highway 2074 from the Buriram PEA four story office building. However the Expat community of Buriram, Surin, Korat and Maha Sarakham might enjoy the English speak technical experts who will staff 29 booths inside the rear of the store on Tuesday October 14th. I've arranged for Free Pizza to be baked on the premise, free beverages to be served by my staff, and of course complimentary Thai food to be served at a restaurant in the building I own next door to Ruangsangthai. On Tuesday October 14th at the Buriram Home & Garden Expo one of the door prizes is a brand new DeWALT bicycle. I carry two mobile phones so you can phone me anytime for product questions or after the sales service. The housing boom in Buriram might not last, but many of the developers are well established local families that I have known and done business with for over 35 years. My staff is setting up displays each day with products from major vendors, some often not seen at a typical Modern Trade Home Improvement Store in Buriram Province. I've hired a qualified bi lingual 66 year old College English teacher to conduct English lessons for my sales staff so they can better serve the needs of expats who are not "obligated" to bring a "translator" when shopping in Buriram."

post-20604-0-22705900-1411870204_thumb.j

post-20604-0-38595100-1411870412_thumb.j

post-20604-0-47390300-1411870441_thumb.j

post-20604-0-50738800-1411870852_thumb.j

Edited by kamalabob2
  • Like 2
Link to comment
Share on other sites

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

Go back to 1997, same thing, people never learn. It's all borrowed money. The banker will loan you x amount of baht on your property, but only if a building is on it. If it's the same as 97, which I suspect it is, the amount of money loaned will be enough to build the structure, give the banker and his boss a little bonus and come out of the whole thing with a large amount of money in your pocket. Nobody ever pays off any of the capital, and only sometimes the interest and then only a small amount of it. The time will come when the lenders wake up and realize they have all these loans and there is no value in them. Beware of the 17 crash if not before.

Issangeorge, I certainly hope that the situation does not get as bad as back in 1997, however there is a recent NY Times article that was reposted here on T.V. (I think in the banking and real estate forum) that shows the explosion of personal Thai debt is actually approaching 100% of GDP. The article touches on the fact that real growth in Thailand could be as little as 1.3 %(I believe that was the number) next year, and tourisim has been hit hard with all the upheaval over the past year. Perhaps the most dangerous and uncontrolable factor for the Thai economy is the upcoming economic crisis in China and the tsunami like ripples it will have all across SE Asia.

Link to comment
Share on other sites

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

I had a similar discussion about 3 years ago as to when the crash would happen and I cautioned that these bubbles can go on for a long long time.
They normally need an event of some kind to prick them. Land prices in Isaan are clearly ridiculous but have been for at least 3 or 4 years during which time they have just become even more ridiculous.
They may well continue upwards for quite a while. However land is not a liquid asset so banks don't tend to forclose on loans as there is no way they will get there money back once the shit hits the fan.
It is only if the banks themselves get into trouble will the effects be seen and with some creative accounting that scenario is I think some way off.

"They normally need an event of some kind to prick them" thumbsup.gif Very true, and the Chinese economic slowdown might very well be that event wai2.gif

Link to comment
Share on other sites

Even expats in Buriram participate in a building boom. I have customers originally from Northern Europe who are willing to invest money to build a 14 room rental housing complex in Buriram. Certainly not on the scale of the local Thai families in Buriam who can afford to build and furnish a 60 room rental building, but my point is that there are expats who believe in the Buriram Real Estate Market. Do not get me started about banks in Buriram and how they want to offer my hard working employees credit and sell life insurance products. I am more focused on stocking the building materials that both Thai Citizens and foreign expats will see the value proposition, not only at the Tuesday October 14th Home show, but the other 51 weeks a year. I am proud to say that Roma Pizza Restaurant will be cooking fresh pizza and lasagna on Tuesday October 14 to be served absolutely free to expats and Thai spouses near the Buriram Ready Mix Concrete plant at the rear of Ruangsangthai Hardware. The expats eating fresh baked pizza can judge for themselves who is buying concrete deliveries and building materials in bulk in Buriram as they relax in the "George Clooney Lakeside Gazebo".

  • Like 2
Link to comment
Share on other sites

The Buriram Building Boom is has created actual demand for some house building materials not normally used in years past. When a Thai building contractor and an Expat building contractor both order a safe brand portable job site construction worker toilet you know they are serious about house building worker conditions. I will have these portable toilets on display at the Tuesday October 14th Buriram Home Show, I have rented a portable toilet bus for guests to have available near the Lakeside Gazebo where they can dine on fresh baked Roma Italian Pizza and Shrimp Tempura courtesy of Jack's Resort in Buriram. The bus toilet looks like a prison toilet for a country club prison. My "project manager" Khun Lady often travels to a Buriram House Building site to help translate for a Thai building contractor and an expat home builder.

post-20604-0-10192500-1412875562_thumb.j

post-20604-0-35783000-1412875677_thumb.j

  • Like 1
Link to comment
Share on other sites

Mr. Pichai the owner of Ruangsangthai Hardware asked me to post his comment on the Buriram Building Boom from his local perspective:

Kamalabob2 - You initially said the above, as if you were simply doing Mr Pichai a favour. Now your posts just read like you are Mr Pichai himself advertising his shop.

If admin are fine with it who am I to say anything I guess. Your promises of pizza entice me however.

Link to comment
Share on other sites

Mr. Pichai the owner of Ruangsangthai Hardware asked me to post his comment on the Buriram Building Boom from his local perspective:

Kamalabob2 - You initially said the above, as if you were simply doing Mr Pichai a favour. Now your posts just read like you are Mr Pichai himself advertising his shop.

If admin are fine with it who am I to say anything I guess. Your promises of pizza entice me however.

Massimo's pizzas are certainly worth getting out of bed for.

  • Like 2
Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Recently Browsing   0 members

    • No registered users viewing this page.





×
×
  • Create New...