Condo Glut to Dissipate

[tomcat]

Want a home in Thailand? You Have 450,000 Empty Ones to Choose From
By Natnicha ChuwiruchMay 16, 2019, 5:00 AM GMT+7

• A supply glut will see developers look to clear excess stock
• Chinese investors are pulling back amid local capital controls

A glut of condominiums as Thailand’s economy wavers and stricter mortgage-lending rules kick in is creating a buyer’s market in Bangkok.

Some 65,000 new apartments were added to the city last year, an 11% increase over 2017 and the most since 2009. Demand, however, is tepid with developers reporting take-up rates of just 55% and average asking prices decreasing 6% year-on-year, a Knight Frank report shows.

It’s a chance to get into the market as home builders look to clear excess stock at lower prices, according to Aliwassa Pathnadabutr, a managing director of CBRE Group Inc. in Thailand.

“The overall condominium market will be slower this year but there are still opportunities in some locations with the right product at the right price,” she said. “We believe the market is entering an equilibrium stage where prices will be adjusted to a more realistic level.”

Thailand’s Finance Ministry cut its economic growth forecast last month, predicting the slowest expansion in three years as the country grapples with moderating exports and heightened political risk after disputed elections. Revised mortgage-lending rules that came into effect in April may also limit the appeal of real estate because they restrict how much money some second-home buyers can borrow.



The Southeast Asian nation’s capital is also being impacted by a drop in Chinese visitors. Chinese investors have historically made up the bulk of foreign property buyers in Thailand but their presence has waned as China’s economy slows and capital controls limit outflows.

CBRE said in a 2019 real estate market outlook report that it was concerned about Thailand’s high reliance on foreigners. “Most of the recent foreign buyers are investors and CBRE doubts they will live in the units they have bought. Foreign sales are highly sensitive to economic conditions of the buyer’s home country.”
And it isn’t just Bangkok that’s hurting. A total of 454,814 residential units across the country were left unsold last year, with a value of $41 billion, according to Sopon Pornchokchai, president of the Agency for Real Estate Affairs Co.

Still, Knight Frank at least believes the glut and falling prices may be short lived, citing Bangkok’s resilience and planned infrastructure projects that will renew the city.
“Ask anyone who’s been in property how many times they’ve heard the bubble will burst?,” the firm’s Bangkok-based head of residential, Frank Khan, said. “I’ve heard this more than 10 times, but in my last 15 years, it’s never burst.”

[Maanaam]

Still, Knight Frank at least believes the glut and falling prices may be short lived, citing Bangkok’s resilience and planned infrastructure projects that will renew the city.
“Ask anyone who’s been in property how many times they’ve heard the bubble will burst?,” the firm’s Bangkok-based head of residential, Frank Khan, said. “I’ve heard this more than 10 times, but in my last 15 years, it’s never burst.”

Of course a real estate agent will push for confidence in the market.

Can someone explain that graph? The y axis is percent. Percent of what and compared to what? The month before, the same time last year?

[knowsitlike]

^ I would assume that is % change in all/selected property stocks (the likes of Sansiri, Noble etc) against the rest of the market, if so then all it is really saying is that property has underperformed against the market since October 2018 but in the same period that everything has been in general decline anyhow

[Maanaam]

I would assume that is % change in all/selected property stocks (the likes of Sansiri, Noble etc) against the rest of the market, i

Yeah, except the trend is showing the same for the stock market.

[Dragonfly]

yep, the graph is misleading and not saying anything

what would be interesting would be the number of deals since the announcement, probably slightly the same as you would need more time

[Norton]

It’s a chance to get into the market as home builders look to clear excess stock at lower prices,

Not yet. Too early. Hold on to your cash for about a year. Will be far better time to buy.

[Maanaam]

Not yet. Too early. Hold on to your cash for about a year. Will be far better time to buy.

Yep. Maybe 2 years.
It will take time for the protests and resultant coup to take place, then the markets have to react.

[cyrille]

Hold on to your cash for about a year. Will be far better time to buy.

It has been for at least 20 years.

[Switch]

All too late for Seekingass. The smug verbose cunter.

[knowsitlike]

^ everyone’s waiting for a crash in prices, but like the guy from Knight Frank said this wait is going on now for a long time and in-between quite a few people have made money the last decade or so. My guess would be no major correction but to find the right opportunities will get harder and the money to play that game will get higher and thus riskier

[Norton]

It has been for at least 20 years.

Far from an expert and not considering buying anyhow but I did by luck get one hell of a deal on a condo in 1999. Paid 65k baht per square meter and sold it for 190k a few years ago.

[jabir]

Very much a buyers' market for now.

I read on the internet so must be true, that a major reason for the strong thb is a flood of black Chinese money being invested not only in property but more or less across the board; they don't mess around once the target is in the crosshairs.

[tomcat]

a flood of black Chinese money

...they've come to the right laundry...

[Switch]

I think Seeking ass would only sell to someone from a similarly deprived background. Not many Irish pikeys in Pattaya, and the few that are there are looking to buy a trailer.

[Dragonfly]

there are a lot of condos available, but do owners want to sell at a reasonable price?

of course not, hence why the market is not crashing, Thais will rather keep it empty and lose all the capital than reduce their asking price by 1 THB

and of course the question of owner diversity, most of those condos are held by the same big and medium size owners as some kind of gold investment

[Maanaam]

Thais will rather keep it empty and lose all the capital than reduce their asking price by 1 THB

This has been my repeated observation in Hatyai.
Example: My wife's friend had a hair salon, paying 8000 per month rent. When a multi-storey department store opened across the road, the landlord said to the tenant that her business will prosper from the increased foot traffic and raised the rent to 15k. Wife's friend moved out. That was 7 years ago and the place is still untenanted.
Another example: My neighbour has an embroidery business (motiffs on shirts etc). It does quite well. Landlord raised the rent by 2k, and my neighbour moved out. That was 3 years ago and the place has remained empty.
Example. A developer near here built 8 quite nice town houses with carparks and small gardens. He totally finished one, but the others are basic construction only. He ran out of money and needs to sell the finished home so as to complete the others. He has sat on the asking price for 2 years. The complex is going to seed.

I think a lot of the ridiculous housing developements in Hatyai are actually a form of money laundering. Prices are ridiculous, and yet so many houses and apartments remain empty.

[Luigi]

Thais will rather keep it empty and lose all the capital than reduce their asking price by 1 THB

If adding in negotiation, then not my real World experience at all.

Have always negotiating buying prices and have always bought (sometimes substantially) lower than their asking price. Usually by quite a bit.

[Maanaam]

have always bought (sometimes substantially) lower than their asking price. Usually by quite a bit.

So is it sometimes or usually? Or is "quite a bit" not substantial?

[Luigi]

Have always bought lower.

Usually by quite a bit.

Sometimes substantially.


Engresh not yer first language or sumfing?

[cyrille]

Have always negotiating buying prices and have always bought (sometimes substantially) lower than their asking price. Usually by quite a bit.

Yeah, the mountain of bs shovelled into that one resulted in quite a lot of confusion.

[Maanaam]

Usually by quite a bit.

Sometimes substantially.

Or is "quite a bit" not substantial?

Engresh not yer first language or sumfing?

Sorry, I never learnt low class pikey.

Have always negotiating buying prices and have always bought

Is that correct pikey grammar? If so, I won't fault you. In the English language rules that I follow, that should have read, "I have always negotiated..."

[Luigi]

"I have always negotiated...

That's certainly correct.

Thank Christ you were able to understand it.

We might have had to put up with a third post of your jolliness had you not.

[tomcat]

In the English language rules that I follow

...the second edition covers spelling: now on sale...

[Dragonfly]

If adding in negotiation, then not my real World experience at all.

Have always negotiating buying prices and have always bought (sometimes substantially) lower than their asking price. Usually by quite a bit.

yeah, when they are desperate to sell as if they need cash ASAP, they will bargain

you probably paid more than they had in mind when things got desperate for them and were ready to undersold them to their Thai friends for a dime, but the farang came to the rescue for a better price

[Luigi]

...the second edition covers spelling: now on sale...

Hopefully the third covers 'quite a bit' and 'substantially'.

when they are desperate to sell as if they need cash ASAP, they will bargain

Amen.