Thread: Bangkok's property boom towers above bubble fears

Some conceptual art of the building:



Anyone got a recent photo of the construction? Will this thing really open or will it become another Sathorn Unique?

Originally Posted by StrontiumDog

described on Internet forums as looking “like it has been eaten by giant termites” and reflecting “the chaos of Bangkok,”

Probably by a bunch of cynical old twats who failed as serious designers. In my opinion its a fantastic design that will hopefully lead the way in shaping Bangkoks skyline.

Originally Posted by Agent_Smith

Will this thing really open or will it become another Sathorn Unique?

Sales are going crazy at the moment and the projects looking good. With the money already invested and Ritz Carlton overseeing the project I would say that it will be completed as planned.

With 1,000,000 millionaires in China, there should be some support for the Bangkok market coming from China. The world's richest people from all countries are richer and richer and are more global everyday so you'd think that might help a bit anyways. It's the middle class that they say is weakening.

There are at least 6 35 floor buildings near us,been finished at least a year now,some a lot more.
I reckon if any have more then 5% occupancy there doing well,all i see is a lot of empty buildings.

Credit created the current boom in building now focused fair and square upon the emerging middle classes and it will be the self same burden which will turn it into a crash.
Paying the equivalent of a full salary on mortgage repayment, service fees and utilities every month for the next 30 years may seem a good idea now but when jobs are lost and confidence goes the Bangkok boom will slide away just as quickly as it emerged.
The other market reliant on Chinese and Russian dosh is just as capricious. The Chinese are soon to appoint a new regime and most know that the days of exporting ill gotten gains in suitcases to HK and onwards have ended. The shift from an export led powerhouse economy to one domestic driven is fraught and nobody with any nous is expecting an easy ride.
Nothing new under the sun but one thing is for sure, the west isn't going to contribute much for the next decade.
Buying shoeboxes of 38 sm at 3.8million a pop when it amounts to more than 10 times the average " good " salary is a recipe for disaster.

Originally Posted by thegent

Credit created the current boom in building now focused fair and square upon the emerging middle classes and it will be the self same burden which will turn it into a crash.
Paying the equivalent of a full salary on mortgage repayment, service fees and utilities every month for the next 30 years may seem a good idea now but when jobs are lost and confidence goes the Bangkok boom will slide away just as quickly as it emerged.
The other market reliant on Chinese and Russian dosh is just as capricious. The Chinese are soon to appoint a new regime and most know that the days of exporting ill gotten gains in suitcases to HK and onwards have ended. The shift from an export led powerhouse economy to one domestic driven is fraught and nobody with any nous is expecting an easy ride.
Nothing new under the sun but one thing is for sure, the west isn't going to contribute much for the next decade.
Buying shoeboxes of 38 sm at 3.8million a pop when it amounts to more than 10 times the average " good " salary is a recipe for disaster.

Unlike the west, Thailand is a creditor nation. It has almost a quarter trillion in forex reserves. As long as they keep buying gold and letting the baht rise, Thailand will remain economically sound. They can afford some waste, on stuff like this.

Originally Posted by socal

Originally Posted by thegent

Credit created the current boom in building now focused fair and square upon the emerging middle classes and it will be the self same burden which will turn it into a crash.
Paying the equivalent of a full salary on mortgage repayment, service fees and utilities every month for the next 30 years may seem a good idea now but when jobs are lost and confidence goes the Bangkok boom will slide away just as quickly as it emerged.
The other market reliant on Chinese and Russian dosh is just as capricious. The Chinese are soon to appoint a new regime and most know that the days of exporting ill gotten gains in suitcases to HK and onwards have ended. The shift from an export led powerhouse economy to one domestic driven is fraught and nobody with any nous is expecting an easy ride.
Nothing new under the sun but one thing is for sure, the west isn't going to contribute much for the next decade.
Buying shoeboxes of 38 sm at 3.8million a pop when it amounts to more than 10 times the average " good " salary is a recipe for disaster.

Unlike the west, Thailand is a creditor nation. It has almost a quarter trillion in forex reserves. As long as they keep buying gold and letting the baht rise, Thailand will remain economically sound. They can afford some waste, on stuff like this.

I trust in Thailand, as well for some of indicators you mentioned. THB currency rates will remain cryptical though

go and have a look at the units in these condos and see how many are occoupied ,not many ,they are mostly empty hulks that will never be occupied .
same as in the bubble towers in china ,nobody will ever live in them

^
Finally a sensible post.

Originally Posted by thegent

Buying shoeboxes of 38 sm at 3.8million a pop when it amounts to more than 10 times the average " good " salary is a recipe for disaster.

Absolutely. I made this same observation to my friends and coworkers back in the early 2000's when they were buying these cookie cutter monstrosities here in Las Vegas and paying mortgages that kept them one month away from the poor house. Saw the writing on the wall back then, surprised no one else has learned from the housing folly in the U.S.

Easy credit seems to always precede economic disaster.

Originally Posted by Agent_Smith

Originally Posted by thegent

Buying shoeboxes of 38 sm at 3.8million a pop when it amounts to more than 10 times the average " good " salary is a recipe for disaster.

Absolutely. I made this same observation to my friends and coworkers back in the early 2000's when they were buying these cookie cutter monstrosities here in Las Vegas and paying mortgages that kept them one month away from the poor house. Saw the writing on the wall back then, surprised no one else has learned from the housing folly in the U.S.

Easy credit seems to always precede economic disaster.

If by easy credit you meaning loaning money to people who patently cannot pay it back, you're right.

The sad thing is, in the last instance, those lending the money were perfectly aware of the fact and didn't give a shit.

They should be held accountable, otherwise the whole cycle is destined to repeat itself.

Originally Posted by harrybarracuda

If by easy credit you meaning loaning money to people who patently cannot pay it back, you're right.

Yes, using easy credit and purchasing things at falsely inflated values, creates a feedback effect until the whole thing comes crashing down. Happened in the late 1920's in the U.S. and we're due for it again. Look at how overvalued the NYSE is and yet the moneyed types are still investing in it hand over fist. History repeating itself.

Sukhumvit 24 has about 8 new high-rises.

I was talking to a guy who owns 2 floors of one of them. I asked him how full the building was.

His reply.

"It was the strangest thing.. when we bought the unit we were told that it was 80% sold. We have been the only people living here since we first moved in"

If all these places were for rich foreigners on high foreign salaries then maybe the prices are about right. However there is only one rich foreigner for every 100 apartments. I think the prices will drop substantially in the near future.

^ let me know when a 2 BR in a decent location drops to 1MM baht, then we can talk

Originally Posted by Lorenzo

^ let me know when a 2 BR in a decent location drops to 1MM baht, then we can talk

Unlikely,

But you might see them for 3-3.5

Why is this a noteworthy topic? Same old crap, same old responses.

Originally Posted by Albert Shagnasty

"It was the strangest thing.. when we bought the unit we were told that it was 80% sold. We have been the only people living here since we first moved in"

they will sell quickly because rich Thai buy them and keep them as a "savings account"

they have no intention to live in it or rent them, it's all about how many you own and blast about it between their friends

that's basically the business model of those property developers and it works,

Do Thais always aspire to purchase a new build or are they happy to purchase previously owned property to live in ?

Originally Posted by Bower

Do Thais always aspire to purchase a new build or are they happy to purchase previously owned property to live in ?

In my experience Thais will generally, if they can stick to new builds.

Originally Posted by Satonic

Originally Posted by Bower

Do Thais always aspire to purchase a new build or are they happy to purchase previously owned property to live in ?

In my experience Thais will generally, if they can stick to new builds.

So perhaps Thais buy them for investment and expect higher capital gain (if not lived in) than rental income ?

Originally Posted by Bower

Do Thais always aspire to purchase a new build or are they happy to purchase previously owned property to live in ?

In S.E. Asia, and in Thailand particularly, it is generally an illiquid market. They do not buy what they perceive to be second hand.

A case in point. A falang acquaintance bought in Thonglor a brand new top spec apartment of 120sm on a high floor for 8 million bt several years ago. He designed a full European kitchen which was fitted during construction. He has tried to sell it at the same price for the past 3 years but hasn't had anyone even come to look at it. Since then hundreds of flats have been built and snapped up by Thai who are happily paying the same price for something half the size constructed by spec developers not enjoying the same reputation as the company that built his condo.

It's crazy but that's the way they think. It's the same story in Penang. An acquaintance in the real estate business there can't shift a condo unless it is to a westerner and it is always at a price cheaper than the original.

Selling to make a profit is generally not viable unless the condo was bought by a flipper who never occupied it and it is sold as virgin new. But then as far as I am aware if it is sold within 2 years of purchase a tax on the profit is due.

Bangkok Post : Condos mushrooming across the capital

Condos mushrooming across the capital

Bangkok is experiencing a boom in unit growth as the market rides a wave of positive post-election sentiment and investors cash in on expansion to the transportation network

• Published: 18/09/2011 at 12:00 AM
• Newspaper section: Spectrum

Despite tougher competition in the condominium sector, there were still many units launched in the first half of this year _ 32,549 to be exact, bringing the total available supply to 251,327 units by the end of June.



Dividing the new launches by location, 19% were in the city centre, 23% in fringe areas and the lion's share, 51%, in peripheral areas. The Srinakarin and Bang Na area is a notable new destination for condominium development, with 7,933 units launched in the first half of 2011, or about 42% of the new supply in the suburban area.

The market along Bang Na-Trat Road has been growing strongly as a number of shopping centres are scheduled to open in this location between now and 2013. The skytrain extension from On Nut to Bearing has also challenged property developers to introduce new residential projects in the area. Another blossoming area in the suburbs is Chaeng Watthana, with 7,395 units launched during the first half of this year, representing 39.1% of new supply in the suburban area. Chaeng Watthana has become a major magnet for developers seeking to tap the thousands of people who would like to move closer to their workplace at the huge new Government Centre.

The majority of supply in the city fringe area has been around Rama IX and Ratchadaphisek, with 5,276 units or 72% of total units launched there in response to increased demand. Construction of the Central Rama IX shopping centre is due to be completed by the end of the year. Ratchadaphisek is also being positioned as a new central business district of Bangkok when multinational firms and the Stock Exchange of Thailand move their headquarters into the area. With a large number of jobs moving into this growth area, investors are taking a chance of reviving the junction.

The property investment climate is expected to be positive after the election. The premium residential market showed consolidation in the second quarter of 2011. It has yet to return to the heady days prior to the global financial crisis of 2008-2009 but the success of some projects points the way to a recovery. The target buyers of premium condominiums include executives of financial institution and consulting companies in Hong Kong and Singapore. Their purpose of buying is for investment, while some prefer having second homes in Bangkok.

However, the overall take-up rate of Bangkok condominiums has decreased from 48.3% in the second half of 2010 to 45.8% in the first half of 2011. In terms of unit numbers, take-up dropped to 14,907 in the first half of this year from 24,895 in the second half of last year. This reflected the fact that the medium- to low-end market had slowed over the period. A total of 57,385 medium- to low-end condominium units were added during the second half of last year to the middle of this year, while no premium supply was added.

Condominium development has already pushed up land prices in locations along the extended route of the Bangkok Mass Transit System. Overall condominium prices increased by 6% on average in the first half of 2011. The sharp increase was in Grade B Condominiums located in the city fringe area, especially the Ratchadaphisek area, with about a 10% increase from last year. The prices of condominiums located in the peripheral area remained stable while some projects increased slightly, with only a 1% rise, while condominiums located in the city area increased in price by 5%.



Further improvement is foreseen in the premium market because Bangkok is still a top-three destination in the eyes of investors because of the lifestyle here. The interest in luxury Thai property is being driven by an uptick in optimism about the overall political and economic environment in Thailand. The new government has made significant promises about stimulating economic growth immediately. Major infrastructure projects are finally likely to progress as well. This would provide long-term support to economic expansion and be reflected in asset price appreciation, particularly for luxury properties. There will be the additional supply added to the luxury market in the second half of 2011 and 2012 as a result.

The medium- to low-end market will slow down after a dramatic number of launches since the second half of last year. This is likely to create pricing pressures and competition among condominiums located in the peripheral areas of Bangkok.

Originally Posted by StrontiumDog

the lifestyle here

The lifestyle here, as it relates to Bangkok at least, means the night life mainly.
Otherwise it's congestion, pollution, and uneven sidewalks that double as open air impromptu restaurants and street markets.
At least it's cheap, and it's Thailand. I'm tossing up whether to get a 'pied a terre' in Bangkok or Pattaya actually.