450,000 empty homes in Thailand..

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Jogger
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450,000 empty homes in Thailand..

Post by Jogger » Fri May 17, 2019 7:47 am

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 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.”

The 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.

Bangkok 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.

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.”

https://www.bangkokpost.com/business/ne ... m#cxrecs_s

fountainhall
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Re: 450,000 empty homes in Thailand..

Post by fountainhall » Fri May 17, 2019 11:01 am

Jogger wrote:
Fri May 17, 2019 7:47 am
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.”
All that is basically true. There have been endless reports over many years about falling prices; yet there has been no major decline in Bangkok since the years following the Asian Economic Crisis more than 20 years ago. The fact is that buying property in mainland China remains a dream for most people. That is why Bangkok developers have in recent year been constructing new condo units in the 25 - 30 sq. meter size. Chinese are still able to withdraw up to US$50,000 per year from their banks, although only $10,000 of that can officially be exported. But as the following article from the South China Morning Post makes clear, there are ways of getting more out. Additionally there are plenty of Thai Chinese in Bangkok to help these purchasers find mortgages or other loans to top up the purchase price.

https://www.scmp.com/week-asia/society/ ... ney-abroad

That article concentrates only on the mainland Chinese middle class. It fails to mention the young couples from cities like Singapore and Hong Kong who have started to buy in Bangkok in big numbers. Again, the price of condo units in those cities is vastly more than most young couples can possibly afford. They see an investment here as a way of making a profit over a period of time which will help them later get into the market in those cities.
Records indicate that approximately 85 projects by 35 developers from Thailand were marketed to Hong Kong buyers last year. Ananda Development and Sansiri were among the most active in marketing to Hong Kong and most major condominium developers were active in marketing at least 2-4 projects. The influx of foreign developments, especially off-plan, into Hong Kong, has been so significant that the Hong Kong Estate Agents Authority will issue new regulations set to take effect in April of 2018 to govern agents selling properties located outside of Hong Kong to regulate agents and protect buyers.

This year (2018), developers are bullish about the prospects for the real estate industry in Thailand and are planning many new launches as well and new phases in current projects. This increase in supply will mean that developers will be targeting foreign purchasers for projects in good locations with high yield potential. CBRE expects Hong Kong to remain a strong investment buyer market for Thai properties in 2018 for both the luxury and mid-market segments.
http://www.nationmultimedia.com/detail/ ... e/30336962

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Re: 450,000 empty homes in Thailand..

Post by pong » Mon May 20, 2019 1:57 am

mainland Chinese-and perhaps also others, buy (bought) small flats to rent them out via AirB&B-to their own fellow-countrymen. But now that Thai govmt. has put a ban on that, that suddenly stopped the money flowing in (though a proper real Chinese will most likely know a way around everyting, including this).

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Re: 450,000 empty homes in Thailand..

Post by Smiles » Mon May 20, 2019 9:36 am

. . . and then there is China.

Cheers ... ( and just one more reason why I love living in Thailand )

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Re: 450,000 empty homes in Thailand..

Post by fountainhall » Mon May 20, 2019 10:28 am

Smiles wrote:
Mon May 20, 2019 9:36 am
. . . and then there is China.
I will only dispute one issue in that video - other than to point out it was filmed a number of years ago. As far as the New South China Mall in Dongguan is concerned, I have been to Dongguan and stayed for a weekend. I would never wish to return! It is a huge industrial and manufacturing city between Hong Kong and Guangzhou with little to recommend it. It has a population of over 8.5 million.

The New South China Mall was opened in 2005. Its creator and financier was typical of many newly minted Chinese billionaires - this one had made his fortune selling instant noodles. They liked the idea of bigger and better even though they had little concept of what they were really getting into. In terms of leasable area, it was then the largest mall in the world - more than twice the size of the Mall of America. The developers saw as its market not the low-income migrant labourers who make up most of Dongguan's population, but the large number of high-spending upper class consumers from neighbouring Guanghzou and Shenzen across from Hong Kong. But even those with Mercedes cars and drivers were just not prepared to make the 75 km trip. Take-up of space was slow, and then all but collapsed in 2008 when Guangdong Province was hit hard by the worldwide recession. A new owner took over, revamped the mall and focussed much more on middle class consumers.

That strategy has largely worked. Since that news item was filmed, occupancy at the Mall and visitor numbers have risen very considerably. 4 years ago in June 2015 this was confirmed in a CNN report.
Chinese 'ghost mall' back from the dead?

When I visited two years ago, the mall was deserted. Most units were empty.

However, a visit in late March revealed a different picture. The mall was buzzing with activity.

Large parts of the previously abandoned buildings are now full of shops, restaurants and entertainment venues.

Visitors could be seen browsing for luxury sunglasses and designer jeans, dining at the Korean, Italian or Chinese restaurants or enjoying the new entertainment facilities. Screams and laughter can be heard from merry-go-rounds.

"It's been a big change. It's a clear modernization," said David Carr, an English teacher from the United States who is living in Dongguan with his wife Danae, also a teacher. "We come here at least once a month now."
https://edition.cnn.com/2015/04/28/asia ... index.html
https://theculturetrip.com/asia/china/a ... host-mall/

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Re: 450,000 empty homes in Thailand..

Post by Smiles » Mon May 20, 2019 1:26 pm

" ... I will only dispute one issue in that video ... "
What??? Only one?
I'm disappointed ... I expected at least three, perhaps even half a dozen. :ugeek:
Cheers ... ( and just one more reason why I love living in Thailand )

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Re: 450,000 empty homes in Thailand..

Post by fountainhall » Mon May 20, 2019 2:07 pm

Well, since you seem deprived, I can continue . . . :o

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Re: 450,000 empty homes in Thailand..

Post by Jun » Wed May 22, 2019 1:58 am

I think some Asian investors are quite happy to buy an apartment and keep it empty, on the presumption that increasing property values will make a return. Doing this late in the cycle seems a little risky to me. I would need a very good rental return to put up with the hassle of buying residential property for investment.

I do note that the Thai government was introducing some cooling measures, such as lower loan to value limits for second and third properties. So there is some evidence of sensible measures to discourage too much of a bubble.

Singapore has also introduced some cooling measures in recent years.

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Re: 450,000 empty homes in Thailand..

Post by fountainhall » Thu May 23, 2019 10:03 am

Hong Kong also has been rolling out cooling measures as apartments there are virtually the most expensive in the world and way out of the reach of most young people. The problem in Hong Kong is that for decades it has been a boom and followed by cooling measures. Then the cooling quickly disappears - other than during major international recessions. At least Singapore has the government-run Housing Development Board which enables most Singaporeans to purchase apartments in government housing developments with generous loan repayments and the ability to use funds in their Central Provident Fund (basically their government-held pension fund) for purchase. That has enabled around 80% of the population to own their own homes. It is the private sector apartments that have become hugely expensive.

It's been reported here before that young Singaporeans and Hong Kongers are buying small units in Bangkok in the expectation they will make a profit over a 5 to 10 years period and generate enough to enable them then to jump on the housing ladder in their own cities. In Hong Kong a 70 sq. m. apartment outside the centre but within 30-minute commuting distance will cost at least Bt. 70 million.
To buy a 650 sq ft apartment in central Hong Kong, a skilled worker in the service sector would have to save their entire salary for 20 years
https://www.ft.com/content/a6d33890-11a ... 3b2440bd73

Little wonder that Bangkok prices are tempting. But whether they will provide a good investment return - who knows?

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