Dead As A Doornail

Discussion in 'Thailand property' started by [email protected], Feb 4, 2009.

  1. Sean@Phuket

    [email protected] New Member

    The Thailand page on this forum is always so damn quite ...

    Lets get some interest going shall we?

    What are your thoughts of the current situation folks? and market?

    And how about the future? One fantastic thing about Thailand is the fact the market, particularly Phuket, is built upon cash and not credit. There are not too many locations in the world which can say this, and for this reason alone I think Thailand stands in good stead for the future! What do you think?

    I know of a place in Phuket where you can get 2 bed 2 bath Thai Boutique style villas for as little as 100k USD! Amazing Thailand they say! :)
  2. egeefay

    egeefay Senior Member

    The property market in Thailand has been affected by the global downturn and the chaotic political atmosphere in Thailand.
    Currently there seems to be an oversupply of condos sitting unsold...especially in Bangkok. Property developers will probably be forced to sweeten the pot to attract new buyers.

    Meanwhile, for the brave, the situation may pose an opportunity.

    1. The plunge in worldwide demand for building materials (steel,cement, etc) makes building in Thailand now cheaper than previous years.

    2. The Thai baht is suppose to weaken in 2009 against the American Dollar, making the cost of investing in Thailand a better deal for some.

    3. The government , eager for foreign investment to replace lost exports, is revisiting some laws that discourage foreigners from investing in Thailand and may loosen some of the restriction

    That's my opinion. What do you think?
  3. Sean@Phuket

    [email protected] New Member

    On top of the cost of construction, the price of land is falling (Phuket) which means developments should be in a more reasonable price margin if this is passed on to buyers. I have become aware of direct beachfront plots available at 50% discounts so the opportunities are their.

    The PM and his team are working hard to restore confidence, are they doing a good job? I don't know. I have heard many a time about laws being amended so I will wait and see on that one. With a new PM comes new rumors of changes! Remember Samak ...

    However even without law amendments, with the Baht's weakening as you say, costs lower and the fact the Thai market is NOT made out of money which isn't actually there things are looking very rosy indeed!

    Things are already picking up slowly, high-end developments are selling better then the last quarter of 08' on Phuket! Phuket is magic!

    I'm personally excited for the future, what particularly excites me are the prospects for the north half of Phuket. More consideration for the environment, better infrastructure, shopping centers, 5* hotels, further developments and the recent news about the construction of a 15,000 seater sports stadium and complex ready to begin!
  4. LisaP

    LisaP New Member

    Thailand is a Gem!

    I totally agree with your statement that Thailand stands in good stead for the future!

    I work in overseas property myself and visited Thailand last summer to look at our developments in Hua Hin and River Kwai.

    Even with the current exchange rates the property available in Thailand is fantastic and looks like only getting better.

    What we need is an awful lot more people with the same opinions as us!
  5. Sean@Phuket

    [email protected] New Member

    Good on you LisaP ... Great to hear from you!! :)
  6. egeefay

    egeefay Senior Member

    Hard Times in Phuket

    Here is part of an article in the New York Times about Phuket real estate market
    Would appreciate hearing from other people in the RE industry in Phuket

    Turmoil Stalls Phuket Vacation Home Boom

    Article Tools Sponsored By
    Published: April 28, 2009

    PHUKET, THAILAND — When there’s blood in the streets, can you sell real estate, even if it is your own? That is the question facing property developers, brokers and investors here.

    The island, Thailand’s largest, is one of Asia’s top markets for vacation villas. Behind the casuarina trees along “Millionaire’s Mile,” luxury multimillion-dollar homes perch on cliffs, their marble swimming pools looking out west over the Andaman Sea. Along Phuket’s roads, billboards tout “no risk” deals and flash pictures of fancy seafront apartments.

    But its rampant development has ground to a halt as a result of the global financial crisis and the political crisis since the removal of Thaksin Shinawatra, the former prime minister, in a coup in September 2006.

    “The market is not slow in Phuket; it is dead. It is absolutely dead,” Larry Cunningham, the chief executive of Phuket One Real Estate, said after the latest disturbances.

    Advocates of the Phuket market have long described it as “bulletproof.” But they are starting to pick their words more carefully.

    However it is worded, the theory is being sorely tested. The airport closures came at the start of high season here, which runs from November through April. Though tourists are still coming, their numbers are drastically down, and risk-averse Japanese, Korean and Chinese visitors canceled en masse.

    “You can’t call it a high season; more of a better low season,” said Peter Schreck, a German who started a dive shop, Absolute Diving, in November near Phuket.

    The problems are taking a toll on Phuket’s luxury property market. Already, several projects have been scrapped, and numerous developments are on hold.

    Across the road from a sign pointing to “Tomato Beach,” construction on Shangri La’s Phuket Resort & Spa stands idle, a watchman and a guard dog the only signs of life. The development, which would have had a residential component, is stalled indefinitely, as its backing came from Lehman Brothers, which is now defunct.

    The land for the Four Seasons resort and luxury villas planned for Rawai, at the southern tip of Phuket, is for sale and the project in jeopardy because it too had financing from Lehman. The Amalfi project planned by Raimon Land, a Bangkok apartment developer, has not gotten off the ground.

    Lersuang Group idled three large developments after it ran into financial trouble. Other projects are going slowly, with delays of at least six months at Jumeirah Private Island and at the Yamu, a development designed by Philippe Starck. Both sit off Phuket’s east coast.

    “Developers who are partway in are slowing down,” said Charlotte Filleul, the general manager of resort property for the Phuket office of CB Richard Ellis. “A lot of those that were on the drawing board are never going to get off the drawing board.”

    Sales at Richard Ellis are down 50 percent compared with a year ago and were particularly slow in the first three months of this year. Whether as a result of the political situation or the financial downturn, buyers “don’t have the same confidence,” Ms. Filleul said.

    It is hard to gauge prices accurately. Foreigners are not allowed to own land directly and often complete deals offshore or through Thai partnerships. But Ms. Filleul said that although she had more than 20 multimillion-dollar villas for sale on Phuket — more than usual — sellers had not been telling her they were desperate to raise cash.

    “It’s not distressed selling,” Ms. Filleul said. “Sellers are not willing to drop prices. Buyers are looking for a 50 percent discount.”

    At the Royal Phuket Marina, a development around a marina for luxury yachts, there have been no property sales since Lunar New Year, in late January.

    “People are not in the mood to buy second homes,” said Gulu Lalvani, the chairman of the Royal Phuket Marina and the founder of Binatone Electronics, a maker of cordless phones.

    Mr. Lalvani retired in Phuket 10 years ago after having fallen in love with the area in 1991 and bought a villa at the Amanpuri resort. But he grew bored in retirement and started developing property, buying 190 hectares, or 470 acres, of marshy land where a shrimp farm had stood. The marina is now built, with berths for 100 yachts, and the company has sold 82 high-end condominiums around it.

    Mr. Lalvani himself has a lavish home, the Grand Villa, at the entrance to the marina. It covers 1,900 square meters, or 20,000 square feet, in a main house and four guest cottages, with space for three yachts in front of its huge expanse of lawn. Behind the home, there is a five-car garage that houses a vintage red MG convertible, a classic purple-and-black Singer convertible and a black Rover town car.

    But the house remains at the end of a dirt road and next to a building site. Adjacent to his home, Mr. Lalvani’s company is continuing construction on four stand-alone villas, although only one has sold so far. There are also several apartments unsold in the first phase of the development, and a second phase of the project that would extend the marina dramatically is on hold. Many of the shops in the 8,000 square meters of retail space stand empty.

    Mr. Lalvani says he can afford to wait for the market to rebound before he continues the marina expansion, as he has incurred no debt on the project. He has invested $120 million of his own money in it, and like every foreign buyer in Phuket, he has had to pay cash. Although some Thai banks claim they offer mortgages to overseas citizens, local expatriates say that is window dressing, and no such mortgages ever get approved.

    Phuket’s boosters hope the fact that it is a cash market will be its salvation. They say that discourages speculation and means that most villa owners are wealthy, with a Phuket home as part of a portfolio of four or five properties.
  7. egeefay

    egeefay Senior Member

    Here's some encouraging news on Property in Thailand

    Online property-research house the Global Property Guide has painted a grim picture of tumbling real-estate prices around the world in what it calls "the housing-crisis contagion", which it says spread to more countries in the year ending on March 31.

    The falling prices accompanied decreased spending on personal consumption, low consumer confidence, tight credit and worsening unemployment.

    Among 32 countries covered by the Global Property Guide's most recent survey of house prices, 27 recorded price falls in real terms during the year to the end of the first quarter.

    The Global Property Guide uses price changes after inflation, giving a more realistic picture than the "more upbeat" nominal figures usually preferred by real-estate agents.

    During the year to March 31, price falls of more than 10 per cent occurred in 12 countries. The previous worst-ever year - to the end of 2008 - had eight price falls of more than 10 per cent.

    However, only seven countries had price falls of more than 5 per cent in this year's first quarter, compared with eight countries in the previous quarter, although some individual price declines were much higher in the first quarter than in the previous quarter.

    The research house said house prices bounced back in Thailand, Austria and Israel during the year ending March 31. In Thailand, prices of single-detached houses with land were up 4 per cent year on year in the first quarter, the first increase since 2006.

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