Archive for the 'Real Estate' Category

Real estate in Phuket : the market in disarray… wants to believe


This article is not really interesting, even quite boring. Because it’s repetitive, it tells us something we already know, since a long time (game over for the real estate market, vanished the famous “foreign buyers”, vaporized the financings, in the toilets the so called “luxury” market in dumps like Pattaya, Phuket, blablabla.).

No… instead what I found fascinating is the pure and perfect human psyche at work.

First, the depressing reality, difficult to handle on a day to day basis :

More than 10 residential projects with a combined market value of nearly Bt10 billion remain “on hold” in Phuket, because demand from both domestic and foreign buyers – especially for luxury homes – has fallen to less than half of last year’s level. […]

“Some Thai investors are interested in buying our residential projects, but the banks reject their loan applications. This is the main problem for local investors,” he said. (Nation)

Then, this thunderlight, so human, so pathetically human :

“We believe the Phuket property market may recover in the final quarter of this year or next year because most of the property projects in this area focus on the luxury market,” he said.


This nobody wants to believe.

It’s beautiful.

I don’t want to mock this man. I won’t tell him that all macro indicators and the simple logic are yelling that any recovery for the end of 2009 and 2010 is a fantasy.

I am beyond.

I just see a man, in total disarray, so flawed, but so touching. Like all of us. ๐Ÿ˜‰

Condo owner arrested… for working illegally

A Canadian man who has lived in Phuket for over a decade has been arrested for working illegally in Thailand, a charge he claims stems from a dispute over maintenance fees with one of the co-owners of a condominium complex in which he owns five units. […]

Speaking to the Gazette from inside the jail cell, Mr Nixon explained that he started spending winters in Thailand about 20 years ago to escape the Canadian climate, and now owns five units at Blue Canyon. He has also been a member of the Blue Canyon Country Club since its inception in 1992.

He told the Gazette that he was not working in Phuket, but had merely been elected by fellow condo owners as their โ€œjuristic personโ€ representative at an annual meeting. Serving as a condo ownersโ€™ representative is an unpaid position and does not constitute work, he maintains.

There are many foreigners on the island in similar positions, and to his knowledge none has ever been accused of working here illegally for this reason, he says.

Mr Nixon concedes that Thai labor law as it applies to foreigners is vague about what actually constitutes โ€œworkโ€, but he feels the authorities are selectively enforcing the law in his case at the behest of one of the condo co-owners who is in arrears on his maintenance fees. […]

โ€œDoes the local government really want to ask us to keep investing in properties and not allow us to sit on management committees? There is something strange about this. If Thai authorities donโ€™t want foreign investors, I think they should just tell us clearly, as opposed to arresting us,โ€ he said […] (Phuket Gazette)

A fascinating story.

-1- the canadian is wrong. He was “working” indeed. He needed a work permit.

Here is the definition from the Department of Employment :

โ€œAlienโ€ means a natural person who is not of Thai nationality; โ€œ Work โ€ means to engage in work by exerting energy or using knowledge whether or not in consideration of wages or other benefits.

Now you start to understand… The trap. ๐Ÿ˜‰

[and we shall remember the…. Tsunami scandal… Foreign volunteers came to help cleaning the disaster… and the thai authorities were adamant : “they are not paid, they are volunteers, they help us, they do a hard work indeed, but… they need a work permit, comprende ? “]

-2- he’s right : everybody is doing it ! That’s the beauty of it. Many foreigners are violating the thai law… They don’t even know it… For years… And then, for some very specific reasons, one day they are nailed. Because, technically, they can be nailed.

You’ll find the same circus about business ownership, house and land ownership, visa etc.

A message on ThaiVisa Forum summarizes perfectly the situation.

You’ll find that the laws are specifically written so that they can be selectively enforced. I don’t think it is an accident that the law is vague.

If you refuse to keep a low profile and offend the wrong person you ARE going to be guilty of something.

-3- the canadian is right… Foreigners should ask themselves : Do I really want to invest in this country ? The Condo Law allows freehold ownership for foreigners… But many other laws try to prevent foreigners… to live in Thailand. It’s a huge Potemkin Village. There is no certainty.

-4- the thai laws rely on one very powerful principle : the fog of war. I showed it at lenght in my special Foreign Business Act dossier.

The fog of war creates and maintains the uncertainty. Uncertainty gives a competitive advantage… A leverage.

-5- the bottom line is simple : foreigners are tolerated in Thailand. Until one day… you piss off the wrong thai big shot… and then, oh my, it’s so easy to screw you.

Latest news from the Boiler Room : situation is “improving”

That’s the good point with the Boiler Room… You think they’re dead, explosed, atomised… but no… like the Terminator they’re always coming back. For that matter, it’s like a movie. Albeit not a very good one.

Anyway. Here are the latest news from the Boiler Room, with a very funny article from the Nation (of course). Ready ?

First the title, it sounds like a bullet, like the drop of 53 % of sales of General Motors in the US in february :

Signs of improvement lead to launch of new projects

A good start indeed. My dear readers know since october that the property market in Thailand is fundamentaly insulated from the crisis. Why ? Because.

So, we have had a crisis in Thailand… But we are lucky : it lasted only 3 months ! Now we have “signs of improvement“. I say : book it and buy it (the article’s title, not the condo). ๐Ÿ˜‰

The top 10 property developers in the Thai market are preparing to launch new residential projects worth more than Bt30 billion as they glimpse what some believe are the first signs of improvement in home-buyer confidence.


Sansiri’s chairman Apichart Chutrakul said that although Thailand’s economy had slumped following the global downturn, his company believed that demand still existed for residential projects priced between Bt3 million and more than Bt5 million.

Good. People are going to received 2000 THB in april from the government, reduce their spendings (VAT collections going down), the Bank Of Thailand slashes interest rates, the sales of cars are dropping, the exports are plunging, the industrial production is falling… but THE DEMAND STILL EXISTS for mid to luxury condo.

Great. ๐Ÿ˜‰

“We’ve seen good signs in the first two months of this year. The number of visitors to our residential projects has increased about 10 per cent since the last quarter of last year, when the number of visitors fell more than 50 per cent below normal. As a result, we believe that when we launch new projects at this time, we will create a feeling of confidence among our customers and in the overall property market, that things are better than in the last quarter of last year,” he said.

This guy is a winner. In Q3 we have 100 visitors. In Q4, its goes down by -50 % (= 50 visitors). Then january it goes up by 10 % compared to Q4… = 55 visitors.

The total is still much lower than Q3. ๐Ÿ˜‰ I guess they don’t teach arithmetic in thai marketing schools.

You want another one (a winner), olympic class ? I give you Sorapot Techakraisri, chief executive of Pace Development’s.

“If investors save their money in the bank or invest it on the Stock Exchange of Thailand, they will get returns on investment lower than 5 per cent. But when they invest in property, they will get an asset that will generate an annual return on investment of between 7 and 10 per cent. This is better than other investment options,” he said. Saladaeng Residences is the company’s second condominium project. The first was successfully developed on Sukhumvit 44/1 in 2004.

Tell me you love it, please. Here we have a casino under LSD and supercharged with yaba. Money on stock market ? You fool ! It’s too dangerous, we have a freaking crisis ! You’ll get a poor return.

But if you invest (ah ah ah) in a condo, you’ll get a ROI of 7 to 10 % ! Striking you think. How ? ! No need to know how, it’s totally irrelevant.

Sorapot tells you 7 to 10 %. Sign here. Sorapot is ready to give you his Mont Blanc pen.

Of course, you would need to find a tenant for your luxury condo (bought from Sorapot) but it’s not a problem. Tenants are running wild (and naked and amok) on Bangkok’s streets, everywhere, in greater number than cockroaches. And they all want to pay a high rent… so you can get your 10 % ROI. They are nice people.

Anyway. Thanks to the Boiler Room you don’t need to go to the cinema to be entertained.

And furthermore… it’s free ! ๐Ÿ˜‰

Let’s celebrate the recession… by opening 11,150 new hotel rooms by 2010

Collision course… of different business and investment cycles… collision course of state of mind (euphoria) and reality of the economy, leading to malinvestments and overcapacity… and then crash. Eventually.

This is exactly what is happening for the hotel rooms market in Bangok, and around.

Relying on past strong growth, and doing inane projections of this growth for the future… investors rushed in. And they are about to get burned. Seriously burned.

And this is not new. This madness was already detected end of 2007... with an astonishing expansion of the luxury market (5 stars hotels).

Sixty-five hotels with a capacity of 11,150 rooms are scheduled to open this year and next despite the economic crisis and political uncertainty, said Prakit Chinamourphong, president of the Thai Hotels Association (THA).

“Thailand’s tourism industry is projected to grow in the long term, as the country can offer tourists a range of products at cheaper prices than other destinations. Many investors are expanding and undergoing investment to tap the trend,” said Prakit.

However, he does wonder how the new operators can build market share during these tough times. That said, newcomers and existing players are all hoping the situation will recover from the second half of this year.

We see the same idea, served over and over to the suckers by the suckers… It makes them feel good… And looking less stupid. But there is NO DATA to support a miraculous “recovery” in the second half of 2009. It’s a fantasy. A wet dream.

Consumers and tourists from Mars and Jupiter are not going to support the car industry, the exports markets, nor the hotel rooms market in Bangkok this year.

The THA has reported that 9,911 rooms came onto the market last year. Twenty-five hotels with a total of 3,823 rooms opened in Bangkok, followed by 25 hotels with 3,119 rooms in the South, nine hotels with 2,028 units in the East, five hotels with 621 rooms in the North and two with 320 rooms in the West. (Nation)

Property market : a crisis, where ? Projects are suspended

First you have to recall what was the boiler room’s motto : there is no crisis, the market is healthy, unlimited growth, ever increasing prices, flowing honey, golden flowers, peace and love (yes love too) etc.

You know the drill now. ๐Ÿ˜‰

A motto perfectly summarized, last october, by a prestigious member of the boiler room :

Thailandโ€™s property market is well insulated from the global financial crisis as it is far less dependent on debt than most property markets, said real estate firm CB Richard Ellis Thailand.

October… Less than 4 months ago.

It’s tasty, isn’t it ? Anyway, time to go on the ground. And what do we see ? Oh my good lord… there are some problems… Amazing. How come ? It’s totally unexpected.

Property developers have suspended work on 12 condominium projects in Bangkok, in some cases because they face financial difficulties in a deteriorating market.

The suspended projects were to provide 209,230 square metres of floor space and were scheduled for construction in 2008 and 2009. (Nation)

You should read the whole article. It gives other data about the stock of unsold units, the number of projects under construction etc. It’s interesting.

But don’t forget the little music : “the thai market is well insulated “…

May peace (and insulation) be upon you. ๐Ÿ˜‰

Penultimate “stimulus plan”… tax cuts to boost property market

The cabinet yesterday approved a new stimulus package of tax cuts worth about 40 billion baht in a further attempt to boost the economy.

The new package comes on top of a 115-billion-baht stimulus package passed by the cabinet a week ago to counter the economic slowdown in the face of the global recession. (Bangkok Post)

Ah ! Are you feeling stimulated enough ? ๐Ÿ˜‰

The good point with Abhisit is his obsession to look and act as foolishly as the leaders in Europe, USA and Asia.

Anyway. The plan is grotesque… With only one serious decision : a nice gift to rich people to boost the property market. They will be able to slash their taxable income by buying more (empty) houses and (empty) condos…

Here are the details of the “plan” (and my comments).


See you soon for more “stimulation” and more of the Dildo Economy.

Change with Abhisit ? Yes we can’t.

Real estate : they invent… the new subprime

Meanwhile, Government Savings Bank (GSB) will set up a joint venture with insurance companies to provide mortgage insurance service to home-buyers to stimulate sales in the real-estate sector, Deputy Prime Minister Korbsak Sabhavasu said.

GSB will hold a 20 per cent stake in the proposed venture.

This measure would allow low-income home-buyers to borrow up to 100 per cent of the property value. They could also pay for the down payment in instalments,” Korbsak said.

Home-buyers are usually required to put up cash, worth about 20-30 per cent of the property value, as down payments. (Nation)

Among the totally inane propositions of the Abhisit government (“Government aims to increase farm prices by 30% this year“)… we can find this gem : the thai subprime ! ๐Ÿ˜‰

Well done guys.

A special program for people with low income… no down payment… and with a loan covering 100 % of the price a property… That’s a perfect recipe for disaster, as we saw in the US.

But Korn, the Finance Minister and ex investment banker, is probably thinking that he’s smarter than the bozos at Wall Street (well actually, it wouldn’t be hard).

Anyway, it’s important to note that Abhisit and his ministers are currently multiplying announcements, with huge amounts, without any order and plan. Probably, most of those “announcements” will never materialize…

Agitation first. And soon after, desesperation will follow.

Property market : the Boiler Room announces a recovery in… 2011

From “everything is fine” to “we are in deep shit 1997 style”… in a snap of a finger.


But wait, there is more : the Boiler Room announces us the… date of the recovery !

Ladies and gentlemen, not 2009, not 2010… but 2011. ๐Ÿ˜‰

I feel like in a fish market.

Thailand’s property market cannot be expected to recover from the present slump until 2011, according to Aliwassa Pathnadabutr, managing director of international property agency CB Richard Ellis (Thailand).

She said the slump began in the final quarter of this year with demand in Thailand’s property market plummeting under the shadow of the global economic crisis.

“When we saw demand in the property market dropping, we suggested to our customers that they wait and see [what happens]. As a result our customers suspended investments of between Bt4 billion and Bt5 billion in the last quarter of this year,” Aliwassa said last week.

The company’s research shows that transactions have fallen in all property segments in the current quarter, some of them significantly, others slightly. This is a sign that the property market may fall by 10 to 20 per cent next year, the steepest tumเธŒble since the financial crisis in 1997, she said. (Nation)

That sounds great and quite reasonable.

Even more when we remember what the same company, CB Richard Elli, was saying exactly 2 months ago :

Thailandโ€™s property market is well insulated from the global financial crisis as it is far less dependent on debt than most property markets, said real estate firm CB Richard Ellis Thailand.

I know, it’s tasty. I know, you love it, like I do. ๐Ÿ˜‰

I told them that this statement would be their curse. Like “our banking system is sound ” from Bush, Bernanke and Paulson last august…

And you can count on me : I will repeat it, over and over.

Anyway, let’s be fair. Only fools and stupid people are unable to change their mind. And CB Richard Ellis is certainly not stupid.

But, you know… it’s difficult to change. I mean really. Aliwassa did start on a good foot. But soon after, she… lost it.

We believe that this recovery cycle will be faster than that after the 1997 financial crisis because global leaders such as the US, UK, Europe, Japan and China have launched measures to solve the problem. Meanwhile, Thailand’s property developers and finance firms are healthier, financially, than they were in 1997,” she said.

You see… It’s pathologic. The magic of the words, the force of the incantations, the power of the verb… But nothing substantial behind. Emptiness.

There is another expression to describe this devastating bias : wishful thinking.

See you in 2011…

Okay… Aliwassa is not paid to say “I don’t know”. But that would be refreshing.

“We don’t know. The crisis is so severe, so global, so pervasive, so… We have no clue. The historical points of reference don’t apply anymore. It’s impossible to foresee the future. Be patient. Stay on alert. Collect data. Take time to analyse all the differents views. And more importantly : stay humble.”

This is what I would like to hear from the Boiler Room.

[I wish you a happy Christmas. Time for a few days of rest. See you soon. Crisisfully Yours.]

Boiler Room Bulletin : “we can’t reduce our prices, because… it would hurt us”


What are the latest news from the Boiler Room ?

Well, they are quite… silent since a few weeks… like fleeing cockroaches, running away to take cover… They eventually understood that something was going on in the world, and something rather weird and of course totally unexpected : a recession.

Goddamnit ! It came so fast. Without warning. ๐Ÿ˜‰

It’s time to adjust speeches and marketing pitches I guess… But as you will see, it’s a difficult exercise.

Take Songkran Issara, managing director of Charn Issara Development, for instance.

Thailand’s political upheaval and the international financial meltdown will lower land prices and the appraisal values of built structures but they are unlikely to bring discounts on ongoing projects, said Songkran Issara, managing director of Charn Issara Development Plc.

Prices of condominiums already under construction are unlikely to drop because developers generally lock in substantial sales before starting work, he said.

Although protests and confrontations have affected the country for months, prices of good new property had remained steady until demonstrators closed Bangkok’s airports in late November. (Bangkok Post)

Again, we see the famous thai rethoric at work. Let me translate it for you : “I can’t reduce my prices because… I would loose money if I do so !”

It’s a master piece. ๐Ÿ˜‰

The bottom line is : if a developper is under the water with an on going project, and if he has no other solution (banks on his back, and customers behind), he will reduce his prices, eventhough it hurts. This is what we call a fire sale. And it happens particularily in hard times…

Anyway, we shall praise the courage of Issara : now the Boiler Room admits that the prices will go down… but for future projects only. ๐Ÿ˜‰ It’s a big step forward. Must have been painful…

Let’s remember… 2 months ago, some were adamant :

Thailandโ€™s property market is well insulated from the global financial crisis as it is far less dependent on debt than most property markets, said real estate firm CB Richard Ellis Thailand.

Between “The Terminator” and “The Insulator” I can’t make up my mind…

Anyway. 2009 is going to be an interesting and insulating year… I can feel it. ๐Ÿ˜‰

Your insulated commentator.

Chart, new condo registrations, per quarter : oversupply

The buzz around town is “condos oversupply“.

People who live in Bangkok can witness a construction frenzy in some areas.

I’ve expressed before my views about it.

But let’s have a look on a good old chart about this famous supply.

(Source Bank Of Thailand, table EC_EI_009)

“Condominium registration nationwide (in number of units)”, per quarter.

Official definition :

“this is the requests for condominium registration by the developers when the construction of condominium and facilities is 100% complete (without room decoration/furnishing). In the event of change in the owner of the condominium building prior to sale of condominium units, cancellation of the existing registration is required before the new registration can be issued.”

Spot on : this is supply indeed. When a developper finishes his project, he goes for registration. So those figures are not sales.


We can see clearly see 3 phases… First one, after the 97 crisis. Then from 2003 to 2006, growth. Since then, super growth.

In exactly 2 years (Q2 2006 to Q2 2008), 34 445 new units were registered in Bangkok (57 298 total nationwide).

But registrations are in a way a view on the past. The problem with real estate is lag effect… To build a condo tower takes time… Seeing the euphoria since 2006, the developpers have launched a lot of new projects.

A taxi ride in the city can prove it.

Therefore, in the coming quarters… the supply will continue to increase. Relentlessly. Right when a recession is about to hit… Right when the demand is falling (people are afraid, banks are afraid, economic growth is going south, welcome to the age of frugality.).

Perfect cisor effect.

And let’s not forget that those figures are for condos only. To get the total supply in real estate, we have to add housing (houses + town houses, a much, much larger market) ! ๐Ÿ˜‰

Bad days for the boiler room : office demand weakening

Demand in Bangkok’s office market has started to slow down after constant growth the past three quarters as large companies scale down expansion plans, according to the international real estate firm Jones Lang LaSalle (JLL).

“The impact of the global economic meltdown has become more evident since the crisis erupted in October,” said Yupa Sathienpabayut, head of markets at Jones Lang LaSalle.

“Occupiers that were actively looking for office expansion opportunities over the first three quarters of the year are now cutting their growth and occupancy plans.”

While new demand for business expansion has contracted, demand for office space from new business setups has completely dried up.

Over the third quarter, JLL was involved in office leasing transactions totalling more than 10,000 square metres of space across Bangkok. Most of these transactions involved lease renewals and relocations.

Most of these companies are looking for ways to minimise occupancy costs through renegotiation of lease terms with landlords, relocation to a more affordable building or downsizing,” said Ms Yupa.The only good news was that so far there were no reports of multinationals shutting down their Bangkok offices, she said. (Bangkok Post)

So to summarize : no new tenants, and the old tenants want to renegociate prices, or relocate, or downsize…

Indeed, bad days for the boiler room…

But wait a minute ! How demand could fall ? It was supposed to increase, indefinitely, like prices, in a perpetual growth and prosperity, like the stories of a a never ending building in construction…

And Bangkok was supposed to be different ? Right ? Did someone lie to us ? ๐Ÿ˜‰

Last point… the crisis didn’t pop up “last october“… Don’t be fooled by the boiler’s room lies… Last may, the same Jones Lang LaSalle was already speaking about “slow pace”, “unfavourable climate”So cut the crap

A crisis like we have now is a long process, a succession of growing imbalances… long cycles… until the tipping point. And then, boum. Burst.

It has been like this for forever. And it will continue. The boiler room can’t do nothing about it.

Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.