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Failure rate for condos in Bangkok, Thailand nears 50%
by David Barkdull
Bangkok

Property speculation in Thailand is a form of doing business and investing (gambling) on Thai property values increasing in the short or long term. In Thailand is it easy to put Bt100K down on a condominium unit or multiple units in a project, pay a small monthly fee, and wait for the property to increase in value during the construction period. The construction period usually goes long so theoretically you can make even more money by drawing out the cycle and not having to pay for the condo until the project is completed. The problems come when the developer in Thailand folds either leaving with the cash deposits or lacking funds to complete the project. When the buyer cannot unload his option before millions of Baht are due the Thai developer now has units back on the market and they may or may not sell.

In many countries the rules of supply and demand are effective are an effective tool to regulate the price of a property buy or lease. Well folks, “This is Thailand! Often if the unit is not selling the price is raised. If the condo cannot be leased and is empty for a time just raise the monthly lease price to cover the losses. It may have something to do with losing face.

Before the latest coupe in Thailand I was in the market to but a Thai condo and looked at about 50 all over Bangkok. The September 19th Thai coup saved me from making a foolish mistake. I have lived in three condos since May 2003 and paid the same lease price for each. Currently I live in a 3,000 square foot unit with a beautiful view on the river. The common denominator besides the price is the land owners. None are Thai. All are educated and own multiple properties here in the capital of Thailand. If a Thai owned any of these properties I would not be able to afford the lease price. There are several units similar to mine owned by Thais but they are Bt20K to Bt50K more expensive to lease per month. They may remain empty forever but no one is going to take advantage of the owner by getting a cheaper price. It is just crazy to leave these spaces empty for years.

I believe if and when condo in Thailand prices reach Bt300K per square meter it may be time to move on from the Land of Smiles. I don’t think there are too many working class Thais that are going to be able to fill that 51% ownership law for these projects. I think that for the same price you can live anywhere in the world quite comfortably.

David Barkdull
Bangkok

Failure rate for condos in Bangkok, Thailand nears 50%

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