Crazy land prices.

[polycian]

A small patch of land in the soi where we have our mini-mart has been sold for 6 million baht. It is only big enough to build two shophouses or two town houses. The high price might have something to do with the fact that its location is right in the CBD and close to Nong Prajak Park.

Land's price in udon, seem to be higher than 2 year ago. Some capital flow from outside. Unbeliveable it's price reached
same level of some land in bangkok,especially near the BRT skytrain. However I 've congratution with you to be the owner of that golden land. No more, eh... =D> =D>

[rct]

LoveDaBlues, your point is you made a really great return on your land over that period up to 2011.

My point, is that it seems much of the run up in prices has been in the last two years. The houses sold at Le Cellini are a case in point, lackluster sales from 2007-2011 leaving the the developer scratching his head why, then all of a sudden, the remaining units all sold out. Late 2012 I even had aan offer to buy mine at a considerable profit.

[KHONDAHM]

A lot of Thais are borrowing against the higher prices (sounds familiar, right?) and running up household debt. I'm keeping an eye on the Legal Execution Department's site. It won't be too much longer before the other shoe drops...

http://led.go.th/

[KHONDAHM]

Or, more accurately...

http://asset.led.go.th/newbid/asset_sea ... 8%D2%B9%D5

[trubrit]

Or, more accurately...

http://asset.led.go.th/newbid/asset_sea ... 8%D2%B9%D5

KD. I used to buy repo's from the bank and split the profit with the manager but those days are long gone. You will find now the banks themselves are quite happy to keep the property on the books, knowing every day that goes by it is still appreciating. :-"
.

[LoveDaBlues]

At the time of the crash in 97 the Thai household debt was 28% of GDP. Currently it is 78%. :-"

There's been two times in America's history that household debt reached 100% of GDP; that would be 1929 and 2007. Hmmm.....did something significant happen in those years?

In Thailand 2016 prices will flat-line and sales will hit the basement; buyers will be scarce. The baht will weaken. So, ride the current wave and sell in time. Then, quickly xfer baht to your home country and wait for the next cycle. At least this is what my crystal ball is telling me........

[parrot]

Or, more accurately...

http://asset.led.go.th/newbid/asset_sea ... 8%D2%B9%D5

KD. I used to buy repo's from the bank and split the profit with the manager but those days are long gone. You will find now the banks themselves are quite happy to keep the property on the books, knowing every day that goes by it is still appreciating. :-"
.

Until it doesn't!

[trubrit]

Or, more accurately...

http://asset.led.go.th/newbid/asset_sea ... 8%D2%B9%D5

KD. I used to buy repo's from the bank and split the profit with the manager but those days are long gone. You will find now the banks themselves are quite happy to keep the property on the books, knowing every day that goes by it is still appreciating. :-"
.

Until it doesn't!

Then of course , no point buying, repo's or not .Unless you want to tie up capital long term , because historically it will always increase it's value at sometime . It is a dwindling resource in an expanding market demand .

[JimboPSM]

.... it should not be forgotten that still lurking in the background there is some 1.1 Trillion Baht of 1997 debt that in 2012 the Government transferred (in a classic smoke and mirrors move) from the FIDF to the BoT to enable it to borrow over 2 Trillion Baht for the proposed infrastructure (and really big brown bags for friends) scheme.

Last year, at the wave of a magic wand, the Government balance sheet not only improved by over a Trillion Baht, but it got rid of the cost of servicing it - the only minor flaw is that while the Thai Government may have ridded itself of that troublesome 1997 debt, Thailand and the Thai people did not

Back in April before the recent fall (when the Baht was at 29 against the USD) it was admitted that there would be no capital repayments against the infrastructure scheme in its first ten years and that it would take 50 years to repay!

With the increased (and unwelcomed) scrutiny that the Thai Government is only just beginning to receive from the financial media and some due diligence from the ratings agencies (where were they hiding?) that only came about as the colossal fiscal impact of the self-inflicted fiasco of the rice scheme started to become apparent, the financing of the infrastructure scheme will be hit by the double whammy of an increased interest rate and an exchange rate that has already fallen by over 10% since April.

I find it increasingly difficult to visualise any way that, with the increased cost of financing, the infrastructure scheme will ever be capable of repayment

As it currently stands, all I can see the infrastructure scheme doing is to temporarily delay when the bubble bursts but, in doing so, the impact of it bursting will be that much greater

If it all ends in tears, it looks like once again the Thai banks will be sat on an enormous portfolio of non-performing assets.

Udon is experiencing a bubble that is creating an irrational level of Bangkok type prices for land and housing - if the bubble bursts does anyone seriously believe that Udon (a town out in the provinces) will be able to maintain price parity with the capital city Bangkok?

In my opinion the impact on Udon in the event of a crash will be far more dramatic than the impact on Bangkok.

If I am paying a Bangkok price level I expect the kind of amenities and benefits that go with it - unless one has a particular dislike for Bangkok and/or its lifestyle, paying Bangkok prices to live in an Udon without all the amenities that Bangkok offers doen't seem particularly smart

[glalt]

I do think that Thailand is in the midst of a huge land bubble. We live in the boonies of Loei province and land prices have quadrupled in just a few years. The area where we live is flat farmland 330 meters above seal level and it seems that the floods have made this land much more valuable than it actually is. No floods here.

Some time ago, Maybe 7 or 8 years ago I bought her 10 rai for 18,000 baht per rai. About 6 years ago I bought her another 10 rai for 20,000 baht per rai. A couple years ago a friend of hers had financial problems. The bank would loan a maximum of 400,000 baht for 16 rai of farmland. My wife loaned them considerably more than what the bank would loan. As I suspected, they couldn't pay her back and they have forfeited the land. She now has another 16 rai. I should mention that all her land has red seal chanotes. She has no interest in any land without a chanote.

I seriously doubt that the banks will be stuck with anything. They are quite realistic, at least in this area, and what they are willing to loan is FAR below what the land is selling for. The ridiculous prices being paid are for the most part cash deals. My wife is now in the process of trying to raise money to buy land adjacent to the 16 rai. They are asking 80,000 baht per rai. No way am I going to help finance any land for that kind of money. I have warned her but she won't listen. She actively farms and knows that the income from farming CANNOT pay for even 20,000 baht per rai land. She, like most Thais, think that the land prices will continue to skyrocket. Since it is her money, I cannot say much and can only warn her that the bubble is likely to burst. She would not consider selling any land and says that land is for her future.

[fatbob]

And the worst case scenario is the land falls to what she originally paid, but its only speculation on your part, maybe land will continue to rise and her buy in price today may be considered cheap in ten years time, there isn't much point in having money sitting in the bank on present interest rates, as the world population increases and food shortages become common farmland will become very valuable. The Indonesians are in the process of buying a huge portion of the NT in Aus for farming as they know a food shortage is not that far away.

[bumper]

The other thing that happened after 97 was inflation big time, along with the value of the dollar falling dramatically

[rick]

The Indonesians are in the process of buying a huge portion of the NT in Aus for farming as they know a food shortage is not that far away.

That will be interesting. There is a reason why there is very little agriculture in the Northern Territory - has been tried before and abandoned, lots of issues. If it was easy i wouldn't have been paying a dollar for one carrot there 30 years ago.

[grievous]

NT isn't much good for agriculture but it does have a decent cattle industry, they have have grass lands suitable for cattle and at this stage turn over 500k cattle in a year. I suppose NT was chosen by the indonesian's for it's close proximity to them to reduce shipping costs.

[fatbob]

I am quite sure the Indonesians will turn it into something profitable for themselves at Australia's loss, time will tell, governments allowing huge portions of land to be sold to foreign nations is outrage's.

[Barney]

At least we can something back to the indos in all those illegal immigrant boats they send us. Win Win
Boat load of veges and a cow each trip.

[glalt]

And the worst case scenario is the land falls to what she originally paid, but its only speculation on your part, maybe land will continue to rise and her buy in price today may be considered cheap in ten years time, there isn't much point in having money sitting in the bank on present interest rates, as the world population increases and food shortages become common farmland will become very valuable. The Indonesians are in the process of buying a huge portion of the NT in Aus for farming as they know a food shortage is not that far away.

I think that 80,000 baht per rai is way more than the land is worth. If she were to buy it and the bubble breaks, she would likely be able to average out the price per rai to what it drops down to. BUT, That 80,000 baht per rai land would drop way back and who knows if it would ever get back to the inflated price. I suppose it really doesn't matter because it is doubtful that she would ever sell any of her land anyways. She is going to to the bank today. I'll let you know how much they are willing to loan on that land.

[KHONDAHM]

My experience is that Thais never reduce prices. Quite unlike anything I've ever seen elsewhere.

I've seen ? rai of "residential land" sold for X million baht/rai. Then, a pig farm, waste dump, scrap yard, factory, etc. is created - rendering the neighboring properties/lots untenable for habitation. In the West, the surrounding owners would have to reduce to sell. Not here.

I offered a very fair price for the land adjacent to ours. Most of which cannot be easily accessed by another party. One might think the owner would take the money and say thanks (especially for the otherwise inaccessible area). Nope. He quintupled the price instead. It boggles the mind. My intent was to buy it and not do anything with it so as to ensure our tranquility. So, his greed has actually helped to achieve the same result but with zero outlay from me.

In that sense, I hope they all continue with their "crazy" pricing. If we do buy in the future, it looks like it will be waaaaaay in the boonies someplace where they are still selling for 10k/rai.

[parrot]

I think you might have left a few a's off of that waaaaaay

[bumper]

1.26 Rai cost me 350K baht seven Klms outside of Udon. No electric, no water and I had to finish the road. In the end the title on the land was a mess. Or I would have built a house there by now. That was three years ago.

The guy at the land office told me that I should have known something was wrong because I got it so cheap

It was just a rice paddy.