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No Rent Sign

I think all farang that stay in Thailand experience things Thais do that they cannot understand. Whether it is raising prices when the number of customers coming in bars subsides, or bar girls raising their prices for similar reasons. But there is one thing that truly does amaze me.

Bangkok Condominium Oversupply

In Bangkok alone there are thousands of empty condo units that have been purchased with a view to renting them out. Many have been sold to unsuspecting Thais who thought that renting them out at a rent that covers their costs (mortgage, maintenace fee) would be easy. Now they are finding that is not the case.

The number of prospective tenants are declining and the ones that do exist know it is a renters market especially at the mid to lower end. Prospective tenants are expecting and even demanding lower rents.

So, an owner has set his rent at 25000 Baht a month which covers his mortgage and maintenance payment.  He doesnt find a tenant for 6 months so therefore has to find a total of 150000 Baht from his own pocket. Obviously some can do this, but most cannot. They are hoping that perhaps someone will pay, but are dissapointed month after month when no one does. They pay no attention to prices of similar units, they just concentrate on recovering their costs.

In the same condo development another owner has the same type of condo and pays the same mortgage and maintenace fee, but because of the empty condo glut puts his rent at 20000 Baht. He rents it out within a month. Therefore over the same 6 months he only has to find 30000 Baht from his own pocket.

 

 

Yes, this could lead to a price war, but the sensible landlords accept it. To westerners this is a no brainer but many Thai people cannot see it, or refuse to and it is their loss.

The wife of a friend of mine has been an estate agent in Bangkok for 9 years. She tells me that she regularly takes clients to view property who like the unit but wants a lower rent. She speaks with the owner and 9 times out of 10 the owner will only reduce the rent by 500 or 1000 Baht. She explains the issues as described but they cant grasp it. Their loss, there are so many empty units the prospective tenant just goes to other units in the same development until they find one at the lower rent they want.


I have just been told that one property development company has just dropped their pre sale (off plan) prices by 35%. This maybe the start of sense prevailing in the Bangkok condo market? But I doubt it.

UPDATE:Just after I published this post I called the Thai owner of a condo up for rent in Bangkok. I didn't have to discuss price as he immediately said he didn't want a farang tenant! The reason, he would have to register the farang with the authorities and he didn't want to have anything to do with them, the authorities that is. I wonder why?

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