Tag Archives: NEWSLETTER No 156 SEPTEMBER 2017

NEWSLETTER No 156 – SEPTEMBER 2017

I am not, and have never pretended to be, an economist and I have a deep distrust of them as their predictions invariably prove wrong. But even I can see a ten year economic cycle especially in the world of real estate where I have been most closely involved over the past ….many years. This tends for obvious reasons to parallel the state of the world economies.

I recall starting work in Abu Dhabi with a responsibility for a good sized real estate portfolio spread across the whole of the USA. This was in 1988 which was a year after the stock market crash in the USA. The real estate market was suffering with poor returns and lack of demand and was really in the doldrums. There was a great deal of vacant office space and simply to keep buildings full, net deals were being agreed – i.e. the cost of putting a tenant into space equaled the rent received over the period of the lease. Not ideal but empty space cost money – net deals broke even.

Ten years later, 1997 and we had the crash of the Tiger economies in the Asia which started in Thailand with the collapse of the Thai Baht. (1997 Asian financial crisis – Wikipedia).

Move on to 2007 and the global financial crisis which started in the sub-prime mortgage market in the USA and culminated in the collapse of Lehman Brothers a year later and subsequent economic down turn and European debt crisis.

So here we are in 2017 and what is happening? Well the Thai Banks are not in trouble but they are reporting very significantly reduced profits. According to Reuters major Thai banks have reported weaker than expected quarterly earnings and have made provision for rising bad debt. You can follow the link above for the full report.

So where does that leave us in our little Koh Samui real estate market? Unfortunately my crystal ball is clouded by the events in Europe with the uncertainty surrounding Brexit, the Euro induced sovereign debt throughout southern Europe, the upcoming German elections, etc. The first half of this year was pretty bleak with inquiries well down. Sales were happening but at a reduced level and at reduced prices. Asking prices for more than 60 properties on our web site have been reduced by an average of 20% since March, some by much more.

On the positive side, inquiries over the last month have stepped up quite a lot which is encouraging. Mostly from Expats already living overseas but also from Thais. Still very few from the Chinese although there have been some purchases. Also the price range has been quite broad, whereas we were seeing very little demand over 10m a few months ago, now we have had inquiries in all price brackets ranging up to the super luxury area. Certainly encouraging but not yet sufficient to get over excited about as there is still a huge stock of available real estate on the market and more being added each month.

Thank you to transislandtravel for sending me this link to a report on the new water pipeline from the mainland.

http://transislandtravel.com/2017/08/28/underwater-pipeline-project/

If you are British and require a letter of confirmation of pension/income for Thai Immigration you should find this link from the UK government web site useful - How to obtain a pension/income letter for Thai Immigration