Warren Buffett in an interview in 2005 argued that there was a housing bubble developing in the US using the following logic:
"I recently sold a house in Laguna for $3.5 million. It was on about 2,000 square feet of land, maybe a twentieth of an acre, and the house might cost about $500,000 if you wanted to replace it. So the land sold for something like $60 million an acre."
Using Buffett's valuation technique on a housing development on the outskirts of Hua Hin, Natural Hill ( I've picked this at random but the prices seem in line with other projects) the houses are built on 400 m2 of land with 116 m2 of living area and cost 4 million baht. The replacement cost of the house is say, 1 million baht making the land worth about 30,000,000 baht an acre.
I know an old Thai guy who spends his time herding his cattle around this area. He owns 10 rai of land making him worth just under $4 million...
housing bubble in Hua Hin?
Easy answer here.HuaHinR wrote:But apropos of "housing bubble" theme, at night most condos seem to have just two or three lights on. . . at what point will the market become over-saturated and prices either go down or level out?
First, most of the condos are owned by well-off Thais from BKK who come down on weekends, and not every weekend at that.
Remaining condos (maximum of 49% in any building with the actual figure less) are owned by falang holidayers, many of whom are here only part-time.
If you accept there is a lot of "corrupt" money circulating in Thailand, then you realise there is a need to have a place to invest said "corrupt" money. Putting the money into a bank would alert suspicion and allow evidence to be found. Better to buy condos in "cousins, nephews etc. names. They are better investments than the bank rates and the real ownership is easily hidden. I know of condos that are over 10 years old and have never had a stick of furniture in them. Thats the reason you have so many unused condos. The Ferang ownership is never usually much more than 10% unless the condo has been built within the last 3 years.HuaHinR wrote:But apropos of "housing bubble" theme, at night most condos seem to have just two or three lights on. . . at what point will the market become over-saturated and prices either go down or level out?
