The market is flooded
How have the floods affected Bangkok's property market?
It has surely not escaped anyone's notice over the last few months that Thailand and now Bangkok are facing their worst flooding disaster for nearly 70 years! But how has this affected the property market in Bangkok?
Well, the obvious and immediate effect has been the loss of many habitable properties on the outskirts of the city. Tens of thousands of townhouses and detached houses - most no more than three storeys high - have been inundated by up to two metres of flood water. And it's even deeper in some areas! Some of our Easyhomes team live on the outskirts of Bangkok and their homes have been flooded for weeks now.
With the average ground floor being about 2.5 - 3 metres high, it is easy to see how the floods have destroyed ground level living areas in most of these properties. Many of the properties are not built for extreme weather conditions and are poor build quality to start with. Private housing on the outskirts of Bangkok is often relatively cheap. A property that costs two or three million Baht is almost certainly not going to be built with the best quality materials on the market. The developers set out to save costs and maximize profits as best they can.
This has of course led to thousands of Bangkokians looking for alternative accommodation, with many heading to their families in the rural areas of Thailand (assuming of course the family members up-country have not been affected by flooding). Many other Bangkok folk - those who still have a job to go to - are looking for temporary accommodation in the city center, which at the time of writing is still dry.
All this is of course having a major impact on the supply of condos, apartments and other properties in the city center. Many buy-to-let owners have a house in Bangkok's suburbs or even perhaps one or two properties they lease out to tenants in the city center. Now these buy-to-let owners are occupying the properties themselves, perhaps with their friends and family. This has meant thousands of rental properties are now off the market indefinitely.
And what of that word ‘indefinitely' - well there can't be a more much apt time to use a word like that as no one knows when the floods will fully recede. No one knows what damage has been done to individual properties and no one knows when life can go back to normal again. Will it be a few months? Will it be longer?
I was speaking to a friend yesterday who is a senior executive of factories in both Ayuthaya and Phatumthani. Both areas are close to Bangkok and have been affected by floods for some time. He said in his best estimation that his factory in Phatumthani might start production in late December and the one in Ayuthaya sometime in February - but even those guesstimates are a tad optimistic.
So if a fully established factory - with hundreds of staff working together to get the factory operational as soon as possible - will take approximately two months, then what hope a family whose house has been submerged for months and their possessions destroyed?
Going back the topic of build quality, if your house was never built that well in the first place, then what irreparable damage will several months of water submersion do? With poor quality, concrete, steel, iron, plastic piping, wiring and tiling all affected. And even if the water miraculously went down tomorrow, then where will you find a plumber, electrician and plasterer? These people are going to be in big demand! And even if you do find one, how and where will they find the supplies to do the job for you?
The factories that make products such as plastic piping, wiring and tiles have been submerged and are out of action as well. Another friend of mine visited one of Thailand's largest furniture shops, with branches and warehouses all over Thailand, and was told on the 30th of October that if he was to order any of their products, the earliest delivery would be the 20th December. And he was not allowed any of the showroom items because they themselves cannot be replaced at present.
Of course, all this is assuming that one has a bottomless pit of money and the fact your company, school or office is closed will mean perhaps that you have no pay or a reduced salary for the foreseeable future.
So when can you afford to move back into your water-damaged house? Well how long is a piece of string?
• What does this mean for expats renting in Bangkok's city center? Well it means there is less supply on the market now and perhaps into Q1 or Q2 of 2012.
• Will this push prices up? Well I'm not sure, but it certainly won't push them down. And once you see a property you like, you will probably have to decide quicker than you would have done in 2011 because there will be less choice on the market, and plenty of others will want it if the property is desirable.
• What advice would I give to those looking for a property between now and March? Be decisive and targeted. Decide what type of condo or property you want and decide on the location. Then be willing to make quick decisions and be flexible on buildings. The more popular buildings will fill up first.
Just keep in mind that the over-supply of condos and property that every man and his dog have been talking about for the last 2-3 years is temporarily no longer with us. And with the floods being not only unprecedented, but also unpredictable, no one knows the future and when the thousands of people who've lost their homes can return to their properties.
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I'd like to see a follow-up article on how people whose homes were flooded are now trying to repair and re-inhabit their homes. Could people share hints and how to conquer mold and other flood-related damage?
By Guy, bkk (27th December 2011)
My wife and I were bank approved on a townhouse mortgage here in Salaya and were planning to go to closing within two weeks when the floods came. Fortunately, the new development hasn't been flooded, but the bank is under 80 cm of water and access to the property, which lies along Boromratchonani Hwy 338, is closed for at least 2-3 weeks more.
We plan to go ahead with our purchase, but I wonder how many others will decide to back out of such deals and opt for condo purchases 3 or more stories above the ground.
It is obvious to me that we in the western suburbs have been deliberately sacrificed to save downtown Bangkok. The water is coming from the Maha Suwas canal and not the north. I can't speak for how the average Thai feels about it, but I am feeling quite bitter that we, who have been surrounded by meter high flood waters for more than two weeks, have been deemed expendable.
Personally, I hope that Victory Monument DOES flood, so Bangkokians can get a taste of what we have been going through.
By Don Johnson, Salaya (11th November 2011)
It may disappoint you to know that the majority of the houses in the housing projects in Nonthaburi aren't flood damaged. They're just cut off from the main roads due to flooding which is why people have evacuated. As soon as the waters go down, everyone will return to their un-damaged houses without the need to hire plumbers, plasterers and electricians.
If floodwaters start surrounding Bangkok condos at the depth of 1m+ then you can bet the units inside them will quickly be evacuated, too. In fact, it's already started happening on a small and voluntary scale. Whether you're in a condo or a house, 1m of water surrounding the immediate area is enough to send most people running for the hills, even if there is no specific property damage or an implied threat of such damage occurring.
I live in a house in Nonthaburi and I've had several almost-gloating messages from people I know saying how glad they are to have chosen a condo and not a house, coupled with references about how they've always felt that living lower than 4 meters above the ground in Thailand was a bad idea.
Well, maybe so, but what if next year Bangkok experiences it's worst earthquake crisis in x years and all the condos come crashing down? Don't think it could happen? Neither did the Japanese. That didn't stop a once-in-150-years event from occurring and devastating a huge area, though. There is no absolute defense against mother nature. If she decides to come after you, she'll get you, regardless of where you live.
Bangkok has a ridiculous oversupply of condos and this crisis isn't going to make a dent in it.
My advice to would-be condo hunters is that if you're thinking of renting or buying a condo, take your time and don't make any rash decisions. It's a buyers market and it always will be.
By Cynical, Nonthaburi (8th November 2011)
It's not only cheap build homes that are suffering. I know one Thai guy who recently bought a 15 million baht house on a swanky new moobarn development. The flood is almost up to the second floor now. I know one can't fight Mother Nature, but you don't really expect problems of this magnitude with a 15 million baht house that's barely six months old.
It's going to be very interesting to see how property sales go in certain areas. I mean - who would want to buy a house in Pathum Thani or Nonthaburi at the moment?
By philip, (6th November 2011)
"And even if the water miraculously went down tomorrow, then where will you find a plumber, electrician and plasterer? These people are going to be in big demand!"
I had to chuckle at that line Neil. These people are nigh on impossible to find anyway. Floods or no floods. It took me six months to find a bloke to hang a dozen pictures on a wall.
By philip, (6th November 2011)