Pattaya’s Real Estate Market – A Review

[Gabor 296]

You could almost hear the collective gasp of relief from the surviving real estate agencies around the town as we hit high season.

The many unfortunate off-plan buyers in pie-in-the-sky condos in Pattaya’s boom days, who are still holding on to worthless sales contracts from “postponed” , bust or otherwise unbuilt condos must be uttering cries of pain, as another year passes with nothing to report on many of Pattaya's stalled schemes, and with their deposits even less likely to be returned.

Trying to work out what's really going on in the Pattaya real estate market, I recently talked to a few reputable, long-standing agents in Pattaya, to try to understand what's selling, who's buying and where the market is heading.

I thought it would be easier to read under the various headings below.

Pattaya real estate market split

The Pattaya sales market seems to be split between a narrow section of high end sales (sales of over 10 million baht, many over 20 million baht and some considerably higher than that), and cheaply-priced units, both condos and houses, at the 2 million baht mark, and often considerably below.

Sandwiched between them is the middle bracket, a mass of condos and houses, many of which were bought at high prices, and which are proving hard to get rid of, as private sellers refuse to discount sales prices.

Much stock in this category is owned by developers offering what they think are good deals for old, unsold units in their developments, but they are increasingly being eclipsed by a new generation of better and cheaper offerings elsewhere.

Of course, many sensibly priced sales in the middle bracket are steadily going through, for all agents, but it is real estate in this category which is proving harder to get rid of without sellers adjusting prices to the new market conditions.

One agent told me that some developments built in the past few years, which still have a very high proportion of unsold units, are simply too expensive when compared with some of the newer, more price-conscious offerings which have come to market lately.

Piling in - unlikely in the short term for many Pattaya veterans.

Off-plan sales

Whilst the off-plan market is slowly coming back, especially for well-funded, reputable developers, some agents told me they refuse to deal in off-plan condos at all, because of the hype, pressure and slick sales spiel of the sales offices and closing rooms of some of them, which leaves many longtime agents in Pattaya feeling ill, usually from bitter experience.

Not entirely surprisingly, the more reputable the developer in Pattaya, and the more competitively priced the development, the easier it is to sell off-plan to buyers, especially if the payment schedule is well-structured in favour of the buyer.

Many developers have learned valuable lessons at the expense of others who have gone to the wall in the past few years, although that is of little comfort to the many private buyers who have collectively lost billions of baht (and maybe dollars) in failed real estate schemes around the town.

Second Hand Market

While more realistic pricing by sellers has started to occur in the second hand market, an agent commented that very few agencies now seem to specialize in second hand homes, and most new agencies are set up to promote a few new builds, or to concentrate on one developer’s offerings, as new-build commissions are often much higher and much easier to earn than in the second hand homes market.

This reduces the ability of current homeowners to sell through multiple agents.

Some agents get annoyed at unrealistic pricing in the middle category of sales from stubborn sellers, because they know they cannot sell overpriced properties.

One Jomtien agent believed that perhaps 75% of second hand property on the market is overpriced to a point where it cannot be sold at all, mainly because of sellers’ reluctance to take a loss, and instead hang on for a price they are unlikely ever to achieve.

Evidence of prices softening

There was a general consensus that agents are routinely seeing 20-30% coming off asking prices in the 20 million baht range of Pattaya properties, and many agents think this will continue, and to trickle down through the properties currently caught in the middle bracket, where, up until now, many speculative sellers have stubbornly refused to budge on price in developments which are now being eclipsed by a new generation of developments offering better value for money.

In Naklua prices are seen to be softening as many new developments come onstream there.

Russians

One agent told me wealthier Russians are generally seen as avoiding Jomtien and overwhelmingly buying in Naklua, with some buying in Pratamnak.

At below one million baht, and with financing, many of the newer developments are being targeted at less oligarchic Russians, in the hope they can afford to buy them.

I spoke to one agent who said some of his non-Russian clients worry about buying in the sub-1 million baht condo category as they fear being swamped by Russian residents, although another said most of his clients accept whatever they get in that very cheap price range.

Overall

All the agents I spoke to were more upbeat than they had been for a long time about the real estate market in Pattaya, believing properly priced real estate will sell, and that cost-conscious buyers are cautiously coming back.

Whilst it is unlikely that the real estate market will ever be as free-wheeling and profitable for speculators as it was a number of years ago, many agents expect demand to continue from residential buyers at the top end, and demand to increase at the bottom end of the market as we move into 2012.

One agent thought 10% and more returns can be achieved in the right developments, and thought, given the state of the world economy and other asset classes, that Pattaya real estate as an investment proposition still holds good.

The Russians and the many Thai buyers fleeing present and future floods seem to have underpinned Pattaya’s cheaper condo market quite effectively, although Thai buyers have been piling into sensibly priced new developments in Pattaya well before the floods happened.

This trend looks set to continue as Pattaya tarts itself up a bit - at least in the glossy real estate brochures.

 

 

http://inpattayanow.com/2011/12/17/opinion/pattayas-real-estate-market-a-review/

[bigmick 840]

You could almost hear the collective gasp of relief from the surviving real estate agencies around the town as we hit high season.

The many unfortunate off-plan buyers in pie-in-the-sky condos in Pattaya’s boom days, who are still holding on to worthless sales contracts from “postponed” , bust or otherwise unbuilt condos must be uttering cries of pain, as another year passes with nothing to report on many of Pattaya's stalled schemes, and with their deposits even less likely to be returned.

Trying to work out what's really going on in the Pattaya real estate market, I recently talked to a few reputable, long-standing agents in Pattaya, to try to understand what's selling, who's buying and where the market is heading.

I thought it would be easier to read under the various headings below.

Pattaya real estate market split

The Pattaya sales market seems to be split between a narrow section of high end sales (sales of over 10 million baht, many over 20 million baht and some considerably higher than that), and cheaply-priced units, both condos and houses, at the 2 million baht mark, and often considerably below.

Sandwiched between them is the middle bracket, a mass of condos and houses, many of which were bought at high prices, and which are proving hard to get rid of, as private sellers refuse to discount sales prices.

Much stock in this category is owned by developers offering what they think are good deals for old, unsold units in their developments, but they are increasingly being eclipsed by a new generation of better and cheaper offerings elsewhere.

Of course, many sensibly priced sales in the middle bracket are steadily going through, for all agents, but it is real estate in this category which is proving harder to get rid of without sellers adjusting prices to the new market conditions.

One agent told me that some developments built in the past few years, which still have a very high proportion of unsold units, are simply too expensive when compared with some of the newer, more price-conscious offerings which have come to market lately.

Piling in - unlikely in the short term for many Pattaya veterans.

Off-plan sales

Whilst the off-plan market is slowly coming back, especially for well-funded, reputable developers, some agents told me they refuse to deal in off-plan condos at all, because of the hype, pressure and slick sales spiel of the sales offices and closing rooms of some of them, which leaves many longtime agents in Pattaya feeling ill, usually from bitter experience.

Not entirely surprisingly, the more reputable the developer in Pattaya, and the more competitively priced the development, the easier it is to sell off-plan to buyers, especially if the payment schedule is well-structured in favour of the buyer.

Many developers have learned valuable lessons at the expense of others who have gone to the wall in the past few years, although that is of little comfort to the many private buyers who have collectively lost billions of baht (and maybe dollars) in failed real estate schemes around the town.

Second Hand Market

While more realistic pricing by sellers has started to occur in the second hand market, an agent commented that very few agencies now seem to specialize in second hand homes, and most new agencies are set up to promote a few new builds, or to concentrate on one developer’s offerings, as new-build commissions are often much higher and much easier to earn than in the second hand homes market.

This reduces the ability of current homeowners to sell through multiple agents.

Some agents get annoyed at unrealistic pricing in the middle category of sales from stubborn sellers, because they know they cannot sell overpriced properties.

One Jomtien agent believed that perhaps 75% of second hand property on the market is overpriced to a point where it cannot be sold at all, mainly because of sellers’ reluctance to take a loss, and instead hang on for a price they are unlikely ever to achieve.

Evidence of prices softening

There was a general consensus that agents are routinely seeing 20-30% coming off asking prices in the 20 million baht range of Pattaya properties, and many agents think this will continue, and to trickle down through the properties currently caught in the middle bracket, where, up until now, many speculative sellers have stubbornly refused to budge on price in developments which are now being eclipsed by a new generation of developments offering better value for money.

In Naklua prices are seen to be softening as many new developments come onstream there.

Russians

One agent told me wealthier Russians are generally seen as avoiding Jomtien and overwhelmingly buying in Naklua, with some buying in Pratamnak.

At below one million baht, and with financing, many of the newer developments are being targeted at less oligarchic Russians, in the hope they can afford to buy them.

I spoke to one agent who said some of his non-Russian clients worry about buying in the sub-1 million baht condo category as they fear being swamped by Russian residents, although another said most of his clients accept whatever they get in that very cheap price range.

Overall

All the agents I spoke to were more upbeat than they had been for a long time about the real estate market in Pattaya, believing properly priced real estate will sell, and that cost-conscious buyers are cautiously coming back.

Whilst it is unlikely that the real estate market will ever be as free-wheeling and profitable for speculators as it was a number of years ago, many agents expect demand to continue from residential buyers at the top end, and demand to increase at the bottom end of the market as we move into 2012.

One agent thought 10% and more returns can be achieved in the right developments, and thought, given the state of the world economy and other asset classes, that Pattaya real estate as an investment proposition still holds good.

The Russians and the many Thai buyers fleeing present and future floods seem to have underpinned Pattaya’s cheaper condo market quite effectively, although Thai buyers have been piling into sensibly priced new developments in Pattaya well before the floods happened.

This trend looks set to continue as Pattaya tarts itself up a bit - at least in the glossy real estate brochures.

 

 

http://inpattayanow....arket-a-review/

 

Is this all you have to do with your time now?? get back to your trip reports, they are much more interesting

[VPI78 11,491]

Maybe Gabor can hire the Real Estate writer to do the first draft of Gabor's GoGo reviews.

[Bazle 1,483]

Is anyone aware of a high-end development at Bali Hi called Waterfront? Apparently, they are selling off-plan like hot cakes, and some people have already run up 20% profits.

 

Apart from that, I can't help but think there is a property bubble about to burst here; so many condos being built yet ones finished 2 or 3 years ago still unsold.

 

The Russian buyers intrigue me. Most of the units where I am seem to be owned by Russians, and I think that is quite common. Surely they can't all be oligarchs, so there seem to be quite a few well off "normal" Ruskies around.

[endi1 1]

In a big corrupt country(150 mil. people or so) there are many opportunities to steal or make money illegally.

[Siam Sam 964]

Let them keep building and bringing the prices down, that suits me fine.

[Norfloxacin400 87]

Gabor branching out into infomercials now?

 

Tonights WS stunner search was brought to you by the good people at ThaiProperty.com, Turkish Kababs (u know you want one) and O Ring Massage shops.

[Rickster59 70]

Let them keep building and bringing the prices down, that suits me fine.

 

+1

[ibnoel2 40]

Gabor,

Thanks for the post. I pretty much come to this board for my regular Pattaya dose and appriciate the interesting read.

 

IBNOEL

[frankie8 21]

thanks for sharing the article!

[papillon 695]

I have no sympathy for those that got shafted buying off plan.

[stonethrower 17]

I have no sympathy for those that got shafted buying off plan.

 

As someone who works in the construction industry I cannot believe how often this is done, not just from property investors but also from first time buyers. Probably the biggest investment of their lives and they choose it from a drawing.

[bigmick 840]

As someone who works in the construction industry I cannot believe how often this is done, not just from property investors but also from first time buyers. Probably the biggest investment of their lives and they choose it from a drawing.

 

Very true. I think so many come here on holiday a few times and want a place here and then just fall for these scams. You would never buy like this in your home country, so why buy off plan in Pattaya. I have bought a couple of condos over the last year, but they have had to have been in a building completely finished first. The whole idea of buying off plan totally puts me off and i am also wary of buying from the Israel investment companies also.

[Grahamxxx 211]

Is anyone aware of a high-end development at Bali Hi called Waterfront? Apparently, they are selling off-plan like hot cakes, and some people have already run up 20% profits.

 

Apart from that, I can't help but think there is a property bubble about to burst here; so many condos being built yet ones finished 2 or 3 years ago still unsold.

 

The Russian buyers intrigue me. Most of the units where I am seem to be owned by Russians, and I think that is quite common. Surely they can't all be oligarchs, so there seem to be quite a few well off "normal" Ruskies around.

 

Yes i had a look at The Waterfront and is seems very impressive and is in a great location for me,but it has gone up 5% not 20% from when it first went on sale.I will wait till it's built before i think about buying in,there are hundreds of studios for sale in there and i'm sure there will be a fire sale or two once its built

[Bazle 1,483]

Yes i had a look at The Waterfront and is seems very impressive and is in a great location for me,but it has gone up 5% not 20% from when it first went on sale.I will wait till it's built before i think about buying in,there are hundreds of studios for sale in there and i'm sure there will be a fire sale or two once its built

I wasn't referring to the developer's asking prices but to what the well located units are fetching on the "resale" market.

[bigmick 840]

Yes i had a look at The Waterfront and is seems very impressive and is in a great location for me,but it has gone up 5% not 20% from when it first went on sale.I will wait till it's built before i think about buying in,there are hundreds of studios for sale in there and i'm sure there will be a fire sale or two once its built

 

Thats exactly what i have done over the last 18 months, there are some ood deals to be had when the buildings are completed. As for the actual resale value increaseing - not really anything for a few years to come. There are simply too many empty houses and condos not getting finished/sold. So the re sale value will not increase for some time. Its a good time to buy if you want a place for yourself - for holidays etc. And also good time to buy if you know "what to buy and where" for rentals.

[Grahamxxx 211]

Thats exactly what i have done over the last 18 months, there are some ood deals to be had when the buildings are completed. As for the actual resale value increaseing - not really anything for a few years to come. There are simply too many empty houses and condos not getting finished/sold. So the re sale value will not increase for some time. Its a good time to buy if you want a place for yourself - for holidays etc. And also good time to buy if you know "what to buy and where" for rentals.

 

Raimonland have just released a new development in Pratanamk Hill called the Mixx where there are a staggering 1200 condo's for sale on the same site.Seems to me there are way to many high end condos getting built and i don't think the current sale price of 100,000 baht per sq/m( for high end) and well over, can be sustained,I will be retiring in 5 years and i can see the best plan for me would be to rent in the building that i like and if i decide to commit there,then just wait for the inevitable fire sale.

For an example,there is a Raimonland development called NorthShore( built about 4 years ago) which is Beachfront and close to Central Festival which was marketed as/is a 5 star development,which it seems to be,but i haven't been inside the place yet to verify.There are many listings for sale at about 85.000 per sq metre in that building, fully furnished,yet new developments in WongAmat are asking 130 to 190,000 per sq metre.

There is a property bubble which i have read is caused by the Thai's..don't forget that all the condos you see in Pattaya are 51% owned by Thai people,and they don't like to see a loss in their investments,so they will hang onto them...no matter what! and if even if they dont sell, the property is still used as income producing rental or merely a weekend getaway.True or not,i'm not sure,but i certainly would not be rushing into buying a condo in Pattaya

[bigmick 840]

Raimonland have just released a new development in Pratanamk Hill called the Mixx where there are a staggering 1200 condo's for sale on the same site.Seems to me there are way to many high end condos getting built and i don't think the current sale price of 100,000 baht per sq/m( for high end) and well over, can be sustained,I will be retiring in 5 years and i can see the best plan for me would be to rent in the building that i like and if i decide to commit there,then just wait for the inevitable fire sale.

For an example,there is a Raimonland development called NorthShore( built about 4 years ago) which is Beachfront and close to Central Festival which was marketed as/is a 5 star development,which it seems to be,but i haven't been inside the place yet to verify.There are many listings for sale at about 85.000 per sq metre in that building, fully furnished,yet new developments in WongAmat are asking 130 to 190,000 per sq metre.

There is a property bubble which i have read is caused by the Thai's..don't forget that all the condos you see in Pattaya are 51% owned by Thai people,and they don't like to see a loss in their investments,so they will hang onto them...no matter what! and if even if they dont sell, the property is still used as income producing rental or merely a weekend getaway.True or not,i'm not sure,but i certainly would not be rushing into buying a condo in Pattaya

 

I agree with you about the 1200 condos, i would not bother with that development and stay far away from it. I could not see that place ever being finished. I waited for a high end building to be totally finished and in the meantime i continued to email the sales office and eveloper to see what units are available. I managed to get the 2 bedroom unit i wanted at 30% less than my neighbor had paid and i got some really good furniture thrown in also. I did alot of research into the area and what it had to offer etc and as a result i rented the unit out to the first person who looked at it. They are now renting the condo for a long term which is exactly what i wanted. I would be looking at prices of about 50k per square meter, anything over that is just a rip off.Some simply research will give you an average price to pay for that.

 

The "bubble" may well have been caused by Thais, and they are able to hold onto the property they buy, because they will always have someone to rent it from them. In many ways, its better to have a long term renter paying slightly less than a short term renter paying slightly more.

 

Your plan to rent in the building you like is a good idea and then to wait for the "sale" is also good. I would suggest when you rent the place you like in the building you like. That you include in your rental contract a paragraph about buying that unit. If you both agree to a sale of the unit you are renting, you can save even more money that way also by cutting out on an agents commission.

[9cisco999 107]

I think this article on www.thaivisa.com offers an extremely well thought out analysis of the real estate situation faced by falangs in Pattaya as well as all of Thailand.

 

 

http://www.thaivisa....thailand.0.html

 

 

Gabor, just curious to know if your photo is actually a recent development on the right hand side heading into Pattaya from Jomtien? Shortly after going under the overpass where the dead and decaying speed boats have their graveyard?

[Idefix 2,275]

There is a property bubble which i have read is caused by the Thai's..

Don't forget that all the condos you see in Pattaya are 51% owned by Thai people, ...

 

Hi Grahamxxx,

I disagree with this statement, on several ways:

- most but not all condos have to respect this 51% quota (a few old ones have a 90% quota)

- in some condos a big part of the 51% Thai quota apparts are own by farangs through a Thai company.

 

There is certainly a big problem with houses in Pattaya, but for condos it seems there is new buyers every day and if prices have go down maybe 10% 2 years ago, they slowly come back to their previous price. At least in condos I know in South Pattaya area.

[js007 795]

One of these days, the reality of the world economy is going to hit the Pattaya condo market. From time to time, I've looked with a view to buying, but in the final analysis, it never made much sense. And for the buyers, things can only get better. I still see mostly overpriced shoeboxes. Three million baht for something that should cost no more than one million.

 

I think I'll rent.

[jacko 8,813]

There is a property bubble which i have read is caused by the Thai's..don't forget that all the condos you see in Pattaya are 51% owned by Thai people,and they don't like to see a loss in their investments,so they will hang onto them...no matter what! and if even if they dont sell, the property is still used as income producing rental or merely a weekend getaway.True or not,i'm not sure,but i certainly would not be rushing into buying a condo in Pattaya

Interesting discussion, I might be tempted to look at a condo as I am getting fed up of living far out of town with poor neighbours.

I was reading that the Thai end of the market was booming currently as the recent floods persuaded many having a residence in Pattaya was a good idea. I also chatted with a marketing girl and she tried to deter me from buying it for the TGF..(.I was hoping to get a better price.) The off plan prices I was being quoted were high. I have a good friend living in Northshore, and he speaks highly of it.

Edited December 21, 2011 by jacko

[Grahamxxx 211]

I agree with you about the 1200 condos, i would not bother with that development and stay far away from it. I could not see that place ever being finished. I waited for a high end building to be totally finished and in the meantime i continued to email the sales office and eveloper to see what units are available. I managed to get the 2 bedroom unit i wanted at 30% less than my neighbor had paid and i got some really good furniture thrown in also. I did alot of research into the area and what it had to offer etc and as a result i rented the unit out to the first person who looked at it. They are now renting the condo for a long term which is exactly what i wanted. I would be looking at prices of about 50k per square meter, anything over that is just a rip off.Some simply research will give you an average price to pay for that.

 

The "bubble" may well have been caused by Thais, and they are able to hold onto the property they buy, because they will always have someone to rent it from them. In many ways, its better to have a long term renter paying slightly less than a short term renter paying slightly more.

 

Your plan to rent in the building you like is a good idea and then to wait for the "sale" is also good. I would suggest when you rent the place you like in the building you like. That you include in your rental contract a paragraph about buying that unit. If you both agree to a sale of the unit you are renting, you can save even more money that way also by cutting out on an agents commission.

 

Hey Mick,

 

Which building did you buy into?

[Grahamxxx 211]

Hi Grahamxxx,

I disagree with this statement, on several ways:

- most but not all condos have to respect this 51% quota (a few old ones have a 90% quota)

- in some condos a big part of the 51% Thai quota apparts are own by farangs through a Thai company.

 

There is certainly a big problem with houses in Pattaya, but for condos it seems there is new buyers every day and if prices have go down maybe 10% 2 years ago, they slowly come back to their previous price. At least in condos I know in South Pattaya area.

 

Your right i did not take that into account,i didn't think the Thai Company/Farang quota would have been too high...

[bigmick 840]

Hey Mick,

 

Which building did you buy into?

 

Laguna Heights - Wongamat