Thailand: Pattaya and Eastern Seaboard Property Newsletter, March 2012

March 2012 The last couple of months have seen strong interest in the Pattaya market from commercial investors. In particular, these investors have shown a great deal of interest in hotels, be they pre-existing properties available for purchase or alternatively prime land spots that can be developed into new properties. The level of interest has been higher than I can ever remember, even five or six years ago when there was also extremely strong interest in similar properties. Right now, perhaps the biggest issue is finding suitable properties for those looking to buy, as there are only very limited numbers of decent properties (and sites) available. 

Perhaps the main reason why so many investors are looking to buy hotels and also why there are relatively few for sale is that tourism here continues to do very well indeed. When I have spoken to hotel owners in recent months, the vast majority indicate that average occupancy rates at the moment are well over 90%. At the same time, Pattaya is nowadays, to a large extent, a year round resort. Unlike other Thai resorts such as Phuket, Samui and Krabi, there is nothing like the same fall off in business during the so-called “low season” months. In fact many of the hotel owners I speak to tell me that they still average around 70% occupancy in the “low season”, actually good high season figures for hotels in many other resort destinations.

And of course the reasons for coming to Pattaya on holiday continue to increase. The recent news that Cartoon Network has teamed up with a local developer to build a huge, themed, state of the art water park in Najomtien, which will be in addition to another similarly impressive water park currently under construction close to the Silverlake vineyard, will undoubtedly be another big draw. Commercial investors tend not to be fools and their level of interest in the Pattaya area is a strong indication that the future of the area is extremely bright.

Another aspect of the local property market that continues to be extremely positive is the huge number of “off plan” condo units that continue to be sold. While the sale of secondary market properties is steady, rather than especially busy, the number of new condo units being sold is truly amazing. It is perhaps a little bit of a mystery as to why there is such a disparity and why more people are not choosing pre-existing condos rather than those that are not yet built. There are a number of possible explanations.

Firstly, to an extent, there isn't a significant enough supply of the kind of units that are being sold new available in the secondary market. In other words, many of the units built in the past don't necessarily suit the requirements of most current buyers.

Secondly, it seems that a lot of units are being bought by people who are not living in Pattaya. Thus they are tourists, whether they be domestic or international in nature. For these kinds of buyers there are certain advantages to buying something off plan. For one thing, they are looking at amazing artist's renderings of what a place will look like, which tend to be more impressive than, for example, the reality of a five year old apartment that could perhaps do with a coat of paint. For another, when buying off plan, they don't have to come up with the whole purchase price straight away, instead paying a deposit, instalments for perhaps a couple of years and a final payment so long in the future that they don't need to worry about it right now.

However, I think the main reason is probably that a lot of the newer real estate agents now operating in Pattaya simply don't try to sell secondary market properties, preferring to focus exclusively on off plan developments, which often mean higher commissions and a lot less effort, both in terms of taking buyers around and also in not having to obtain and photograph lots of individual units to get their listings. However, my own belief is that, even if a buyer ends up deciding to buy a new, off plan unit, it would be in their best interests to look at secondary market units as well before doing so. For one thing, there can be some exceptional deals to be had, for another they could start using their property straight away and of course there is no risk of, say, an economic downturn coming along which might mean that a new development doesn't end up being built. To look at secondary market units as well would also mean dealing with an agent who has significant secondary market listings, which tends to mean that they will have been in the market here for longer and thus be more experienced, with better market knowledge and therefore best able to offer good advice on what and where to buy.

As usual, there are some more good deals around this month. The 2 bed/bath, 176 square metre Jomtien Beach Road condo mentioned below is, I think, a particularly good deal. As well as being a foreign quota unit, what makes it stand out is that it has a very large balcony directly facing a stunning sea-view, plus the fact that it is an end unit and thus has only one neighbour, which also means there are windows and natural light to three sides of the apartment. It is a nice condo in a nice development and so the price of 5.8m Baht (which works out at just under 33,000 Baht per square metre) is exceptionally attractive.

The big 3 bed, 4 bath house in South Pattaya (also below), with private swimming pool, is another very good deal indeed, bearing in mind the size of the house, the location and how nicely it has been decorated and furnished. We have also just had a new property listed, in a very nice East Pattaya gated community. It is a very large, 4 bed, 5 bath home with a big garden and large private pool. It looks fantastic and has a huge kitchen with a separate utility room. The asking price of 5.99m Baht makes it a very attractive proposition indeed.

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