What A Difference A Year Makes

[JonnieB]

Well, seems like the property chickens have finally come home to roost in the Thai, and surely the Pattaya, real estate market. Things were sure going gangbusters while the good times were rolling (just like in the good-ole USofA) but all good things must come to an end and the adults must reestablish their supervision of the children. I come at this topic as a very long termer expat type to Thailand...having lived many years in both the Big Mango as a renter and again many years in Pattaya as a renter and owner. Therefore rental and property prices are of more than just a passing interest to me but not of major importance financially as 95 percent of my investments/assets are in non-Thai investments.

Probably the best visual way to see the property slump is to pick-up a current issue of the Pattaya Property Trader magazine. Over the past years, this magazine was growing thicker and heavier by the month. At it's peak maybe 6-9 months ago, it must have been approaching an inch thick!!! Most of this heft was the pages on pages of adverts from property developers and agents with new moobaans and condos for sale/rent. Now, the PPT is a shadow of its former self...must be around 1/4 an inch for the most recent issue!!! Also, our little ole Pattaya papers the Mail and Today have only a few pages of property related ads per issue compared to dozens per issues up until recently.

Another development is that most of the property ads that are still around feature prominently the words "priced for quick sale" "big discount" etc. as to the previously featured words like "buy now before prices rise." I have seen ads for new bungalow 3 BR 3 BA houses that sold in the secondary market for 4.5-5.5M baht now listed for 3-3.5M!! I have also seen condos in a certain building (Star Beach) that sold for 2.5-2.7M a couple years ago being listed NOW at these same prices, i.e., no appreciation (unless sold during the boom interim) over the last few years.

I see signs all over my soi (more Thai oriented than farang) for big reductions for townhouses and shophouses. In fact, a big sign outside this internet shop blares out a reduction for a house/shophouse reduction of B950,000 from the original price of B1.3M. What's that, about a 25% haircut or so.

The reasons for this are many and have been discussed adnasuem here and everywhere expats congregate in person or online. I am not a pesimist...like all markets, when the excess is rung-out (and in the Thai market specifically - the rules re ownership and visas get clarified and simplified for foreigners) prices will find their floor and then resume a measured climb. However, I would suppose the quick gains of the past are a thing of the past.

Funny though, quality still sells apparently. Even at high prices. The Northpoint condos being developed by Raimon in Naklua are just about sold out at prices of about B100,000 per square meter. It looks to be a decent building but those are really expensive units. Many speculators in this building I suppose and I wonder how they will make out. Maybe alright as the building won't be done till 2009 if on schedule and maybe the market will be more settled by then.

In any case, though my house purchased as a place to live over a year ago has likely stayed about the same in baht value (good buy to begin with and not located in an overpriced farang ghetto) I have made about 20% on in as a currency play (baht up about 20% vs the dollar). Not too bad I guess

[stevemiddie]

We are all happy for you

[Prakanong]

We are all happy for you

Whats the matter Steve - gave up your job as a brickie to become an estate agent in Patters?

[JimmyTheMook]

I have made about 20% on in as a currency play (baht up about 20% vs the dollar). Not too bad I guess

One of the only things I feel good about about regarding my home purchases here also.

Give it 5 or better yet 10 years when all the new malls and high end condos are built to really judge things and savy buyers know it is best to buy in a down market.

[stevemiddie]

We are all happy for you

Whats the matter Steve - gave up your job as a brickie to become an estate agent in Patters?

Brickies pay more

[JonnieB]

Agree short-term fluctuations in the property market are always to be expected anywhere, especially a place that has had a fast run-up as Pattaya has had recently (at least for much of the housing marketed directed at foreigners). As a longer term investment, if you buy at a reasonable entry point, you should do just fine over the medium and long term. Pattaya is getting better all the time (even with its well known infrastructure problems) and with the opening of the J-Avenue and Central department store malls now and in the near future, the area will continue to become more popular as a vacation home and holiday destination.

It's more than likely that LOS will eventually get the visa/business issues sorted out that reaches reasonable accommodation between the needs of foreign residents and investors and Thailand's needs and wants. So IMHO, Thailand will continue to be a popular place for a certain type of foreigner to hang his/her hat/bonnet. It will be a somewhat higher cost/higher amenity market than some others in the region...that's to be expected and for the good. Those who are priced-out have other viable options here in SE Asia.

One nice benefit if one has some spare investment cash available during these times of market dips, you can really break some balls right now as there are lots of cash needy and leveraged sellers out there.

[Lance_A_Lot]

I/we bought a 2 bdrm, 2 bath garden style home on 84 sq. wah in a nice development just over 3 years ago for 3.0 million Baht in E. Pattaya, only a couple of kms from Sukhumvit in a desireable location. We just sold the property for 3.45 million Baht. A year ago, it may have realized 3.6 - 3.7 million Baht. We consider ourselves very lucky to have sold at this point in time. In fact, we had taken the home off the market; but, one major realtor never removed the photos of our property from their website. Sure enough a disgruntled renter in a lower standard development (nearby) saw the photos and called the realtor who we know. We agreed to show the house and it sold. As far as I know, it's the only home to have been sold this year by this major real estate company. Sure, they have sold their share of condos albeit fewer this year so far.

We found a decent rental and move in about two weeks.

[gguy]

I have noticed many more apartments for rent in my condo.

When I moved in the building two years ago, I had to wait for three months for a vacancy to occur. Now, based solely on the signs posted in the laundry and food shop over 10 units are available. I have no idea the number of units available through agents.

An interesting test of market strength will the finalization of VT6 on Beach Road. It is set for completion in Dec or January. The buyers will have to come up with the cash to purchase. In addition, still they are being sold as shells, the speculators will have to also pay to outfit the apartments if they want to rent them. It should be interesting.

[JonnieB]

Lance-A-Lot

You were very fortunate. I certainly would not want to be a seller at this time. Houses in Pattaya are about as easy to value/sell as sub-prime debt CMO's in the States right now. There is virtually no market so it's tough to know what anything is worth. What with possible FBA changes (unlikely to ever really be passed), visa hassles for long-termers, 30% reserve requirements, strength of Thai baht against some currencies, the market for farangs buying and selling property has just about frozen-up.

Maybe by next year, when the military have put in place a new Democratic Party led government, things will start to get organized and somewhat back to normal. Abhisit has already ruled out any major FBA changes and if any would be passed before his government was placed in office, his government would repeal them (or certainly not enforce them [to save the face of those who wanted to make a nationalist rant in passing them knowing full well they would be repealed or never enforced by a succeeding government].

[mark100]

Well, seems like the property chickens have finally come home to roost in the Thai, and surely the Pattaya, real estate market. Things were sure going gangbusters while the good times were rolling (just like in the good-ole USofA) but all good things must come to an end and the adults must reestablish their supervision of the children. I come at this topic as a very long termer expat type to Thailand...having lived many years in both the Big Mango as a renter and again many years in Pattaya as a renter and owner. Therefore rental and property prices are of more than just a passing interest to me but not of major importance financially as 95 percent of my investments/assets are in non-Thai investments.

Probably the best visual way to see the property slump is to pick-up a current issue of the Pattaya Property Trader magazine. Over the past years, this magazine was growing thicker and heavier by the month. At it's peak maybe 6-9 months ago, it must have been approaching an inch thick!!! Most of this heft was the pages on pages of adverts from property developers and agents with new moobaans and condos for sale/rent. Now, the PPT is a shadow of its former self...must be around 1/4 an inch for the most recent issue!!! Also, our little ole Pattaya papers the Mail and Today have only a few pages of property related ads per issue compared to dozens per issues up until recently.

Another development is that most of the property ads that are still around feature prominently the words "priced for quick sale" "big discount" etc. as to the previously featured words like "buy now before prices rise." I have seen ads for new bungalow 3 BR 3 BA houses that sold in the secondary market for 4.5-5.5M baht now listed for 3-3.5M!! I have also seen condos in a certain building (Star Beach) that sold for 2.5-2.7M a couple years ago being listed NOW at these same prices, i.e., no appreciation (unless sold during the boom interim) over the last few years.

I see signs all over my soi (more Thai oriented than farang) for big reductions for townhouses and shophouses. In fact, a big sign outside this internet shop blares out a reduction for a house/shophouse reduction of B950,000 from the original price of B1.3M. What's that, about a 25% haircut or so.

The reasons for this are many and have been discussed adnasuem here and everywhere expats congregate in person or online. I am not a pesimist...like all markets, when the excess is rung-out (and in the Thai market specifically - the rules re ownership and visas get clarified and simplified for foreigners) prices will find their floor and then resume a measured climb. However, I would suppose the quick gains of the past are a thing of the past.

Funny though, quality still sells apparently. Even at high prices. The Northpoint condos being developed by Raimon in Naklua are just about sold out at prices of about B100,000 per square meter. It looks to be a decent building but those are really expensive units. Many speculators in this building I suppose and I wonder how they will make out. Maybe alright as the building won't be done till 2009 if on schedule and maybe the market will be more settled by then.

In any case, though my house purchased as a place to live over a year ago has likely stayed about the same in baht value (good buy to begin with and not located in an overpriced farang ghetto) I have made about 20% on in as a currency play (baht up about 20% vs the dollar). Not too bad I guess

Have you noticed how many cheap buisnesses there are for sale in Pattaya now, some have been reduced by up tp 50% compared to a year or two ago.

ls this a sign of the times ??

[Jingthing]

It will be a somewhat higher cost/higher amenity market than some others in the region...that's to be expected and for the good. Those who are priced-out have other viable options here in SE Asia.

WHY is that for the good, exactly? I really do not understand why people think people who aren't rich are a problem. It sounds like a form of bigotry to me, as if having a huge surplus of money makes you a superior person. So some old pensioner lives comfortably for 20k baht a month here. Who does this hurt? I can see why the Thai government might not see the money benefit, but this is good for you, as a farang, to see this farang go? Its certainly not good for that farang. So how is it good?

Edited August 21, 2007 by Jingthing

[the gent]

I rather think the pricking of the cheap credit bubble, inflated over 7 years in the West, will ripple further than even the most blinkered of myopic posters who perenially witter on about how things in the LoS are really tickety boo could possibly imagine.

The fallout from years of stupid lending by unregulated banks in their quest for immediate profits will smother the very medium by which the zenith was measured i.e property will crash.

A feature of the property boom throughout the world has been the disconnection of the traditional link between income and loan. In the US this was exhibited, now infamously, by the subprime lending market indemnified by European institutions which have yet to quantify their losses but those in the UK and Germany are probably going to walk with a limp for some time to come. The point is, subprime exists in some form or other throughout all property markets which have seen unrealistic increases in their value. Now that the supply of cheap credit fuelling that boom has ceased it is likely the inevitable correction, long postponed by complicit self serving governments, back to that traditional link will be sharp and to some very painful indeed. Now is not the time to be leveraged.

As in all corrections there is a flight to quality. The top end by definition is a niche market commanding prices only those with liquidity can compete in....cash was always king. The lower end typified by the glut in Pattaya/Jomtien will be decimated for years to come and one suspects that what exists in between shall fester in denial until vendors become more realistic.

The waters are unchartered. Usually cycles downwards are precipitated by recessions but many pundits opine that the world economy is essentially strong and current blips are transitory but most of them grew up in the shadow of Greenspan who pronounced tinkering with money suppy mechanisms to be redundant. Current events would suggest that he was dreadfully mistaken.

Still, if you simply want a place to live in that you can call your own then buy but do drive a bargain, 30% discounts would fall within most projections.

[JonnieB]

It will be a somewhat higher cost/higher amenity market than some others in the region...that's to be expected and for the good. Those who are priced-out have other viable options here in SE Asia.

WHY is that for the good, exactly? I really do not understand why people think people who aren't rich are a problem. It sounds like a form of bigotry to me, as if having a huge surplus of money makes you a superior person. So some old pensioner lives comfortably for 20k baht a month here. Who does this hurt? I can see why the Thai government might not see the money benefit, but this is good for you, as a farang, to see this farang go? Its certainly not good for that farang. So how is it good?

Jing,

I didn't mean the comment to which you referred to above as a put-down of anyone. It is a values neutral statement of fact only. It was to point out that Thailand (and in particular, Pattaya, my current "neck of the woods") is a growing and improving place to visit/live-work/retire to destination (in fits and starts of course). This development, like anywhere, generally raises the cost of living BUT in return, there are goods and services available that are lacking in other less developed countries/locations.

Due to all the development recently, we have a plethora of nice restos, golf courses, and other tourist amenities. In terms of infrastructure, sure, there are many issues, like the annual water shortages, but things have improved over time. The improvements to Sukhumvit road the past couple years and many other roads/sois around Pattaya have made it easier to navigate around town. Pattaya has 3 very decent [one of them being brand new and very nice but premium priced] private hospitals and 1 public one. Also, within 25 minutes drive, there is another in Sri Ratcha. There is also a range of condo and housing options to fit any budget.

My general point is that having all this makes the cost of living hear higher than some other places BUT you get more and better services, infrastructure, health care, etc. Having all these extras is the "good" I am referring to BUT also pointing out that to enjoy them, one has to WANT to pay for them. If not, then one would have to find another place where the convenience/amenity level may be less but you also pay less. I did not mean to convey the impression that the rising cost of living in and of itself was good because it is driving out less well healed expatriates...only that it is a fact that this is/can happen.

In fact, I still believe one can still live incredibly cheaply in Pattaya (heck, with all the fools throwing their free getting married to a farmer's daughter parties every nite all around town, and all the restos that put out free-food spreads for the price of a drink, one can practically eat for free in this town if you don't mind eating almost the same food all the time ). Thou I myself am quite flush, I like to live below my means and have a very comfy lifestyle with 3 BR 3 BA house, car, plenty of entertainment, resto food everynite (paid), etc. and spend about US$1200-1500 per month. By cutting out some (but certainly not all) of the entertainment, this could easily fall to $1000. Just about within anybodies means Oh, and I forgot to mention, I don't drink much booze or stable and feed any farmer's daughters...just suckle at the teat when the urge strikes and pay tab on the way out

Addemdum...Panicy selling continues...especially in areas that had big run-ups in prices like Pratamnak Hill and Jomtien and "South" Jomtien areas. Just thumbed through the latest Pattaya Today and several more ads for houses for sale at big discounts. These are owner ads and not agency adds. One for a house on the Hill was basically marked down from B17M to B14M...a B3M (20%) haircutt...and that's an offer price and not the actual sale price. There was another ad for a soon to be completed house at the Jomtien Marina development also offered at a big discount. All this is in addition to the many posts for properties for sale at big discounts on the notice boards at Foodland and Carrefore.

Edited August 22, 2007 by JonnieB

[farangfool]

It will be a somewhat higher cost/higher amenity market than some others in the region...that's to be expected and for the good. Those who are priced-out have other viable options here in SE Asia.

WHY is that for the good, exactly? I really do not understand why people think people who aren't rich are a problem. It sounds like a form of bigotry to me, as if having a huge surplus of money makes you a superior person. So some old pensioner lives comfortably for 20k baht a month here. Who does this hurt? I can see why the Thai government might not see the money benefit, but this is good for you, as a farang, to see this farang go? Its certainly not good for that farang. So how is it good?

Jing,

I didn't mean the comment to which you referred to above as a put-down of anyone. It is a values neutral statement of fact only. It was to point out that Thailand (and in particular, Pattaya, my current "neck of the woods") is a growing and improving place to visit/live-work/retire to destination (in fits and starts of course). This development, like anywhere, generally raises the cost of living BUT in return, there are goods and services available that are lacking in other less developed countries/locations.

Due to all the development recently, we have a plethora of nice restos, golf courses, and other tourist amenities. In terms of infrastructure, sure, there are many issues, like the annual water shortages, but things have improved over time. The improvements to Sukhumvit road the past couple years and many other roads/sois around Pattaya have made it easier to navigate around town. Pattaya has 3 very decent [one of them being brand new and very nice but premium priced] private hospitals and 1 public one. Also, within 25 minutes drive, there is another in Sri Ratcha. There is also a range of condo and housing options to fit any budget.

My general point is that having all this makes the cost of living hear higher than some other places BUT you get more and better services, infrastructure, health care, etc. Having all these extras is the "good" I am referring to BUT also pointing out that to enjoy them, one has to WANT to pay for them. If not, then one would have to find another place where the convenience/amenity level may be less but you also pay less. I did not mean to convey the impression that the rising cost of living in and of itself was good because it is driving out less well healed expatriates...only that it is a fact that this is/can happen.

In fact, I still believe one can still live incredibly cheaply in Pattaya (heck, with all the fools throwing their free getting married to a farmer's daughter parties every nite all around town, and all the restos that put out free-food spreads for the price of a drink, one can practically eat for free in this town if you don't mind eating almost the same food all the time ). Thou I myself am quite flush, I like to live below my means and have a very comfy lifestyle with 3 BR 3 BA house, car, plenty of entertainment, resto food everynite (paid), etc. and spend about US$1200-1500 per month. By cutting out some (but certainly not all) of the entertainment, this could easily fall to $1000. Just about within anybodies means Oh, and I forgot to mention, I don't drink much booze or stable and feed any farmer's daughters...just suckle at the teat when the urge strikes and pay tab on the way out

Addemdum...Panicy selling continues...especially in areas that had big run-ups in prices like Pratamnak Hill and Jomtien and "South" Jomtien areas. Just thumbed through the latest Pattaya Today and several more ads for houses for sale at big discounts. These are owner ads and not agency adds. One for a house on the Hill was basically marked down from B17M to B14M...a B3M (20%) haircutt...and that's an offer price and not the actual sale price. There was another ad for a soon to be completed house at the Jomtien Marina development also offered at a big discount. All this is in addition to the many posts for properties for sale at big discounts on the notice boards at Foodland and Carrefore.

I think you are a bit too positive in your description of the infrastructure.

1. The new developments will add to the already bad traffic. The shopping centres will turn 2nd road as well as klang and tai into a parking lot for a much longer time per day as they are now. If shopping is a reason to visit a tourist destination, then Pattaya has to come a long way. Pattaya sells sex and not much more. The "new image" is a developer's dream and not reality. I doubt that anyone who had his 14 yr old daughter here on a family holiday will recommend the place or return.

2. Your desciption of the hospital situation, especiallly the premium priced one, is totally off the mark. That premium hospital is actually a lethal health risk at ripp off rates as we learned this year and discussed in the relevant thread in the pattaya forum.

3. I think you actually did suggest that spenders with lower income you be pushed out. The logic you employed is that of a developer and real estate agent. Renters and lower budget are not potential customers, that's the only good reason to get rid of them. After all, 20K is a good thai income. So gentryfication is what you hope for. Short time visitors with high spending to sustain expensive commercial developments and an increasing premium market. That's the only way foreign real agents can make the dough to live comfortably.

Jing, you were right on with your comments. I myself keep my money in the bank and watch with patience and pleasure the efforts of the local real estate people when trying to come to terms with reality. Cash rules, rihtly so. I kept my in the right place and I m sure you do the same.

[midas]

A feature of the property boom throughout the world has been the disconnection of the traditional link between income and loan.

Aha !! not many people seem to mention this in this day and age of

young people working on contracts, having to look after their own

superannuation arrangements for their old age -the disconnect seems to be

growing wider and wider Has anyone carried out a survey

as to just how many members of generation " X "

will be able to afford multimillion dollar mortgages ?