Trends In Pattaya/jomtien Real Estate Development Market

[KhunTao]

It is clear that we are in a downturn in the Pattaya/Jomtien real estate market. Contributing factors are (random order):

1) Uncertainty in respect of the Thai company ownership structure of houses and land;

2) Tightened visa requirements slowly squeezing out marginal long-stay residents;

3) Oversupply of units, both existing and under construction;

4) Continued political uncertainty in Thailand in the conext of an international financial crisis;

5) Signs of failure of certain high profile high-rise developments;

6) Higher costs of construction, due to steep cement & steep price increases.

In light of these unfavorable conditions, I think the following trends will become evident during 2009:

A. More low-rise, less high-rise

I think low-rise (up to 7 stories) will be king and high-rises will struggle. Construction costs for low rises are dramatically lower (per m2) when compared to high rises. A low rise can be constructed for between Bt.17,500 and Bt25,000 per m2, depending on the quality and finishings. A high rise will set you back around between Bt.80,000 and Bt120,000 per m2, depending on quality and complexity (a 90 stories tower is exponentially more complex to build when compared to a "mere" 30 stories). The higher construction costs of high rises are partially offset by the fact that more units can be built on the same size land, however "all-in" high rises are far more expensive to construct whilst it is not immediately clear what added value they provide in terms of a living experience. In addition, high rises will take around 3-4 years to complete, whereas a low rise can be finished in as little as 18 months.

B. More condos, less houses

The Thai company ownership structure of houses and land continues murky and questionable. As a result, the housing developments on the dark side struggle to attract new punters (alias informed investors) and beg the real estate agents to shift their unsold stock (with promised sales commissions at times reaching 15%). I therefore think that condos (allowing 49% freehold onwership by farangs) will gain in relative importance.

C. More asprirational developments, less cheap boxes

I think that years of building any old <deleted> and being able to flog it to punters (alias savvy visionaries) are over. The days of stacking cheap bare boxes on top of each other (example: VT) are counted and the market will move towards more aspirational, life-style projects (examples: the Cove or Sunset Residence). Buyers will become choosier and demand top quality finishings as well as a clear identity of the development. Branded developments may be next, like in Samui and Phuket.

Any views of trends during the next coming few years ?

[plasticpig]

Yes, the market is fcuked.

don,t buy for the next two years. unlees its a real good deal.

exchange rates are <deleted> as well.

is there any thing good about the house/ condo market?

yes loads of them empty.

so better deals to be had, at some point in time.

and what estate agent do you work for??

Edited September 26, 2008 by plasticpig

[KhunTao]

I do not work for any developer or real estate agency. I simply have a private interest in investing in real estate in the Pattaya & Jomtien area.

I am posting my ideas and views because I enjoy discussing and testing them.

Edited September 26, 2008 by KhunTao

[LennyW]

If there is a downturn at present then surely this would be the time to buy, particularly homes and condos that already exist / are completed, as anything that will be built in the future will cost more to construct and consequently more to resale?

People here tend to forget that there is a global downturn at the moment, it is in no way particular to Pattaya, the bottom line is that property in Thailand is still great value for money in comparison.

Those that have the insight to buy now will be sure winners! watch this space!

[Ungabunga]

There are many similar hard-core discussions in the Real Estate section of the forum. Perhaps you should check out that part also.

Edited September 27, 2008 by Ungabunga

[Woofer]

It is clear that we are in a downturn in the Pattaya/Jomtien real estate market. Contributing factors are (random order):

1) Uncertainty in respect of the Thai company ownership structure of houses and land;

2) Tightened visa requirements slowly squeezing out marginal long-stay residents;

3) Oversupply of units, both existing and under construction;

4) Continued political uncertainty in Thailand in the conext of an international financial crisis;

5) Signs of failure of certain high profile high-rise developments;

6) Higher costs of construction, due to steep cement & steep price increases.

In light of these unfavorable conditions, I think the following trends will become evident during 2009:

A. More low-rise, less high-rise

I think low-rise (up to 7 stories) will be king and high-rises will struggle. Construction costs for low rises are dramatically lower (per m2) when compared to high rises. A low rise can be constructed for between Bt.17,500 and Bt25,000 per m2, depending on the quality and finishings. A high rise will set you back around between Bt.80,000 and Bt120,000 per m2, depending on quality and complexity (a 90 stories tower is exponentially more complex to build when compared to a "mere" 30 stories). The higher construction costs of high rises are partially offset by the fact that more units can be built on the same size land, however "all-in" high rises are far more expensive to construct whilst it is not immediately clear what added value they provide in terms of a living experience. In addition, high rises will take around 3-4 years to complete, whereas a low rise can be finished in as little as 18 months.

B. More condos, less houses

The Thai company ownership structure of houses and land continues murky and questionable. As a result, the housing developments on the dark side struggle to attract new punters (alias informed investors) and beg the real estate agents to shift their unsold stock (with promised sales commissions at times reaching 15%). I therefore think that condos (allowing 49% freehold onwership by farangs) will gain in relative importance.

C. More asprirational developments, less cheap boxes

I think that years of building any old <deleted> and being able to flog it to punters (alias savvy visionaries) are over. The days of stacking cheap bare boxes on top of each other (example: VT) are counted and the market will move towards more aspirational, life-style projects (examples: the Cove or Sunset Residence). Buyers will become choosier and demand top quality finishings as well as a clear identity of the development. Branded developments may be next, like in Samui and Phuket.

Any views of trends during the next coming few years ?

In general I agree with what you say. The housing market has been dead for a couple of years now. The condo market is still selling, but mainly to investors not for people wanting to live in condos. The rents for condos are going down, but they keep building more. Soon the condo market will collapse when people realize some developments will not be completed, owners can't sell there condos and rents will be very cheap.

Now is a great time to buy a house if you want to live in it. It is also a good time if your a long term investor as housing construction costs will always go up. However, I would not even count on renting an investment house in current market, but it you are happy to leave it vacant for a couple of years I sure you will make money.

The condo market has yet to bottom, so I would stay clear of it. You hear all sorts of rumors about the problems of some of high profile projects not going ahead and I am sure some of them will be true. I friend I mind has a big condo in a prime area of Pattaya and a few years ago used to rent it for 50,000 baht a month. Now he rents it for 35,000 baht a month and he is lucky to get that. A year or so ago I looked at buying some investment condos and looked at some nice condo, but most of the buildings were empty. I would stay clear of condos for the moment, but in a few years time when the market bottoms out it will be a good time to buy a condo.

[prefabs]

If there is a downturn at present then surely this would be the time to buy, particularly homes and condos that already exist / are completed, as anything that will be built in the future will cost more to construct and consequently more to resale?

People here tend to forget that there is a global downturn at the moment, it is in no way particular to Pattaya, the bottom line is that property in Thailand is still great value for money in comparison.

Those that have the insight to buy now will be sure winners! watch this space!

I agree that you can buy cheap, and what you pay here for a house is cheaper than elsewhere. especially in the West. But to say GREAT VALUE is rubbish. Buying a house for someone else, which is what people actually have to do over here, does not represent value, and a 30 year lease is a rental deal with strings attached. Wonder how many will not be renewed after the 30 years.

Look at the big picture, unlike most starry eyed holidaymakers who lose their savings when they follow the advice of the real estate guys. The days of making money on house are long gone.

[expatgaz]

The best way to get the market back on track is to instill a bit of realism.Everyone seems to be overpricing their property.If realism was used then things would shift.A good indication of a correct evaluation would be to half the current asking price.Therefore houses being touted on the market and not selling at say 20 mil should be on the market for 10 and so on.The same goes for condo's.

I've been around Pattaya / Jomtien for ages and believe me few properties are actually worth upwards of 10 mil.This money a few years back was unheard of,now every tom dick and harry think there property is worth it.I remember being offered a place on View Talay Villas in 98 (off plan) for 15 mil (possibly 17,I can't remember),the same place is currently on the market at 55 mil,and surprise surprise,not selling !!!

EPG.

[prefabs]

The best way to get the market back on track is to instill a bit of realism.Everyone seems to be overpricing their property.If realism was used then things would shift.A good indication of a correct evaluation would be to half the current asking price.Therefore houses being touted on the market and not selling at say 20 mil should be on the market for 10 and so on.The same goes for condo's.

I've been around Pattaya / Jomtien for ages and believe me few properties are actually worth upwards of 10 mil.This money a few years back was unheard of,now every tom dick and harry think there property is worth it.I remember being offered a place on View Talay Villas in 98 (off plan) for 15 mil (possibly 17,I can't remember),the same place is currently on the market at 55 mil,and surprise surprise,not selling !!!

EPG.

I thought that escaping "realism" was the reason most of us came to Thailand in the first place

[Ungabunga]

The best way to get the market back on track is to instill a bit of realism.Everyone seems to be overpricing their property.If realism was used then things would shift.A good indication of a correct evaluation would be to half the current asking price.Therefore houses being touted on the market and not selling at say 20 mil should be on the market for 10 and so on.The same goes for condo's.

EPG.

I agree mostly with this. Looking on the websites and Pattaya Trader mag etc. I reckon a large portion of properties here are overpriced. Those houses that are currently being sold are the ones with sensible people involved, or at least a sensible attitude to price and desire to sell. Take this how you will, but before you all rush to single out the real estate agents - take a look at yourselves first, because it is often the house owners who tell or 'instruct' the agents how much they want for the house in the first place. The mark of a half decent broker is the one that says to you "hang on a minute, your asking too much.... market value is 'x'". Unfortunately however, most would seem have no backbone, nor 'professional training' to be able to do this. Most will simply agree with the house seller and then nothing sells, which is a large part of the problem of which they are complicit.

My message to those trying to sell your house is: just because you fitted a new bath a year ago, don't expect to be able to sell your house for 2 million more than what you paid for it. Keep it real. Seek valuations from several agents and keep an open mind.

My message to any real estate agent is equally clear: "please learn about market value and if someone is asking way over the top price on a property, give them a reality check and/or refuse to put it on your books". After all, you only get paid if you sell right? How are you going to sell if the price is over the top?

Ok, I'll get back to the bar now.

[PattayaParent]

A. More low-rise, less high-rise

A low rise can be constructed for between Bt.17,500 and Bt25,000 per m2, depending on the quality and finishings. A high rise will set you back around between Bt.80,000 and Bt120,000 per m2, depending on quality and complexity (a 90 stories tower is exponentially more complex to build when compared to a "mere" 30 stories).

The probelm as expatgaz states is ovepricing.

You're in the right balllpark regarding construction costs but how many of these low rises are selling for less than 50,000 Baht a square metre?

This only reinforces my opinion that new condos are priced so that the developer recovers his costs (at least) by only selling the Farang 49% and rh units are really only 'worth' half the asking price.

[PattayaParent]

A good post from Ungabunga too.

I see many older properties for sale that are listed at twice the price of a similar place on a brand new development just down the road.

It seems that the owners feel they have a god given right to a 100% profit just 'cos they've owned the place for a a few years.

Needless to say hey remain ussold while the newer properties sell.

[zorro1]

I do not work for any developer or real estate agency. I simply have a private interest in investing in real estate in the Pattaya & Jomtien area.

I am posting my ideas and views because I enjoy discussing and testing them.

Testing your ideas as a potential buyer is not a smart move here as its biased towards Renters.

1. landlords

2. renters who have a successful portfolio and are able to achieve a return of 20% or more offshore. Many here claim 30-50% (me skeptical)

3. renters who have no money

[LennyW]

A. More low-rise, less high-rise

A low rise can be constructed for between Bt.17,500 and Bt25,000 per m2, depending on the quality and finishings. A high rise will set you back around between Bt.80,000 and Bt120,000 per m2, depending on quality and complexity (a 90 stories tower is exponentially more complex to build when compared to a "mere" 30 stories).

The probelm as expatgaz states is ovepricing.

You're in the right balllpark regarding construction costs but how many of these low rises are selling for less than 50,000 Baht a square metre?

This only reinforces my opinion that new condos are priced so that the developer recovers his costs (at least) by only selling the Farang 49% and rh units are really only 'worth' half the asking price.

As previous readers will know i am not a great fan of condos too much, and as for thinking less than 50,000 baht / sqm is any kind of value, ??????????????????, i have heard all the no brainers thinking that it is worth paying double money to have the property in their own name, ( ie: foreign quota condos) up to them, obviously have not thouroughly researched the alternatives! But as with anything here - up to you!! It must be really great to think you have a mega project condo unit in your own name only to find it is not actually going to be a reality - so 1000 bt / sqm or 100000 bt / sqm means the same eh?? Absolutely nothing!!!!!

[PattayaParent]

As previous readers will know i am not a great fan of condos too much, and as for thinking less than 50,000 baht / sqm is any kind of value, ??????????????????, i have heard all the no brainers thinking that it is worth paying double money to have the property in their own name, ( ie: foreign quota condos) up to them, obviously have not thouroughly researched the alternatives! But as with anything here - up to you!! It must be really great to think you have a mega project condo unit in your own name only to find it is not actually going to be a reality - so 1000 bt / sqm or 100000 bt / sqm means the same eh?? Absolutely nothing!!!!!

Then ESCROW is the way to go.

[sotsira]

The best way to get the market back on track is to instill a bit of realism.Everyone seems to be overpricing their property.If realism was used then things would shift.A good indication of a correct evaluation would be to half the current asking price.Therefore houses being touted on the market and not selling at say 20 mil should be on the market for 10 and so on.The same goes for condo's.

EPG.

I agree mostly with this. Looking on the websites and Pattaya Trader mag etc. I reckon a large portion of properties here are overpriced. Those houses that are currently being sold are the ones with sensible people involved, or at least a sensible attitude to price and desire to sell. Take this how you will, but before you all rush to single out the real estate agents - take a look at yourselves first, because it is often the house owners who tell or 'instruct' the agents how much they want for the house in the first place. The mark of a half decent broker is the one that says to you "hang on a minute, your asking too much.... market value is 'x'". Unfortunately however, most would seem have no backbone, nor 'professional training' to be able to do this. Most will simply agree with the house seller and then nothing sells, which is a large part of the problem of which they are complicit.

My message to those trying to sell your house is: just because you fitted a new bath a year ago, don't expect to be able to sell your house for 2 million more than what you paid for it. Keep it real. Seek valuations from several agents and keep an open mind.

My message to any real estate agent is equally clear: "please learn about market value and if someone is asking way over the top price on a property, give them a reality check and/or refuse to put it on your books". After all, you only get paid if you sell right? How are you going to sell if the price is over the top?

Ok, I'll get back to the bar now.

Couldn't agree more, estate agents in Pattaya and Jomtien have no idea in what the job involves, i made enquires to sell my property with over 10 different agents and they all just asked me how much i want to sell for with no advice or valuation of their own, i even asked them what i should sell for and none gave a straight answer and most didn't even come to inspect the property, they just took photos from my flash drive that i took for them!

Low and behold i've had more feedback from my own private advertising than any of the agents, and they have the cheek to ask for 5% commission! In Pattaya, i think anyone and everyone is or can be an estate agent, a complete farce.

[LennyW]

As previous readers will know i am not a great fan of condos too much, and as for thinking less than 50,000 baht / sqm is any kind of value, ??????????????????, i have heard all the no brainers thinking that it is worth paying double money to have the property in their own name, ( ie: foreign quota condos) up to them, obviously have not thouroughly researched the alternatives! But as with anything here - up to you!! It must be really great to think you have a mega project condo unit in your own name only to find it is not actually going to be a reality - so 1000 bt / sqm or 100000 bt / sqm means the same eh?? Absolutely nothing!!!!!

Then ESCROW is the way to go.

Absolutely, for those developers that actually adopt it!!

[billaaa777]

I think low-rise (up to 7 stories) will be king and high-rises will struggle.

WRONG, could not be more incorrect even if you tried. The low rise buildings are terrible investments that appreciate slowly if all. And you can forget about trying to sell one, it is not going to happen, unless you have 10 years or so. Buyers like VIEWS of the ocean.

I therefore think that condos (allowing 49% freehold onwership by farangs) will gain in relative importance.

That trend started two years ago, where you been.

The days of stacking cheap bare boxes on top of each other (example: VT) are counted and the market will move towards more aspirational, life-style projects (examples: the Cove or Sunset Residence).

Dude don’t you think when you post something here you ought to have a least a little clue what your talking about. The VT projects are great money makers with exceptional ROI. And as for them not selling VT5D sold approximately 64 units last month to go from 40% to 49% foreign ownership and have SOLD OUT. Once again, when it comes to the real estate market you can be guaranteed that 95% of the people that post have NO idea what they are talking about.

Couldn't agree more, estate agents in Pattaya and Jomtien have no idea in what the job involves, i made enquires to sell my property with over 10 different agents and they all just asked me how much i want to sell for with no advice or valuation of their own, i even asked them what i should sell for and none gave a straight answer and most didn't even come to inspect the property, they just took photos from my flash drive that i took for them!

I will answer one of these them I am done here.

Don’t you know why none of them wanted to do business with you? I do. If you had a property they think they could sell, you think they would have just walked away? You are just one more person walking into their office with no idea what their property is really worth.

Marking your price way up, when there are another 20 properties just the same as yours priced way less. Why, would they spend time messing with you? They have MUCH better deals to offer their customers. Don’t you realize agents have to spend time and money marketing your property? And if they have so MANY better deals than yours, then why would they?

Just one more at this site that does not have a clue that is going to blame an agent because they can’t sell their property. Everything can be sold, but at what price. Just reading your post is SO sad and the fact that I am the only one that responded, might even be worse.

Your post just SCREAMS OUT, “I do not have a clue what I am talking about.”

[LtCol]

So , from reading this thread as a house buyer the trend in Pattaya is the same as the majority of other Countries.

The main difference that concerns us is that there is a continued reference to the Thai Company ownership of a house being doubtful , but there is a plethora of Farang couples with houses that have been there for years.

In reality ,would ANY government close down this 'loophole' & risk losing the income generated by hundreds if not thousands of Farang Home 'owners' living in LOS????

[fidelio]

I think low-rise (up to 7 stories) will be king and high-rises will struggle.

WRONG, could not be more incorrect even if you tried. The low rise buildings are terrible investments that appreciate slowly if all. And you can forget about trying to sell one, it is not going to happen, unless you have 10 years or so. Buyers like VIEWS of the ocean.

I therefore think that condos (allowing 49% freehold onwership by farangs) will gain in relative importance.

That trend started two years ago, where you been.

The days of stacking cheap bare boxes on top of each other (example: VT) are counted and the market will move towards more aspirational, life-style projects (examples: the Cove or Sunset Residence).

Dude don't you think when you post something here you ought to have a least a little clue what your talking about. The VT projects are great money makers with exceptional ROI. And as for them not selling VT5D sold approximately 64 units last month to go from 40% to 49% foreign ownership and have SOLD OUT. Once again, when it comes to the real estate market you can be guaranteed that 95% of the people that post have NO idea what they are talking about.

Couldn't agree more, estate agents in Pattaya and Jomtien have no idea in what the job involves, i made enquires to sell my property with over 10 different agents and they all just asked me how much i want to sell for with no advice or valuation of their own, i even asked them what i should sell for and none gave a straight answer and most didn't even come to inspect the property, they just took photos from my flash drive that i took for them!

I will answer one of these them I am done here.

Don't you know why none of them wanted to do business with you? I do. If you had a property they think they could sell, you think they would have just walked away? You are just one more person walking into their office with no idea what their property is really worth.

Marking your price way up, when there are another 20 properties just the same as yours priced way less. Why, would they spend time messing with you? They have MUCH better deals to offer their customers. Don't you realize agents have to spend time and money marketing your property? And if they have so MANY better deals than yours, then why would they?

Just one more at this site that does not have a clue that is going to blame an agent because they can't sell their property. Everything can be sold, but at what price. Just reading your post is SO sad and the fact that I am the only one that responded, might even be worse.

Your post just SCREAMS OUT, "I do not have a clue what I am talking about."

Well your post screams out : " I am the king of real estate bullshitter ".

[Guderian]

So , from reading this thread as a house buyer the trend in Pattaya is the same as the majority of other Countries.

The main difference that concerns us is that there is a continued reference to the Thai Company ownership of a house being doubtful , but there is a plethora of Farang couples with houses that have been there for years.

In reality ,would ANY government close down this 'loophole' & risk losing the income generated by hundreds if not thousands of Farang Home 'owners' living in LOS????

I'm a renter (of the penniless variety ), so I don't always remember all the details about house ownership and so on. Back in 2006, I'm sure the government announced that it was going to start investigating the shareholder structure of every single company in Thailand, starting with the smallest ones, specifically aimed at finding companies illegally owning property on behalf of a farang. They declared a 2 year moratorium on that as I recall, to allow said companies to restructure themselves and so avoid falling foul of the law. I think the idea was to check every Thai shareholder and their background, and when it was obvious that they could not possibly have paid for the shares themselves (maids, motorbike taxi drivers, etc.), they would take appropriate action against the shareholders and/or companies involved.

That two year moratorium must just about be up by now. Does anybody know if they are going to start investigating individual companies? Or has it all blown away in the post-Toxin fallout?

[LennyW]

So , from reading this thread as a house buyer the trend in Pattaya is the same as the majority of other Countries.

The main difference that concerns us is that there is a continued reference to the Thai Company ownership of a house being doubtful , but there is a plethora of Farang couples with houses that have been there for years.

In reality ,would ANY government close down this 'loophole' & risk losing the income generated by hundreds if not thousands of Farang Home 'owners' living in LOS????

Try hundreds of thousands John!! Remember, half the posters on this forum have only ever been here for a "two week millionaires holiday" and have absolutely no relative input to anything posted here, WE KNOW WHO YOU ARE!!!!!

[LtCol]

Try hundreds of thousands John!! Remember, half the posters on this forum have only ever been here for a "two week millionaires holiday" and have absolutely no relative input to anything posted here, WE KNOW WHO YOU ARE!!!!!

Thanks Lenny, the emotive ups & downs over this for us is phenomenal, I think by the time we get there in a few weeks we'll be glad of the face to face interaction with resident ex-pats instead of trying to work out on this forum who's there & who's not

John

[Johan78]

As a buyer; Are there actually good deals to be had or are the sellers just sticking to their higher prices waiting/hoping for better times?

As a seller; Would I be able to sell my house if I significantly lowered the price or are people just not buying with all the (perceived?!?) uncertainty right now?

// Johan

[Kaojai]

I recall some mega condo being planned a couple of years ago, to be built in Jomtien

The 91-storey Ocean 1 condominium, 327 metres in height, is being spearheaded by Siam Best Enterprises Co. It will occupy a site of 12 rai in Jomtien, south of Pattaya, with 611 units, priced anywhere between five million and 150 million baht each, or 100,000 baht per square metre.

Bruno ######, Siam Best's managing director, said it would be a new city icon, adding that its height had already attracted bookings of 12% from buyers from Europe, Australia and the United States.

The company invested 280 million baht in acquiring the land for Ocean I with the construction financed by TMB Bank. It will be launched officially in October.

I seldom visit the area of Jomtien where I believe this was to be built. Haven't heard anything about it recently. Is it still on? I haven't noticed any extraordinary structure casting a shadow across the landscape.

Even when it was proposed, in the midst of what seemed to be condos popping up everywhere, it seemed ovely ambitious. In the current market I would think it would be a financial disaster.

[kedawi]

When I look a the QUALITY of property available I find it hard to regard it as value for money.......it's CHEAP ... yes....but the quality is SOOO low....most of it (houses) look as if they'll last for 25 years at most. Concrete construction is abysmal. THe condos are verging on "jerry-build" too...if collapses occur during construction, what on earth is going to happen after a decade or two of wear and tear?

My last house in UK was 100 years old when I bought it and my house in Australia was 90 years old....and THAT one is made of wood....but both have a great life expectancy and even preservation assistance from local govt....can't see myself getting a deal like that in Thailand.

the more I look at real estate here the less I'm impressed

Edited September 28, 2008 by kedawi

[plasticpig]

name='billaaa777' date='2008-09-28 08:39:33' post='2241739']

Your post just SCREAMS OUT, "I do not have a clue what I am talking about."

[RobertPattaya]

I’m a Real Estate Broker from America living in Pattaya for the past three years. Additionally I ran a Mortgage Brokerage Business. Coming from south Florida I witnessed the implosion of that market and I see many parallel’s here. Regarding valuation I have looked at a number of properties here in Pattaya and Jomtien and have yet to see a property that makes economic since. This is exactly what happened in Florida three years before the market crashed. The difference was all the financing options in America distorted the values even more than they are here but the fundamental valuation methods still apply.

Being an investor I use economic value to determine the price I will pay for a piece of real estate, because I’m interested in yield, what is its production value. Of course there are other methods to value real estate and things that affect the value of a particular piece of real estate but I like economic value as my preferred tool to analyze value.

As an example I looked at a very nice condo on the 17th floor of View Talay 2 recently, one bedroom about 85 2m. In tip top condition, top of the line everything, asking price 3.8 million baht. The Seller rents the property for $25,000 baht a month he says but it is currently vacant. My feeling is that he would not find a consistent income stream at that figure and 20,000 a more would be more realistic.

Using the Sellers figure $25,000 baht a month for 12 months the property produces a GOI (gross operating income) of 300,000 baht a year. If we use 20% expense ratio (which is modest in America I wouldn’t be interested in anything that would not cover 40%) we have a NOI (net operating income) of 240,000 baht.

Currently I can yield 4% on a completely safe liquid investment. If I’m going to remove 3,800,000 baht from this safety and liquidity and risk that money in an illiquid investment I want to make at least 10%. I’m already making 4% on my money so the production from that condo has to yield me at least 14%. Divide 240,000 by 14% I would have to buy that condo for 1,714,285 baht and that’s based on a floated rental figure that I probably cannot get. This is exactly the situation that occurred in the Florida real estate market before it collapsed.

I talk with many investors here that own a lot of real estate and there happy with their investments but most bought 3-5 years ago when numbers made more since. I have seen nothing that makes economic since for me here at current prices. I will say that I’m not working here and really have only been a passive shopper of real estate and that surely these deals can be found by someone that is aggressively prospecting the market. In Florida when the Market topped it took about 2 additional years for Sellers to realize that they had to reduce prices in order to sell their property.

R….

[nouvo135]

I recall some mega condo being planned a couple of years ago, to be built in Jomtien

The 91-storey Ocean 1 condominium, 327 metres in height, is being spearheaded by Siam Best Enterprises Co. It will occupy a site of 12 rai in Jomtien, south of Pattaya, with 611 units, priced anywhere between five million and 150 million baht each, or 100,000 baht per square metre.

Bruno ######, Siam Best's managing director, said it would be a new city icon, adding that its height had already attracted bookings of 12% from buyers from Europe, Australia and the United States.

The company invested 280 million baht in acquiring the land for Ocean I with the construction financed by TMB Bank. It will be launched officially in October.

I seldom visit the area of Jomtien where I believe this was to be built. Haven't heard anything about it recently. Is it still on? I haven't noticed any extraordinary structure casting a shadow across the landscape.

Even when it was proposed, in the midst of what seemed to be condos popping up everywhere, it seemed ovely ambitious. In the current market I would think it would be a financial disaster.

No Building yet but if you need concrete there is a great mixing plant there, supplying local projects around Jomtien area.

You can even watch them live on webcam

http://ocean1cam-2.viewnetcam.com:81/Image...mp;Sound=Enable

Great idea hey!!!!. when they do start buidling you will be able to watch it live.

[fidelio]

I'm a Real Estate Broker from America living in Pattaya for the past three years. Additionally I ran a Mortgage Brokerage Business. Coming from south Florida I witnessed the implosion of that market and I see many parallel's here. Regarding valuation I have looked at a number of properties here in Pattaya and Jomtien and have yet to see a property that makes economic since. This is exactly what happened in Florida three years before the market crashed. The difference was all the financing options in America distorted the values even more than they are here but the fundamental valuation methods still apply.

Being an investor I use economic value to determine the price I will pay for a piece of real estate, because I'm interested in yield, what is its production value. Of course there are other methods to value real estate and things that affect the value of a particular piece of real estate but I like economic value as my preferred tool to analyze value.

As an example I looked at a very nice condo on the 17th floor of View Talay 2 recently, one bedroom about 85 2m. In tip top condition, top of the line everything, asking price 3.8 million baht. The Seller rents the property for $25,000 baht a month he says but it is currently vacant. My feeling is that he would not find a consistent income stream at that figure and 20,000 a more would be more realistic.

Using the Sellers figure $25,000 baht a month for 12 months the property produces a GOI (gross operating income) of 300,000 baht a year. If we use 20% expense ratio (which is modest in America I wouldn't be interested in anything that would not cover 40%) we have a NOI (net operating income) of 240,000 baht.

Currently I can yield 4% on a completely safe liquid investment. If I'm going to remove 3,800,000 baht from this safety and liquidity and risk that money in an illiquid investment I want to make at least 10%. I'm already making 4% on my money so the production from that condo has to yield me at least 14%. Divide 240,000 by 14% I would have to buy that condo for 1,714,285 baht and that's based on a floated rental figure that I probably cannot get. This is exactly the situation that occurred in the Florida real estate market before it collapsed.

I talk with many investors here that own a lot of real estate and there happy with their investments but most bought 3-5 years ago when numbers made more since. I have seen nothing that makes economic since for me here at current prices. I will say that I'm not working here and really have only been a passive shopper of real estate and that surely these deals can be found by someone that is aggressively prospecting the market. In Florida when the Market topped it took about 2 additional years for Sellers to realize that they had to reduce prices in order to sell their property.

R….

An interesting and educated post.

The conclusion being that properties in Pattaya are more than 50% overpriced....