Cracks In Real Estate Market Starting To Show?

[wpcoe]

A friend is contemplating buying a retirement condo, and since I live in Jomtien he asked me for information about units and the market down here.

Based on a cursory scan of ads in the local papers (Pattaya Mail and Pattaya Today), I notice "innovative" advertising that I had not seen previously in this market. Some random examples from classified ads and a full-page ad, all from established real estate firms:

"The price is only 2.7m Baht with a payment of 40% to move in and the balance spread over a 2 to 5 year period."

"Owner finance is available at 50% deposit and the balance over an agreed period."

"The owner will accept financing of 4 quarterly payments over 1 year after a deposit of 50% has been paid."

"Selling Price 13.95 Million Baht. Reduced from 20.15 M"

"Selling Price 2 Million Baht. Reduced from 3 M"

"Selling Price 7 Million Baht! Reduced from 9.5 M"

When I used to follow the market closely a few years ago, these types of ads were unseen. Is there a similar trend of owner-financing and/or price reductions in the Bangkok condo market, as well?

(For the mathematically challenged, the price reductions in those three properties are a drop of: 30.7%, 33.3% and 26.3% -- rather healthy "discounts"!)

[quiksilva]

Pattaya has been amongst the worst hit of all markets with almost total reliance on a Western buyers, who have all but evaporated. Discounts in the region of 30% are in line with the sort of levels that Singapore saw since September last year, a market which has already begun to see sales return (our firm launched a large project in SG recently and sold out in a week! Not bad considerring the months prior there were almost no sales at all).

To answer your question, I have heard of some owners in Bangkok letting units go at the levels they bought in at, even if that means at prices that are lower than what the resales were trading in its frothy period, but I have not seen much in the way of discounts above and beyond that. I can use the Met as example where I have heard of units selling at 90-100k per sqm recently against a backdrop of prices of 140k being reached last year.

I am not really close enough to the resales market to comment on the prevalence of owner financing in Bangkok.

Edited July 3, 2009 by quiksilva

[trogers]

Not surprised Pattaya is the first to be hit. Units cannot be resold or rented out easily. Next will be villas in Samui and then Phuket.

[Benjie]

Mostly its just a case of sales technique with a made up initial price and then offering a big 'reduction' when the place is only really worth the reduced price anyhow.

[LennyW]

The first part of your post shows that in these times people have to be flexible in their payment terms which is understandable. They may have to be even more flexible yet, ie: longer payment terms, before it gets any better.

The second part of your post - price reduced - is more likely just "creative" marketing and is certainly nothing new.

[khundon]

A friend is contemplating buying a retirement condo, and since I live in Jomtien he asked me for information about units and the market down here.

Based on a cursory scan of ads in the local papers (Pattaya Mail and Pattaya Today), I notice "innovative" advertising that I had not seen previously in this market. Some random examples from classified ads and a full-page ad, all from established real estate firms:

"The price is only 2.7m Baht with a payment of 40% to move in and the balance spread over a 2 to 5 year period."

"Owner finance is available at 50% deposit and the balance over an agreed period."

"The owner will accept financing of 4 quarterly payments over 1 year after a deposit of 50% has been paid."

"Selling Price 13.95 Million Baht. Reduced from 20.15 M"

"Selling Price 2 Million Baht. Reduced from 3 M"

"Selling Price 7 Million Baht! Reduced from 9.5 M"

When I used to follow the market closely a few years ago, these types of ads were unseen. Is there a similar trend of owner-financing and/or price reductions in the Bangkok condo market, as well?

(For the mathematically challenged, the price reductions in those three properties are a drop of: 30.7%, 33.3% and 26.3% -- rather healthy "discounts"!)

I suspect that the original selling prices were inflated, so any discount is not realistic. Have you ever met anyone who puts a realistic sale value on their pride and joy.

The reduced prices are still way over priced IMHO.

[olsen]

Well...these huge dicounts just show how over-priced the market is at the main tourist destinations!!

[Topprofile]

I suspect that the original selling prices were inflated, so any discount is not realistic. Have you ever met anyone who puts a realistic sale value on their pride and joy.

The reduced prices are still way over priced IMHO.

How would you know... you don't even know what the property was..

[sanmiguellight]

I suspect that the original selling prices were inflated, so any discount is not realistic. Have you ever met anyone who puts a realistic sale value on their pride and joy.

The reduced prices are still way over priced IMHO.

How would you know... you don't even know what the property was..

Because there has been a global property boom in the last 10 years, and property everywhere that Westerners have been buying is way overvalued .... especially in tourist resorts!

[thaimate]

in Pattaya ,check the advertised price take off between 30/50% and make an offer based on the lower price ,you wont go far wrong .cynical ,no ,just realistic

[Rimmer]

There is a very good editorial article in the new edition of ‘Real Estate Magazine’ issue 98 July. It is on page 28 and 29 and is well worth reading if you are thinking about investing in the real estate market in Pattaya.

The article is written by Clayton Wade who is the MD of Premier Homes in Jomtien. He writes an editorial for the magazine every month.

Briefly he is saying that nothing in Pattaya real estate industry has changed and things have got worse over the last few years.

He mentions brochures procuring millions of baht in sales only to have that money disappear into the sunset.

He mentions real estate agencies that are well know for duping foreigners out of large amounts of money.

He mentions the local real estate brokers association and authorities are doing nothing to address the situation.

He thinks the situation will get worse before it gets better.

He mentions that he wrote several years ago that we did not want global reports of foreigners being ripped off from investments made in Pattaya wishing to purchase properties.

He also wrote a number of years back that we did not want a skyline littered with half finished condo blocks. And now we have both.

He goes on to say that it is too dangerous to speak out in this town as the rewards of doing so are nil.

He further feels that it is because of lawlessness and lack of regulation that the industry is in the position it is in now, he states that if you look at the amount of unfinished buildings and the amount of money that has been swindled from foreigners buying into the real estate sector you have to agree.

A very good editorial well worth reading.

[redman]

There is a very good editorial article in the new edition of 'Real Estate Magazine' issue 98 July. It is on page 28 and 29 and is well worth reading if you are thinking about investing in the real estate market in Pattaya.

The article is written by Clayton Wade who is the MD of Premier Homes in Jomtien. He writes an editorial for the magazine every month.

Briefly he is saying that nothing in Pattaya real estate industry has changed and things have got worse over the last few years.

He mentions brochures procuring millions of baht in sales only to have that money disappear into the sunset.

He mentions real estate agencies that are well know for duping foreigners out of large amounts of money.

He mentions the local real estate brokers association and authorities are doing nothing to address the situation.

He thinks the situation will get worse before it gets better.

He mentions that he wrote several years ago that we did not want global reports of foreigners being ripped off from investments made in Pattaya wishing to purchase properties.

He also wrote a number of years back that we did not want a skyline littered with half finished condo blocks. And now we have both.

He goes on to say that it is too dangerous to speak out in this town as the rewards of doing so are nil.

He further feels that it is because of lawlessness and lack of regulation that the industry is in the position it is in now, he states that if you look at the amount of unfinished buildings and the amount of money that has been swindled from foreigners buying into the real estate sector you have to agree.

A very good editorial well worth reading.

It is certainly worth reading and highlights the fact that Real Estate crooks are part of the scene and have been tolerated for some time back. The fact that there is no regulation after all this time is probably down to the fact that most people who are ripped off are foreigners, because Thais would probably have a lot more success in the courts.

[moo9]

There is a very good editorial article in the new edition of ‘Real Estate Magazine’ issue 98 July. It is on page 28 and 29 and is well worth reading if you are thinking about investing in the real estate market in Pattaya.

The article is written by Clayton Wade who is the MD of Premier Homes in Jomtien. He writes an editorial for the magazine every month.

Briefly he is saying that nothing in Pattaya real estate industry has changed and things have got worse over the last few years.

He mentions brochures procuring millions of baht in sales only to have that money disappear into the sunset.

He mentions real estate agencies that are well know for duping foreigners out of large amounts of money.

He mentions the local real estate brokers association and authorities are doing nothing to address the situation.

He thinks the situation will get worse before it gets better.

He mentions that he wrote several years ago that we did not want global reports of foreigners being ripped off from investments made in Pattaya wishing to purchase properties.

He also wrote a number of years back that we did not want a skyline littered with half finished condo blocks. And now we have both.

He goes on to say that it is too dangerous to speak out in this town as the rewards of doing so are nil.

He further feels that it is because of lawlessness and lack of regulation that the industry is in the position it is in now, he states that if you look at the amount of unfinished buildings and the amount of money that has been swindled from foreigners buying into the real estate sector you have to agree.

A very good editorial well worth reading.

well editorials....

Edited July 9, 2009 by moo9

[manarak]

Well...these huge dicounts just show how over-priced the market is at the main tourist destinations!!

there are only 3 things that count: location, location, and umm.... location!

I have been observing the Pattaya market for over a year now, and prices are definitely falling, and there are also more properties for sale (I mean, not projects, actual properties for sale by their current private owner).

[rayong09]

Well...these huge dicounts just show how over-priced the market is at the main tourist destinations!!

there are only 3 things that count: location, location, and umm.... location!

I have been observing the Pattaya market for over a year now, and prices are definitely falling, and there are also more properties for sale (I mean, not projects, actual properties for sale by their current private owner).

Thank you for that detailed 12 month observation, I sense a new Alan Sugar in the making.