Pattaya Real Estate Returns

[PattayaOneTeam]

Real Estate Investment Returns

A question I am sometimes asked by prospective real estate investors is “What kind of a return should I be looking for?” As with many questions, there is no simple answer. In fact, any proper response is conditional upon numerous factors, such as how much you are investing, how much risk you wish to take and whether you are looking for capital appreciation or income?

Important considerations include the fact that there are some good deals on offer due to the current slow market, which offer significant potential for capital growth over the relatively short term, but also the fact that the same economic and political factors that have hit the sales market have brought downward pressure to bear on rents. Thus, during the last couple of years rent for an average rental property has decreased by perhaps 20 to 25%, which has obviously hit the income returns of many landlords. However, it is also fair to say that at the same time interest rates have dropped dramatically so that money sitting in the bank has earned virtually nothing. Thus, even a 5% income return on money invested in real estate is much better than the 1-2% you will receive from a bank.

Looking at the question from the perspective of a small scale investor, someone who is looking to buy one or two investment properties, right now a good investment would ideally have solid potential to earn both an income and provide capital appreciation in the foreseeable future. So far as income is concerned, a net annual return of anything in the range of 6 to 8% represents good business. Sometimes, it is possible to be in the right place at the right time and pick up a good investment property at a fire-sale price from a seller who needs money very quickly. In those circumstances, the low purchase price can mean that the percentage income return from renting the place can be higher, typically in the range of 8-14% per annum, but normally an investor would need a little bit of good fortune to find such a place.

The reason is simple, namely basic economics. There is no shortage of real estate investors in Pattaya and so the demand for properties priced such that renting them at a market rent would provide a net annual income of 8-14% is very high. Of course, they need to be properties for which there is a strong enough demand to ensure that renting the place would be relatively straightforward. To this end, location is important, as is the nature of the property and other considerations that I don't have the space to detail here.

As for capital appreciation, the situation is a little more complex because, although people tend to talk in terms of annual growth, real estate prices typically rise and fall quite suddenly. Thus, it is probably easier to work on average annual growth over a number of years. Personally, I believe that upon the local market recovering, prices will quickly revert to where they were around three years ago. Accordingly, if you can buy a place at, say, 30% less than that, as and when the market recovers that should represent your capital growth. If that happens in two years time, that is 15% per annum over two years, or in other words a very solid return.

While any such analysis and attempt to put figures in place involves lots of ifs, buts and maybes, in general if you buy at the right price, right now you ensure you have good potential for solid capital growth. If, at the same time, you are earning a decent income of significantly more than your money would earn in a bank or in an alternative and similarly safe investment, to my mind you have made a good buy.

If you have any questions or queries in relation to the above, or if you would like to discuss any other matters related to the local real estate market, please call me on 087 137 0392 or email me at [email protected].

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-- Pattaya One 2010-11-06

[Bizz]

O.k ill bite nil, sorry yes nil.

[jori]

Pattaya property returns...yeah correct I think not. The whole lot is in a downward spiral,rents,values etc. Just running around in ever tighter circles justifying nothing. Loss loss loss that is all,keep it up,a complete nut case may open an eye to your twaddle,but it will have to be a 100% off his head type

[LennyW]

Pattaya property returns...yeah correct I think not. The whole lot is in a downward spiral,rents,values etc. Just running around in ever tighter circles justifying nothing. Loss loss loss that is all,keep it up,a complete nut case may open an eye to your twaddle,but it will have to be a 100% off his head type

At least you are consistent jori -

You would do well to learn from people of experience like the article writer, rather than continiue to post the same old nonsense that you do every time a property related thread appears.

Edited November 6, 2010 by Rimmer
flame

[jori]

Pattaya property returns...yeah correct I think not. The whole lot is in a downward spiral,rents,values etc. Just running around in ever tighter circles justifying nothing. Loss loss loss that is all,keep it up,a complete nut case may open an eye to your twaddle,but it will have to be a 100% off his head type

At least you are consistent jori -

You would do well to learn from people of experience like the article writer, rather than continiue to post the same old nonsense that you do every time a property related thread appears.

But I have been consistantly correct,constantly year in, year out, have you? doubt it. The problem with trying to defend your corner ie your property, may hold some form of something worthy to YOU only,when all around you are constantly crumbling values,and there is nothing, absolutely nothing to check the downturn,come this time next year your house undoubtly will be another 20% less at the very least as of now,and downward it will continue for years .I believe most of the housing here is now unsellable ,unless it comes within the scope of Thai buyers 1.2 to 1.5.

All I have to do is sit and wait it out to be proved right and I will be proved right . Told you last time I predicted a major event people like you I did contact after the event,they were quite rude in their answers LOL.

If I listened to every article writer spewing the nonsense this character is doing trying to talk a non-existing market up (more like trying to breath life into a long dead market) I would well deserve to be in a nut house,now I know I am right,so that must make you wrong. Just sit it out,do not think of your property in money terms,you have need to enjoy it, do not get so upset at my comments it puts your blood pressure up

[LennyW]

Pattaya property returns...yeah correct I think not. The whole lot is in a downward spiral,rents,values etc. Just running around in ever tighter circles justifying nothing. Loss loss loss that is all,keep it up,a complete nut case may open an eye to your twaddle,but it will have to be a 100% off his head type

At least you are consistent jori -

You would do well to learn from people of experience like the article writer, rather than continiue to post the same old nonsense that you do every time a property related thread appears.

But I have been consistantly correct,constantly year in, year out, have you? doubt it. The problem with trying to defend your corner ie your property, may hold some form of something worthy to YOU only,when all around you are constantly crumbling values,and there is nothing, absolutely nothing to check the downturn,come this time next year your house undoubtly will be another 20% less at the very least as of now,and downward it will continue for years .I believe most of the housing here is now unsellable ,unless it comes within the scope of Thai buyers 1.2 to 1.5.

All I have to do is sit and wait it out to be proved right and I will be proved right . Told you last time I predicted a major event people like you I did contact after the event,they were quite rude in their answers LOL.

If I listened to every article writer spewing the nonsense this character is doing trying to talk a non-existing market up (more like trying to breath life into a long dead market) I would well deserve to be in a nut house,now I know I am right,so that must make you wrong. Just sit it out,do not think of your property in money terms,you have need to enjoy it, do not get so upset at my comments it puts your blood pressure up

No fear of that, quite the reverse actually - your way off the mark ramblings give me quite a giggle.

[jori]

Giggling? I'm laughing.

[Thailaw]

You would do well to learn from people of experience like the article writer, rather than continiue to post the same old nonsense that you do every time a property related thread appears.

Where is the "experience" of the writer? You certainly can't tell he has any from the article, which is a string of inuendo and vague speculation, and nothing more. It is simply an advertisement in the disguise of an article on Pattaya property. There isn't a specific example of what he has done that has or would derive the returns he suggests can be earned. It's very simple, if someone writes some bull that you agree with (i.e., that the Pattaya housing market is the best investment since the beginning of time), the writer is insightful, intelligent, experienced and should be listended to and his advice followed without criticism. If someone says that the Pattaya housing market is not a good minvestment and is laden with land mines for the average buyer/investor, that person is stupid, spews nonsense and should be ignored without question. Your approach is foolish and totally biased, and much worse that what you critize others for doing -- much, much worse.

Edited November 6, 2010 by Thailaw

[sharecropper]

. Told you last time I predicted a major event people like you I did contact after the event,they were quite rude in their answers LOL.

Jori, care to elaborate on what that "major event" was, for the rest of us?

Thanks.

[LennyW]

It's very simple, if someone writes some bull that you agree with (i.e., that the Pattaya housing market is the best investment since the beginning of time), the writer is insightful, intelligent, experienced and should be listended to and his advice followed without criticism. If someone says that the Pattaya housing market is not a good minvestment and is laden with land mines for the average buyer/investor, that person is stupid, spews nonsense and should be ignored without question. Your approach is foolish and totally biased, and much worse that what you critize others for doing -- much, much worse.

And if you dont agreee, dont understand or simply dont believe what someone posts.........................

[Thailaw]

It's very simple, if someone writes some bull that you agree with (i.e., that the Pattaya housing market is the best investment since the beginning of time), the writer is insightful, intelligent, experienced and should be listended to and his advice followed without criticism. If someone says that the Pattaya housing market is not a good investment and is laden with land mines for the average buyer/investor, that person is stupid, spews nonsense and should be ignored without question. Your approach is foolish and totally biased, and much worse than what you critize others for doing -- much, much worse.

And if you dont agreee, dont understand or simply dont believe what someone posts.........................

I think you've hit the nail on the head -- you simply don't understand.

[jori]

I stand by every word ,quote and statement I make and more.A fool and his money are so very easily parted and there were enough fools here to be taken in by garbage being printed above, not many properties selling now, appears to be not only in decline but flat on its back,no not seems, is flat on its back I should say ,so the market dies,finished,no support from any quarter be it Chinese ,Indians other Thais, Australians, Americans (broke) Europeans (broke). If you could kindly guide me where the next batch of investors flocking to buy property in Thailand are coming from I'll gladly agree ,but I see no one ,there is no one ,nothing Reported in other forums three quarters of the market is currently for sale more being added too, virtually whole estates up for sale,a rush for the exit door I would suggest is under way ,political events awaiting to develop,visa issues forever being adjusted ,Thai content in some condos already being called into account,the tourist market deader than dead, every pub/ restaurant whatever lacking any customers/up for sale all the ingredients for not a joyous and happy time for investment I would say and most others would,time to get out seems to be the order of the day.Thailand is entering a cycle that has devasted Spain ,Cyprus USA,last in first out does not come to mind, but far deeper does,and it is going to be one hel_l of a depression

Still do not let me spoil your enjoyment ,pretend all I have quoted does not appear on your radar or let it interfere with your life.I am sure their is enough sand in your patch to bury your head in.The saying he who laughs last ,laughs etc etc etc springs to mind.

I assure you they will happen,obviously already a houseowner you appear a little concerned as though you alone can stop any developments as described above taking hold,they will.

[jori]

. Told you last time I predicted a major event people like you I did contact after the event,they were quite rude in their answers LOL.

Jori, care to elaborate on what that "major event" was, for the rest of us?

Thanks.

Got censored,not repeating it

[tgladwin]

You would do well to learn from people of experience like the article writer, rather than continiue to post the same old nonsense that you do every time a property related thread appears.

Where is the "experience" of the writer? You certainly can't tell he has any from the article, which is a string of inuendo and vague speculation, and nothing more. It is simply an advertisement in the disguise of an article on Pattaya property. There isn't a specific example of what he has done that has or would derive the returns he suggests can be earned. It's very simple, if someone writes some bull that you agree with (i.e., that the Pattaya housing market is the best investment since the beginning of time), the writer is insightful, intelligent, experienced and should be listended to and his advice followed without criticism. If someone says that the Pattaya housing market is not a good minvestment and is laden with land mines for the average buyer/investor, that person is stupid, spews nonsense and should be ignored without question. Your approach is foolish and totally biased, and much worse that what you critize others for doing -- much, much worse.

It is my article and I have an awful lot of experience that I would happily detail to you if you would like to come into my office. For the article I have a very limited word count which doesn't allow me to go into more detail. However, I would be delighted to give you as many examples as you would like of successful property investors/landlords in the Pattaya market. Those who know what they are doing, or who take good advice have made a lot of money in the local real estate market over the years. Whether you like it or not, it is absolutely true. Is the market currently as good as it was? Of course not, which is a fact I state in my article. Are there others who have not done the necessary research, nor taken good advice who have lost money? No doubt whatsoever. However, the same is true of most property markets around the World. Nevertheless, if you exercise care and undertake the right level of due diligence there remain plenty of good investments out there.

This is my job, my area of expertise in which I have worked for numerous years. I would be very interested to hear what experience you have that justifies you making the claims that you do. I rather suspect that you have very little. Are you a real estate investor in Pattaya? Have you worked in real estate in Pattaya? If so, for how long? If you answer these questions anyone reading it will have a far better idea of how qualified and experienced you are to make the sweeping, negative and ill informed comments that you do. I deal with people on a daily basis who have and do invest in Pattaya real estate. They tell me exactly how their investments are doing, so I have very good quality first hand experience of how property investors here do. Where exactly do you get your "knowledge" from? Let me guess, its what you've heard sitting in a bar.

[jori]

As you quote you have reams of experience and all you do with your wealth of it is flip flop through paragraphs of waffle, utter tripe. Research you say,just how do you research,flip a coin up? No need to be a rocket scientist to have knowledge that this market is as dead as the Dodo,and no 7th cavalry to revive it.

The only reason there is no price crash here is most people in Thailand owning property this is their only home,sold up wherever they came from and bought here, no more money invested anywhere,they need to maximise whatever they can to move forward,never in a million years will that be achieved here now,they are prisoners in their own homes,needless to say fire sales will eventually become a norm when anxiety/depression take a hold.

There are plenty of reasons to leave this market alone,chiefly the comments of the heir to be a few years ago regarding foreigners living in the Kingdom,probably brought about by the IMF conditions laid down at the time of bail out. I could name other reasons,but it is pointless,your out to make a profit from someone elses potential pain, and yes I bet you could guide a willing punter or two to a few "sound" investments,probably your own and getting the hel_l out of it.

Edited November 7, 2010 by jori

[tgladwin]

As you quote you have reams of experience and all you do with your wealth of it is flip flop through paragraphs of waffle, utter tripe. Research you say,just how do you research,flip a coin up? No need to be a rocket scientist to have knowledge that this market is as dead as the Dodo,and no 7th cavalry to revive it.

The only reason there is no price crash here is most people in Thailand owning property this is their only home,sold up wherever they came from and bought here, no more money invested anywhere,they need to maximise whatever they can to move forward,never in a million years will that be achieved here now,they are prisoners in their own homes,needless to say fire sales will eventually become a norm when anxiety/depression take a hold.

There are plenty of reasons to leave this market alone,chiefly the comments of the heir to be a few years ago regarding foreigners living in the Kingdom,probably brought about by the IMF conditions laid down at the time of bail out. I could name other reasons,but it is pointless,your out to make a profit from someone elses potential pain, and yes I bet you could guide a willing punter or two to a few "sound" investments,probably your own and getting the hel_l out of it.

Are you trying to be ironic, cos you are doing a good job of it. I explained exactly where my knowledge and experience comes from, yet what you say is utter waffle, without any substantiation, justification or explanation.

Having read back over a few real estate topics, it seems that almost all the positive comments are from those who say they have bought property here, while the negative stuff comes from those who appear not to have done so. I think that says it all really.

[moo9]

Lol, what a funny article.

Business rents are going up or staying stable, but soon without tenants as those are forced to pass on the costs to their clients. This mixed with the high valued Baht turns Thailand / Pattaya quite offsite.

Greedy until it's too late!

[TJo]

You would do well to learn from people of experience like the article writer, rather than continiue to post the same old nonsense that you do every time a property related thread appears.

Where is the "experience" of the writer? You certainly can't tell he has any from the article, which is a string of inuendo and vague speculation, and nothing more. It is simply an advertisement in the disguise of an article on Pattaya property. There isn't a specific example of what he has done that has or would derive the returns he suggests can be earned. It's very simple, if someone writes some bull that you agree with (i.e., that the Pattaya housing market is the best investment since the beginning of time), the writer is insightful, intelligent, experienced and should be listended to and his advice followed without criticism. If someone says that the Pattaya housing market is not a good minvestment and is laden with land mines for the average buyer/investor, that person is stupid, spews nonsense and should be ignored without question. Your approach is foolish and totally biased, and much worse that what you critize others for doing -- much, much worse.

It is my article and I have an awful lot of experience that I would happily detail to you if you would like to come into my office. For the article I have a very limited word count which doesn't allow me to go into more detail. However, I would be delighted to give you as many examples as you would like of successful property investors/landlords in the Pattaya market. Those who know what they are doing, or who take good advice have made a lot of money in the local real estate market over the years. Whether you like it or not, it is absolutely true. Is the market currently as good as it was? Of course not, which is a fact I state in my article. Are there others who have not done the necessary research, nor taken good advice who have lost money? No doubt whatsoever. However, the same is true of most property markets around the World. Nevertheless, if you exercise care and undertake the right level of due diligence there remain plenty of good investments out there.

This is my job, my area of expertise in which I have worked for numerous years. I would be very interested to hear what experience you have that justifies you making the claims that you do. I rather suspect that you have very little. Are you a real estate investor in Pattaya? Have you worked in real estate in Pattaya? If so, for how long? If you answer these questions anyone reading it will have a far better idea of how qualified and experienced you are to make the sweeping, negative and ill informed comments that you do. I deal with people on a daily basis who have and do invest in Pattaya real estate. They tell me exactly how their investments are doing, so I have very good quality first hand experience of how property investors here do. Where exactly do you get your "knowledge" from? Let me guess, its what you've heard sitting in a bar.

Don't you agree though that the problem with Pattaya real estate at the moment is that it is almost all unrealistically priced? It is currently possible to buy equivalent units on the Spanish coast or in Florida for less than Pattaya asking prices. These are secure transparent jurisdictions with virtually no political risk. They also have first rate infrastructure.

I agree that on paper rental yields look OK in Pattaya but I know may people who are struggling to achieve these notional yields due to oversupply and voids.

There is talk of discounts but I have yet to see one from any agent which is attractive or meaningful.

Aren't your transaction levels very low at the moment?