Buying A Condo In Jomtien

[Awohalitsiktoli]

There clearly must be something very odd about any property market where places stay on sale for years on end. This just isnt normal.

I think that the entire condo market in Pattaya is warped by the large percentage of people who own many units, and who have no real motive for selling them because they cost relatively little to own (no property taxes) and they dont need the money and couldnt get any real return anywhere else anyway. So if you dont need the cash or the income, you may as well just keep the condo on the market at a high price and hope that a farang pigeon will land on your balcony one day, and perhaps get some rental income in the meantime as well. And that is exactly what the owners here are doing.

Good post. But I am not sure about "large percentage of people." I think there is a small percentage of real estate investors (farangs) who own many units in many condo developments that have no real motive to sell or rent at a realistic price. That just sit on their investments and dream of a Pattaya and Jomtien that will never materialize. Over the paste decade, they bought into a development fantasy, but they are not being pressed for income, so they just sit and wait for a miracle to happen. They did see prices go up over that time and many did make $$$. But I think those days are over (bubble already happened). I totally agree with this: "There clearly must be something very odd about any property market where places stay on sale for years on end...this just isn't normal." I will add that many Thais own condo units and rarely even use them except on the odd weekend, and they never drop prices no matter what happens. In fact, the Thai mentality is to raise prices in the face of an economic downturn. It is a screwball market that is primarily supported by "hype" and "smoke and mirrors."

[johnnyk]

Condos can be a money-washer, too.

[Darrel]

But I am not sure about "large percentage of people." I think there is a small percentage of real estate investors (farangs) who own many units in many condo developments that have no real motive to sell or rent at a realistic price.

I can only base my comments on what I see. I have lost track of the number of units I have looked at only to learn (often from the vendor himself) that he also has the place next door, and another on a higher floor, two in the neigbouring building and three more down the beach somewhere. I'm not even counting the ones that reckon to own 20, 50, 150 units (this is not a joke: they are legion). Often they come out with these other units as a sort of afterthought, as you or I might say "oh, I found a 10 Baht coin down the back of the chair the other day". Cause for reflection. These people are also the ones that put property on and off the market, more or less at a whim and on a daily/weekly basis. I have often heard the phrase "off the market for x months because the owner has found a tenant, back on when he leaves".

Units being sold by people who only own that one unit are in a tiny minority. In fact I would put it at 10 or 20% only of the ones I have seen. They tend however to be much more serious vendors.

I fully agree with your comments about Thai owners, and of course it is more or less the same attitude that one gets from the farang owners of multiple units. They dont need to sell (at the moment), they would just like to sell if they can get a very high price. What will happen when/if they need to sell is another matter. And that's when the real meaning of the word bubble may become apparent. The bubble is clearly there, in my opinion.

[totonjoy]

"The stigma behind this is that they are not legally bound and could under future government policies become a dead loss to the owners,

Recently in India this happened to many foreigners and they lost their properties outright due to the fact that they had illegal companies set up."

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"Even when a lawyer sets up a company for a purchase to take place only 49% of the shareholders can be foreign and 51 % Thai so in theory

a foreigner can only own 49% of his company hence his condo or house."

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What about the people who own through a Company with Thai shareholders, but where the foreigner also holds signed, undated share transfer forms? Would this be an acceptable way to proceed?

I ask because I am looking at a nice condo in this situation.

[sotsira]

What about the people who own through a Company with Thai shareholders, but where the foreigner also holds signed, undated share transfer forms? Would this be an acceptable way to proceed?

I ask because I am looking at a nice condo in this situation.

Broadly speaking my answer would be no it's not an acceptable way to proceed, because as i stated previously it's not 100% legal.

What you need to consider is if one day you need to resale again you would struggle to find a foreign buyer with a company owned condo.

Also, if one day the Thai authorities (inland revenue) decide to revoke your company due to irregularities then you could lose all of your investment.

Unless your willing to take a chance on the above 2 points then i would only look to buy condo's that are foreign owned, then you are 100% legal owner.

[Jingthing]

Generally, almost everyone who tells you buying a condo with a company scheme is perfectly OK are --

real estate agents looking for commission

lawyers looking for business

owners of such companies, especially when trying to sell

Foreigners can't generally own land or real estate in Thailand. We can own condos in our own name. What could be more clear? If you are going to buy a condo, which is a big risk in the first place, of course you want it in your own name.

Edited April 11, 2011 by Jingthing

[totonjoy]

Gentlemen. Thank you very much.

[morphic]

There clearly must be something very odd about any property market where places stay on sale for years on end. This just isnt normal.

I think that the entire condo market in Pattaya is warped by the large percentage of people who own many units, and who have no real motive for selling them because they cost relatively little to own (no property taxes) and they dont need the money and couldnt get any real return anywhere else anyway. So if you dont need the cash or the income, you may as well just keep the condo on the market at a high price and hope that a farang pigeon will land on your balcony one day, and perhaps get some rental income in the meantime as well. And that is exactly what the owners here are doing.

And in the end you only need to compare the cost of a house with the cost of a condo. It is all very out of kilter. Most condo prices need to drop perhaps 30-40% to be at any sort of sensible level. And the proof is that many units sold are only sold at a big discount on average asking prices. All the ones I have seen recently have been in this group.

I am prepared to pay perhaps 20-30% below average asking prices for a reasonable unit that I could live in indefinitely, on the assumption that if other all units drop to a reasonable price in a "crash" I wont actually lose very much.

I completely agree that asking prices are much too high. As far as how much thats hard to say. I would say they are over priced by a minimum of 30-40% on average.

if bidding remember this is not London, Singapore or even Bangkok. Where there is a liquid market with frequent transactions it is easier to estimate a "fair value". Here, the asking price is often the owner's fantasy and unless that owner needs the money immediately then there will be no reasonable negotiation.

To discover whether the owner is reasonable or not you need to be prepared to offer vastly less than he is asking, far more aggressively than you would in a normal market. That may mean offering just 50% of the asking price. Or, if that asking price is particuliarly stupid, it could be just 30%. The price you pay must be based on its fair price, not the inflated asking price. (Its not the duty of the buyer to make the seller rich and also don't think the agent is supposed to be your friend). If the owner says no to your offer then fine, leave it, walk away.

But if he is a genuine seller then he should move to some extent etc. If not then why waste your money and have to hold for the next 20 years to have any chance of getting your money back?

Maybe the best analogy is to buying a T-shirt from one of the stalls here. You say, "how much" and he says 600 Baht. You ask for his best price, he says 300. You offer 150 and he won't budge. If you want the shirt you need to pay a bit more so you say 200 and he agrees. Deal done, both sides happy. You just paid a third of his ludicrous asking price, he made a fair profit.

[Darrel]

Generally, almost everyone who tells you buying a condo with a company scheme is perfectly OK are --

real estate agents looking for commission

lawyers looking for business

owners of such companies, especially when trying to sell

Yes, yes and yes. Residential property ownership via companies is simple trickery, designed to bypass the law. As this is an "emerging" economy people still get away with a lot things that are against the law. This will probably change one day but no one knows when. That's about all that can be said about it.

[Darrel]

Maybe the best analogy is to buying a T-shirt from one of the stalls here.

A good analogy.

This is a carpet-bagger economy and the property market is no different to a tourist market stall; masses of shoddy stock, not many buyers or sales, totally negotiable prices, no consumer protection, lots of wide-boys, spivs, pick-pockets and beggars. Caveat emptor.

Edited April 11, 2011 by Darrel

[Barack]

Maybe the best analogy is to buying a T-shirt from one of the stalls here.

A good analogy.

This is a carpet-bagger economy and the property market is no different to a tourist market stall; masses of shoddy stock, not many buyers or sales, totally negotiable prices, no consumer protection, lots of wide-boys, spivs, pick-pockets and beggars. Caveat emptor.

I think it is terrible analogy. Comparing a real estate transaction to buying a souvenir T-shirt is ludicrous. Everyone knows cut-throat bargaining is expected at flea or night markets.

For those that think the real estate market is over-priced, they may be right but they could also be dead-wrong too. Negotiations take place behind closed doors between seller and buyer and the public does not really know the final selling price. There is no transparency here, no public record of the transaction. Who can understand the mindset of both these new cash rich foreign buyers and the Thai (and foreign) sellers? Many come from countries that are new to capitalism. The capitalism practiced here is ”quasi-capitalism". Ever drive to rural areas (Isaan) and stop buy some fruit or produce from one of those straw-thatched huts all lined-up in row and all looking the same? The price is the price and that's it. No marketing, no negotiating, no discount. In my old home (California), the valley farmers would have signs advertising their product, sometimes miles in advance. Buy from Me, Best Price, Best Quality, Only 100 meters ahead!!! I sold a condo recently, 5% below the asking price, and the buyer was ecstatic at getting a great deal, a high-floor unit with a great view. He was confident that the Pattaya condo market was on the upswing and he got in on the ground floor. I said nothing dampen his enthusiasm.

[Darrel]

For those that think the real estate market is over-priced, they may be right but they could also be dead-wrong too.

They could be, but it is still the only obvious reason why properties take so long to sell, as I mentioned. If you know another reason I would be glad to hear it.

I sold a condo recently, 5% below the asking price, and the buyer was ecstatic at getting a great deal, a high-floor unit with a great view. He was confident that the Pattaya condo market was on the upswing and he got in on the ground floor.

You dont say how your asking price compared to that of other similar units, and that's the crux of it. Maybe you are much more reasonable. As I mentioned, I have also seen properties sell recently, but mostly the ones that were priced significantly cheaper than the average.

Or maybe it's just that there's one born every minute and you found him. That's what all the other vendors are waiting for too. It is a long wait for most of them.

[Barack]

For those that think the real estate market is over-priced, they may be right but they could also be dead-wrong too.

They could be, but it is still the only obvious reason why properties take so long to sell, as I mentioned. If you know another reason I would be glad to hear it.

I sold a condo recently, 5% below the asking price, and the buyer was ecstatic at getting a great deal, a high-floor unit with a great view. He was confident that the Pattaya condo market was on the upswing and he got in on the ground floor.

You dont say how your asking price compared to that of other similar units, and that's the crux of it. Maybe you are much more reasonable. As I mentioned, I have also seen properties sell recently, but mostly the ones that were priced significantly cheaper than the average.

Or maybe it's just that there's one born every minute and you found him. That's what all the other vendors are waiting for too. It is a long wait for most of them.

The Pattaya condo market, as we know, does not fit the real estate mold. The foreigners are 100% cash buyers and I've been told the Thai here deal primarily in cash. There is just no sense of urgency to sell at steep discounts. Each new project comes at a higher price (land, material, labor, etc) which impacts the entire market. Occasionally, an expat may have to repatriate funds due to illness and sell at a steep discount. I know personally of several cases where the expats have died and heirs wanted to quickly settle the estate. The realtor bought the property at a steep discount and later put the property on the market at his leisure and made a nice profit. This market is not like California, for example, where properties are bank financed and owned and buyers have little equity. In economic downturns, banks (the lenders) will move properties at steep discounts to get them off their books. People when they have their own money invested don’t think like banks. They can afford to wait and be patient. I do not see a major correction in condo prices unless we have another Asian economic flu (think the 90's) and I don't see that happening soon (but it will happen someday).

I sold my unit through Seaboard:

I priced my unit 100k baht less than an identical unit two floors above me. The realtor said to accept an offer of 100-200k under the asking price. I accepted an offer of 300k under my asking price. My unit sold (deal completed) after 9 months on the market. My final selling price was less than 5% under my asking price. The developer's current price was 28% over what I paid. I was not a "flipper" but realized I had more space than needed. Those units with higher asking prices have sold too but it took longer.

Edited April 13, 2011 by Rimmer
Unnecessary commercial link

[Jingthing]

I also don't think super bargains on foreign owned units are that common. Discounts, yes, gifts, not so much. I do think a lot of people WISH they were. If I was selling and I got one of these offer 50 percent bozos after pricing the unit based on my perception of the market (which isn't that hard to determine really), I would probably just laugh at the guy and say Bye Bye. Why waste time with a buyer like that who is never going to pay anywhere near the price you think your place is worth? There are of course desperate for cash sellers, so the trick is to find them. Sales made by them don't reflect the larger market. Like the vast majority of buyers who paid cash, I'd rather sit on it for years than GIVE it away. Yes, that's the psychology and if you buy with cash, you're likely to be the same way. And so it goes.

Right now, I think there is a balance between buyers and sellers, but I could be wrong as I am not doing either at the moment. That means most sellers are not going to say asking price or forget it. If a seller says that, I would think they aren't serious sellers. It is true some sellers offer their place at a fantasy price they don't expect to ever get, but would be glad to sell if they got it. Those people aren't real sellers. Personally if I was buying I wouldn't go near units priced ridiculously, waste of my time as a buyer. Buyers and sellers really do need to do some homework to figure out values here or they are operating in the dark.

It's a horrific cliche, but really I think this applies to even this market. Price real estate intelligently and it will sell. That's based on the market, not on fantasies. Right now in the US they are almost giving away real estate, that's the market in action (unemployment, recession, plus a huge market glut of bank owned foreclosures and short sales).

Edited April 12, 2011 by Jingthing

[morphic]

I also don't think super bargains on foreign owned units are that common. Discounts, yes, gifts, not so much. I do think a lot of people WISH they were. If I was selling and I got one of these offer 50 percent bozos after pricing the unit based on my perception of the market (which isn't that hard to determine really), I would probably just laugh at the guy and say Bye Bye. Why waste time with a buyer like that who is never going to pay anywhere near the price you think your place is worth? There are of course desperate for cash sellers, so the trick is to find them. Sales made by them don't reflect the larger market. Like the vast majority of buyers who paid cash, I'd rather sit on it for years than GIVE it away. Yes, that's the psychology and if you buy with cash, you're likely to be the same way. And so it goes.

Right now, I think there is a balance between buyers and sellers, but I could be wrong as I am not doing either at the moment. That means most sellers are not going to say asking price or forget it. If a seller says that, I would think they aren't serious sellers. It is true some sellers offer their place at a fantasy price they don't expect to ever get, but would be glad to sell if they got it. Those people aren't real sellers. Personally if I was buying I wouldn't go near units priced ridiculously, waste of my time as a buyer. Buyers and sellers really do need to do some homework to figure out values here or they are operating in the dark.

It's a horrific cliche, but really I think this applies to even this market. Price real estate intelligently and it will sell. That's based on the market, not on fantasies. Right now in the US they are almost giving away real estate, that's the market in action (unemployment, recession, plus a huge market glut of bank owned foreclosures and short sales).

As I said, find a genuine seller, then they will be reasonable.

As another good indicator that asking prices are much too high just look at what you would actually earn as a yield if you paid the asking price and rented the property out. By the time you've factored in void periods, a realistic rent, maintenance, transaction costs etc and potential tax the yields look very very low, not even close to the levels claimed by the agents Agents often claim 7% or so which would be acceptable for a developing country like Thailand. The truth though could be closer to 2-3%, which would be stupidly low. That itself should tell you a lot about Pattaya asking prices.

My own experience is I did obtain a 40% discount from the asking price on a property but concluded the price was still too high. I had the money, the cost would have been loose change to me, but it just wasn't worth it.

If you want better value property then perhaps try bangkok, because sellers in Pattaya are mostly living ion lala land and because the quality of construction may be better in Bangkok.

But the most convincing evidence showing Pattaya property is massively over priced is that thne transaction volume in the resale market is extremely low and properties remain on the market for years often without a single viewing. That ought to tell you something. And for those suckers falling for the off plan sales person's hype, remember that was is off plan today will become resale tomorrow.

[FarangBuddha]

A friend has two new condos on Pratomnack Hill for sale. Most agencies wouldn't even take the listings as they already had so much inventory on their books. During past 5 months, has had a total of ONE showing and of course, no offers.

[ThaiBob]

There clearly must be something very odd about any property market where places stay on sale for years on end. This just isnt normal.

I think that the entire condo market in Pattaya is warped by the large percentage of people who own many units, and who have no real motive for selling them because they cost relatively little to own (no property taxes) and they dont need the money and couldnt get any real return anywhere else anyway. So if you dont need the cash or the income, you may as well just keep the condo on the market at a high price and hope that a farang pigeon will land on your balcony one day, and perhaps get some rental income in the meantime as well. And that is exactly what the owners here are doing.

And in the end you only need to compare the cost of a house with the cost of a condo. It is all very out of kilter. Most condo prices need to drop perhaps 30-40% to be at any sort of sensible level. And the proof is that many units sold are only sold at a big discount on average asking prices. All the ones I have seen recently have been in this group.

I am prepared to pay perhaps 20-30% below average asking prices for a reasonable unit that I could live in indefinitely, on the assumption that if other all units drop to a reasonable price in a "crash" I wont actually lose very much.

I completely agree that asking prices are much too high. As far as how much thats hard to say. I would say they are over priced by a minimum of 30-40% on average.

if bidding remember this is not London, Singapore or even Bangkok. Where there is a liquid market with frequent transactions it is easier to estimate a "fair value". Here, the asking price is often the owner's fantasy and unless that owner needs the money immediately then there will be no reasonable negotiation.

To discover whether the owner is reasonable or not you need to be prepared to offer vastly less than he is asking, far more aggressively than you would in a normal market. That may mean offering just 50% of the asking price. Or, if that asking price is particuliarly stupid, it could be just 30%. The price you pay must be based on its fair price, not the inflated asking price. (Its not the duty of the buyer to make the seller rich and also don't think the agent is supposed to be your friend). If the owner says no to your offer then fine, leave it, walk away.

But if he is a genuine seller then he should move to some extent etc. If not then why waste your money and have to hold for the next 20 years to have any chance of getting your money back?

Maybe the best analogy is to buying a T-shirt from one of the stalls here. You say, "how much" and he says 600 Baht. You ask for his best price, he says 300. You offer 150 and he won't budge. If you want the shirt you need to pay a bit more so you say 200 and he agrees. Deal done, both sides happy. You just paid a third of his ludicrous asking price, he made a fair profit.

We all understand the difference here between the asking and selling price. Sellers and buyers understand prices are negotiable. When I priced condos to sell you always give yourself some "wiggle" room and it also makes the buyer feel good getting a lower price. But we are talking about real estate here and not T-shirts. When you make unsupported generalizations of high prices and offers of 30-50% and you lose all credibility. If you made me an offer like that I would escort you the lift or the balcony edge of my condo and say the way down is your choice.

[Darrel]

If I was selling and I got one of these offer 50 percent bozos after pricing the unit based on my perception of the market (which isn't that hard to determine really), I would probably just laugh at the guy and say Bye Bye. Why waste time with a buyer like that who is never going to pay anywhere near the price you think your place is worth?

The seller's perception of the condo market is:

1) largely irrelevant, as it is the buyer's opinion that matters

and

2) based on other asking prices, nearly all of which are total fantasy also, at least around here

It all boils down to the indisputable fact that used condos in Pattaya sell extremely slowly (if at all) and the reason for that is because they are overpriced. It really is that simple. Just because a seller thinks his condo is worth xMBaht doesnt make it so. It is only worth what someone will pay for it, and if the seller is just going to reject everyone who is a serious buyer but who doesnt share his absurdly high estimate of his condo's worth then he will wait a very long time to sell. And indeed that is precisely what we see here. Many wait years and years and years and even after that they still dont sell.

In countries where there is a serious property market (as opposed to the fantasy one that exists here) an agent will provide an estimation of value based on recent sale prices (not asking prices) of similar properties. Here that isnt so easy as lots of places are on sale (at very high asking prices), very few sell, and even when they do sell the real price is not known.

If anyone thinks there is another viable reason perhaps they could say so?

[Darrel]

We all understand the difference here between the asking and selling price. Sellers and buyers understand prices are negotiable. When I priced condos to sell you always give yourself some "wiggle" room and it also makes the buyer feel good getting a lower price. But we are talking about real estate here and not T-shirts. When you make unsupported generalizations of high prices and offers of 30-50% and you lose all credibility. If you made me an offer like that I would escort you the lift or the balcony edge of my condo and say the way down is your choice.

And your unit would remain unsold, just like hundreds of others here.

Everyone the world over knows that there is a margin for negotiation in property prices. It's just like used cars. However in most places with a normal market, that margin might be somewhere between 0 and 10% (though in every country and town there is also the occasional Pattaya-style loony vendor, who asks way over the top and who cant sell). Here the margin just happens to be much higher. Unfortunately many owners think that because everyone in their building is asking 4MB for units like theirs that it actually means that those people will get just under 4MB when (if) they sell, and not that they will settle for 3Mb or maybe even 2.5 or 2.

I have seen a nice enough place on a decent beach that started life at 3.8MB and over the last couple of years has dropped to 2.75MB. It isnt sold.

In another building I saw a unit that started at 6MB and sold when the asking price had dropped to 3.9MB (though for all I know it actually sold for less). There are a couple of identical units in that building that are up for sale at between 5 and 6MB.

I also saw a reasonable unit that sold for well under 2MB in a building where just about everything the same size is listed at 2.5 - 3MB, or even 3.5MB.

Another unit with a stunning view (no, not one of these agents' "sea views" where you can see 1 square inch of sea if you stand on a chair in the bathroom), at well under 3MB asking price in a building where other owners are asking 5MB for similar sized ones, or just over 2MB for units half the size. And all not sold.

A large unit in good order and in a popular building that sold with an asking price of 3MB. In the same building there are many units in worse condition and only 2/3rds the size, with an asking price of 0.5MB more. Not selling though.

This compares with a house in Europe that was sold for 98% of the asking price within 2 months of being put on the market. The asking price was based on the official recent selling prices of similar houses in that street, as released by the government land agency. During the recession, I might add.

[Jingthing]

Such arguments are the stuff of markets. Happy buying and selling. (And holding for years ...)

There are indeed some quite unusual things about the local market here. I agree the lack of good information of actual sales prices makes determining real value more difficult than it should be. But another thing to consider is the beach area condos can be used as rentals, and when you add the low carrying costs for people who bought with cash (pretty much all foreigners) that's another disincentive to unload at deep discounts. I don't think time on market, even years, is the indicator of overpricing the same way it would be in a western market with large carrying costs for most owners, and less desirability as rental units.

Edited April 13, 2011 by Jingthing

[ThaiBob]

We all understand the difference here between the asking and selling price. Sellers and buyers understand prices are negotiable. When I priced condos to sell you always give yourself some "wiggle" room and it also makes the buyer feel good getting a lower price. But we are talking about real estate here and not T-shirts. When you make unsupported generalizations of high prices and offers of 30-50% and you lose all credibility. If you made me an offer like that I would escort you the lift or the balcony edge of my condo and say the way down is your choice.

And your unit would remain unsold, just like hundreds of others here.

...........

Sorry to disappoint but the unit sold and that was 2 years ago during the bottom of the real estate market. I followed the realtor's advice and the selling price was 200k under the asking price (3%). If you have a desirable property (condo), you will be able to sell in this market. After I sold, the other units sold in the project sold too, and at higher asking prices than mine I might add.

[Awohalitsiktoli]

We all understand the difference here between the asking and selling price. Sellers and buyers understand prices are negotiable. When I priced condos to sell you always give yourself some "wiggle" room and it also makes the buyer feel good getting a lower price. But we are talking about real estate here and not T-shirts. When you make unsupported generalizations of high prices and offers of 30-50% and you lose all credibility. If you made me an offer like that I would escort you the lift or the balcony edge of my condo and say the way down is your choice.

And your unit would remain unsold, just like hundreds of others here.

Everyone the world over knows that there is a margin for negotiation in property prices. It's just like used cars. However in most places with a normal market, that margin might be somewhere between 0 and 10% (though in every country and town there is also the occasional Pattaya-style loony vendor, who asks way over the top and who cant sell). Here the margin just happens to be much higher. Unfortunately many owners think that because everyone in their building is asking 4MB for units like theirs that it actually means that those people will get just under 4MB when (if) they sell, and not that they will settle for 3Mb or maybe even 2.5 or 2.

I have seen a nice enough place on a decent beach that started life at 3.8MB and over the last couple of years has dropped to 2.75MB. It isnt sold.

In another building I saw a unit that started at 6MB and sold when the asking price had dropped to 3.9MB (though for all I know it actually sold for less). There are a couple of identical units in that building that are up for sale at between 5 and 6MB.

I also saw a reasonable unit that sold for well under 2MB in a building where just about everything the same size is listed at 2.5 - 3MB, or even 3.5MB.

Another unit with a stunning view (no, not one of these agents' "sea views" where you can see 1 square inch of sea if you stand on a chair in the bathroom), at well under 3MB asking price in a building where other owners are asking 5MB for similar sized ones, or just over 2MB for units half the size. And all not sold.

A large unit in good order and in a popular building that sold with an asking price of 3MB. In the same building there are many units in worse condition and only 2/3rds the size, with an asking price of 0.5MB more. Not selling though.

This compares with a house in Europe that was sold for 98% of the asking price within 2 months of being put on the market. The asking price was based on the official recent selling prices of similar houses in that street, as released by the government land agency. During the recession, I might add.

This is, indeed, a very strange market, and the investors seem enmeshed in a strange money-making strategy: wait forever until a sucker comes knocking at the door. They bought into a false dream (mostly false). Now they are clinging to that dream and filling the airwaves and internet with hype. They are lucky they do not need the income from their investments now, but they likely will later. If they had been smart, they would have invested in different locations outside of Thailand where they could have bought and sold for a profit ten times during the same period. In other words, in Pattaya and Jomtien they have to sit on the property for a 5-10 years before they can see a profit (unless it is a top end condo and there are not many of those). Outside of Thailand in a "hot real estate location" they could have turned their properties over many times. So, if they are wanting to make really big money, they are not really in the right place. Of course, they will come back with stories about how they are making huge money and that this is the best market in the world, blah, blah, blah.

[morphic]

There clearly must be something very odd about any property market where places stay on sale for years on end. This just isnt normal.

I think that the entire condo market in Pattaya is warped by the large percentage of people who own many units, and who have no real motive for selling them because they cost relatively little to own (no property taxes) and they dont need the money and couldnt get any real return anywhere else anyway. So if you dont need the cash or the income, you may as well just keep the condo on the market at a high price and hope that a farang pigeon will land on your balcony one day, and perhaps get some rental income in the meantime as well. And that is exactly what the owners here are doing.

And in the end you only need to compare the cost of a house with the cost of a condo. It is all very out of kilter. Most condo prices need to drop perhaps 30-40% to be at any sort of sensible level. And the proof is that many units sold are only sold at a big discount on average asking prices. All the ones I have seen recently have been in this group.

I am prepared to pay perhaps 20-30% below average asking prices for a reasonable unit that I could live in indefinitely, on the assumption that if other all units drop to a reasonable price in a "crash" I wont actually lose very much.

I completely agree that asking prices are much too high. As far as how much thats hard to say. I would say they are over priced by a minimum of 30-40% on average.

if bidding remember this is not London, Singapore or even Bangkok. Where there is a liquid market with frequent transactions it is easier to estimate a "fair value". Here, the asking price is often the owner's fantasy and unless that owner needs the money immediately then there will be no reasonable negotiation.

To discover whether the owner is reasonable or not you need to be prepared to offer vastly less than he is asking, far more aggressively than you would in a normal market. That may mean offering just 50% of the asking price. Or, if that asking price is particuliarly stupid, it could be just 30%. The price you pay must be based on its fair price, not the inflated asking price. (Its not the duty of the buyer to make the seller rich and also don't think the agent is supposed to be your friend). If the owner says no to your offer then fine, leave it, walk away.

But if he is a genuine seller then he should move to some extent etc. If not then why waste your money and have to hold for the next 20 years to have any chance of getting your money back?

Maybe the best analogy is to buying a T-shirt from one of the stalls here. You say, "how much" and he says 600 Baht. You ask for his best price, he says 300. You offer 150 and he won't budge. If you want the shirt you need to pay a bit more so you say 200 and he agrees. Deal done, both sides happy. You just paid a third of his ludicrous asking price, he made a fair profit.

We all understand the difference here between the asking and selling price. Sellers and buyers understand prices are negotiable. When I priced condos to sell you always give yourself some "wiggle" room and it also makes the buyer feel good getting a lower price. But we are talking about real estate here and not T-shirts. When you make unsupported generalizations of high prices and offers of 30-50% and you lose all credibility. If you made me an offer like that I would escort you the lift or the balcony edge of my condo and say the way down is your choice.

Not making up stories, I negotiated the price down by about 40% and as I said, I still didn't think it was worth the money.

And I am not making unsupported generalisations, I have backed my assertions up with solid arguments. The arguments were the low rental yields and the very low turnover, i.e., properties sitting offered but unsold for years. These are both factual, verifiable statements. Go and check for yourself, learn something.

I do think the T-shirt analogy is valid. Lots of sellers waiting for a sucker to pay vastly over the odds and the only way to discover the true price is to offer far below asking. And judging by the evidence of low turnover and yields etc, there will be a seller now and then that is genuine and will cut their asking price by a huge amount. Then, there are many others who will wait years for a sucker to come along, but that will probably never happen. these people may well have to hang onto their properties until the day they die. But property here is horribly and cheaply constructed and for every year they wait their property becomes less desirable. Even 10 years is considered old here.

Sorry, but the property here just shouldn't be more than a small fraction (10%, say, maximum) of prices in say, London, Singapore etc. Every time I enter one of those condos with its dark corridors, the usual flickering lights, the usual dodgy characters, the usual toilety smell, the usual paper thin walls, the tacky furniture, I think, wow, these are liabilities, not assets. On the other hand you get the new ones with the new feel but these are often even more over priced versions of the older ones, the walls are just as thin, the fittings are just as tacky and in a few years they will feel just as seedy. And by the way, Im including the better down town beach road condos in this, that View Talay thing on Beach Road is a monstrosity. I don't even want to look at the out of the way places in Jomtien and central Pattaya, they are almost more like doss houses than homes.

[Barack]

We all understand the difference here between the asking and selling price. Sellers and buyers understand prices are negotiable. When I priced condos to sell you always give yourself some "wiggle" room and it also makes the buyer feel good getting a lower price. But we are talking about real estate here and not T-shirts. When you make unsupported generalizations of high prices and offers of 30-50% and you lose all credibility. If you made me an offer like that I would escort you the lift or the balcony edge of my condo and say the way down is your choice.

And your unit would remain unsold, just like hundreds of others here.

Everyone the world over knows that there is a margin for negotiation in property prices. It's just like used cars. However in most places with a normal market, that margin might be somewhere between 0 and 10% (though in every country and town there is also the occasional Pattaya-style loony vendor, who asks way over the top and who cant sell). Here the margin just happens to be much higher. Unfortunately many owners think that because everyone in their building is asking 4MB for units like theirs that it actually means that those people will get just under 4MB when (if) they sell, and not that they will settle for 3Mb or maybe even 2.5 or 2.

I have seen a nice enough place on a decent beach that started life at 3.8MB and over the last couple of years has dropped to 2.75MB. It isnt sold.

In another building I saw a unit that started at 6MB and sold when the asking price had dropped to 3.9MB (though for all I know it actually sold for less). There are a couple of identical units in that building that are up for sale at between 5 and 6MB.

I also saw a reasonable unit that sold for well under 2MB in a building where just about everything the same size is listed at 2.5 - 3MB, or even 3.5MB.

Another unit with a stunning view (no, not one of these agents' "sea views" where you can see 1 square inch of sea if you stand on a chair in the bathroom), at well under 3MB asking price in a building where other owners are asking 5MB for similar sized ones, or just over 2MB for units half the size. And all not sold.

A large unit in good order and in a popular building that sold with an asking price of 3MB. In the same building there are many units in worse condition and only 2/3rds the size, with an asking price of 0.5MB more. Not selling though.

This compares with a house in Europe that was sold for 98% of the asking price within 2 months of being put on the market. The asking price was based on the official recent selling prices of similar houses in that street, as released by the government land agency. During the recession, I might add.

This is, indeed, a very strange market, and the investors seem enmeshed in a strange money-making strategy: wait forever until a sucker comes knocking at the door. They bought into a false dream (mostly false). Now they are clinging to that dream and filling the airwaves and internet with hype. They are lucky they do not need the income from their investments now, but they likely will later. If they had been smart, they would have invested in different locations outside of Thailand where they could have bought and sold for a profit ten times during the same period. In other words, in Pattaya and Jomtien they have to sit on the property for a 5-10 years before they can see a profit (unless it is a top end condo and there are not many of those). Outside of Thailand in a "hot real estate location" they could have turned their properties over many times. So, if they are wanting to make really big money, they are not really in the right place. Of course, they will come back with stories about how they are making huge money and that this is the best market in the world, blah, blah, blah.

This is a resort and retirement destination. We "investors" came here because we fell in love with Thailand and Pattaya. I bought here because I prefer not to pay money to a landlord. That was my choice and it is the choice of many. If I were a true "investor" I would have done something else with my money. Some of my friends have multiple units which they rent out. They get a nice return on their money. They like being close to their money and for them they "in the right place". They are happy and I am happy for them. You are entitled to your opinion but quite frankly, I don't think you are qualified to give advice on "a hot real estate location" (nor am I).

Edited April 14, 2011 by Barack

[Awohalitsiktoli]

We all understand the difference here between the asking and selling price. Sellers and buyers understand prices are negotiable. When I priced condos to sell you always give yourself some "wiggle" room and it also makes the buyer feel good getting a lower price. But we are talking about real estate here and not T-shirts. When you make unsupported generalizations of high prices and offers of 30-50% and you lose all credibility. If you made me an offer like that I would escort you the lift or the balcony edge of my condo and say the way down is your choice.

And your unit would remain unsold, just like hundreds of others here.

Everyone the world over knows that there is a margin for negotiation in property prices. It's just like used cars. However in most places with a normal market, that margin might be somewhere between 0 and 10% (though in every country and town there is also the occasional Pattaya-style loony vendor, who asks way over the top and who cant sell). Here the margin just happens to be much higher. Unfortunately many owners think that because everyone in their building is asking 4MB for units like theirs that it actually means that those people will get just under 4MB when (if) they sell, and not that they will settle for 3Mb or maybe even 2.5 or 2.

I have seen a nice enough place on a decent beach that started life at 3.8MB and over the last couple of years has dropped to 2.75MB. It isnt sold.

In another building I saw a unit that started at 6MB and sold when the asking price had dropped to 3.9MB (though for all I know it actually sold for less). There are a couple of identical units in that building that are up for sale at between 5 and 6MB.

I also saw a reasonable unit that sold for well under 2MB in a building where just about everything the same size is listed at 2.5 - 3MB, or even 3.5MB.

Another unit with a stunning view (no, not one of these agents' "sea views" where you can see 1 square inch of sea if you stand on a chair in the bathroom), at well under 3MB asking price in a building where other owners are asking 5MB for similar sized ones, or just over 2MB for units half the size. And all not sold.

A large unit in good order and in a popular building that sold with an asking price of 3MB. In the same building there are many units in worse condition and only 2/3rds the size, with an asking price of 0.5MB more. Not selling though.

This compares with a house in Europe that was sold for 98% of the asking price within 2 months of being put on the market. The asking price was based on the official recent selling prices of similar houses in that street, as released by the government land agency. During the recession, I might add.

This is, indeed, a very strange market, and the investors seem enmeshed in a strange money-making strategy: wait forever until a sucker comes knocking at the door. They bought into a false dream (mostly false). Now they are clinging to that dream and filling the airwaves and internet with hype. They are lucky they do not need the income from their investments now, but they likely will later. If they had been smart, they would have invested in different locations outside of Thailand where they could have bought and sold for a profit ten times during the same period. In other words, in Pattaya and Jomtien they have to sit on the property for a 5-10 years before they can see a profit (unless it is a top end condo and there are not many of those). Outside of Thailand in a "hot real estate location" they could have turned their properties over many times. So, if they are wanting to make really big money, they are not really in the right place. Of course, they will come back with stories about how they are making huge money and that this is the best market in the world, blah, blah, blah.

This is a resort and retirement destination. We "investors" came here because we fell in love with Thailand and Pattaya. I bought here because I prefer not to pay money to a landlord. That was my choice and it is the choice of many. If I were a true "investor" I would have done something else with my money. Some of my friends have multiple units which they rent out. They get a nice return on their money. They like being close to their money and for them they "in the right place". They are happy and I am happy for them. You are entitled to your opinion but quite frankly, I don't think you are qualified to give advice on "a hot real estate location" (nor am I).

Not sure how to respond--you agreed then disagreed. I was focusing on "making money." You seemed to have agreed that the investment money would have produced more profit elsewhere, which was my point. Then you gave an explanation why some investors would prefer to earn less (makes sense). You stated "Some of my friends have multiple units which they rent out. They get a nice return on their money." Yes, some no doubt do. But I think most are struggling to rent out their concrete cells at grossly inflated prices. You last comment has already been ignored.

Edited April 14, 2011 by Awohalitsiktoli

[Barack]

Let me clarify:

- I reject your premise that I am an "investor" (that was the reason for the quotes) and your concept of what or who is an "investor" here

in Pattaya.

- and that buying my condo was "investment" money or I bought into some "false dream".

- all (friends) their condos are rented; they also bought when prices are lower; I agree it would be difficult to get a reasonable return with

current prices.

[Awohalitsiktoli]

Let me clarify:

- I reject your premise that I am an "investor" (that was the reason for the quotes) and your concept of what or who is an "investor" here

in Pattaya.

- and that buying my condo was "investment" money or I bought into some "false dream".

- all (friends) their condos are rented; they also bought when prices are lower; I agree it would be difficult to get a reasonable return with

current prices.

Maybe disregard my posts today. It is Songkran and I am f&%$#@g tired of having people throw water on me and wipe stinging powder in my eyes. The ritual should be happy with a good heart behind it. I think I am running into too many bad people. But, have a good Songkran if you can

[JomtienEats]

I've heard a good rule of thumb to assess the value of a property is to take its monthly rental value and multiply it by 150 - that's considered very good value. Take that same figure and multiply it by 250 - that's considered very expensive and of course the range is in between.

Of course there are other factors in Pattaya to consider like the build quality, relative liquidity of the market and perils of foreign ownership.

Also it can be difficult to accurate gauge even a fair rental price in Pattaya. I was offered a place on a one year lease at 35,000 p/m. I came back with a 30,000 offer and asking for a new 42' TV. I thought I was haggling and would get a counter offer. I didn't, the owner nearly bit my hand off to take the offer, leaving me feeling like I had probably overpaid.

Assuming 25,000 would be a fair rent for the property - a sale price then would be somewhere between 3.75 mil (150x) and 6.25 mil (250x). I've noticed owners with similar properties have asking prices in 6million range. Toward the very expensive end of the range in other words.

Considering the illiquidity of the market, I think it makes sense only to buy if you're either getting a very good price, or you plan to live in a property for a long time and are getting at least a reasonable price.

[Jingthing]

Yeah, these days especially, I would buy housing to live in it, not with dreams of big profits. Not just in Thailand of course. I have a friend whose US condo is now worth 50 percent of what he paid and if he rented it it would still be a negative cash flow of 800 dollars per month. Basically a nightmare.

[Darrel]

Also it can be difficult to accurate gauge even a fair rental price in Pattaya. I was offered a place on a one year lease at 35,000 p/m. I came back with a 30,000 offer and asking for a new 42' TV. I thought I was haggling and would get a counter offer. I didn't, the owner nearly bit my hand off to take the offer, leaving me feeling like I had probably overpaid.

I'm afraid you did. Rental asking prices here suffer from the same syndrome as re-sale asking prices. They are way over the top and very negotiable.

It's common to hear "owner nearly bit my hand off".