Pattaya Property Article

[Buff-horns]

Messy Pattaya draws new cash

Published on October 31, 2005

Where there’s muck, there’s money, so the saying goes. Last week, Pattaya was literally overflowing with muck and the money was not far behind.

Tourists descending on Pattaya last week found this out first hand upon arrival, and the sight was not pretty. Traffic jams piled up from Sukhumvit Highway, taking tourists three hours or more from the highway into the city. It was faster to fly to Hong Kong. With poor drainage and unplanned overbuilding, the city was engulfed by flood waters for much of Wednesday last week.

Still, property speculators are streaming in, eager to push prices higher still. Prices for land have been gradually pushed up as more speculators, many from abroad, dabble in local real estate even though there are clear restrictions on foreign ownership of landed properties.

But many of last year’s residential sites are quiet. Better ones like Northshore have sold well, but most projects offered were antiquated in design and as the euphoria fizzled out so have failed sites been abandoned, as burnt investors look for new suckers to come along.

Yet a new wave of expensive luxury projects arrived last week. They include The Sails and Baan Talay, both marketed by CB Richard Ellis at the distant end of Jomtien.

So even as old troubled projects are washed out, new ones are sweeping in, bringing more cash to one of Thailand’s messiest, worst governed towns. Twenty years after it became a registered township, Pattaya is still filled with potholes, unpaved roads and half-finished esplanades that are left to rot in the open for a year or more.

Many foreign retirees here are resigned to the ways of local efficiency and provincial-level competence.

Indeed, even as the city reels from poor infrastructure, an exploding population and yet another street filled with loud and loutish beer bars, another truckload of investors are coming in.

The next wave is mega hotel chains. Among the big names flaunted to kindle speculative interest are the Hyatt, the Intercontinental, Hilton and Crowne Plaza.

New completed hotels attest they have hit jackpot. The 240-room Mercure Hotel, opened three months ago on Soi 15 in Beach Road 2, is already packed out with bookings until next March. Its guests include tour groups from Hong Kong and China.

This Accor mid-range brand hotel was built on a 5-rai site after the old Mercure site’s contract ran out.

While current high occupancy has boosted existing hotels that are up and running, the picture for new yet-to-be-built hotels appears less certain.

Will there be a glut of rooms once all the half dozen new chains open in two years?

Eerily, the first Pattaya real-estate crash came in 1979-1980 following the “Raja Finance” stock-market crash. At the time there were also many global chains that had opened large hotels in Pattaya, Hyatt among them. All faded out after the crash as the properties reverted to Thai hands.

The second Pattaya crash, in 1989, also followed a real-estate meltdown. As prices in Pattaya outpaced Bangkok the bubble burst and it took 15 years for Pattaya to claw back.

The current boom started two years ago and since then, the Pattaya housing market has climbed and slumped.

Housing is far from smooth sailing, even for professional builders. A year after its initial launch on Jomtien Beach, Thai developer NC Housing still has a fair amount of unsold stock.

NC appears to be one of the few name developers willing to venture into this rough and tumble market, where building plans are often undisciplined.

Even the country’s top builders – such as Land & Houses, Property Perfect and Supalai – fear this market. Their absence speaks volumes. “They know this is not their typical market,” said one resort developer. “The customer profile here is very different to Bangkok’s. In Pattaya, they are in uncharted waters.”

Without too much competition from local heavyweights, however, smaller firms such as NC are willing to take a gamble. Its Baan Fa Rim Had project offers units ranging from 158 square metres to 220 square metres in built-up space with a starting price of Bt4.6 million.

Green Field Villas on Chaiyapornvitthi Road, meanwhile, is offering homes from Bt3.5 million for a unit with 296 square metres of built-up area, constructed on a 74-square wah plot.

Itthi C Tan

The Nation

nationmultimedia.com

[fxm88]

Wow, I'm surprised The Nation would publish such an obvious propoganda piece! Clearly this was planted by some group of investors wishing a dip in the market so that they can snap up lots of property. I've always put more faith in The Nation than in, say, Pattaya City News but now I guess I'll have to reassess that opinion.

[gharknes]

Personally I believe there is so much building going on in Pattaya that eventually it will drive the price down, availability will be so high that builders will have to reduce prices to compete, as it stands the cost of housing is ridiculously high, I would caution people buying at current prices, I think they are about 30% above what they should be. People getting greedy.

[COBBER]

Property prices in Pattaya are rediculously high, particularly for residential properties east of sukhumvit rd. Its just shear madness that some prices have doubled within a year. Not surprising that the big players are staying away. Many devalopers will get burnt. The only question is how higher will the prices go before the crash. It's astounding that they can find buyers at current prices. Eventualy they will run out of foreign buyers that dont realise how overpriced the properties are.

Edited November 1, 2005 by COBBER

[baht&sold]

Eventualy they will run out of foreign buyers that dont realise how overpriced the properties are.

<{POST_SNAPBACK}>

Overpriced, ok. But compared to where, Spain, Mexico or?

Edited November 1, 2005 by baht&sold

[gharknes]

Eventualy they will run out of foreign buyers that dont realise how overpriced the properties are.

<{POST_SNAPBACK}>

Overpriced, ok. But compared to where, Spain, Mexico or?

<{POST_SNAPBACK}>

That's not the point, we are in Thailand and there seems to be a core of western property opportunists trying to charge near western prices, people who are dupted into buying at these prices will be very sorry in 2-4 years time, we are in Thailand, that means we have a thai economy not spanish or English, it is greed and some idiot will pay the going rate thinking it must be right, they will find out soon enough they where conned. I've seen properties here that have a greater asking price than at home in Ireland and UK, don't you think there's something wrong with that, too many properties are being built right now, demand will drop and so will the prices, what we will have is people who bought and lost and people who built and can't sell, it's gotta give, I'd be really pissed if a builder sold me a house for 20m baht then sold the same type house 12 months later for 13m, it is greed and manipulation, the bubble will burst for sure. Western rip off meets Thai economy, western looses. I would say there are a few here on both sides of the senario

Just my opinion

[TizMe]

The place 2 doors up from me was just recently purchased, almost immediately it was put back up for sale at 40% more than it was purchased for.

[barryofthailand]

Hey Geoff,

Your right, but look at all the Farrangs that come here and open up Bars, and lose most if not all of thier money,

Barry

[Sir Burr]

1. The laws of supply and demand don't work in Thailand. If demand slumps, the prices will stay the same. Sometimes the price is put up if there is no sale, to make up for the previous years lack of income. This is especially true of rentals.

2. Where is the water going to come from to supply all these new properties?