Is this a condominium bargain……… or a sign of difficult times?

[Asiantravel]

I am noticing in the Pattaya condominium market some developers are now offering their properties for sale on the basis that the developer will guarantee a minimum rental over a fixed number of years.Of course this is not a new idea and in fact rental guarantees have been criticised harshly by some sceptics.

But some developers are even going as far as also offering to purchase the property back after a certain period at the original purchase price. And for commitment to an even longer period of ownership in some cases they are offering to purchase the property back at a higher price in the future than the sale price now.

I’m quite intrigued as to what is making some developers do this. Is it simply a way of them increasingly liquidity to allow them to develop even more buildings? Are real estate developers now finding it more difficult to raise finance through conventional means so this way they can recoup working capital even if it’s only temporary.

But I also wonder what are the risks to the buyer? For example all I seem to hear about now is the growing prospect of deflation in the global economy. A bit like what happened in Japan after 1990 and ever since then that prices slowly deflated and then stagnated. Like air escaping from a tyre.

Under this kind of scenario, how would the real estate development company be able to afford to buy back a property in the future at a higher price if in the meantime real market prices have gone down.

I certainly think prospective buyers and the lawyers will more than any time before need to carefully read the fine print before signing any contract.

I’m just wondering if any TV members here have been presented with this opportunity and whether they think it’s a good idea or not?

[mandee]

guarantee ???? I should cocoa.!

[ThaidDown]

You are assuming that the 'Real Estate Development Company' will still exist when the time comes to honour these buy back 'promises'.

They are company promises not personal ones.

[johng]

But some developers are even going as far as also offering to purchase the property back after a certain period at the original purchase price. And for commitment to an even longer period of ownership in some cases they are offering to purchase the property back at a higher price in the future than the sale price now.

Yeah right

[Asiantravel]

But some developers are even going as far as also offering to purchase the property back after a certain period at the original purchase price. And for commitment to an even longer period of ownership in some cases they are offering to purchase the property back at a higher price in the future than the sale price now.

Yeah right

　

I wholeheartedly share your scepticism of this

for a minute take this one step further and assume this " marketing concept " is being aimed at Chinese and Korean prospective buyers on the basis they will find the offer too good to miss.

Well anyway this is how they are hoping to shift their stock..............

Edited March 11, 2015 by Asiantravel

[johng]

If anyone falls for this " marketing concept " ( i'd use another word ) they probably deserve what they get,though I'd still feel sorry for them.

For anyone thinking of buying ask for a big discount on asking price if they refuse then walk away there is a huge huge amount of condos

comming up for sale in the Pattaya/ Jomtien area the building never stops.

[n210mp]

I remember getting into a nasty debate with "Dirty Dog" of Teak door forum. ( I think that at that time he owned the forum and didn't we posters know it)

Some time ago about 4/5 years ago I had the audacity to say on that forum, that with the Western world economies floundering the price of Pattaya land would ether remain stable, depreciate or collapse completely

The reason I felt that it would remain stable without any real increase in value was because of the hold, those with the money power and investment in the area would not allow any serious depreciation of Pattaya land values just by simply holding onto their investment because they were exceedingly rich, please read over capitalised, and unaffected by possibly short term fluctuations in the land values .

This is in effect IMHO is a right and proper way of maintaining any investment as long as one's main capital is unaffected and business can be continued semi normally .

I say semi normally because Pattaya has always been the odd one out, the sex capital of the world and once the place where thousands of men (and some women) from all over the world came to satiate their sexual desires because it was cheap, cheerful and the ladies were the most beautiful, of course the Yanks had led the way into making this place the most promiscuous place on Earth but that is another story

in other words the big boys are waiting for the market to return, hopefully before the inevitable crash that comes when the world economies do not recover in time and Pattaya becomes a wasteland of half built and empty building.

Unfortunately this has not happened and here we are some five years later still not really understanding just what is going on in Pattaya or like DD of the Teak door forum having so much invested in Pattaya that He could not face up to the fact that Pattaya is slowly dying a death.

For those with tooooooo much investment in Pattaya unable to face up to the reality that I see in the place on a daily basis just look at the numbers of tourists from the more wealthy parts of the world who are simply not coming here anymore to marry into the culture and become the lifeblood of Pattaya by eventually becoming in the scheme of things local "wealthy"residential ExPats.

Go out in the dark side and see many geriatric and older old farts like Costas and I

The only younger semi ExPats are the offshore workers who make up the clientele of the bars, cafes.

I can only think that the powers that be are closing their eyes and ears to what is going on in the world at large.

The only tourist of plenty I see are the Chinese and the Arabs widely know for their inability to part with any real cash money!

I was in discussion with a like minded friend the other day who used the argument that the Thais were getting ready for the mass immigration to Pattaya and to Thailand when the barriers finally come down with the opening of the borders and boundaries to the Assian Community.

in that the building that seems to be completely out of sync or sensible control with the demand at this moment in time will be justified when the masses arrive.

In other words the writing is on the wall for me at any rate and there will be at this moment in time some properties where the builders, owners ,may be in dire circumstances and possibly taking a big cut in asking prices for their properties.

To summarise and go to the reason for the OP

If I were a customer for a condo or indeed any property in Pattaya I would be waiting a year or so to see what the effect of the opening of the borders has on the value of properties in this area and possibly taking advantage of the reduction in rentals that is now becoming more apparent especially since the void left by the Russians has left many properties in the jomtien area with a question mark over them as well as many properties that have been vacated by them

[balo]

Don't believe anything they say and never buy off-plan. Or you will end up very dissappointed.

[Asiantravel]

If anyone falls for this " marketing concept " ( i'd use another word ) they probably deserve what they get,though I'd still feel sorry for them.

For anyone thinking of buying ask for a big discount on asking price if they refuse then walk away there is a huge huge amount of condos

comming up for sale in the Pattaya/ Jomtien area the building never stops.

Look even though I am probably as sceptical as you (in my case you can even use the word cynical) but I don’t think you can say it’s the word you would like to use- provided the guarantees they offer could be legally enforced and that is a huge “if “.

For example putting the entire amount of money plus promised increases to the original asking price all in escrow. But then I would be very surprised if any developer agreed to that because it would tie up too much of their money.

It seems to me what they are counting on is capturing the interest of prospective foreign buyers as we gradually see interest rates on bank deposits dwindling to nothing (and in some cases even suffering the effects of negative interest rates). Many foreigners might see this as an opportunity to make the return they are being promised plus getting more money back later? Of course you and I know it entirely contradicts the realities of the property market in Pattaya.

And that was the reason for my question as to whether it's getting harder for developers to raise money in more conventional ways that they did in the past.

[thefactoryoutlet]

Where is this proposed ?

[Asiantravel]

Where is this proposed ?

It's not proposed........ they are actually doing it now

Actually my neighbour has just started working for them doing this. I won't name the specific company but it's in the Pratumnak area.

He is now working full-time trying to find buyers in places like China and Korea because apparently (according to his employers) these two nationalities have already been buying condominiums as investments in Pattaya and there are high expectations that they will be an adequate substitute for the Russians who have left the scene.

I'm intrigued as to how they will identify overseas buyers anyway.

[cigar7]

You are assuming that the 'Real Estate Development Company' will still exist when the time comes to honour these buy back 'promises'.

They are company promises not personal ones.

ThaidDown is exactly correct. The developer may be bankrupt by the time it proposes to buy back the units.

[fforest1]

Where is this proposed ?

It's not proposed........ they are actually doing it now

Actually my neighbour has just started working for them doing this. I won't name the specific company but it's in the Pratumnak area.

He is now working full-time trying to find buyers in places like China and Korea because apparently (according to his employers) these two nationalities have already been buying condominiums as investments in Pattaya and there are high expectations that they will be an adequate substitute for the Russians who have left the scene.

I'm intrigued as to how they will identify overseas buyers anyway.

I just dont see the Koreans or Chinese as long term residents like the Russians were...The main times you see them is when they are following the flag.

[marinediscoking]

Yes seems times are desperate if this developer is offering this. No way anyone can guarantee renters or buy back at or above asking price. I feel sorry for your friend who is working for them which amounts to no more than to a boiler room swindlers scam.

[toenail]

I wonder, in the 10 years I have lived/worked here there had to be over 24 condo complexes built, some medium size apartment buildings, some huge towers such as the ones along Wongamat Beach or Na Jomtien. I wonder if any of the members know specific ones that are not 50% filled; or complexes that fizzled out? We all have been exposed to the slick promotion displays and charming Thai sales ladies at the lobby of the shopping centers, I wonder which ones have gone down the tubes? I still do not understand the over build of condos. Are there that many farangs that can cough up 2-3 million baht (or more)in hard cash and move in? Even if they have extra "cash" are the buyers confident that their building will be maintained with the monthly maintenance fee? Their neighbors will not be loud and crude? The Pattaya infrastructure will improve and their condo will not suffer from brown-outs or water shortages? No noisy bar will be build across the street or a new View Talay won't be built to block their view?

For me, no a young buck anymore, I will keep my money invested and use the interest for my rent and move when needed.

[Srikcir]

Assuming legitimate developers with contracts of sufficient enforcement clauses to sue for any breach or default of contract, the deal sounds quite attractive. For the developer it's a matter of maintaining a high net asset balance sheet that would be used as a basis for borrowing equity on future projects, sacraficing short-term profit margins for long-term returns. The key to every developer's survival is having adequate inventory and ability to attract capital.

BUT how much security and guarantees can a buyer get from any developer regardless of the amount of due diligence performed? The cost of attorney fees alone for the buyer may turn the deal uneconomical. Like any risky investment, never gamble what you cannot afford to lose. For the investor that has a lot of nonperforming capital resources, this kind of deal would be worth the risks.

[Torrens54]

MATE!!!

Have I got a deal for you. You are obviously a very astute individual with an eye for a great deal.

Just happens, I own an Australian Icon. I'm sure you've heard of, maybe even SEEN the SYDNEY HARBOUR BRIDGE!

Well, so happens I've got it up for sale.....just send me your Bank Account Number and Password and you'll almost instantly become the new OWNER of this fabulous Landmark, just a stone's through from the Opera House.....now, tell ya what, if you take BOTH the Bridge and the Opera House off my hands.....Psssttt... can't tell you here, where all those other astute members of tv will see the deal and want to crack onto it...as I said, just send me all your Banking Details and I'll get back to you.......in a hundred years or so.

[rocketboybkk]

It's only guaranteed buy back until you ask them to buy it and then it's not guaranteed.

Come on, savvy up

Sent from my iPhone using Tapatalk

[Anthony5]

It's a genuine and real bargain offer, and I wouldn't hesitate for a second to sign up for it. The only issue you may experience is that the company you signed up with will not be around anymore when you decide to claim your rights, but hey that are problems for later,

[JMWPACIFIC]

Most of these developments are done under shell companies with the property being the only asset. Once the "profits" are taken out, only the shell is left with you holding a worthless guarantee.

[joesanunu]

If the Developer doesn't perform as promised you can hire a Thai lawyer and fight it all the way to the Supreme Court for 5 years.

Fun.

Good luck finding a Thai lawyer that you can trust.

[craigt3365]

If the Developer doesn't perform as promised you can hire a Thai lawyer and fight it all the way to the Supreme Court for 5 years.

Fun.

Good luck finding a Thai lawyer that you can trust.

I've got a friend going after a development company now for several issues found after the unit was turned over. Basically, the developer told him to buzz off. He's getting a lawyer, but it's not going to be easy and it's not going to be cheap. He might actually just have to deal with the problems himself. Do some research on the development company first before signing any contract.

As for guarantees, I visited a development in Phuket several years ago that was offering "guaranteed" returns of some X percent a year as they would rent out the unit for you. I asked how they could do this with such a bad economy and stiff competition? Their reply, "guaranteed yes, but not this year". LOL I almost fell on the floor. Promptly walked out.

[givenall]

But some developers are even going as far as also offering to purchase the property back after a certain period at the original purchase price. And for commitment to an even longer period of ownership in some cases they are offering to purchase the property back at a higher price in the future than the sale price now.

Yeah right

This is Thailand and scams are not limited to taxis or tuk tuk

[MRGTINGTONG]

I have always thought Thailand property prices are over inflated, considering 50% of the population are still third world! the prices per sq m are on par with UK, <deleted>.

Do not fall for the (in the future) promise from developers, they can simply go into liquidation or name change and there's always the very very small print in the contract.

I showed some interest in a Condo project in Hua Hin 4 years ago, promotion in shopping malls and free visit, food and drinks to show house, site plans and scale models of the project. Trying to sell off plan, discounted of course, I didn't buy but out of interest, I visit the show house every year, they have sold 75% of the first condo block but they have only just started building so I imagine it will be another 2 years until the project is completed. Apparently they have only just received a licence to build. Feel sorry for the people that signed up 4 or 3 years ago and still waiting.

Over development now, just like Spain, I'm waiting for the crash.

[n210mp]

I considered not writing anymore on this topic because it seems as though like Dirty Dog of Teak door at the time, there are those in common with Nero of Ancient Rome who will continue to fiddle whilst the city is burning.

Now if you are still dreaming of buying your condo in Pattaya and still cannot understand why it would be wrong maybe you should take a look at this Youtube link and the many like it from very astute world economists

​Listen to what is being said and the effect it will have on places like Europe as well as Asia

It may wake you from your dream of buying anything here in Pattaya

Edited March 12, 2015 by Rimmer

[USNret]

I would imagine there is a lot of fine print, all of which protects the developer & makes the promise worthless. I would think something like they will deduct the price of all rent you have received from the buy-back price, or "subject to market conditions", subtract for wear & tear, etc. In the end, it ends up an empty promise. Do not bank on it having any value at all.

[shirtless]

When i first arrived here I saw the rental guarantee signs everywhere on real estate agents windows and now i just see vacant shops there is no guarantees here on anything

[yellowboat]

Problems with buying condos in Thailand

1. Visas are a pain now

2. Oversupply, they just keep building condos as that is the only thing they know how to do

3. Up keep: Management money rarely goes towards fixing broken elevators, pool care or making the lobby and hallways look good. Try reselling a condo in a run down looking building with a broken elevator.

There are exceptions. Properties connected to hotel chains would be safe if affordable.

Rents are so cheap, buying seems like a hassle.

[torpedo1970]

Pattaya will end up like spain

can already see the signs... many condo's are only 50% sold so we already can see the bad times coming....

especially in Jomtien, sitting on my balcony i can see 7-8 new building sites. seeing my condo unit only have 50% empty units...

OP, yes it is a sign of difficult times....

[ToddinChonburi]

Yes I think time to sit back and wait. watch for the prices to fall or the construction company to go bankrupt. Both should happen.