Off-plan condos VS re-sales and pre-owned apartments
By Ekaterina Okisheva, managing director Invest East Property agency.
The Property market in Pattaya has always been driven by new developments, with off-plan and under construction condos offering payment terms over the period of time of construction. For quite a long time purchasing a condo from a developer was the most popular choice for investors and property buyers, until just a few years ago when the second hand and resale purchases began to occupy a large part of the market.
Ten years ago, when I had just started working in the property market in Pattaya, the second hand market was comprised of pre-owned condos aged 20-25 years old, mostly studios 30-40 up to 70 sqm with some kind of kitchenette and balcony. Larger apartments, with 1-2 even 3 bedrooms were available as well, but the sizes were 100-200 sqm and more. Such units were either inconvenient or unaffordable for many family buyers. The age of these condos was also quite a big disadvantage.
At that time agents would normally recommend buyers and investors choose from a selection of new condominiums available direct from the developers’ price lists. The potential growth was quite a big advantage and also developers started to implement smart planning and modern design in order to be able to offer what the market was looking for: comfortable apartments that were not too expensive. The 1 or 2 bedroom units of 35-45 sqm could accommodate a couple or small family and there were also family condos with 2 bedrooms from 50 sqm and up. From 2010 such condominiums were common on the second hand market and by 2014 there were a few thousand available on the second-hand and resale markets.
The “Resale market” refers to deals available for the re-selling of a contract with the developer for a new condominium while the building may still be under construction. When purchasing a resale contract the new buyer will have to deal with the seller first. After the contract payment to the seller is complete, he will then need to continue the payments (if any) to the developer. Handover of the apartment, title deed and house book can then be obtained from the developer’s office. The “Second hand market” normally refers to pre-owned apartments, where the buyer deals only with the seller, from whom he receives all the documents, title deed and keys.
It was quite a profitable business for those who were able to get condos on “presale”, paying a 25%-30% down payment to the developer and then selling it on when the construction was almost complete. Normally, by then, the developer had sold out of all the best units and available foreign quota so things were quite promising. That was until mid 2014 when the Russian currency dropped almost 100% and Russians, who had been the super buying power on the Pattaya property market, started to get rid of their purchases*.
By the end of 2014 the second hand and resale markets were variegating offers one was better, then the other. Prices for similar apartments in the same building could differ up to 50%, depending on how badly the seller needed to sell. Europeans followed, as the euro currency also depreciated and started to sell their holidays homes, offering up to 30% discounts for a quick sale. Every day our mailbox received dozens of new emails from sellers with lower prices for their units. For the next couple of years smart buyers were able to get some really nice pieces of property in Pattaya at very attractive prices.
By last year there were fewer and fewer of these deals available on the market but agents and sellers were still labeling their offers “hot sale price” to make their listings looks more attractive.
Meanwhile, the off-plan market slowly recovered after the shakeup of 2014 and 2015 (when a few projects were cancelled or postponed) and by 2017 prices were different for new condos and second hand or resale deals by at least 30-35%.
Nowadays a new buyer looking in the Pattaya property market can find a variety of similar units but for totally different prices, depending on the seller. It is still quite reasonable to purchase from the developer, because paperwork and money transfers are easy and clear. Plus, payment on installments without any interest is always a big advantage, even when the final price is a bit higher.When purchasing on the resale market the price might be better but the payment plan will not be so comfy and easy. The second hand market of pre-owned condos is very simple, you buy what you see, you pay what you agree.
Every new buyer has their own objectives and opportunities, and there is no universal rule about what and how to buy. But nowadays every new buyer has such a great choice of offers to choose and compare, that he definitely need to look a bit further than fancy showrooms and check what else the market can offer to him.