The Pattaya Condo Boom
With the start of the traditional high season now just around the corner, perhaps the biggest vote of confidence in Pattaya and its future prospects comes from the plethora of developers who have just launched or are about to launch new condominium projects in the city. To give just a few examples, there are Amazon and the Vision from Matrix Iguana, Atlantis, Centara Avenue, La Santir, Laguna Beach Resort and so the list goes on. Raimon Land
have also just confirmed that they are about to launch a new project on their site on the Pattaya side of Pratumnak Hill. And of course this does not take into account those developments, of which there are many, that have now been launched for a while, but upon which construction has not yet started.
Particularly bearing in mind the current state of the World economy, and the relatively slow performance of some other sectors within the Pattaya real estate market, the amount of money being invested in these developments and others is absolutely incredible. Yet the reason for so many new projects being launched is that those already on the market have sold exceptionally well. Whatever the underlying reasons that have allowed this particular sector of the Pattaya market to do so well in an undoubtedly different economic environment, there can be no doubt about what it has achieved.
At least part of Pattaya’s success can be attributed to the breadth of its appeal. In recent times, a lot of Bangkok Thais have again started to enter the Pattaya property market. In particular, projects like Raimon Land’s Zire and the Palm have struck a cord with buyers from the Thai capital, but they are certainly not alone. While those are high end developments towards the top end of the price range here, budget developments have also achieved a great deal of success amongst domestic buyers. This means that ever more Thais are entering the Pattaya property market, at all levels, and this will be a massive boost to the overall viability of the market going forward.
Notwithstanding the growth of the domestic market here, sales to international investors are still very important. Such buyers can be divided very easily into at least two categories. Firstly, there are those who buy “on the ground”, i.e foreigners who are either living here or visiting. Secondly, there is ever increasing demand from investors based overseas, who buy properties here as investments often without even visiting the City. The fact that prices here are, on an international scale, still very cheap and that expected returns are therefore very high relative to those achievable elsewhere makes many of these developments very attractive to these kinds of investors.
Moreover, there are other good reasons why more and more international investors are looking towards Thailand. From the perspective of those in the West, there continues to be a strong threat of a double dip recession, while the credit ratings of banks are again being downgraded. On the other hand, economies in East Asia, including Thailand, have been doing well, although obviously they have not been completely immune to the fallout from the West. Nevertheless, it seems fair to assume that Asia is somewhat of a safer bet than many of the large Western economies right now. Certainly we are told that local banks do not have any significant exposure to the sovereign debt crises, unlike most of their Western counterparts.
Furthermore, in spite of the well publicized political problems in Thailand in 2010, tourist arrivals were still up nearly 15% for the year. Early reports suggest a similar increase is likely for 2011. Bearing in mind the economic situation in the West, clearly Thailand is attracting a lot of new visitors from new markets, while not suffering the kind of fall off in terms of Western visitors that one might perhaps have expected. Bearing this in mind, it would not appear unreasonable to assume that as and when economic recovery is finally underway in the West (which might be a few years yet), there is likely to be another surge in tourism to this most popular of holiday destinations.
I have written on many occasions that Thailand’s proximity to both China and India provides the potential for huge growth both in tourist numbers and overseas investors. The rapidly growing middle classes in these two huge nations are soon likely to be bigger than anything the World have ever seen in the past. Already the numbers of visitors from these countries are increasing rapidly and individuals are starting to enter the property market here. The recent announcement in China that individuals will only be allowed to own a maximum of two properties in their own country has meant that there has been an immediate demand amongst those with money for property investment opportunities overseas. Thailand and Pattaya in particular are exceptionally well placed to benefit.