Info for investors
If you are a small time investor, content to put your life savings into one of Pattaya or Jomtien’s small but modern condos, buying-and-holding until the market trend shifts to a seller’s market, or a large investor intent on reaping substantial returns-on-investments (ROI) by buying a considerable number of condos, probably off-plan to maximise your returns, The Pattaya Condo Guide will save you endless arduous Internet searches, browsing through numerous real estate agents’ or developers’ websites. The Pattaya Condo Guide is Pattaya’s best and most comprehensive condo resource, boasting hundreds of visitors from far and wide every day, with literally hundreds of detailed listings from the smallest studio to the most lavish duplex super-luxury penthouse.
The Pattaya Condo Guide is literally a one-stop facility that can give you, the investor, everything you need to know about our tropical paradise, with its world-class facilities and wide and varied condo stock, giving you sufficient information without ever having to leave our portal that will enable you to make an intelligent and considered investment purchase or purchases.
Now is the time to invest
Pattaya, Jomtien and their surrounding districts have witnessed a phenomenal growth in their condo stock over the past 12 years and the ROIs have been and continue to be among the best in Thailand. Major international developers have led the field in redefining quality standards, simultaneously attracting reputable developers of the same ilk, so that Pattaya now has excellent, secure off-plan potential. In addition, because of the present economic climate of recovery and the fact that for the moment the Pattaya Property Market favours buyers and investors, the majority of developers are offering hitherto unheard of discounts, developer finance and other inducements, that make now the prime time to invest.
Property investors, as you probably know, normally adopt one of two strategies: short term (18–24 months), the "flip" strategy, or medium term (3-5 years), the "buy to let" or "buy and hold" strategy. In either case, three factors are vital to take into consideration: investment objectives, the time frame and risks involved. Of the two strategies, the ‘flip’ method carries the promise of the most lucrative returns in the shortest time, where it is possible to double one’s investment. Off-plan investments are the best example of this type of strategy, involving purchasing a property at a low initial price that has either not started or is actually under construction and then reselling the property before construction has finished, assuming one has chosen a project with a good demand and capital appreciation potential. Strictly speaking, the beauty of off-plan investments are that they are a purchase and sale of an option to purchase the property and are highly attractive as, not being property transactions as such, they don’t incur penalties such as registration and taxation, like stamp duty, but involve a low initial investment, typically 10% to 30% of the purchase price and some minimal legal fees, and the investments can be freed up quickly for reinvestment.
You, as an investor, almost certainly constantly monitor your chosen property market and attempt to predict its potential in the short, medium or long term, depending on your choice of strategy. If you are a medium term investor, buying-to-hold up to 5 years, with a view to selling at a profit when the market price has increased appreciably, income generation in the interim, as you know, is a vital consideration to offset the cost of financing, taxation, maintenance and eventually the capital gains on the profit upon sale. Seasoned investors are fully aware that, initially, a property needs to be identified which will have a good medium-term rental potential. For example, in Pattaya before the recent market downturn, studios and one-bedroom condos were seen as being attractive to the younger (31-50 year-old), single, short-term tenant intent on living close to the entertainment night spots and beaches, hence the importance of location. To counteract the seasonal demand, high in the high season and diminishing markedly in the low season, it is advisable for continuity to choose a development which offers guaranteed rental schemes, as well as recruiting tenants, of which there are many in the Pattaya region and which The Pattaya Condo Guide can point you towards. Basically, this strategy demands flexibility and patience in order to maximise profits, but then you are probably fully aware of this, already.
- Thailand - an astute property investment location.
- The current state of the Thai off-plan market
- Macro-due diligence
- Micro-due diligence
- Pattaya’s investment potential
- In depth investment matters
Thailand is a world-class tourist destination, boasting numerous tourist attractions, resorts with excellent facilities, spectacular islands, clean beaches, luxuriant tropical forests, graceful mountains, developed infrastructure and culture-rich cities, with an equable climate that unfailingly attracts winter visitors from November to February. Thailand is one of the cheapest and most accessible destinations to fly to in Asia, especially since the completion of Suvarnabhumi Airport. Thailand is also one of the world’s foremost retirement destinations, due to the familiarity of the Westerner-friendly cities and accommodating nature of the populace, with a comprehensive and efficient health care system, where foreigners over 50 years-of-age can easily obtain retirement visas. The Thai property market is amongst the cheapest and most varied in Asia, increasingly popular among investors, retirees and second-home seekers, alike, both foreign and domestic, with excellent rental potential due to the high demand among tourists, working expats and local residents. Thailand is one of the ‘tiger economies’, representing one of the fastest-growing in SE Asia and attracting significant foreign investment, notably from China and Japan. It also represents a regional hub from which companies frequently disperse their employees throughout Asia.
The Bangkok property market was the first in Thailand to recover from recession and the last quarter of 2009 saw off-plan sales (largely to Thais) representing an increase of 380% from the same period in 2008 as major mid- to high-end developers like Sansiri, Asian Property (AP) and Noble started new condominium projects in the inner city, the greatest percentage of sales being achieved by the low-end developers Supalai and LPN who both launched five projects of which more than 70% have already been sold. In Pattaya, Raimon Land’s Northpoint condominium has just completed construction and if the cheapest unit had been bought off-plan two years ago for Bt4.5 million, it could have been sold for Bt8.3 million, just prior to completion. In both cities, however, the examples used are major, reputable developers with long track records; other less established companies barely registered any off-plan sales! This fact alone amply demonstrates the risk factors involved in buying off-plan and the crucial need for in-depth due diligence.
Initially, as a foreign investor, you undoubtedly know that you would be well advised to consider the macro-factors such as the state of the economy, the political situation, and local taxation of any country you were considering buying condo investments in. In Thailand’s case, the economy registered a 5.8% GDP growth in Q4 2009, because of the rapid recovery of exports to Asian markets. Domestic tensions continue, but the impact has been on foreign, not local demand, which remains strong despite the recent political problems; even so, evidence shows that long-term foreign investors have traditionally disregarded numerous coups and other political problems that Thailand has experienced in the past as comparatively speaking, Thai property represents one of the best bargains in SE Asia due to its relatively low cost, variety and high quality. The Thai government has just rescinded its tax incentives, but this again is deemed to have limited impact on demand.
From a micro-perspective, due diligence is normally limited to the local area and a specific project, covering a competitive analysis of other similar projects, the number of new projects currently under construction and their potential impact on market price and demand, as well as current market trends and the long-term prospects for the locale. The developer’s track record should be investigated, whether or not the land is owned by them, if the EIA (environmental impact assessment) has been passed and construction permits are valid, whether they are self-financing or if not whether construction financing has been obtained, the track-record of the general contractor, measures taken to offset possible rise of construction costs and finally, the investor’s recourse if the developer defaults.
1.The prospects for 2010
A leading Thai developer in Pattaya, Jugkarut Ruangratanakorn, Vice President of Ratanakorn Asset, has predicted growth of between five and ten per cent this year, as well as an increase in property prices. Three major developments, Heights Holding’s W Tower in Wong Amat, Major’s Reflection super luxury condominium in Jomtien and Apex’s White Sand Beach-Spinnaker projects, have all just restarted construction after being on hold. The same applies to The Beaches Water Theme Park, the largest entertainment project of its kind in SE Asia. Nigel Cornick, erstwhile CEO of Raimon Land (the company that started the high-end property boom in Pattaya with its Northshore condominium) now CEO of Binswanger Brooker (Thailand) has strongly hinted at introducing a “new and exciting project concept” that “could pioneer the development of the next property boom location for Thailand’s Eastern Seaboard.”
2.A summary of Pattaya’s assets
a)Pattaya, the ‘Asian Riviera’ and commercial and entertainment hub of the Eastern Seaboard (a region with economic growth second only to Bangkok) is Thailand’s pre-eminent tourist destination, having attracting as many as 6.68 million tourists annually in the past and is expected to do so again. Its equable climate, relatively cheap cost of living and thriving, desirable property market, whose fundamentals are strong, and foundations have been well laid, all serve to enhance its attractiveness.
b)Pattaya enjoys high popularity as the primary and secondary home of working expats, retirees, buy-to-let investors, local businessmen and a significant number of Bangkok Thais.
c)Pattaya’s appeal rests in its accessibility (1.5 hours from Bangkok), the recent attempts to redefine the city-resort to make it family-friendly, the continuing infrastructural improvements, its top-class hospitals, 4 international schools and 20+ excellent golf courses close at hand. Added to which there are an increasing number of 4 and 5-star hotels like the Royal Cliff, Amari, Holiday Inn, Centara Grand, Sheraton and soon Hilton, as well as numerous cheaper forms of accommodation, restaurants to suit virtually every gastronomic taste, top-class shopping facilities and an abundance of recreations and entertainment facilities, including water sports, sailing, fitness, spas, exotic nightlife, botanical gardens, a floating market and cultural shows.
In short, Pattaya makes an ideal investment venue, where, because of the constant demand for condos, both the off-plan and buy-to-let investor can expect to reap substantial ROIs for the indefinite future.
- 1.Reasons To Be Optimistic
- 2.Buying Off-plan
- 3.SE Asia condo price and rental market comparison
- 4.Legal Issues: 2008 Amendments to the Condominium Act
- 5.Legal Issues: Inheritance tax and law