Sansiri in Pattaya – The winner takes it all

Pattaya loves Sansiri. I love Sansiri. I have seen most of their developments in Bangkok, and oh my God, that company can knockout any competitor it might meet on its path. Sansiri has just launched its second high-rise project on second road in the heart of Pattaya, a project that is called The Base Central Pattaya. Sansiri’s first development in Pattaya was the famous Baan Plai Haad that is a Grade A development. We don’t talk about the grade of a development in Pattaya because most of the developments are Grade D or lower. Sansiri’s third develpment in Pattaya will be the dcondo on Thepprasit Road.

A wind of change is blowing through the streets of Pattaya. People sitting in their offices all day might not have noticed anything unusual but something new and good is happening in Pattaya. It almost feels like spring has come early after a long winter. Pattaya warmly welcomes Sansiri as the new leader in town.

Once the word gets out that Sansiri always finish what they start, even the foreigners will prefer Sansiri. Sansiri is a no-risk investment, the customers will not have to worry about loosing any money. That is just one of the reasons that Sansiri already is declared a winner in the property market.

Read all about Sansiri’s exhibition at Siam Paragon on 15 – 17 february 2013 here.

I know Sansiri very well as it is one of my favourite developers. Sansiri is a very big Bangkok based company with more than 40 developments in the portfolio and that make the local developers seem very small in comparison. Actually it does not make any sence to compare the big developers in Bangkok to the local developers, it is like comparing comparing mice and men, not in any way disrespecting the local developers but they are up against some really huge professionally run companies. Practically all of the big developers in Bangkok are listed on the Stock Exchange of Thailand and Sansiri has been listed since 1996. Most of the local developers in Pattaya did not even exist 7 years ago and they do not have a real company structure, it is more like a company where just one man is making all the decisions and that person has to work very hard (a one-man show).

I knew that sooner or later the developers from Bangkok would come to Pattaya and I knew they would end up dominating the market but I did not anticipate it would happen so quickly.

I doubt the local developers in Pattaya have any idea of just how big the Bangkok based developers are. You can visit the most remote areas of Bangkok and you will find lots of projects from developers like LPN and Supalai. Talking about LPN Development, it is worth mentioning that they offer units at the same prices for both thais and foreigners. The local developers happily charge 300.000 – 400.000 baht more for a unit simply because the buyer is a foreigner.

LPN Development should use this as a slogan when advertising their properties: Same price for all.

This is a great slogan that would make that company stand out in a very positive way. LPN is not using it as a slogan and I don’t know why? Perhaps they are scared of stepping on somebody’s toes? It is a great idea, it is a unique idea and I hope somebody has the courage to go forward with it. Just break down that wall that has been here for too long and let the prices be equal for all customers. Then they will all have to follow the good example.

I don’t mean to unnecessarily dramatize the situation but there has been a severe change in momentum regarding the property development in Pattaya signaling a change of direction with new companies taking charge and leading the way.

Sirisa is a giant in the development industry, a giant that can easily crush any opponent. Sirisa has a strong financial background but that is not the only reason why the local developers should fear them. It is a thai company with deeply rooted connections to the thai middle and upper classes. A thai customer faced with the choice of buying a condominium from Sirisa or from a foreign developer will at any time choose Sirisa. You don’t really need to know much about the property market in Bangkok to understand that Sirisa has an invaluable reputation in the development industry.

All points to that the good times have come to an end for the local developers. LPN Development will take care of the lower segments of the market while Sirisa will deal with the middle and upper segments. And then we have not even considered what will happen when the other 20 mega developers from Bangkok enter the local scene. My guess is that the local developers will need to look elsewhere. This is Thailand and Thais prefer to do business with other Thais. And when the foreigners find out what Sansiri has to offer they too will prefer Sirisa. This kind of news tend to attractattention and spread fast on the internet. What is hot and what’s not? – Sirisa is hot and The Base Pattaya is even hotter!

Sirisa and other Bangkok based companies have taken over and are now showing the way to the future. The war, if you can call it that, was over before it even started. There was nothing the local developers could have done to prevent it from happening. How can small local companies compete with professionally managed giant companies from Bangkok that are listed on the Stock Exchange of Thailand? They must have known the good times were coming to an end. But “game over” probably happened earlier than they expected.

The Bangkok based companies came to Pattaya because they could smell money. LPN Development is not running a charity for the working class, they are in this business to make money. Only a few developers build because they have a need to create something unique, for the rest it is only about making profit. If you know about the Klondike Gold Rush you understand the effect that money has on people: you can never get enough, always needing more.

The local developers will be very careful before they launch new projects in the near future. You do not launch immediately after one of the big boys have launched a successful 1000++ unit development, the same way as filmmakers do not release a movie at the same time that a blockbuster movie is released.

You cannot compare Pattaya to Bangkok. Bangkok is one of the biggest cities in the world with 15 – 20 million inhabitants while Pattaya can account for only a couple of hundred thousand. Pattaya’s problem is that we lack people.

If you remove the Russians from Pattaya, the beaches at Wong Amat will be very quiet and the same can be said about the boats leaving Bali Hai Pier going to Koh Larn. No Russians, very little activity in Pattaya, a fact that few will dispute.

Pattaya has no financial districts like Bangkok do. We do not have other industries than the tourism industry, hence Pattaya is a city that depends heavily on the tourists. The people that make big money are the developers, building contractors, the hotel owners, owners of entertainment venues and popular restaurants and bars. And the only big road we have is Sukhumvit Road. We do not have the infrastructure to handle the expected increase in population. As far as I know nothing is being done to prepare for the future.

Bangkok is a real metropolis that is crowded with people while Pattaya is a resort city. We have some nearby industrial estates in Laem Chabang and Rayong and some of the executives might live in Pattaya, but not the workers.

The problem is that there are too few people living in Pattaya. Looking at some of the high-rises in the evening you might see light in only 4 or 5 apartments, the rest is just total darkness. It is a bit scary but that is the way it is. Many new developments were supposed to have a restaurant on the ground floor, that space is often vacant. Even though the property has been sold out, very few people are actually living there permanently. You can’t make a profit running an outlet these places. We need more people, we need more real jobs and we need at least one business district.

If you live and work in Bangkok you might consider buying a 4 – 5 million Baht condominium in that city, but you will most likely not spend the same amount on a holiday-condominium in Pattaya. That would be a lot of money to spend on a home for the holidays, a home that you might visit only 10 – 15 times per year. Generally condominiums in Pattaya are cheaper than in Bangkok, even beach side properties in Pattaya are cheaper than properties along the mass transit systems in Bangkok.

People were saying “there is a buzz in town” when a developer was about to launch a new development, this phrase has now been changed to “there is a buzz in Bangkok“, and that is the way it should be. At the moment it is like Pattaya is not even part of Thailand, some see Pattaya as being a british colony even though the most spoken second language it not english anymore, it is actually Russian. At Bali Hai Pier the local thais speak russian to the tourists, the sellers at Wong Amat communicate with the tourists in the Russian language. The thais have had to learn Russian because many Russians are not able to speak english. Pattaya and Bangkok are slowly merging, that is why we are seing these changes.

A wrong way of doing business in Pattaya is that the developers advertise a product that does not exist anymore. Every day you can read about prices from 1 Million baht or 1.3 MB even though only a limited number of such units were available 2 years ago. Yes, they happily advertise prices that has nothing to do with reality. You may call it bait (a luring substance) or you may call it a scam. They advertise old prices for units that never were available in a foreign name: a limited number only in a thai name! A foreigner will need to pay in the region of 2 Million Baht for a small unit simply because he has to pay 300.000 – 400.000 Baht extra, that is money ending up in developers pockets. There is no law that says that foreigners must pay more.

These days the condominium developments often come fully furnished. Be aware that the furniture often is of a low quality. A developer must always try to maximize the profit so don’t expect too much. It is really cool that all 800 units have the exact same furniture, I hope you can see that 🙂

We should all be on the same side here in Pattaya, it really is a shame that some people wish otherwise. Why internal war when unity could make us strong?

Published 14 february 2013.

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