Pattaya’s Property Bubble – Part 18

Bubble BurstingImagine your wealth plunged by 40%. Imagine the value of your assets is worth 40% less than 6 months ago. Furthermore, imagine your salary is cut by 40%. Get the picture? Well, this is what has happened to our Russian friends. One question:

Do you think the Russians will invest in off-plan developments abroad after this? Would you?

The Russians are our best customers. In some developments they account for up to 90% of the condo purchases. In other developments they buy only 50% of the units. During the last 5 – 8 years the Russians have been major investors in the Pattaya property market.

Let’s look at the reason for the Rouble’s dramatic decline. The Ukrainian crisis has resulted in the USA and Russia engaging in a psychological war. The new cold war between the US and Russia has seriously affected the value of the Russian Rubel. During 2014 the Russian Rubel has lost 35% of its value against most currencies.

Selling condominiums in Pattaya to Russians will be much more difficult in the future. Many Russian buyers will not be able to complete the payments on already booked units.

THOUSANDS of condo units will flood the property market in Pattaya. This could be disastrous to the local economy. The good citizens of Pattaya will most certainly feel the impact of the Russian Rubel losing value.

There is NO DOUBT that the local developers will be seriously affected by this. If a project goes down it might affect other projects like a domino effect or a snowball effect. A snowball effect is a process that starts from an initial state of small significance and builds upon itself, becoming larger as it rools, and also perhaps potentially dangerous or disastrous.

When the cash flow from Russia to Pattaya is reduced significantly it will most likely result in some companies going bankrupt. This is what is happening now, this is reality unfolding before us. This is a very serious situation. This could be the beginning of the end. This could potentially lead to the collapse of the local property market. A lot of properties will flood the market.

The property market in Pattaya is all smoke and mirrors right now. There are lies everywhere and some people give the impression that things are good. I can confirm that things are NOT good. For obvious reasons the newspapers DO NOT ask any unwanted questions. Do not look for the truth there. They will paint the glamorous picture they are paid to paint. Paid to do the dirty job.

Do not always believe what you read, not even here. There are limits as to how far I can go. Sometimes even I have to play by the unwritten rules. Sometimes the truth is withheld from the masses. Not all information is available to the public and it has to be that way. Revealing the truth to the masses can cause mass hysteria. The absolute truth is for the select few.

You may have heard about powerful secret societies. They are a reality, they operate on a global scale and they are indeed more powerful than you can imagine. Among the members you will find people of extraordinary wealth, people of extraordinary intellect. That is as far as I can go on this subject.

How deep is the rabbit hole? If you go down the famous rabbit hole in Pattaya you will find a never ending tunnel, always finding more tunnels. Don’t expect to find the answers you are looking for. You might not be able to find your way back. I know a lot more than I am allowed to say.

However, the show must go on. This is the most important rule of them all. Carved in stone by a leading member of the most important secret society. Despite all that is happening, the show must go on. Somehow Pattaya will bounce back, it will all be arranged. But the immediate future does not look good.

The year 2014 is coming to an end. Let’s look back at what has happened on Pattaya’s property scene. Why did the local developers keep launching new projects at a time when the Bangkok based developers took a step back? Why did they do it? The answer is simple. They were scared of missing out on a piece of the pie. Time is money and if you can’t respond fast the other developers might enjoy the pie all by themselves.

It it a pity that the Bangkok developers took a step back in 2014. They added some confidence to the local market. They had no choice, they are not allowed to use the shareholders’ money on high risk investments. The rules for off-plan projects for non-listed local developers are different, they are not held accountable for anything. They are free to do as they please.

In 2014 we saw many new projects in locations which are definitely not primary locations. Primary locations still exist in Pattaya but the prices for land has risen to very high levels.

We noticed a pattern where the local developers were launching new projects simply because the competitors were launching. Furthermore they were all launching in the very same part of town along Jomtien 2nd Road and the prices per square meter for these projects are nearly identical. Same units sizes, same location and same prices. For more information read my article, Timing issues in the world of property business.

The new stricter visa rules that make long stay visits impossible was terrible news for the local property market. Unless you can afford the Thailand Elite Card then you will be in trouble. Many tourists will think twice before investing in a country with constantly changing visa rules and an unfriendly environment.

Then came the proposed changes to the foreign business act, very hostile changes that would prevent foreign investors from controlling their own companies. Madness, but there are elements within the Thai military and The Thai Chamber of Commerce that want to eliminate foreign influence in the country. The very same thing happened after the last coup in 2006 and now they tried again in 2014. Make no mistake, if they can get away with it they will do it. They might sneak it in the back door.

Arcadia Beach Continental has been launched in December 2014. Almost 4000 units have been launched within one year under the Arcadia brand. Beat that if you can! No doubt this is serious headline stuff. No developer has ever pulled such a stunt in Pattaya.

The agents get good commission rates, why should they care? Many of my readers are agents. REM also mentioned the new HH launch, everything seemed perfectly normal to the dear ‘journalist’. That is always the case in all these magazines. This is exactly Pattaya’s main problem. NOBODY is ever talking about anything important because of the dependency of the industry.

Pattaya is NOT booming at the moment. We all know that. Why on earth would anyone launch such a high number of units in a time of crisis?

As the only one I say the emperor is not wearing any clothes. Everybody else seem to believe the emperor is wearing the finest, best suit of clothes.

Do we really have to go through life keeping quiet all the time? Kind of sad. Then we’re nothing but slaves.

All in all, 2014 has not been a good year what the local property market is concerned.

Published 12 December 2014

Pattaya’s Property Bubble Bursting

Part 2
15 May 2013
Read More
Part 3
26 May 2013
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Part 4
12 June 2013
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Part 5
21 June 2013
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Part 6
24 June 2013
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Part 7
15 August 2013
Read More
 Part 8
28 August 2013
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Part 9
15 September 2013
Read More
Part 10
7 October 2013
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 Part 11
12 October 2013
Read More
Part 12
12 November 2013
Read More
Part 13
19 December 2013
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Part 14
29 December 2013
Read More
Part 15
9 June 2014
Read More
Part 16
26 July 2014
Read More
Part 17
9 August 2014
Read More
Part 18
12 December 2014
Read More
Part 19
22 February 2015
Read More
Part 20
7 June 2015
Read More

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