My predictions regarding the property market in Pattaya finally came true. The bubble really did burst. I never imagined it would come to this, I never imagined it would be be this bad. The real estate market in Pattaya is in the middle of a very difficult time. Frankly, writing about it is depressing. For several reasons I won’t be able to tell the full story. But even the part I am allowed to talk about is ugly.
So what is Pattaya like in June 2015? Has the city become a ghost town or an abandoned village because the economic activity that supported the city has failed? By all means, no, life in Pattaya goes on as usual for most citizens. The ones that are affected are mainly people that make a living from the real estate business, such as real estate agencies, newspapers and magazines.
The main business in Pattaya is tourism. The tourists that arrive to Pattaya will not know that the real estate market is in trouble. Unless they follow newpattaya.com on a regular basis they won’t have a clue as to what kind of trouble the city is facing. They won’t know unless they are told about it.
There are two main issues that have caused problems for the developers in Pattaya:
• The weak market
• The EIA committee or the tough EIA rules
So what is it like when the bubble bursts? It is a relatively quiet affair because people in the industry don’t like to talk about it. Make no mistake, it is felt all the way down the food chain. The most visible signs are realtors closing their offices in town. Business is so bad that they actually have to close their business down.
Then we notice that the property booths in the shopping malls are slowly disappearing. At Central Festival Pattaya Beach, on the 6th floor just outside Sizzler, there is not even a single booth left. The last one to leave on that floor was ORP.
Among other visible signs are the empty billboards along the motorway. The developers have had to tighten their belts, this means that the advertising budgets are reduced.
The most important sign is that everybody has stopped launching new projects. The local developers that launched mega projects in 2014 have all burnt their fingers badly.
Most of the customers, all the people that have purchased property in Pattaya, do not live in the city. They live in Bangkok and in other cities all around the world. Their loss or their pain is not felt in Pattaya. If a project they have bought into is not completed, and if their investment is not refunded, then they will take a big financial loss. As a result investor confidence will take a blow.
The tough EIA rules will prevent many projects from ever being built. Even projects that have sold well will have to be cancelled. This is a shame. By the time the developers get the message that EIA approval has been rejected they have already spent perhaps more than a 100 million baht on showrooms, advertisements, lawyers etc. In these cases it is unlikely that the buyers of units will get their full investment back. The money has simply been spent on various activities. Some of the money might even have been spent on luxury cars.
There is no need to delve into the reasons for the weak market. Others have done that and we have talked about this in many of the earlier Property Bubble articles.
There was a time just a few years ago when it was relatively safe to invest in off-plan projects in Pattaya. Most of the projects made it all the way to the finished product and only a handful of them were never built. This is no longer the case. Currently off-plan developments must be categorized as high risk investments. Don’t buy it if you can’t see it. Don’t even think about buying before the project has received EIA approval. The times have changed. The rules of the game have changed.
We have been asked to present predictions for the immediate future of the development industry in Pattaya. Well, from June 2014 to November 2014 it is unlikely we will see big changes in the status quo. What the next high season is concerned we just have to pray to the heavens above, hope for something unexpected to happen. At the moment I see no light at the end of the tunnel.
Well, this is not exactly true. I hope than Ramayana Water Park will be in operation at the end of 2015 or early 2016. This would be a step in the right direction.
I hope that the M Gallery hotel in the Waterfront development will be in operation within the next year. I expect the restaurants at the new hotel will attract a new kind of clientele to the city.
The opening of the new water park and the new Bali Hai hotel won’t change everything but it is something good to look forward to. These venues will help the process of giving Pattaya a new brand and identity. Think of Pattaya, think of water parks, think of living the good life, enjoying good food at luxury hotels.
Below we will mention a few projects that cause raised eyebrows. We will talk about projects that have either not started construction at all and projects that for some reason have halted construction.
I have to stress that halted construction does not necessarily mean that the projects in question will never be completed. Construction might resume at a later time if the developer can find a solution to the problems.
The nature of the problems are seldom known because the developers never tell us what is happening behind the scenes. So we are left guessing why there is no activity at the construction sites. Guessing does not always leave us with the right answers.
This is my personal list of projects that cause raised eyebrows:
• Zense Condominium has halted construction for about 1 year.
• Sea Max Condominium has halted construction for almost 1 year.
• Savanna Sands is supposed to include three 26-storey condominium towers. I can only see a single tower being built at the moment.
• The Sky Jomtien received EIA approval years ago, no activity at the site.
• Mr Bond @ The Beach never started construction.
• Moroc Condo pattaya has not started construction, EIA status unknown.
• Aurora Pratumnak has received EIA approval but not started construction.
• ZEN In The Park never received EIA approval.
• Star Residence has received EIA approval over a year ago, no activity at the site.
• Orion Pratumnak started the piling works, after that construction was halted. The project’s website has not been operational for many months. The website www.orionpattaya.com does not exist anymore.
• Orion Wong Amat Boutique Living has no website, www.orionwongamat.com does not exist anymore.
• The Onyx Residences is a complete mystery. Launched in 2012, no activity at the site.
• Sands Condominium is still waiting for EIA approval, project dates back to September 2013.
• Blue Lagoon condominium Pattaya – They have received EIA approval but no activity at the site.
• Abatalay – Seems like the project just disappeared.
• Masters Residence – Oh my God!
• Imperial Twins – Oh my God!
• Sixtythree@12 was cancelled a few years ago. I believe they did not get the needed EIA approval. I believe the investors were refunded the money.
• Meridiem Park Condominium – Very strange indeed!
• U Smart Condo – No construction activity at the site.
• Buritara Condo – ???
This is not all, the list goes on. Three high-rises have quietly been shelved and investors have been refunded. There is no shame in cancelling a project. A few months ago NYX by Sansiri was cancelled in Bangkok. The project had sold 30% of the units during the first 12 months, this was not good enough for Sansiri. Few developers like to talk about the need to cancel a project.
Things work differently in Pattaya. 30% sold during the first year after launch will seldom mean that a project is cancelled. They are not responsible to any shareholders, they can do more or less as they please. It is better for most of the the local developers to wait and let time do the job.
Ask why I don’t talk much about construction in Pattaya at the moment. I say what is there to talk about? This? It is mostly bad news.
However, it is not all bad. Blue Sky Group seem to be doing ok, none of their projects seem to be having the problems mentioned in this article. Most other developers are effected in some way either by the weak market or by problems with the EIA committee.
Matrix has taken a beating on various forums for not building according to to specifications. This has meant a delay in authorities issuing the occupancy certificates. I say don’t be too hard on Matrix. Sooner or later the customers will get their keys and they will be able to move in. Perhaps not on time, but they will move in.
Which scenario do you prefer:
– You need to wait a little extra but you investment is safe
– All your money is lost because the project failed
The times are tough, don’t complain and whine about the little things when things could be much worse. You need to look at things in the right perspective. Think about all the investors that have actually lost money by investing in property in Pattaya. This number is growing on a daily basis.
Here are four little words that explain EXACTLY how I feel about things at the moment:
“Better late than never”
Published 7 June 2015
Pattaya’s Property Bubble Bursting