Market Roundup – Civil Unrest Edition!
As much as I would enjoy writing my two cents on the situation in Bangkok (which has now spread to killings in Udon and down south), I think I’ll heed the advice of some colleagues who have advised against it. However, I suppose I can at least give some thoughts on how it has all affected the local property market.
As per usual, I can really only speak for our business as well as my chats with some other local area realtors, so please don’t see this as a broad stroke of market analysis.
The high season really seemed to start off with a bang this year. By late November we were starting to see good high season numbers of buyers and renters and really gave the impression that this year could have been something special. By mid-December, however, whatever strong market demand there was seemed to die off and replaced with apprehension and uncertainty given the doom and gloom in the capital. Short-term rental demand remained, but as I’m sure many realtors will agree, this isn’t exactly where we all make our bread and butter.
I really expected the market to get a lot worse once the ‘Bangkok Shutdown’ started on January 13th, but strangely enough, things seem to have picked up since then. Perhaps the shutdown wasn’t as dire as some thought – I know I was pleasantly surprised but the lack of continued participation by the throngs of anti-government supporters as well as lack of widespread violence (not to downplay the horrible isolated incidents that have left several dead).
As a broker I have to find silver linings in any situation, both for my clients as well as my own piece of mind. The falling Baht is definitely something to take advantage of. As most of us who have been here long know, a falling Baht never lasts long, so even if you’re don’t have a particular property to buy yet but know you will buy in the near future, do yourself a favour and get your money over here now to take advantage of a very good exchange rate. It never seems to take long for consumer and foreign investment confidence to rebuild here, so expect rates to go the other way fairly soon.
My overall assessment at this point is that most people who were scared off by violence and civil unrest have now made peace with the situation and are full steam ahead again. Though not posting record numbers, I think most agencies are quite steady and doing fine business in both sales and rentals.
Over the last year, sales have been quite brisk – even during what many feel has been a slowdown year – and for good reason. The noticeably increased demand for shorter-term rentals over the past couple of years has opened up a huge market for investment buyers. Shorter-term lets can offer much greater returns and keep the property occupied (and making money!) between long-term tenants.
A major argument against letting a property out on a short-term basis has been that shorter-term tenants typically don’t take care of the property as well. Of course, steps can be taken to cut back on these risks such as taking adequate security deposits and furnishing your condos accordingly. Additionally, many new condo developments are offering in-house property management and maid services. (TIP: Having a maid service inclusive within your rental agreement ensures that your condo will be well maintained and also acts as an extra feature to potential tenants).
These brisk sales can also be attributed to non-cash buyers being welcomed to the market more than ever. Lower down-payments and the opportunity to defer up to 70% of the unit price for up to four years are opening up the market to more people than before.
The expat demographic has always been quite low in the downtown area, with most houses located well outside, and the majority of condo buildings being situated in Jomtien, Najomtien and Naklua. Prior to the opening of Northshore, View Talay 6, City Garden, etc., the only major condo projects downtown were Markland, Centre Condo and Yensabai – not very inspiring. Yet sales at Northshore showed an incredible market demand as units were swept up and flipped at a remarkable rate – tipping-off fellow developers to one of Pattaya’s few remaining untapped real estate wells.
The expat population in the downtown area will likely double (or triple, or quadruple?) within the next five years. It will be interesting to see how long the current infrastructure will support it. Roads, traffic, water, waste and even available phone lines are all concerns which will most certainly need to be addressed. Here’s hoping city hall will have enough foresight.
Given certain trends we’ve noticed over the past year, I believe the urban area of Pattaya will become inundated with both short term renters and older single expats all looking for centre-town living with little need for transportation and easy access to bars and restaurants. This will hopefully keep local businesses busy during low season and, of course, keep us agents busy renting!