The Doldrums of Summer
While property markets in the West always see a major boost in business during the summer months, Thailand’s low season is in full effect. It certainly has been an interesting year here to say the least and I think most agents and sellers are beginning to see the effects of several influences here.
First and foremost, the political situation in Thailand certainly hasn’t done the property market any favours. We began to see the effects of this even in late 2013 and it really did snowball from there. Having said this, most people I speak with here, expats in particular, see the military coup as a positive thing and the steps taken by the ruling junta thus far have been overwhelmingly positive. I think we all expected somewhat of a trickle-down effect from this, so it’s nothing shocking.
The current political situation in Russia/Ukraine has definitely dampened the demand from Russian buyers. With tourist arrivals down 30% year on year and the Russian economy scuppered by sanctions and their economy heading toward a possible recession, even the ones that have showed up in the Land of Smiles are being a bit more shrewd with their hard-earned Rubles. But again, this is hopefully a temporary situation (as most conflicts and sanctions tend to be) and I believe we’ll start to see the numbers coming back in no time at all.
The new visa regulations also seem to have gotten some people a bit spooked. I wrote about this at greater length a couple of issues back – in a nutshell, I explained that this is nothing new. In my years here I’ve seen visa regulations change drastically numerous times, only to see everything balance out again. There is no reason to believe this time is any different. However, I do understand that to the uninitiated, it may seem like a reason to panic.
Last but not least, let’s not forget this is the low season. These few months in the middle of summer have always been a bit of a slog and the grey weather certainly doesn’t help improve the mood of the bored agent staring out his shop window. There are some very positive aspects of the current market that are quite encouraging to me.
Resale prices in older buildings are going up considerably at the moment. I’ve been calling this for a while – the differential in pricing between the older builds and the off-plans was far too great, so we’re now beginning to see that gap narrow. The View Talay buildings, older Wongamat condos, as well as the older Pratumnak buildings are edging up considerably, particularly with the smaller studio units. Land prices around town are also still climbing at extraordinary levels – from the darkside to Bangsaray to Pratumnak, I’d estimate land prices are growing at a steady 20% a year. This just does not happen in a recessed market.
Finally, the amount of enquiries we’re getting for this upcoming high season is at least on par with last years, so I do see these summer doldrums passing us by. As insulated to the world as we’d like to think we are here in Pattaya, sometimes we have to remember they’re not all sunny days.
Increased Demand Outside the City
Many years ago there seemed to be a bit of a boom out at Phoenix Golf Course. We sold a few houses and pieces of land and I really thought that the area was taking off. It made perfect sense – it’s the closest golf course to the city that offers actual housing and the land prices at the time were only about 4 to 5 million THB per rai backing right on the fairway. But alas, it was as short-lived burst, and while the housing at Phoenix has continued to grow, it certainly hasn’t done so at the levels I expected it to.
Fast forward about ten years, and while Phoenix housing is a still quietly moving along, the surrounding area is rapidly growing. The main Huay Yai Road, particularly between Sukhumvit and the big temple several kilometers down is now peppered with signs for new housings estates, and upon further investigating, they are sizeable estates at a healthy end of the market (4 – 10 million THB) and they all seem to be selling rather well to both Thais and expats.
Further down around Silverlake there also seems to be a bit of a boom happening. It’s a nice spot down here and I’m always impressed by how clean the area is, even on the little side sois. There is talk of a high-end golf course going up in this area, and as with everywhere else, land prices have seen a sharp increase over the past couple of years.
With the ever-growing population and traffic in Pattaya and Jomtien, it only makes sense that there was going to be a migration of former city dwellers to the further reaches. As far as 30km sounds, most of these more rural areas are easily reachable with a 20 – 30 minute commute from the city. And now with more area attractions reaching out this way, we’ll definitely see more commercial businesses opening up and serving not only the tourists but the local population making it more self-sustainable than it has been in the past.