What if now is the right time to invest in Pattaya real estate market?

13 July 20182979 views0

Often criticized by a lot of people, Pattaya is a seaside resort located just 1.5 hours south of Bangkok on the east coast of the Gulf of Thailand. Pattaya is a very cosmopolitan city: foreigners are numerous and come from all over the world. Active expats, or retirees who have chosen this city to enjoy life … there are more than 40,000 foreign residents in Pattaya and more than 8,000,000 tourists each year, making it one of the most famous destinations in the Kingdom and a perfect place to invest in real estate.

Long time ahead in the country’s real estate sector, Pattaya currently suffers from a bad image in the eyes of many of us: overload of properties for sale, non-rented condos, unsalable properties, Russian crisis having permanently buried the local real estate market, etc. We are sure that if you are even just slightly interested in the Thai real estate market, these words echo in your memory.

And yet …

Have the people who gave you this information been aware that the stock of available housing is decreasing? That the prices of some apartments have reached prices similar to the capital? Are they also aware that every year more than 14 million people visit the city? Do they know that 43 billion USD will be invested in the region over the next five years to develop infrastructure, industry and tourism?

Do not listen to these so-called experts from groups on social networks and find out why now is the right time to invest in Pattaya real estate market.

A constant demand and a decreasing stock of properties

With a well-established popularity and numerous advantages (infrastructure, proximity with Bangkok, activities available, rental potential, etc.) Pattaya has kept a steady demand for purchase over the last few years, although the demand from the Russians has for a while moment fell sharply, it quickly recovered and was surpassed by the demand from Chinese investors. As proof, the Edge project recently launched in the centre of Pattaya saw its quota of apartments available for purchase for foreigners to be sold out in just a few hours. Forecasts even announce an imminent increase in demand thanks to the fact that the Thai middle class is getting richer and tend to buy more than before, whether to live there or to invest.

Meanwhile, the supply is decreasing. Indeed, instead of continuing to build numerous new projects, real estate developers have focused on completing and selling their current projects rather than starting new ones. New program launches have therefore declined sharply. We can also add to this that new projects are being sold at increasingly higher prices (we will come back to this point a little later) and that some of the potential buyers therefore naturally turn to second-hand goods, helping to reduce the stock of available apartments.

If we refer to the law of supply and demand, the basis of any market, prices will mechanically increase in the months and years to come, allowing great opportunities for capital appreciation and earnings.

An increase in prices

Let’s go back to a previously announced point: the price increase that is real. Indeed while the average price in 2016 was around 82,500 THB per square meter, many projects now easily exceed 100,000 THB per square meter. For example, the Edge project in downtown Pattaya and Andromeda project in Pratumnak which are sold (off-plan) at more than 180,000 THB per square meter, similar to prices in Bangkok.

Another concrete example is given to us by Gaëtan Monpas from Vauban real estate agency in Pattaya: “The increase in prices is certain and great capital appreciation is possible. For example, one of our customers who bought an apartment in downtown Pattaya 5 years ago at a price of 3,600,000 THB. His apartment is now worth 5,500,000 THB for resale and 25,000 THB per month for renting (long-term). I let you imagine his smile when he hears that real estate in Pattaya is not profitable”.

Buying now can allow you to enjoy great deals while benefiting from the overall trend of increasing prices before it is too marked and limits your earnings.

An offer that meets all needs and budgets

One of the great advantages of Pattaya that cannot be found in other destinations in the Kingdom is the great diversity of its real estate offer. Indeed, it is probably the only destination where it is possible to find a wide variety of goods ranging from apartments costing less than 50,000 USD to villas costing more than a million USD.

It is also one of the only destinations offering a range of solutions for:

New soaring areas

In addition to the traditionally recognized neighbourhoods popular among real estate buyers such as Wongamat, downtown Pattaya, Pratumnak or Jomtien, Pattaya’s surroundings are quickly growing. We will focus on two main areas with Na Jomtien and Bang Saray which see their rental demand rising sharply with a quieter and more family-oriented tourism than in Central Pattaya and its immediate proximity. The supply of property for rent is still relatively low at the moment but the few projects that are emerging are very popular and sold very quickly.

Here is a quick preview of what you can expect in those two areas:

Na Jomtien:

Discover the offers! (One-bedroom – Two-bedrooms).

Bang Saray:

Discover this wonderful residence!

A constantly increasing rental demand

With traveling being easier than ever and the development of transport infrastructure (for example the expansion of the U-Tapao airport and the opening of new routes) and with a massive influx of visitors (in 2017, are more than 14 million foreign and local visitors who have traveled to Pattaya and have generated an estimated 200 billion THB revenue), the resort is one of the most visited destinations in the Kingdom with different profiles of visitors coming for durations ranging from a few days to several months, and all looking for accommodation for the duration of their stay. Last year, for example, Pattaya hosted:

2.54 million Chinese
800,000 Russian
600,000 Korean
400,000 Indians
400,000 Germans
etc.

Chinese have even elected Pattaya as their favourite destination in South East Asia!

It is also important to note that the Thai government, through the Tourism Authority of Thailand (TAT), the government agency responsible for tourism – which wants to improve the image of the city – multiplies the campaigns of communication among the local population, targeting mainly the upper and middle classes with a high purchasing power.

With the help of a well established real estate agency and the growth of booking platforms such as Airbnb or booking*, the purchase of one (or more) apartments in Pattaya can quickly become a very good way to generate a new source of income.

To sum up, Pattaya has two big advantages over Bangkok:

Mostly cheaper apartments for a better return on investment.
A seasonality allowing a better return on the high season with short and medium term rentals while in Bangkok the vast majority of rentals are one-year contracts with a fixed and lower price than for short periods.

*Remember, although in fact, it depends mainly on the decision of the residence juristic office, rentals of less than a month are normally not allowed in Thailand without the acquisition of a hotel license. However, for those wishing to make the most of the seasonality and the superior yields offered by very short-term rentals (charged per night), there are several investment solutions in residential hotels with this hotel license. This is the case, for example, of the Wyndham Atlas residence in the Wongamat district.

The Eastern Economic Corridor

Last but not least, the Eastern Economic Corridor (EEC), which, to sum up, represents a series of investments worth 43 billion USD and measures aiming to develop existing infrastructure (and creating new ones as per example, a high-speed rail link connecting Pattaya and Bangkok in just 30 minutes) and attracting global economic players to develop the local economy (for example, Airbus has already signed a partnership with Thai Airways to develop a gigantic maintenance center at U-Tapao airport) is estimated to create around 100,000 new jobs per year from 2020.

It is then easy to realize that this will attract a large stock of manpower ranging from the factory employee to the top executive. These newcomers will obviously be looking for housing solutions, whether by buying, which will help to reduce the stock of properties currently unsold, raising prices and thus once again offering great opportunities for capital appreciation. Some will choose the rental solution, greatly boosting the rental demand and offering profitable rental investments.

Interested to invest in Pattaya? Feel free to contact – Vauban Real Estate agency Click Here Or call +66 (0)3 825 1729
Vauban Real Estate Thailand covers the main and more attractive real estate markets in Thailand with 6 agencies in Bangkok, Chiang Mai, Hua Hin, Pattaya, Phuket and Samui.