Real estate casualties

Real Estate Casualties

I was sorry to read of the recent resignation of Raimon Land’s popular and articulate CEO, Nigel Cornick, who was always a friend to Pattaya and whose (perhaps irrationally exuberant) tub-thumping for the City and its real estate prospects helped catapult Pattaya to a new level of global respectability.

Alas, no matter how vigorously you breathe air into a burst paper bag, eventually people tire of watching your unsuccessful efforts, and you begin to look less the prophetic promoter, and more like a nutter, as the market falls off a cliff, and you stand knee-deep in the wreckage, still optimistically talking up new developments, expensive condos and far-off improvements in the market.

Unfortunately not just Raimon have been hit by their inevitable reliance on foreign buyers. Most Pattaya developers have also had to over-market to foreigners because of the 49% restriction on foreign ownership rules.

My feeling is that high condo prices for foreigners, which few if any Thais would be willing to pay for their units in the same building, may act as a subsidy for the Thai percentage.

If this outdated 49% restriction were ever removed (as happened after the 1997 financial crisis), business prospects for developers might be different, as they may be able to more sensibly price their units knowing they can market most or all of them to foreigners, who may buy in greater numbers if more sensible pricing was adopted.

But right now, things are tough for all developers focusing on foreign buyers, in Pattaya and elsewehere, and maybe now is the time for a more sober and realistic approach to marketing real estate, and perhaps Nigel has fallen victim to this change. He most certainly won’t be the last.

Most economic news in Thailand is grim right now, and the real estate market is no exception.

Buyers have dried up, people are refusing to complete buying their off-plan condos, put off by (in many cases) weak home currencies against the Baht, and there is no silver lining in sight. A weakening Baht doesn’t address other real worries people have about investing money here, for all the well known political and economic reasons.

Ironically I hear the weakness of the British pound is spurring one section of the local market, as British sellers seek to reduce their losses by selling real estate at sensible prices in order to capitalise on the strength of the Baht. They can then repatriate money back to the UK at conversion rates up to 30% higher than the rates at which they originally brought money into Thailand.

So maybe there is a small sliver of silver up there.

Contact me at pattayatodaypete@yahoo.com


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