The New Thai Investment Culture

By Clayton Wade

Managing Director

Premier Homes Real Estate Co., Ltd.

clayton@premierinternational.com

It was only about 18 months ago that I attended a Bangkok breakfast lecture presented by Ensign Media, publishers of Property Report Asia Magazine and organizers of the Thailand Property Awards. Guest speakers were Simon Dervillé, deputy vice president, research and development, Raimon Land, and James Pitchon, executive director, CBRE Thailand.

It was a well-attended function that included some of Bangkok’s top real-estate professionals gathered to network and to capture some insights into the industry’s future.
Pitchon, who talked to the breakfast meeting about the stability of the market, was recently quoted in the Bangkok Post saying, “Thailand is facing a very limited impact from the sub-prime mess in the United States, mainly because Thai banks are still haunted by the ghosts of 1997 and have been very conservative in their lending to the real estate sector”.
Stability is one thing,  and being conservative is another, but what really surprised most attendees was when Raimon Land’s Dervillé announced at the Ensign Media breakfast that a total of 1,087 condominium units were transferred in fourth quarter of 2009 for an average price of 98,551 baht per square meter! And even more surprising, Raimon Land’s domestic buyers, during that same period, represented more than 90 percent of sales while foreigners comprised only 8.8 percent, showing that the political upheaval upset the international investment market more than Thai buyers.
Our own Eastern Seaboard Nova Group, headed by Rony Fineman, launched the well-marketed ‘The Cliff’ in the Cozy Beach area during the same fourth quarter. Of the more than 400 condo units, 41 percent were sold; 61 percent of those sales being to Thai buyers, something that had not been equaled on the Eastern Seaboard throughout the entire 2003 to 2007 condo boom.
Yes, I can hear you now, “But what about the first quarter of 2010 with the Red Shirts and the ensuing chaos that snared Thailand into the international limelight as a failed democracy falling into political disrepute”?
Believe it or not, the first quarter of 2010 was very active in inner-city Bangkok, with one of the key findings of Raimon Land’s research being that the demand from Thai buyers had been remarkably strong with many developers turning their attention to this target group of Thai buyers.
In fact, during that quarter, three Bangkok land site sales topped the one million baht per square wah price level. That’s one million baht per four square meters, folks!
The market price of land in those three locations–Siam Paragon, and the areas in front of the Chidlom and Phloen Chit BTS stations–was estimated at 1 million baht per square wah or 400 million baht a rai, according to the latest survey by the independent property consulting firm Agency for Real Estate Affairs (AREA) headed by Dr. Sopon Pornchokchai.
Even into the second and now third quarters of 2010, Raimon Land was finding that Thai buyers continued to represent two-thirds of their sales, gaining significant ground over the foreign demand that was prominent over the boom years of 2003 to 2007.
Did this huge appetite for investment property subside in 2011? Not by a long shot!
After being relatively flat for a couple years, 2007 saw Thailand’s GDP at 4.8  percent only to tumble down to its lowest point in 2009 at a -2.2 percent.
Since that economic low-point, the skies opened for Thailand and GDP flew up to 7.8 percent in 2010. GDP for 2011 is still being calculated and is said to be somewhere between 6.5 percent and 7.5 percent during a year with the greatest flooding calamity in many decades!
If that is not a display of resilience, it is still astounding to me, that the Thai economy recorded its best growth performance in 15 years, with 12 percent growth in the first quarter of 2010–an increase of 12 percent (equivalent of one-year growth)–represents the strongest growth since the second quarter of 1995, despite the political unrest the world witnessed in downtown Bangkok.
You talk about Amazing Thailand and I have personally seen this entire scenario before here in Thailand.
Those of us who were in Thailand in 1991 remember that Army chief Suchinda Kraprayoon overthrew the government of Chatichai Choonhavan, eventually making Suchinda Kraprayoon prime minister for the very short period from April 7, 1992 until May 24, 1992.
During that period Thailand experienced a coup d’état, a military ‘hunta style’ government takeover and yes, Thailand was the world’s fastest growing economy at 9.2 percent from 1987 to 1996!
Is Thailand capable of doing it again? Is Thailand capable of reaching the world’s fastest growing economy status again?
I have been here 20 years and I say anything is possible with this amazing country. My experience has been like the title on the famous Expat’s Guide to Doing Business in Thailand by Robert Cooper. Thai’s Mean Business!
So what does this ‘Thai investment culture’ buyers market and the possibilities for a robust real estate future have in store for the Eastern Seaboard?
Here, in February 2012, we are witnessing the Thai buyer still ranked number one and purchasing even more and more condominium apartments in Pattaya and throughout the Eastern Seaboard.
What is really exciting to see with this new Thai investment culture is that the sizes and prices of apartment units are going down down down!
Yes, there are hundreds of thousands of first-time Thai home buyers that are able to make their very first property investment and they are making those purchases mainly in pre-construction condo apartments and as well in newly-built, detached homes.
That investment culturing goes all the way to the top as we are witnessing some Thais buying large numbers of units for long-term selling profit while taking advantage of the rental income short term.
With all of these great condo designs and attractive housing developments, the Eastern Seaboard/Pattaya area has more than a great selection of properties for those robust Thai ‘investment-cultured’ buyers that are going to be coming back for more…more and more ‘Amazing Thailand Real Estate’!

Our very special thanks to Clayton Wade, managing director of Pattaya’s Premier Homes Real Estate Co., Ltd. for preparing this ‘Eye On Pattaya’ report.

Clayton Wade is Managing Director of the Premier Homes Real Estate Co., Ltd. the Eastern Seaboard’s leader in exclusive property sales and rentals and as well, Managing Director of the Premier Land and Development Co., Ltd.

Clayton Wade has been in the real estate industry going on 25 years. Having started his real estate career in the United States, he was licensed and practiced both real estate sales and property management in Seattle.

He was personally responsible for bringing in the first 53 General Motors executives for the ‘start up phase’ of Thailand’s General Motors manufacturing facility and had a three year exclusive with the company. Following that experience he placed most all of the ‘start up’ executives for the Eastern Seaboard’s BMW manufacturing facility.

Having done business very successfully here on the Eastern Seaboard/Pattaya area of Thailand for over 15 years, Clayton Wade is known throughout the Asia-Pacific region for his writing and public speaking, having written regularly for many of the area’s leading newspapers and magazines (Bangkok Post, Thailand Property Report, Tropical Homes Magazine, Real Estate Magazine Thailand, Big Chilli Magazine, Homes and Condos Magazine, etc.)

He also speaks regularly throughout the Asia-Pacific region and has been a guest speaker at a number of Asia-Pacific property shows, including the SMART International Property Shows in Singapore and Hong Kong.

Clayton Wade is also well known for his many television presentations including his appearing as the resident real estate consultant for Thailand’s Property Profile Show. His many accomplishments in promoting Thailand’s Eastern Seaboard real estate industry include having been a guest speaker with several of Thailand’s top political and business figures on CNBC’s Managing Asia program.

Premier Homes is Pattaya’s leader in exclusive property sales and rentals, which may be seen by visiting their website at: www.premierinternational.com. Clayton Wade may be contacted by telephone at +(66) (81) 634-2915 or by email at: clayton@premierinternational.com

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