This year has not been the best of years for the Real Estate industry, let’s face it some agents and developers claim that 2009 will go down as one of the worst for some time. World recession, a lack of stability in Thailand right now has resulted in very slow times and a concern that Foreigners are not committed to buy right now.
This is not to say that the market is flat, a number of Developers and Agents have reported that things seemed to have improved of late, however with a lack of foreign investors we raise the question “ Should agents and developers be looking to capture the Thai market?
Our research shows that in the current financial climate, agents and developers should be looking to sell to the Thai Domestic market, due to the lack of Foreign Investment
This article has been inspired by the fact that wealthy Thais, the one’s that tend to invest in property do not on the face of things seem to be changing their lifestyle a great deal.
The writer is a regular patron at Mumaroi Seafood Restaurant in Naklua, for those of you are who are not familiar with the restaurant, it is direct beachfront with seating for 1000 people outside and for a further 200 people inside. It is not the most expensive restaurant in the area but certainly not the cheapest with an average meal for two with wine ranging anything between THB 2500-5000. Week in week out this restaurant is full, weekends especially people are waiting for a table. 95% of the clientele is Thai. A walk around the car park and one will see an abundance of Mercedes. BMW’s even the odd Ferrari or Porsche, not to mention Mini’s emblazoned with Union Jack Roof’s and wing mirrors. So looking into all of this, are these people suffering?
A natural starting point had to be Ananya Condominium, as their showrooms actually sit on the site of Mumaroi’s and the development sits along the same stretch of beach as Restaurant. This is a high class project, direct beachfront, low rise exclusive and with prices ranging from THB 9million-THB 42million. So on investigation we were advised that Phase 1 sold out to Thai, Chinese and Japanese customers with a scattering of European buyers. Phase 2 we were told continued in a similar pattern with the majority of buyers being Thai. The developers have done marketing to the foreign market and naturally have employed local foreign realtors to market the project and this has resulted in Foreign Investment, but in recent times interest has slowed, although interest from Thai’s has remained high.
In a lower price range of THB 2million-THB 11million Apus Condominium is project that has also seen a lot of success marketing and selling to Thai’s. At the launch in January 2009 (not exactly the best time to be launching a brand new project) the developers did very little marketing in English and decided initially to sell to the Thai market. This resulted in sales of 40% in the first 6 months with nearly 90% being Thai investors. Payment terms were competitive for the buyer but not so for agents, so initially even Real Estate Agents were not on board. Only at this point did the developers then plan their detailed marketing campaign in English. We spoke to Apus Marketing Director Jason Payne about this approach.
“Initially we were unsure if this was the way forward, but we knew Thai’s were still buying, our website was dedicated to the Thai Buyer and we marketed a lot in Bangkok. I personally had concerns that being English that I would have to rely on my sales team negotiating all deals with the buyers, but I quickly found this not to be the case, the opposite actually with a lot of our buyers from Bangkok wanting deal with senior management or at director level. It has been a pleasure dealing with articulate educated Thai investors. Buyers came, sales were made in a market where all we was reading about was that nobody was selling, we were seeing extremely positive results. The first 6 months allowed us to concentrate on building so we could show the foreign buyer who we knew was still out there that we were going to build and complete the project, this approach did come with a few downfalls initially as I think that a lot of expat agents and “local experts” had the impression that we were a “Thai only” project and thus quality and reliability may have been questioned. As soon as we started our English Marketing campaign, in local magazines such as The Trader and other quality publications, revamped our website to an international site in English, Russian and Thai, and we went out and spoke with Local agents I think attitudes changed. Sales are now approaching 70% and we have received a lot of interest from Foreign Investors. Although I have to say that interest from Thai’s is also strong”
Asked if Jason felt that it was the right approach? “For us at that point in time, yes I feel it was the right decision sales results have proven this. January when we launched the project was a time when some agents and developers were thinking about throwing in the towel, we had issues with developers stopping construction, foreign investors questioning whether or not the projects they had invested in were even going to start let alone be completed. However a marketing campaign in English, Russian and Thai from the very beginning would of, given us an edge in branding our product. My own personal opinion buyers are still out there whether it is Thai or Foreign but naturally in this current economic climate buyers are far more cautious and rightly so”
Finally, to Raimon Land and their, Condominium Focus Report. “In Sales volume terms for Raimon Land’s projects in Pattaya, Thais accounted for 25% of the purchases in H1/09 ahead of Russians (20%), British (11%), Chinese (7%) and Americans (5%). This is a fact that sales rely this year more on domestic demand, particularly Thai Nationals. These Buyers were also relatively young, with 56% between 31-50 years of age and 21% under 30 years, while only 23% were 51 years and over. The majority of these buyers purchased studio units (68%) followed by 1- bedroom (18%), 2- Bedroom units (9%) and 3- Bedroom units (5%). When all buyers were asked the reason behind their purchases 50% said they bought as a holiday home.
Raimon Land views this demographic as a trend shifting towards younger generations seeking affordable, compact Pattaya Condominiums, not necessarily beachfront, as holiday homes offering sound investments that are easily accessed from Bangkok”
So in conclusion it seems that these developers have all decided that marketing to the Thai market is a way of giving them higher sales figures in this current financial climate. It is not their sole focus but an important aspect of their International marketing campaigns. So to my original question whether or not wealthy Thai’s are hurting as much as the, Foreign Investor? From the reports from these 3 well know Pattaya developers the answer seems No. Young Thai Nationals seem to be still looking to Invest in the Pattaya Real Estate market, and it seems they have the funds to do so.
Apus Condominium Pattaya, Thailand will surpass the dreams of the most discerning buyer seeking that rare commodity – the perfect value for money combined with 5 Star facilities and that ‘homely’ feel.