Since the outbreak of Covid in early 2020, Pattaya and other tourist destinations around Thailand have struggled heavily over the past two years. In 2020, we didn’t know what we were facing, now we have a vastly better understanding, and we realise that we cannot continue with lockdowns or crippling restrictions.
An overnight disappearance of international tourists impacted all areas of life in Pattaya, including the property market. As we all know, there has been a massive over-supply of studio condos and shophouses. The latter is visible across Pattaya, with closed shophouses on every street, shutters down with faded and worn For Sale & Rent signs.
What’s happening with the condo market?
Regarding condo buildings, the most significant number of units are studio units. Now consider that some big-name Thai developers are offering one-bedroom units that are the size of a traditional studio unit with about 30m2 to swing the proverbial cat.
Developers need to rethink their strategy regarding studios and tiny, so-called one-bedroom units. Over the years, they have become smaller in size while prices have increased, way above market value. As a result, the demand for studio units is very low and is reflected in the extremely low rental prices. No one seems to be buying studio units as the price for one, and two-bedroom condos have become more attractive and you can explore condos for sale here.
In our opinion, condo rental rates have fallen in value by almost 50% since 2020, while two-bedroom units are down by about 20%. Sale prices are also down; factors such as location and condo-quality affect the overall sale price.
Great value! Well-appointed 2 bedroom condo in a popular project close to the beach.
What does this mean for condo buyers and sellers in Pattaya?
It’s good news for buyers as there are good deals to be had, and as more condos are purchased, this affects the supply and demand ratio, which affects the overall prices. But, unfortunately, the current situation with studio and shoebox one-bed units in the condo market can expect a prolonged recovery as there is an oversupply.
Owners of one- and two-bedroom condos are in a better position, rental and sale prices are improving, and they can be profitable again over time.
There has been a recent rumour that casinos may be allowed in Thailand, which has created a buzz and will positively affect property prices. If true, it should make the small size units more attractive for casino gamblers who may be looking for a pied-a-terre or second residence.
What about house and land prices?
House prices have been very robust and less impacted than the condo market. At the same time, land prices have bucked the downward trend and are at all-time highs, which indicates a promising future for Pattaya and the surrounding areas.
The majority of houses can be found in East Pattaya, primarily Thai and Expat communities. Although there has been an exodus of expats, and Thais have suffered losses in business, overall, there is continued demand for buying and renting houses.
There are fantastic bargains available by motivated sellers who have suffered from the overall economic turmoil. The attractively priced properties often sell quickly to the delight of both buyer and seller.
An exclusive house near Bangkok Hospital, this property will sell quickly.
Our property investment suggestions?
We often get asked, ‘What do you suggest as a property investment?’ It is a good question, but there is no perfect answer. So I would ask, what return do you expect from your investment?
As mentioned earlier, land has and is a wise financial investment. While foreigners cannot own land directly, there are perfectly legal ways to circumvent this to ensure a profitable long-term return.
Pre-covid, the popular choice would be to purchase multiple condos and rent them out to the thousands of tourists here. In hindsight, this strategy is flawed as you’ll solely rely on overseas tourists.
Thais are now purchasing more property in Pattaya as it is less overrun with undesirable tourists; we’ll cover this in a future article, which positively impacts the overall property market.
Highend property that exceeds 20m Thai Baht has been unaffected on the sales front. Many relocations, corporate rentals and foreign industrial investment remain strong in this sector.
With many property developers struggling or having gone bankrupt, buyers are far more cautious, especially with promises of high ROI, et cetera. However, buyers are no fools and expect honest assessments, real-estate in Pattaya has prematurely grown, and buyers or investors must now have a longer-term view.
Our approach at Prestige Properties is to listen to our clients, offer suggestions based on individual needs and available budgets. Then, together, we can find an ideal property that makes you, the client, happy.
In our opinion, the best investment in your property purchase or rental is to be happy.