Property

East Side Story

East Side StoryFor the most part, Phuket, Koh Samui and to some degree, Hua Hin, get the lion’s share of media ink — and megabytes — regarding vacation homes and holiday investments in Thailand: Pattaya rarely gets mentioned in the same breath as those luxurious locations. But the little city on the east side of the Gulf of Thailand, a scant 165 kilometres from Bangkok, has a lot going for it. Granted it also has something of a sleazy reputation stemming from its sex industry-heavy nightlife on Walking Street. But the city’s forward looking young mayor, Ittipol Khunplome, has a good grasp on what needs to be done to transform Pattaya from a perceived oversexed ghetto into a worldclass vacation city.

And he’s clearly on to something. According to research by CBRE Pattaya is on the rise. “Pattaya continues to grow as one of the most preferred retirement and second home destinations in Thailand. Pattaya is also the commercial centre of the Eastern Seaboard and there is growing demand from expatriates for rental condominiums apartments and houses which create, property investment opportunities,” the agency notes in a report on its website. “Properties in Pattaya range from luxury or high-end beachfront condominium and villa developments to mid-range condos and houses which can be located close to the beach, in central areas in the city or in rural locations east of Sukhumvit Road.” The efforts to clean up seem to be working.

“It’s much more a Surfer’s Paradise-type environment. If you go back 25 years it was the R&R spot for the Vietnam War. From that a tourism market evolved but in the early days there was a Thai market. A lot of that actually got lost during the R&R era. Thais wanted a quieter spot. That was the status right up to the crisis in the ’90s,” explains Nigel Cornick, CEO of Pattaya-focused developer Kingdom Property. “But I would say since 2004 the market has changed quite significantly. Initially it was due to Europeans — like Thais buying holiday homes — and they’ve been replaced by Russians. But Indians are starting to travel there more, and they could surpass Russians within three years.”

The growing tourism market (Thailand has seen an overall bump in arrivals of 30 percent this year) has spun off a great deal of commercial activity and a resort industry that generates huge amounts of cash. Beachfront villas and condominiums are increasingly becoming the norm, as the city centre has no more room for development. It’s not Koh Samui glamorous, but Pattaya does, as CBRE noted, have a wide range of properties that suit entry-level or first time investors and luxury seekers alike, something that’s becoming rare in Phuket.

“There is this industrial eastern seaboard, which has created demand for accommodation for workers and management for rentals. There’s a strong rental market that wasn’t there in 2004,” points out Cornick, whose Kingdom Property has one of the many new condo developments under construction. “Many Japanese car manufacturers have made the decision to move their primary factories to the eastern seaboard and that has created more demand. That’s born out by the take-up of industrial land this year.” Taken together it means the city doesn’t rely solely on tourism or industry, and no one demographic.

But of course there’s a downside, largely rooted in the low cost of land, at least for now, rather than image issues or travellers getting bored with the city. “Land is still relatively inexpensive in Pattaya and the development model suits a lot of B-grade developers. That’s where I think there could be some backlash in, say, two years when the product sold off-plan today is delivered and it’s not up to expectation, or it isn’t delivered at all,” Cornick warns. “Those are the concerns I have — not about whether Russians will stop coming, or Indians will stop coming.”

And are there fears that Pattaya will turn into the next Phuket, which many feel is overdeveloped already with resort upon resort dotting the coast? “No, I don’t think so, for a few reasons. If you look at where you can develop, say the edge of Pattaya City and the beach that [stretches from there] you’ve got about 25 kilometres,” says Cornick. “At the moment there are about 10 high rises on those 25 kilometres. There’s a lot of high rises to be built.”