Vulture Market, Somebody out there is buying

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In Pattaya everyone is always talking about what “season” it is. For tourism its “high season”, “low season”, “Chinese season” and a long time ago we used to see “Russian season”. The property market is similarly affected by timing but usually over less predictable and longer chunks of time we refer to as “cycles” or “markets”.

 

We have “buyer’s markets”, “seller’s markets” and sometimes “panic markets”. Savvy real estate investors make money by reading the signals in these cycles and taking action.

 

These days in Pattaya, it seems like our property ship is caught in the doldrums without even a hint of a breeze to blow us in one direction or another.

 

We are over supplied with property and under supplied with buyers. Every day when we wake up there are brand new condos and houses on the market.

 

Every day realtor’s phones ring and emails arrive with new listings of second hand properties. The phrase “fire sale” has become so overused it has little impact.

 

Blame it on the junta. Blame it on the global economy. Blame it on the way-too-strong Thai currency. The general consensus is the Pattaya real estate market is dead in the water. Or is it? Real estate agent’s lights are still on.

 

I still see them out slapping backs and driving around in their SUVs. They’re still advertising. Their websites are still running. Somebody is buying and somebody is selling. What kind of market are we in right now?

 

“Welcome to the “Vulture Market”.

 

Last week I cornered a handful of Pattaya property-pushers and grilled them about how they were surviving and/or prospering in these lackluster times. The responses I got came in three categories.

 

Some said that the lingering low-energy cycle had produced an abundance of “deals you can’t pass up”; properties so under-valued even a novice investor realized the profit potential.

 

Others told me about a demand-side push as investors with cash to spend were popping up and saying “show me your best deal”. And the oldest and craftiest agents of the bunch were feeding the meatiest desperation deals to a secret group of opportunistic buyers they keep on speed-dial when they spot an obvious profit feast. Intrigued by these answers, I pushed for examples.

 

 

Offer you can’t refuse

 

Prices have dropped. That’s right, I’m saying it out loud and in public. Let’s not pretend it isn’t true. Some of it is due to a ridiculously strong local currency, but our over supply problem has led to decreasing prices.

That fact is important to investors for two reasons. First of all, in the long run prices generally go up. If we can time a buy close to the bottom of the cycle, we can realize greater capital appreciation. Additionally, if we are buy-to-let people, our return on investment from renting out our property can climb into the double-digit per annum category.

 

Craig Turner from Right Move Pattaya showed me a shining example of an offer too good to turn down. It’s a gigantic 119 square meter one bedroom at the Executive Residence on Pratumnak Hill. The place is immaculate with gorgeous tiled floors, a full-blown kitchen and a balcony bigger than many new studio apartments. The view is green and clean all the way down to the beach. The building is chockfull of all the amenities including a pool and gym.

 

It sounds great right? But why is this deal too good to pass up? It’s only 3.5 million baht … half what the owner paid for it. It’s less than 30,000 baht per square meter. It’s huge by any one-bedroom standards and already set up for long term rental. It’s a slam-dunk instant income property with nothing but upside for capital appreciation. Some smart vulture is going to swoop in on this place and feast.

 

A rare offer

 

Mark Welch from One Stop Realty showed me a deal that took my breath away. One of my favorite buildings in Pattaya is Ananya on Naklua Beach. Ananya is a swanky low-rise with a beautifully unique swimming pool and is located directly on one of the most picturesque beaches on this coast. Mark showed me a 223 square meter corner unit that has never even been lived in. It’s a three bedroom/two bath rambling affair with spectacular hard wood floors, a European kitchen with breakfast bar, granite counter tops and all the right appliances. The bedrooms are huge with all the right built-in stuff. Both of the balconies offer panoramic absolute beachfront views. This place can be had for 14.9 million baht. That’s roughly a 35% discount to the market value. I challenge you to find an absolute beachfront 3 bedroom unit for less than 70,000 baht anywhere else. The sky is black with vultures circling around this one

 

Secret Society

 

One salty old agent who shall remain nameless told me that the best deals he sees never make it to the market. He has a deep book of investors with even deeper pockets who do not hesitate to scoop up severely undervalued properties. “I had to buy two condos that popped up last week” he said. “I knew I could make money on them”.

Personally, I was a little hurt that I’m not on the secret insider list, but alas the pockets of a struggling teacher and writer are decidedly shallow. It conjured up visions of a bunch of rich dudes sitting around squawking about which properties they’d swooped on lately, using the secret vulture handshake and sipping cocktails at a private bar called “The Carrion Club”.

But I don’t think you need an invitation to attend the vulture party. Check out some of the deals being offered by the top realtors. Scour the websites and you’ll see houses, condos and even business properties for extremely discounted prices. Visit your favorite real estate agent and make them show you the real deals.

There’s never been a better time to buy … you can be a vulture too.

 

by Bart Walters

 

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