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Expert evaluation of the real-estate market in 2013/2014

To rephrase the famous Bible verse, there is time to sell and time to built. This year Pattaya transformed into a huge construction site. There is no single district that won’t be busy with construction. Even traditionally tranquil districts between the Third Road and Sukhumvit turned into a construction site, and foundations for several buildings are laid along Sukhumvit. Just a year ago the situation was not so rosy. What has changed?

About a year ago the market of Pattaya newbuilds was stricken by a paradox. Lots of projects were launched and sold out, but no one was being erected. This situation gave rise to pessimistic rumors that this was a beginning of the end and that new condos will never be finished. Indeed, Pattaya looked quite depressing back then – many fenced-off construction sites. Emptiness and silence governed inside. The problem has affected almost all developers.

The situation was considered as an overall market stagnation which is not so damaging, but it made many apartment purchasers very nervous since they bought their property on the zero construction stage. It was not, of course, an evil ploy of the developers who wanted to steal investment money. The reasoning behind was clear for insiders familiar with peculiarities of authorization document issuance in Thailand. Whathasactuallyhappened?

The wind of changes

The main issue that affected the developers was the change of authorization procedures and requirements to condo projects from state regulators. Lots of projects became subject to EIA regulations (a special committee that investigates the possible environmental impact of the new buildings). To put it roughly, before the changes were made, only 10 out of 100 projects required a EIA permission, while afterwards 90 out of 100 were bound to apply for the permission. The projects that were almost sold out appeared to be the most susceptible to the changes. This was a difficult situation, since the projects were devised before the new regulations were made public. Therefore the developers were forced to revise the projects and make changes that, on the other hand, should not affect the interests of the buyers. Thisputmanyconstructionsonhold.

Only those projects that announced the timeline with substantial backups were not delayed. For instance, a medium-sized ACQUA project for 309 apartments. The developers has attributed 3.5 years for the construction instead of 1.5 years that could well be enough for that. Thanks to this foresight, the developer managed to maintain an appearance with the clients and to finalize the project 6 month ahead of the schedule. It is possible that similar tricks will become popular on the market as they save the face for the developers and in reality changes nothing.

It should not be forgotten that the changes in legislation also bear positive consequences. The discussed situation was at the end beneficial for earlybird purchasers, since developers became more cautious with their new projects. The time has gone when dough-baked projects with sloppy layouts and not yet confirmed facades entered the market. The only thing the developers knew in this case was where the construction site is located.

Some developers have decided to not engage with the authorization procedures and went their happy way to devise small-scale condos that are not subject to the new regulations.

All to the good

In the short- and mid-term perspective the above-mentioned legislation changes inflicted lots of troubles to the developers and nervous breakdowns for average buyers and investors. But nevertheless in the long-term perspective these changes are positively colored. It will not be allowed anymore to erect two 40-storey highrises just 12 meters apart from each other. This indeed happened with the Zire project: the second tower is just 12 meters away from the popular Sky Beach condo. Now there are additional restrictions on insolation norms and on the ratio between building and landscaping areas. Thanks to these regulations, Pattaya’s future as a resort is well protected. The situation when condominiums are growing next to each other without green spaces inbetween, which is so familiar to Russians, can now be avoided. The tropical paradise of Pattaya will not turn into yet another concrete jungle!


"Turn-key" journal, Volume 7, July 2013

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