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Pattaya Forecast: Demographics, Foreign Investors, Property Investment

Pattaya Forecast: Demographics, Foreign Investors, Property Investment Pattaya Forecast: Demographics, Foreign Investors, Property Investment

The United Nations Population Division forecasts that significant numbers of retirees will come from countries that are large markets for the Pattaya tourist industry and consequently potential residents in the future. With lower government pension provisions expected in the era of the greying babyboomers, many in the west may choose to live their remaining days in a country offering them a better standard of living in a warmer climate.

Many factors are falling into place that will continue to propel Pattaya forward as an international city rather than simply a resort. Growing demand from foreigners in vibrant visitor markets such as Russia and India - More Thais now purchasing property as a second home - The increasing industrialization of Chonburi province and Pattaya as a potential commercial hub - future retail and entertainment development that will enhance the attractiveness of the city. In previous reports Colliers International was bullish about the future prospects of the city over the course of the next ten years. There is nothing to alter this viewpoint and in fact events in the past six months go some way to strengthening that positive outlook.

Pattaya as well as other resort towns in Thailand have been hampered by the strength of the Thai Baht against currencies of the vast majority of foreign demand. However in the past six months currencies have recovered although the fraught financial situation of many governments in Europe as well as the USA can add more pressure on the euro and dollar in the future.

The Russian market, already the strongest one in terms of foreign buyers could see further growth on back of an increase in retirees in the second half of the decade. The lure of tropical Pattaya could be the prefect antidote to the severe Russian winters. The Russian market is a particularly strong one and is further increasing. Many come from the eastern part of the country where countries like Thailand are in closer proximity than the Black Sea, Greece or Turkey which are popular with Muscovites for example. Many in the east work in the energy and mining industries and can earn a great deal of money. Due to the generally poor level of English most are attracted by the Russian language infrastructure of Pattaya city with menus, signs and information in the Cyrillic alphabet as well as Russian speakers, both native and Thai to assist them.

Foreign Ownership/Domestic Demand

In contrast to the Bangkok market, foreigners take up the lion’s share of lower end condominiums in Pattaya and Jomtien as many are retirees with limited financial resources and foreign Bangkok residents looking for an inexpensive holiday home. This has meant that for units below 2 million Baht there is often a dual pricing structure resulting from the 49% foreigner owner limitations. In the newly emerging upmarket residential markets of Wongamat and Pratumnak, local buyers are the main driver and there are far fewer dual pricing policies.

In the case of Pattaya city the market is predominantly Bangkokians looking for a cheap second home for weekends, although demand also comes from the local market and foreigners. Other Bangkok based developers are likely to follow. Often local buyers are attracted by better payment terms compared to foreign buyers and therefore the developers financing structure can have a significant bearing on the local buying component.

Once again we see a time of a very strong Thai baht against many major currencies, as the Asian financial strong commodities sector enhances the value of the currency. This goes some way to explaining why more Australians are buying resort property throughout Thailand, including Pattaya, as well as the prohibitive prices of coastal real estate in Australia. The average price for an apartment on the Gold Coast in Q2 2011 is 16.5 million baht.

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