Bangkok Post, Wednesday January 17, 2007
Concern over amendments to the Foreign Business Act and new capital controls have caused the Pattaya property market to decline for the first time in a decade, said a Pattaya developer. Paisan Bundityanond, managing director of Rabbit Resort and Cat Property Co, said many foreign investors and buyers were utterly confused by changes to the laws and their impact on the property business.
''The changes reduce their confidence,'' he said. ''They don't comprehend the changes made to the Thai laws, which are now not very clear, unlike the laws in their countries.''
Since the Bank of Thailand imposed a rule requiring foreign investors set aside 30% of their funds as a reserve, and with nominee shareholding structures in certain businesses about to be outlawed, sales of villas, a popular asset class among foreigners, have dropped sharply.
The only residential units bought by foreigners are now condominiums while some foreign buyers have switched to leasehold units instead, said Mr Paisan, a licensed real estate broker in the US and the first president and founder of the Real Estate Brokers Association of Thailand.
The trend is quite alarming, given that the Pattaya property market's relatively strong health. It survived the country's economic crisis in 1997 relatively unscathed and had boomed for the past 10 years on a steady flow of investment from abroad, he said.
To help restore foreigners' confidence and educate them about the Pattaya property market and the Thai laws related to the property business, Mr Paisan plans a seminar entitled ''Is the Boom Over?'' in the resort city on Feb 9.
Tourist arrivals have always been the catalyst of the booming Pattaya market, he said.
Of the estimated 13 million tourists visiting Thailand last year, four million visited Pattaya, creating income of about 40-50 billion baht for local people. The opening of the new Suvarnabhumi Airport also contributed to the positive outlook in the resort city.
He said foreign buyers were interested in properties priced at more than two million baht each while Thais favoured units less than two million baht each. Transactions by foreigners were all freehold.
Sopon Pornchokchai, managing director of the Agency for Real Estate Affairs (AREA), said that as the country's economy tended to slow down this year, the housing market trend in Greater Bangkok in 2007 would drop by 5% in number from last year to an estimated 59,455 units and 10% in value to 156.7 billion baht, he said.
According to AREA's survey, a total of 66,510 units were launched last year worth a combined 206 billion baht. About 94%, or 62,584 units worth 174.11 billion baht were residential units.
Of the total residential units, about 44% or 27,342 units were condominiums, 27% or 16,953 were townhouses and 21% or 13,062 units single houses.
In December, the number of newly launched units totalled 4,751 units worth 22.42 billion baht, down by 34% and 19% respectively from November 2006.