......The cloud hanging over property worldwide has led to speculation about the viability of some of Pattaya’s landmark projects.
We speak to David Walton, right,
who is vice-president, sales and marketing at The Waterfront

It was during one of those “help me understand the market better” chats with David Walton of The Waterfront that he made a few statements that I thought should reach a wider audience, writes John Davids.
I was hedging around the subject of website blogs putting question marks against the true intentions of the developers of The Waterfront. Some had even suggested it was a long-term scam.
“Was he prepared to go on record with his replies?” I asked.
“Ask me any question you want,” was his response.
It was an opportunity too good to miss, I felt. Here is the record of our chat...

REm: Doubts are being expressed on the web about the future of landmark projects including The Waterfront. Is The Waterfront going to be built?
David Walton (DW): Yes it will be built. But, yes it will probably complete 12 months later than originally planned. The original completion date was April 2011, now we are looking at the first half of 2012.
We make no apologies for that 12 months’ delay. In the current climate I can’t think of a business
of any size that hasn’t had to
re-evaluate its plans, let alone when talking about a project on this scale.
We have reviewed all aspects of this project, in the light of shrinking markets and investor nervousness.
We have retendered both of the main construction packages (groundworks and structure) based on current prices – not those of six months ago. One of the major reasons projects fail is that they procure materials and labour at the top of the market, very often entering into fixed-price contracts. We are determined to avoid the problems this poses.
We believe the prices we are achieving now by retendering as prices fall will provide enough efficiencies to offset any slowdown in sales or lack of a high season this year. Using our time wisely now will enhance the sustainability of the project.

REm: There doesn’t appear to be much building activity at present. Why is this?
DW: Last October/November contractors investigated 30 of the 106 pile holes the building requires. Based on this 30-hole test they attempted to virtually double the original contract price. We asked them to stand by their original price, but they declined. I guess in the light of subsequent events, their timing wasn’t great.
We now have new, more acceptable numbers in and we expect the drilling to re-commence in the next four-eight weeks. The pace will be dictated by how we see the market unfolding. But we believe this drilling will take us through to the fourth quarter of this year.
Coming into 2010 we believe we will be in a position where piling is complete and construction will be coming out of the ground.
But I would add a caveat to that statement. If we have another financial ‘tsunami’ of the scale we have just seen we would have to review what we are doing. My personal view is that the occupation of the airport and political issues at the back end of last year had more of a negative impact on the market than the economic situation. I am really hoping for an extended period of stability.
That said, I am confident we will see the market beginning to rise towards the end of this year. We can already see signs of returning investor confidence as some semblance of normality returns to the political scene.
Thanks to our pragmatic approach we will meet our contractual obligations.

REm: At one time I couldn’t open a Pattaya-based publication without seeing The Waterfront being advertised. My perception is that you have cut back your marketing effort. If that’s correct can you explain the thinking behind it?
DW: Absolutely correct, we have cut back. The launch of every project sees a surge of marketing activity. Initially, we were spending a vast budget on a mixed bag of media. But, to continue at that level in a stagnant market would have been a nonsense.
In terms of bolstering local market confidence it is more important to refocus from media spend to operational spend. So we have opted to put some of the budget available to us into commencing the groundworks rather than spend it in the media.
Let me ask you a question, as an investor which would you prefer to see – billboards on the Sukhumvit Road or plant and people working on site?

REm: Does the cut-back in advertising and slowdown in construction help fuel the fire of the doubters?
DW: Possibly. But this is something I cannot control. In a climate where marketing budgets are first to get cut our priorities are to re-evaluate capital costs.
We are taking the available budget and applying it where it will do most good. We have decided to allocate the money to servicing the site until the end of the year.
Our media suppliers have been absolutely understanding and very professional about this. They understand that we are taking an advertising ‘holiday’ and will come back at an appropriate time.
I’m with Cees Cuijpers (REm – One Wish for 09) the only way to quieten the bar-stool barristers and self-proclaimed experts (in just about everything) is to try to achieve transparency, this is why I welcome responsible journalism.

REm: I know you are keen to explore every avenue to boost investor confidence. What steps have you taken?
DW: We are doing everything possible to satisfy customers that their money is safe.
At our own expense we have established an escrow facility which the initial 15 per cent downpayment can go into and we are operating staged payments in arrears! So the next payment will not be made until the piling is complete. This escrow and arrears payment combination, we feel, makes us unique in Pattaya if not in Thailand.
Last July the government agreed in principle to the idea of escrow accounts but left it to individual banks to put a scheme in place. But no Thai bank has done it, so we had to develop our own in co-operation with HSBC.
Escrow is a form of insurance to protect investors’ money. There is a fee involved but this goes direct to the scheme’s trustees, the major Bangkok-based law firm Tilleke & Gibbins, not to us.
They will only release money to us upon receipt of two independent reports confirming that the work has been carried out. This means that all costs between now and completion of piling is down to us. Only when the piling is complete will a staged payment be released to us.
Introducing this form of innovation makes it especially exasperating to read on the web that some people think The Waterfront is some form of long-term scam. Scams only work where the perpetrator controls the money that has flowed in. We get the money back after we have spent it. That’s a pretty weird way of working if you are trying to cheat people. I have little or no respect for people who hide behind a computer screen, confident that anonymity allows them to say anything they like about anything they like.

REm: How are sales progressing?
DW: Sales last November and December were absolutely dreadful [this was at the time of the airport closures]. There was a lot of ‘window-shopping’ going on without much commitment.
In January and February we have closed a number of deals and we are seeing an increase in visitor numbers. We have reviewed the sales forecast and are confident we can weather the storm. Sales will not impact on what we are doing on site between now and the end of the year. That work will be carried out irrespective.

REm: How are you looking to address the question of selling the 51 per cent in a Thai name?
DW: We are looking at all kinds of things. I have never moved away from the standpoint that there is a significant Thai investment market and we will continue to market directly to them via several routes.
Fractional ownership looks interesting but we need to understand 100 per cent how it works before we consider it further. We will not bring into play any partnership that might adversely affect our customers. So there is no possibility of us introducing tainted concepts [such as timeshare].
If we do enter some form of partnership it will only be done if it is workable, legal and advantageous to our customers.
REm: Do you view the future with confidence?
DW: Yes I do. Personally, I have a great affection for Pattaya and a huge degree of confidence in the future of the city.
Strategically, there is nowhere better placed in Asia to become a destination hub than Pattaya.
Just look at what’s going on around the city, the big names in retail and hospitality continue to invest heavily.
The infrastructure has some catching up to do, as we can see with the traffic jams that followed the introduction of Central Festival.
The marina [planned right outside The Waterfront] is critical to the city’s future. Someway down the line we hope this will be a cruise ship destination bringing even more up-market visitors
here.
Walking Street lends itself to becoming a high-end visitor location. This would require some proper, judicial zoning to be carried out.
But, having said all that, it would be awful were it to become some form of sanitised Fisherman’s Wharf type of set-up [in San Francisco].
Everything evolves but, hopefully, not to the detriment of what helped put Pattaya on the tourist map in the first place. Ω