How will the recent flooding in Bangkok impact on the Pattaya property market both short-term and in the longer view? Those are the questions I propose to address in this column.
Flooding in Bangkok has certainly caused hardship for Bangkok residents over the past couple of months.
Local and international news reports have widely documented the severe flooding causing residents to evacuate their homes. Many industrial estates in Ayutthaya and other areas to the north have been forced to shut down.
Food and water shortages in Bangkok have been widespread. These shortages have also made their way to Pattaya as many Bangkok residents and area residents with families living in and around the capital have been buying provisions here and hauling them to Bangkok.
Countless numbers of residents who evacuated their homes in Bangkok have been searching for short-term, temporary housing for a month or two in both Pattaya and in Hua Hin. My agency alone has received several hundred phone calls over the two weeks before I wrote this article from Bangkok “refugees” seeking temporary housing.
If you or your friends have tried to find a hotel room or short-term rental, you know it has been next to impossible to find accommodation.

Lasting impact?
The question on my mind today is whether these floods will have any lasting impact on the property market here in Pattaya.
Will Bangkokians buy second homes here, and even consider relocating to Pattaya? In my opinion the answer is yes. Over the past two years we have experienced a significant number of inquiries from Thai property buyers.
In fact, prior to the floods we already had begun to see a significant influx of Thai visitors who were being drawn by Pattaya City’s concerted efforts to increase local tourism here. Most week-ends there have been festivals of all kinds to attract tourists.

Strong economy
The Thai economy has been very strong these past two years. Thailand’s GDP stands at about $319 Billion USD, an increase of 7.8 per cent in 2010 and forecasted growth of four per cent in 2011. Exports were up 20 per cent in 2010 with further growth of three per cent expected in 2011. And unemployment is very low at 1.2 per cent.
Despite the sub-prime mortgage crisis in the US and tight credit markets globally, home mortgages are readily available to Thais. Mortgage rates currently range from around 4.9 per cent for a variable rate mortgage to three-year fixed rate mortgages for 6.25 per cent. Although there has been some tightening on the amount of a home loan (now up to 90 per cent of the property value), mortgages are widely available.

Growing level of enquiries
All of this means that Thais are spending, and they are also investing in properties. Our Bangkok office interacts with primarily Thai property owners, many of whom own several properties in both Bangkok and Pattaya. And the level of inquiry from these Thai buyers regarding Pattaya real estate continues to grow.
With the flooding and related damage in the industrial estates north of Bangkok, one might expect corporate executives to consider minimally locating satellite facilities in the industrial estates in Sri Racha and Rayong, and maybe even fully relocating their operations to either. Pattaya is a popular residential option for employees working in both of these areas, so such moves would increase demand for residential property here.
I have long believed that Pattaya could become a “second city” to Bangkok and would be a good alternative for office space. Occupancy rates in Bangkok are consistently around 85 per cent or more, with prices in the CBD averaging more than Bt620 per sqm per month.

Lower-cost alternative
With a relatively ample supply of land in Pattaya and with consistently strong demand for office space in Bangkok, Pattaya could become a strong, lower-cost alternative to Bangkok.
The past few years have seen an impressive amount of development in Pattaya:
 l The extension of the Bangkok-Chonburi Motorway to Pattaya City has reduced travel time to less than 90 minutes;
 l The Central Mall with the Hilton Hotel and Holiday Inn opened on Pattaya Beach;
l Centara Grand Hotel on Wong-Amat Beach is the area’s newest five-star hotel.
l Pattaya added just fewer than 5,000 new condominium units in 2010.
l Developers based in Bangkok, including Major Development and LPN have launched new projects here in Pattaya.
l High-profile condo projects with hotel partners Centara and Park Plaza have recently been launched in Pattaya.

Plenty of choice
And with all of the residential project development we have seen the past three years as well as several new project launches, there is good quality housing for employees new to the Pattaya area to choose from.
But can Pattaya absorb a large influx of year-round residents? These past few weeks we have all experienced the traffic jams resulting from our visitors from Bangkok.
So yes, careful planning and further infrastructure investment is required to enable Pattaya to get to that next level. Motor traffic, parking, water supply and drainage all need to be addressed if Pattaya is to emerge as Bangkok’s second city.

Resilient and innovative
My experience over the past 10 years is that Pattaya is very resilient and innovative when it comes to attracting visitors. Foreign and Thai investors seem to have a strong appetite to purchase real estate here.
The recent flooding in Bangkok may serve to accelerate that development further over the next several years. Ω