Any Good News Out There?

By Clayton Wade

Managing Director

Premier Homes Real Estate Co., Ltd.

clayton@premierinternational.com

I have been sensing a change in the Eastern Seaboard residential new construction market for well over a year now.

I wrote 'What's Up with the Condo Market' back in March of 2012 and then seven months later in November 2012 I wrote 'Keeping an Eye on the Condo Market'.

In 'What's Up with the Condo Market' back then a year ago I wrote concerning our Eastern Seaboard new construction condominium market: 'I have always been very "bullish" about our real estate industry here on the Eastern Seaboard of Thailand and in general, I am sure I will continue to be so for many years, but I feel it is my journalistic duty to draw attention to market indicators.'

In November of last year I wrote: In a completely normal real estate market, 'property bubbles,' which, by definition, are not normal or rational price inflation incidences, should not exist.

However, markets do not always respond in the way we think they should and 'pricing bubbles', which are created when varied perceptions by consumers drive prices of a commodity far out of their real value range will eventually force a price adjustment necessary to a property market.

I used the 'O Word' (oversupply) for the first time publicly in the Property Guru Magazine's Real Estate Predictions for 2013 published in late December 2012.

Looking towards the coming year at that time I wrote: Phuket Gazette's recent poll indicated that most people (62.5 percent) foresee a downward trend in real estate prices for Phuket over the next five years due to oversupply.

The Eastern Seaboard, also oversupplied, will be witnessing a good number of their developers and developments falling by the wayside as the entire area is also overheated!

And…..of course in my most recent two articles I have come forward with statistics showing not only a growing over supply of residential properties in the provinces with data supplied by a good friend of mine, Samma Kitsin, and his team at the Real Estate Information Centre in which they made a startling discovery as a result of their survey throughout the major provinces of Thailand.

Samma found that as of the end of December 2012 (75 days ago!) there was an inventory of 71,770 housing units worth 229.26 billion baht unoccupied and available on the market place and top Thai researchers are already predicting that it will take at least two years to sell them completely and almost half (44 percent) were in the province of Chonburi with 31,340 property units worth 92.43 billion baht…and climbing!

No sooner have these statistics entered the public domain when we now have the Pattaya Condominium Report having just come out via Colliers International's top market researcher Surachet Kongcheep.

What was the highlight of Surachet's research? Approximately 15,400 condominium units are scheduled to be completed between 2013 and 2015 in the Jomtien Beach area alone, according to developers!

Good God. That's why I ask….is there any good news out there?

It does seem like most of the industrialized world is racing towards bigger and bigger and higher and higher plateaus of abundance and prosperity, but that's always how it is before the end of an economic cycle.

Are we nearing a great climax locally and worldwide?

Locally here in Thailand it has taken the Thai SET index nearly 20 years to reach a level of recovery to its pre-crisis, record-high stock market index level.

The Nikkei, Tokyo's stock exchange, burst in 1990 after one of the biggest and longest-running stock market bubbles in history; it is currently trading at a third of its pre-crash value after more than 22 years.

Considering this, why did it take the US stock market only three years to climb back to its record-high level of Oct. 9, 2007, even though statistics show that current US industry fundamentals remain extremely weak?

"We all know it's going to end badly, but in the meantime we can make some money"

Think about it as it is very difficult to understand how it could take the US only three and a half years for their stock market to set a new record high as just last week the Dow Jones Industrial Average breached its Oct. 9, 2007 level of 14,164.5.

The US stock market recovery can only be attributed to one man, Ben Bernanke, the US Federal Reserve chairman, and one entity, the US Federal Reserve, which is committed to printing money like mad men to artificially prop up the US economy and financial markets.

In doing so, are we witnessing the biggest US stock market bubble in history?

The recent performance of the US stock market would raise questions from any corner of the world as I am very sure we are all about to witness the greatest stock market bubble of all time.

With this in mind, what did Jim Cramer, host of CNBC's Mad Money and co-anchor of CNBC's Squawk on the Street, have to say to sum up where the US stock market stands today: 'We all know it's going to end badly, but in the meantime we can make some money'

That pretty much sums up a lot of things in my mind as pertains to the United States economy, the world economy and the economy right here on the Eastern Seaboard of Thailand.

Market, sell, build…market, sell, build just as long as there are warm bodies out there willing to listen to your sales pitch and lay down their cash money.

I don't have the greatest visions for the US stock market or economy for that matter, but Thailand is in a different and unique situation.

Supported by its ASEAN neighbors banding together, being under the umbrella of the Chinese super power and super economy and as well being visited by massive numbers of Chinese, Japanese, Koreans, Arabs, Indians and Russians…Thailand really does have a promising future.

The question of the day is whether Thailand can endure the repercussions of a collapsing economy in the west and maintain a good balance of real estate properties supply and demand.

So far so good and here's where the 'good news' comes in…and that is the fact that land prices on the Eastern Seaboard of Thailand have not stopped going up for more than ten years now…ten years!

Land prices on Pattaya Bay and Second Road are currently asking/listing at 350,000 to 400,000 baht per tarang wah or 140 million baht to 160 million baht per rai and very recently are actually achieving sales of more than 300,000 baht per tarang wah or 125 million baht per rai!

Yes, it's always a real estate roller coaster here in the Land of Smiles, but there always seems to be 'good news' somewhere!

Our very special thanks to Clayton Wade, managing director of Pattaya's Premier Homes Real Estate Co., Ltd. for preparing this Pattaya Today column.

Clayton Wade has been running Premier Homes Real Estate Co., Ltd., with his wife, Khun Supap, for more than 17 years. He himself has been in the real estate industry going on 27 years, having started his career in the United States where he was licensed and practiced both real estate sales and property management in Seattle, Washington.

Clayton personally was responsible for bringing in the first 53 General Motors executives for the start-up phase of Thailand's General Motors manufacturing facility and had a three-year exclusive with the company. Following that experience, he placed most of the start-up executives for the Eastern Seaboard's BMW manufacturing facility.

Clayton Wade is a council member with the Gerson Lehrman Group, the New York based international research and consulting firm, and has been a national panel judge with the Thailand Property Awards for many years.

The American-born entrepreneur is known throughout the Asia-Pacific region for his writing, public speaking and television presentations. His many accomplishments in promoting real estate on Thailand's Eastern Seaboard include having been a guest speaker with several of Thailand's top political and business figures on CNBC's Managing Asia.

Premier Homes is Pattaya's leader in exclusive property sales and rentals, which may be seen by visiting their website at: www.premierinternational.com. Clayton Wade may be contacted at +(66) (81) 634-2915 or at: clayton@premierinternational.com