How good are the Pattaya rental guarantee options?

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The principle behind the rental guarantee option is pretty sound, especially in a city such as Pattaya where the number of tourists coming to the city is increasing year on year. The only question mark relates to the developers’ ability to be able to honour their side of the bargain. This is usual determined by a combination of factors including their management teams and experience, their liquidity and their overall financial strength. For it to be truly successful, the developers need to be strong in all of these departments.

If we look at just four of the developers offering rental guarantees, New Nordic, Heights Holdings, Kingdom Properties and Tudor Group we see that that they are all well established in terms of longevity as developers, however they have had varying degrees of success when it has come to achieving completion targets with only New Nordic consistently completing projects on time.

With regards to financial stability and liquidity, there have been plenty of rumours surrounding three of the four with only New Nordic again coming out with a clean bill of health. It should be stressed that these are purely rumours and we have no evidence of their accuracy but when combined with their failure to meet completion dates, there must be an element of doubt in investors’ minds.

The next issue when determining how good the rental guarantee options are is the strength of the management team and indeed their experience. Again, New Nordic come out of this very well having successfully offered the rental guarantees for over nine years so they have both the experience and the skill to be able to successfully manage such schemes. The other three developers are trying to emulate what New Nordic has already achieved so there is no track record on which we can make an accurate judgement. However, the lack of track record along with the other two factors again points to New Nordic’s reliability and strength.

Another factor connected to the developers’ liquidity and therefore their ability to honour monthly payments is the infrastructure. New Nordic own and also have established connections with reputable tour companies who are in a position to meet minimum occupancy demands. The group also owns other businesses that make their units more attractive such as restaurants, bars, massage shops and convenience shops – they also have a doctor onsite. None of the other developers have the infrastructure in place, at this time, to compete with New Nordic. Once again this emphasises the strength of the group above all others.

So to conclude, all of the rental guarantee options are, on the face of it excellent. We naturally hope that all of the projects are a success but there will inevitably be nagging doubts about any developers that don’t have proven track records. At this stage, purely from an investment point of view, we could only whole heartedly recommend the New Nordic projects for all of the reasons that we have outlined. The others may prove to be equally successful over time but this suggests that there is an increased element of risk.

  • Ken

    I wouldn’t recommend any of them, even New Nordic.
    If you want an investment property, buy one in a stable country that is not rife with corruption, has decent infrastructure, has sound standards of construction and a legal system that is not totally biased towards it’s own citizens.
    I guess that counts out Thailand for the foreseeable future.

  • Muppet1

    Very cleverly, and carefully, worded article that is quite clearly biased towards just one developer. Nice bit of marketing 😉

    • mike mongerer

      Agreed. The article sounds like an advertisement for New Nordic. The property market in this town may have decayed to the point where developers are now backstabbing each other in public to pick up the remaining business. I also wonder how much damage has been done to this industry by the recent crackdown on Chinese zero baht tours. Somebody in the property rental business has to be hurting bad.

      • Wolf

        I think Pattaya is overdeveloped. So many apartment buildings seem to be 80% – 90% empty during the low season, at least in the Jomtien area. At the same time many new apartments are being built. To me it makes no sense. I can’t imagine all buildings being rented out full time in the high season.

        The only reason one should buy anything in Pattaya (or Thailand) at this moment is if one intends to live there. Or at least spend holidays there.

  • Ken

    Only thing guaranteed in Thailand is crime committed by Thai men

  • Tony Akhurst

    the guarantee is as safe as a brown paper bag in a thunderstorm.

  • Mike Murphy

    good as the person that translates them.

  • le chef

    With returns of 10% I’m surprised the developers don’t rent them out. No returns like that anywhere in the world that i know of

  • Joe

    Can the Author please explain to me how it is possible to sell Condo’s at 100k per sq mtr when the average price in that area is 50k, then offer them for rent at much lower prices than the other Condos are being offered at and still pay 10% return

  • Kasper Jansen

    Caveat emptor!!!
    I personally have some first hand experience of one of the said developers, and their extremely dirty business practices in this city. (I am not naming it here, due to the distorted attitude of the local law towards warning others of already court-proven wrong-doings…)
    I would´t trust anyone in this market situation for these kind of hollow promises; at the end they will just shake their shoulders, that it is a civil case; breach of agreement. Not criminal offend so the owners will walk away happily whistling to the next business opportunities; should I say “from the solid experience of settlement and wall buildings background..”. 😉

  • Ken

    No guarantee in Thailand is worth the paper it is written on.
    If some company fails to deliver their ‘guarantee’. There is absolutely nothing you can do about it. They all know that and operate accordingly, with absolutely no regard for their customers.

  • Leone Esse

    Is there someone here that has actually invested in the New Nordic group and that has seen these 10% rental guarantee respected so far?

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