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This fast developing resort city is making all out efforts to attract tourists and potential investors from Russia and other CIS (Commonwealth of Independent States) countries. Indicative of the new pro-active stance being adopted by both government and real estate agencies in Pattaya, October saw members of the Pattaya City Council and the Tourism Authority of Thailand attending Moscow's "Leisure 2007" Show. Meanwhile, Thai hoteliers and travel operators visiting St. Petersburg's "CIS Travel Market 2007 Tourism Fair", sought to encourage Thai Airways and other airlines linking CIS countries and Thailand to increase flight frequency, inaugurate direct flights from St. Petersburg, and expand operations to cover the whole year instead of just the November-March high season.

As CIS and Thai tour operators increasingly target holidaymakers from Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Ukraine and Uzbekistan, the number of visitors from these countries to Pattaya-Jomtien is dramatically increasing - from 482,000 in 2006 to an estimated 600,000 this year and a projected one million in 2008. As a result of this growth, some savvy real estate agents have already employed Russian speaking consultants to facilitate negotiations with CIS citizens, and at least one company, Premier Homes, has followed the Thai lead by planning to attend the Moscow International Property Show in April 2008, to meet potential high-end investors on their home soil.

CIS property investors generally fall into three main categories: middle class tourists, YURIs - Young, Upwardly-mobile Russian investors, and super-rich oil and gas magnates, with annual incomes that range from one to tens of millions of US Dollars. As the Russian economy continues its dramatic expansion, more Russians are intent on purchasing property overseas. However, their interest in once favourite venues such as Spain, Portugal, Cyprus and Italy, where their naiveté was often exploited, is fading. In Italy, for example, property purchases of $10 million incur taxes and duties of around $1 million. Instead of such exorbitance, many CIS buyers now look for cheaper holiday-homes and rental investments in Thailand. In Pattaya, the sector from Najomtien to Ban Amphur is becoming something of an enclave. Most CIS investors remain wary, however, and rarely deal with anyone that doesn't speak their native tongue.

In many cases, it has been bilingual tour guides that liase with real estate agents and deal with potential buyers in Pattaya.But turning enquiries into sales is not always easy. According to one guide, Euginiya Lisovskaya from Big Holiday Co., "Out of an average of 600 expressions of interest per week over the last two years, only twenty CIS tourists actually bought a Thai property."

The fact that most CIS professionals still only earn salaries of between $100-200 per month could well have some bearing on this. However, more recently, a new generation of affluent YURIs has emerged, who take advantage of tax relief on overseas property, have sufficient disposable income and can readily raise loans. These are now the majority purchasers in Pattaya.

YURIs are far more cosmopolitan than their middle class counterparts and have distinct preferences. They tend to demand high quality product in beachside or secluded settings, and prefer outright ownership, which has boosted the sale of freehold condominiums. They recognise the potential value appreciation of buying before construction is complete, and favour the largest, most prestigious properties as one-upmanship and boasting to ones peers about foreign ownership is part of the appeal.

According to Bruno Pingel, CEO of Siam Best Enterprises, properties purchased by Russian and Chinese investors over a period of just six weeks, recently accounted for revenue of more than 162 million Baht. Figures like these have kick-started the Pattaya real estate industry and provided a huge boost in confidence. Siam Best Enterprises are the developers of the ultra-prestigious, 12 billion Baht Ocean 1 Tower, a landmark condominium project destined to be the tallest residential building in Thailand. Around 23% of the freehold units have already been sold, 6 to 8 of them to YURIs at prices between 125,000-130,000 Baht per square metre. Other properties favoured by these investors include luxury homes at View Talay Villas residential estate, and houses nearing completion at Majestic Residence beachside estate. Michael Suttie, MD of Pattaya Properties, the real estate arm of Siam Best, says he's very optimistic about future CIS investments.

Another developer, Anthony Thomas of BravoThai, co-partner in the Vineyard project, likewise professed that he could see a great deal of potential in CIS investments. "We are currently arranging educational-investment tours to attract CIS custom," he said. Meanwhile, Premier Homes are currently promoting the up-market development Talay Sawan in Bang Saray. "I expect at least 10% of sales in the property to come from CIS investors," explained Jan Nuyten, Premier's GM. "In my experience, they see, fall in love with property and buy - often for cash."

CIS investors are by no means predominantly Russian, however. Mrs. Euginiya cited Kazakhstanis as making up the majority of her clients, while Jan's Nuyten's customers have been largely Ukranian and Latvian. Despite many rumours to the contrary, no overt CIS real estate development is yet evident in Pattaya, apart from an optimistic developer on Koh Chang who envisaged bringing over Russian supervisors to teach Thais how to build houses in a month. What CIS developers there are, include Kazakhstani nightclub owners, intent on building in North Pattaya, Walking Street and Central Pattaya, and one major CIS developer that has plans to build a shopping mall near Al Kazar.

All this interest from Central and Eastern Europe, combined with predictions for a boom in Asian arrivals and investments in the year ahead, has certainly impacted on Thai interests in Patttaya. The Minister of Tourism and Sports recently scheduled a presentation entitled "Improving Pattaya's Image", and international marketing by bodies such as the TAT increasingly promote Pattaya as a family destination. Until recently it seems, CIS tourists and investors have been kept in the dark about Pattaya's former reputation. As a result, they increasingly see Thailand's "Sin City" as an attractive long-term investment opportunity.
 

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