Two-tier pricing claim baffles developers

PHUKET: Real estate developers have reacted with bafflement and irritation to an accusation that the property industry in Thailand indulges in double pricing, with foreigners paying up to 75% more than Thais do for homes. The accusation came in a report published yesterday by the South China Morning Post in Hong Kong – the biggest market by far for the high-end residential property available in Phuket. The paper quoted Bangkok-based Francis Lai Pang Fee, former Chairman of the Thailand chapter of the prestigious London-based Royal Institute of Chartered Surveyors (RICS), as saying that the tourism industry’s much reviled two-tier pricing system was mirrored in the residential property market. “Assuming it is a prime location, the increase in price for foreigners can be as much as 75%,” the newspaper quoted Mr Lai as saying. “Normally, such projects ,which are sold off the drawing board, are offered to foreigners first at the higher price. Later, the leftovers are sold locally at a discount.” Bill Barnett, CEO of consultancy c9 Hotelworks and developer of the successful East Coast Ocean Villas project, told the Gazette today, “Probably 90% of the clients are non-Thais so it’s not a very practical thing. I’ve never seen any two-tier pricing, or been aware of it. “Normally, when you buy off plan, you get better value, and when sales reach critical mass, prices go up.” But, he said, this was a normal pricing strategy, and had nothing to do with nationalities. There were no “leftovers” as described by Mr Lai, he said, adding, “If anything, the last few properties sell at a premium.” Tanan Tanpaibul, developer of The Heritage, where homes are selling for 7 million to 10 million baht, said, “No, no. Not in the property business. The land price and the building costs are the same for anyone. We have both Thai and foreign buyers and we sell to them at the same price.” David Edwards, Director of Green Heritage Developments, which built Katamanda, said, “It defies logic and it’s certainly not the case in anything I’ve been involved with.” Long-time property agent and developer William Pinsent of Phuket Land could think of only one circumstance where there might be a price differential – in the selling of mixed condominiums, where the 49% earmarked for foreign freehold ownership might carry a premium of 20%. This was because those units could be sold to anyone in the world, while the remaining 51% could only be sold to Thais. “But that’s a supply-and-demand issue,” he said, “and the buyers know this.” He described Mr Lai’s allegation of a 75% difference as “absolute crap”. Even in the Thailand chapter of the RICS, Mr Lai appears to have little support for his views. The current chairman, Haydn Thomas, told the Gazette, “I would personally distance myself from the article. I am not aware of any two-tier pricing system [in the Thai property market].”