Kingdom has just begin construction of its first project, Southpoint, and he says he already sees signs of a recovery.
“I believe it will come back because Thailand is now seen as less risky. We’ve seen that to some extent in Southpoint where the Japanese have bought around 20 units. Russians are also buying, and we are selling two-bedroom units for up to B9 million.
The big buyers in Pattaya at the moment, Mr Cornick says, are the Russians – “They are by far the largest market” – but at the low end Southpoint also has condos priced around the B2 million mark, appealing to the growing Thai middle class.
With that element he is ahead of the big Bangkok boys. Although Sansiri, for example, has eight low-end projects on the go in Phuket at the moment, it has yet to do the same in Pattaya.
“I don’t think it will be long before people like Sansiri will step it up a pace [at the lower end of the market] in Pattaya, because Pattaya’s got that backdrop of the eastern seaboard, the industrial base, where you have people with the potential to buy a condo for B1 million-plus.”
But he foresees potential problems for developers in the low end. “The stuff that’s being churned out now is easy to sell but the difficult thing will be delivering, because construction costs without a doubt are rising and will continue to rise.”
Labour is the main problem, he believes. The B300 minimum day wage is having an effect, but the accelerating economies of Myanmar and Cambodia will see rising demand for labour in those two countries which, up to now, have provided most of the labour for Thailand’s developers.
In addition, car makers are hiring the same kind of skilled people – electricians, plumbers and so on – as the construction industry, but for wages that are twice or three times as high.
“So these margins [on low end developments] will come under real pressure. The quality of what you get for that money – and a lot of it hasn’t been built yet – will not be up to much. It can’t be.”
With Southpoint, he says, Kingdom is averaging sale prices of around B90,000 a square metre, of which B40,000 is pure construction costs. Add in marketing, fees and the price of the land and Kingdom needs to be selling at about 65,000/sqm to start making a profit.
“We’re very keen to make sure the first project sets the standard,” he says, adding with a grin, “So we aren’t necessarily being as greedy as we might otherwise be.”
Mr Cornick has spent the past three years in the wilderness, running Kingdom as an agency. He plainly was not enjoying it, and is happy to be back in development.
“Being in the middle in the agency is being between a rock and a hard place. The owner doesn’t want to pay you nor does the customer. It’s fee-driven and you’re not really producing anything.”
Raimon Land in his day built half a million square metres of property, in projects that won awards and which he believes have “improved the landscape”.
His official biography, handed out to the press, describes him as having “unerring vision”. He seems slightly embarrassed by this, but is also proud of some of the decisions he made.
“When [Raimon Land] started Northshore, people thought I was crazy to even think that I could sell anything in Pattaya for B50,000/sqm. But in the end we averaged about B75,000 and some people sold for B180,000 before we finished.
When he started on The River in Bangkok, people said, “You’re crazy. It’s on the wrong side of the river. Why would you possibly want to buy that?” That project too, has been highly successful.
“I paid prices [for land] that other developers thought I was crazy to pay. ‘Why are you paying B900,000 a square wah for Rajdamri Rd?” Today it’s worth two million.
“So I’d like to think that’s what they mean [by ‘unerring vision’].”
Under Mr Cornick, Raimon also had a reputation for its CSR programme – in Phuket the most visible was sponsorship of the King’s Cup Regatta for four years.
Regatta committee member Bill O’Leary, passing by during the interview with Mr Cornick, said, “He saved the regatta. Without him there would have been no King’s Cup. Put that in your paper.”
Mr Cornick believes that CSR is a very effective tool in the marketing toolbox. “Its a different way of spending our marketing budget. Probably at Raimon, between 2003 and 2009, we averaged B6 million a year for CSR. That’s less than one tenth of a per cent of the marketing budget.
“The regatta was good. And it was good to bring our customers down to Phuket. A little does go a long way – to turn a mediocre event into a good event doesn’t take a lot,and people remember it.”
He has no plans at the moment for projects in Phuket. But he likes the island. “I want to come back more often. Maybe we [Kingdom] should try to do something with the King’s Cup next year.”