The new normal at the New Nordic Group

The orange dream of a riskfree investment in Thailand’s signature property markets

The ambitious business model: Thailand has an amazing track-record with a diverse portfolio of hospitality projects offering a full range of service facilities and amenities. Foreign investors have been assured to generate a sustainable passive income without worries and that the offered projects constitute turnkey and hassle-free investments with consistent and durable returns. New Nordic Group, the most successful player on this market, wrote an astonishing growth story by continuously expanding a diversified hotel portfolio in high-growth segments and destinations.

Net annual earnings projections based on a (much too) easy financial model with average occupancy rate projections, average room rate projections, and average guest spend projections. Projections are modeled on recent data from comparable hotels located within close proximity to the new hotel development. No-name hotels like “Marcus 4” used the same performance projections as branded landmark projects like Centara Grand and Amari Residences.

Well-known projects are Phuket Water World in Phuket, Samui Water World and Samui Resort in Koh Samui, Chumphon Coral Beach Condominiums and Chumphon Coral Beach Villas in Chumphon, the Marcus Hotel in Pattaya. Previous projects of the New Nordic Group Thailand, now sold-out, had been Palace Condominium and Palace Hotel, The Castle Hotel, The Castle II, Club 4, Club 5, Club 8, Boutique, all of these located in Pattaya. Completed developments include Atrium, Club 1, 2 and 3, C-View Boutique and C-View Residence, Marcus 2 and 3, Suites 1, till 6, The Castle 1, Trend 1 – 7, Vip 1 – Vip 6. Off-plan developments are Bangtao Water World Condominium and others. The naming could certainly have been surpassed in individuality.

Rental guarantees: The developments promised a return of 6 – 10% per year for a term of 5 years with an optional 5-year extension. 1/12 part of the amount is paid monthly, regardless of whether your apartments used or not. Only the investor has the right of early contract termination. New Nordic cannot terminate the rental guarantee contract. New Nordic make all renovation works at their own costs, including breakages, repairs, and replacements. At the end of the agreement, New Nordic undertakes to make repairs and pass the apartments in good condition to the investor. 

A guaranteed buyback from the developer, with 100% rate from the original purchase price and progressing rate by 5% during the 5 years starting from 10th to 15th year of ownership (the final buyback rate will reach 125% on 15th year). 

Investment redemption: The reservation payment typically amounts to THB 50,000, the first payment after contract signing 35%. The further payment plan is subject to negotiation. All payments transferred on the installment plan are rewarded with 3% p.a. starting from the next month. As soon as the buyer covers 100% of the purchase price, he starts to get monthly payments from 10% p.a., starting from next month, even if the building is not yet completed.

The user agreement, as published on the New Nordic website, has a certain limited scope of application. Under the agreement, any portion of services can be modified at any time without a notice period.  The user accepts that New Nordic shall not be liable for any modification or termination of services, or suspension or termination of the access to such services. Disputes will be resolved by binding, individual arbitration. The right to participate in a class-action lawsuit or class-wide arbitration is explicitly waived.

The New Nordic Group is just a part of the global group, founded by Mr. Kurt Svendheim. Arumi Invest is active in Latin America, Oroma Invest in Africa, and the Auran Group creates a U.S. investment structure. All group members share the orange corporate color. New Nordic Group Thailand is located in Bangkok and Chonburi. It consists of five companies: New Nordic Group Co., Ltd., New Nordic Development Co., Ltd., New Nordic Maintenance Co., Ltd., New Nordic Management Co., Ltd., and finally New Nordic Holding Co., Ltd.

Hidden legal entities: Marketed as “New Nordic Group”, the provider avoids naming a particular legally attributable company. The Bangkok address is New Nordic Group Thailand or New Nordic Thailand Sales Office. The same applies to Pattaya Sales Office and Koh Samui Sales Office. Kurt Svendheim, the Norwegian entrepreneur, businessman, and self-proclaimed visionary resides at the same Bangkok address and office unit. Even the New Nordic Group site on the Internet, which is subject to the waivers of right under the user agreement, is defined as New Nordic Group website, New Nordic Group API, and/or any associated websites or mobile applications. This offers great opportunities to exchange the parties involved at any time and even undercover and also to swap them for a legal entity outside of Thailand. 

The impact of the pandemic as a stress test to New Nordic Group’s operations in Thailand

In a press release as of March 27, 2020, New Nordic announced to take immediate actions that will have a detrimental short-term effect on investors. This is argued to be due to the impact of the pandemic. Commencing April 1, 2020, all contractually assured interest (rental guarantee) payments and repurchases have been suspended until further notice. Cashback payments have been reduced to 3%. Overdue payments are to be made at a later date if and when this should be possible. The outstanding receivable amount should be confirmed in writing on a monthly basis.  The press release does not promise interest on late payments. New Nordic asserts that decisive measures have already been taken to protect creditors. No details are given.

In a statement as of June 27, 2020, the economic substance of the rental guarantee and cashback payments have been explained in a slightly surprising way. The rental guarantees issued to investors are based on the operational revenue from the New Nordic Group’s operations. The cashback payments are based on the capital gain of new land bank purchases and new investments.  

The 11-year anniversary message on July 15, 2020, the Chairman Kurt Svendheim informs about the intention of a restructuring under which investments in Thailand are not protected by Thai jurisdiction. Also, the CEO describes the need to convert the existing condominiums in Thailand into hotels by August 2021 to be able to legally operate as a hotel. 

In a statement on August 19, 2020, New Nordic is preparing for a restructuring of its operations. The plan will be announced in September 2020, after the strategy has already been finalized.

Fight for your rights: Although the impression of harmony is often conveyed, there are considerable conflicts of interest between the New Nordic Group and the investors behind it on the one hand, and the property buyers on the other, who believed the marketing propaganda at the time and now feel tricked. Even worse, the big bath tactic is abusing the corona disaster to hide one’s own misconduct by blaming past omissions and mistakes to the pandemic. 

Independent and unimpaired legal services in Thailand’s real estate industries: How to team-up as a powerful pressure group without getting lost in the uncertainties of a class-action lawsuit

PUGNATORIUS Ltd. is focussed on foreign investments in Thailand. Land developments, condo purchases, and property litigations are the core of the law firm’s practice. This includes especially rental guarantees, buy-back options, and other structured property investments. The Bangkok law firm supports foreign investors in Thai real estate developments in all steps of the acquisition process. In addition, the legal counselor assists in the event of disruptions in the processing as well as in the enforcement of legal claims. PUGNATORIUS Ltd. represents individuals or groups of aggrieved parties in the robust assertion and (also in court) enforcement of claims.

Class action lawsuits have been introduced into the Thai legal system in 2015. Although deemed to provide fairness and efficiency in cases with a large number of parties, the strategic decision for participation in class action proceedings in Thailand should be carefully considered. What makes sense for consumer protection with tiny claims of each plaintiff, might slow down the procedures and eliminate flexibility in case of breach of property investment contracts. Whether New Nordic’s user agreement can efficiently ban its customers from participating in a class action, has to be decided on a case-by-case basis. Anyway, Thailand’s new legislation implemented the right to opt-out of the class action to file a separate lawsuit with a more beneficial result. #classaction


A little knowledge is a dangerous thing. This low-resolution high-level outlook constitutes neither legal advice nor an attorney-client relationship. This post bases on specific hands-on know-how and experience. Secure your passive income in paradise.

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