Developers heading for the hills
As little as 60 years ago, there wouldn't be much use in going to what is now Hua Hin unless you had a really soft spot for rickety houses and leaky boats. Called Samor Riang at the time, the little fishing village 200 km south of Bangkok started to gain notoriety when King Rama VII built a summer palace there in 1921. A nearby beach was christened Hua Hin (stone head), which for some reason caught on better than Samor Riang, and a new town was born. Fast-forward to the present day and you'd be hard pressed to imagine a time when the bustling city wasn't crawling with tourists, vendors and especially property brokers catering to buyers of all shapes and sizes.
One could easily say that there are three main hotspots for Thai property right now, those being Pattaya, Phuket and Hua Hin. All three are experiencing rapid growth and expansion but not all offer the same thing to the same people.
"All of them have their strengths and weaknesses," said Nusara Banyatpiyaphod, President of Ocean Property. "Phuket is the most expensive due to the airport and pristine quality of its water and beaches, but the effects of the tsunami still linger. Pattaya is close to Bangkok, but it's a party town with a wild reputation and every Western convenience. Hua Hin is a nice compromise: it's smaller and has a more traditional, relaxed feel to it."
A recent survey by Knight Frank Chartered (Thailand) shows that Hua Hin has a total of 18 condominium projects with 1,732 units launched for sale priced from Bt30,000/sqm to Bt100,000/sqm. The firm expects to see sustained growth in the Hua Hin condominium market for the rest of the year, driven largely by Thai buyers seeking to acquire lifestyle properties.
"Foreign investors with high purchasing power have recently shown increased interest which helped pushed the average asking price higher by an additional 10 - 20%," said Knight Frank's Managing Director Mr Phanom Kanjanathiemthao. Phanom added that Thai buyers made up 70% of total purchasers, with the remaining 30% going to foreign investors.
As in other Thai vacation hubs, a new trend sees more Thai buyers buying into resort properties for the sole purpose of leasing out to foreigners. In line with the latest Tourism Authority of Thailand's figures in 2005, the number of Thai tourist arrivals into Hua Hin was 1,800,000 while foreign tourists totaled 400,000.
As a result of this new trend, one of the hottest resort developments on the Hua Hin beachfront area, the Bt4 billion Boathouse Hua Hin Resort Development, has come up with a special package geared towards real estate investors where they can take advantage of a guaranteed 6% yearly rental for the first two years and can expect to obtain over 10% for the next 8 years on average, should current strong hotel occupancy rates in Hua Hin continue unabated.
The resort development covers an area of 72 rai and comes with a massive 15,000-square metre free-form swimming pool that runs through every unit. In total, there are 121 villas for sale as well as another 383 condominium units housed in four 14-storey high building blocks. The first block, or Condo A, has 98 units and prices start from Bt4.8 million which have seen a take up rate of over 60% since launch date last year and selling prices have moved up on average 8% per annum.
Ocean Property, developers of super successful San Marino Condo and the world-class Ocean Marina Yacht Club, both in Pattaya, are keeping it comfortable with their newest Hau Hin venture. Ocean Villas, a 10-rai, 18-unit development on Hua Hin soi 5. Mixing Thai-Victorian design elements and located on prime beachfront, its expected completion date is September of this year. It will be bordered by Ocean Resort and Spa, a 5-star 100-room hotel on 20 rai of land that will cater to residents of Ocean Villas to offer all the luxuries of the hotel, right next door to your house. It will be open in early 2007.
These villas and others like them mark a noticeable shift away from tall condo buildings to smaller, more personal developments that retain the luxury lifestyle many seek, but cut out the 'box-in-the-sky' concept.
"Seaside land here is at a premium after so many years of development, so there isn't too much room left for huge condo structures," said Banyatpiyaphod. "People who still want to build houses here are being forced to build up on the hill, further back from the beach." This trend is also noticeable in Pattaya, where smaller, funkier developments are starting to garner more interest, and development is pushing outward from the city centre as people try to find their own plot of paradise.
One person who decided to build in Hua Hin is Johnny Thoyts, a retired British Army Colonel. "I looked at houses in Hua Hin proper but most of them had tiny gardens or were too close together," he said. "I started looking out toward Pranburi and it dawned on me that the only way to get what I wanted was to build it."
Thoyts has also noticed the slow build-up of houses further away from the beach. "The favoured locations are on the hills about 2km back from the road. The hillsides are seeing a lot of new village complexes and of course the shops, garden centres, and restaurants etc that go with it," he said. Thoyts bought 2 rai of land for Bt800,000 in the late 90's, but has seen neighbouring land prices rise around him. "The woman I bought my land from wants to sell the adjoining pineapple field for 800,000 baht per rai, but I'm not sure she'll get it."
One of the things making Hua Hin such an attractive place for many people is the Royal presence. The extreme respect that Thais have for the Royal Family even extends into the very character of Hua Hin.
Warodom Charnintranan from Plus Property Partners said: "The fact that the King lives in Hua Hin has made a huge difference in how the town has grown. Crime rates are low, infrastructure is well funded and there is a real effort to keep Hua Hin away from some of the less desirable traits that come with mass tourism and development. It just makes it an easy city to be in overall as it's a place to live, not a place to party."
Thoyts agreed. "We chose Hua Hin because of its relatively close proximity to Bangkok and the lack of sleaze, which will never happen as long as the King lives here. It's just a pleasant place between sea and hills, with a reasonably large farang community."
But these positive effects are being felt by would-be buyers. Land is becoming scarce as smaller and smaller plots are being sold off. "It's getting to the point that there are less and less good plots of land to have in Hua Hin," said Charnintranan.
One of the few bigger developments yet to open in town is Baan Sanploen, a Plus Property/Sansiri development located opposite Market Village in the downtown core. Obviously, the demand for centrally-located condos is still high, as all the units have already been sold. "It's such a great location," said Charnintranan. "All 129 units are gone, and people start to move in next month. We're also excited about our Laweng Pool Villa development, which will have a show unit opening up this month."
So once all the best plots are gone inside the Hua Hin city limits, what's next? Most agents and residents agree that development will spread south, toward Pranburi and even further. One example of this is Plus Property's colorful, Mexican-themed Las Tortugas development, between Hua Hin and Pranburi on Khao Tao beach. This development has 159 units priced from Bt3.3 to 9 million, and will be completed in two years.
The one issue that's been on a lot of minds over the past month or so is the recent Interior Ministry regulation stating that all investors have to show where their money came from. Depending on who you talk to, this is either the beginning of the end for investors in Thai property, or nothing more than a huge pain in the neck. At any rate, the publicity the decision has generated has definitely made waves.
"It's definitely scared some people away," said Charnintranan. "But basically all it's done is make more paperwork for buyers, so they can't use their maids or drivers on the certificates. Nothing has changed too much." Like many Thai laws, there are usually a few creative ways to deal with an unfavorable situation, but care still needs to be taken when dealing with large investments like property.
This became evident when, last month, several shady characters were busted for selling land on Ko Samui that they weren't legally allowed to sell. When asked if Hua Hin has experienced any of the same deals-gone-bad, Banyatpiyaphod said: "We have all the title deeds to our property, so everything is on the up-and-up. Still, if someone is interested in buying a property, they should always do a bit of research and have a lawyer go over the contract and ownership details: that's just good business. If the practice becomes more widespread, I think that it might have the potential to scare of investors," she said. "But the presence of the King here will keep things in check."
Asia Property Report
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