But Phuket preserves luxury niche while Hua Hin and Cha-am remain favourites among Thais
Perhaps the most dramatic occurrence in the resort property market this year is the resurgence of Pattaya, after being below the radar for several years, and the amazing resilience of Phuket despite the ravages of last December's deadly tsunami.
Amid the changes, the market in Hua Hin and Cha-am continues flourish and remain a favourite among Thais.
Even though Pattaya has always been a major tourist destination, its real estate market has mainly consisted of grade C properties. It was only with the launch of two grade A condominium projects, Raimon Land Plc's Northshore and Wise Power Land Company's La Royale Beach, that the market shifted up a gear.
Part of the reason for Pattaya's revival can be linked to the imminent opening of Suvarnabhumi Airport and the motorway extension to Chon Buri, bringing the eastern region within much easier reach of the capital city.
Raimon Land's recent research shows that the total value of condominium projects under development in Pattaya is 12.2 billion baht. Since the end of 2003, 4,670 condominium units were launched and as of June this year, 2,029 had been sold with a take-up rate of 43.4%. A breakdown of projects under development during the first half of this year shows that 7% are grade A condominiums, 11% grade B and 82% grade C.
Building on the big success of Northshore, where Raimon Land's sales have topped 1.2 billion baht, the company is poised to launch another luxury condo project in the resort called Northpoint.
Interest in real estate in Pattaya has been building up for two years, says Robert Collins, Jones Lang LaSalle's head of commercial markets. He says it's fuelled by Bangkok money and not a flow of funds from Hong Kong or Singapore, with the former still focused on Phuket and the latter keener on Bangkok.
Thai demand is also expected to return to Pattaya, as locals bought a lot of condos in the resort in the past, with a dip during the late 1980s and 1990s when there was a long period of limited new supply.
``New supply is becoming available and prices are going up and it's proving to be a good investment market,'' Mr Collins said.
Recent exhibitions in London and Manchester have shown that Raimon's Northshore project is also attracting many British buyers, over its Kata Gardens project in Phuket which is a favourite of all nationalities, including Hong Kong, CEO Nigel Cornick said.
Pattaya's spectacular rebirth has not dented Phuket's property market, famed for its million-dollar villas despite being battered by the tsunami last December.
``According to our research there are approximately 63 projects of international grade that are currently being marketed in Phuket. This is an increase of 23% from two years ago. We forecast that by the end of 2006, there will be in excess of 83 projects in the market,'' said Steve O'Brien, managing director of the agency Knight Frank Phuket.
His company's research shows that the proportion of villas and apartments on the island in July 2005 consisted of 8% priced above 50 million baht, 20% in the 30-50 million baht bracket, 40% at 15-30 million baht and 32% below 15 million baht.
Most of the new villas entering the market are coming in at less than 20 million baht, but the villa market never seems to be oversupplied.
``In the next two years our research has predicted that there will be a limited supply of villas beyond 50 million baht. There are no remaining villas in the market on the west coast that have sea views for under 25 million baht,'' Mr O'Brien said.Knight Frank Phuket predicts an oversupply of apartments on the southern island. In August 2004 apartments represented 12% of supply, but this has now climbed to 26%.
``We forecast that there is enough supply of apartments to satisfy demand for the next four-and-a-half years.''
Raimon Land's research shows demand for condos on the island continues. Average asking prices have risen by 4% since the tsunami and now stand at 59,920 baht a square metre.
More condo developments are cropping up on the east coast but the majority are still located on Phuket's exclusive west coast where developers can charge more for the island's famous white sand beaches and views, the firm said.
Units priced under 10 million baht now account for half of the island's supply, up from 33% in December 2004. The ideal condominium in Phuket is thought to be in this price range with either two or three bedrooms and floor space in excess of 120 square metres.
Raimon Land's latest survey also shows that there are 23 condo projects totalling 823 units at different stages of construction in Phuket. The total includes nine projects launched since the tsunami, seven of which hit the market in the second quarter of this year and two others in the first quarter.
Due to building code restrictions, developments in Phuket are much smaller than in Bangkok and consist of several low-rise buildings, which are also called boutique apartments.
There are also a few small syndicate projects in Phuket, in which a group of friends builds the property, sometimes having done so because the market did not provide what they wanted. This can mean they have ended up buying a bigger plot than they needed, which can be sold off.
``There have been two Hong Kong-based original home buyers who have now expanded into buying projects,'' Mr Cornick said.
On Koh Samui, Raimon Land says that build-for-sale developments still concentrate on villas but condominiums weren't out of the question since a similar move has been seen in Phuket.
While Phuket and Samui homebuyers are mostly foreign and Pattaya is seeing a mix of foreign and Thai buyers, Hua Hin and Cha-am are mostly a Thai market, the firm says.
At the time of Raimon Land's survey there were 13 condominium projects under development in the area; three were launched in the second quarter of this year. The first consisted of two pre-built towers with a total of 106 units on Cha-am Long Beach, which consist of three bedrooms covering 150 square metres, starting at 8.25 million baht.
The second is The Boathouse Hua Hin, developed by Praphaisith Tankeyura, a former president of Bank of Ayudhya, and the Chinthammitr family, a major shareholder of the Khon Kaen Sugar group. Sales of its first condominium phase, which consist of 98 units, have already opened. These units range from 93 to 226 square metres and include two- to three-bedroom layouts, starting at 4.8 million baht.
The latest launch in the area is Prime Nature Villa with 50 high-end units of 15-25 million baht, it said.
The majority of the supply, up to 59%, is located around Cha-am because beachfront land in Hua Hin is becoming more scarce, driving some supply further south to Kho Tao and Pranburi, Raimon Land, research shows.
Meanwhile, Knight Frank Thailand's director of residential sales, Anirut Kanchanakhuha, predicts there will be many more residential developments in Hua Hin and Cha-am from the second half of this year to early next year.
There has been moderate growth in property sales in Hua Hin and Cha-am coming mostly from real demand rather than speculation, with the main buyers from Bangkok, seeking a second home close to the capital.
``Our experience shows that the up-and-coming new generation, comprising young couples, prefer the trendier condominium projects to invest in while traditional well-heeled families opt for landed properties like houses or villas,'' Mr Anirut said.
Bangkok Post 31 October 2005 www.bangkokpost.com
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