Overseas buyers to fuel boom

Foreigners expected to take sizeable share of new condominium market

Property experts believe foreign buyers will snap up a significant chunk of the Bt40 billion worth of new condominiums completed or coming on the market in resort destinations.

Raimon Land said condominiums sold last year in Pattaya, Phuket, Hua Hin and Samui were worth Bt15.8 billion - an almost 40 per cent increase on 2005.

In comparison, Bangkok developments recorded Bt42.5 billion in sales.

In terms of value, resort destinations accounted for 27 per cent of condominiums sold in Thailand in 2006.

The building boom saw condominiums worth Bt35.3 billion come on the market in 2006.

Property developers are planning even more accommodation at popular beach resorts.

Charn Issara Development has one of several new projects at Cha-am, and J&W Development is developing a property in Hua Hin.

Sansiri will manage the J&W project. President Srettha Thavisin said demand for resort condominiums has grown enormously among foreign buyers looking for holiday homes. Popular locations are Hua Hin, Phuket and Pattaya.

"Foreign investors have more purchasing power than domestic buyers in the current economic climate," he said.

Ocean Property president Nusara Banyatpiyaphod said that in spite of domestic economic sluggishness, the company was pressing ahead with Bt3.3 billion worth of developments in Hua Hin and Pattaya. Most of the interest is from overseas buyers.

Ocean, which has built the Bt1.8 billion Ocean Portofino condominium in Jomtien, is building Ocean Villas Hua Hin for Bt600 million and the Asara Villa and Suite Hua Hin for Bt900 million.

The Jomtien condominium project is 52-per-cent pre-sold.

Raimon Land said resort condominium prices were approaching those of inner city Bangkok.

Pattaya beachfront developments are commanding prices of up to Bt140,000 per square metre for the best units. The average selling price in Pattaya is slightly more than Bt86,000 per square metre, roughly equal to the price in the Sukhumvit area of Bangkok. At Phuket, buyers were paying an average of almost Bt95,000 per square metre, in line with the prices on Silom and Sathorn.

Raimon Land said recently completed buildings in Pattaya and Phuket suggested rental yields mirrored those of inner-city Bangkok.

A total of Bt6.9 billion worth of condominiums were sold in Pattaya during 2006, followed by Phuket at Bt6 billion.

Units at Hua Hin tend to be smaller and less expensive than in Pattaya or Phuket. The bulk of buyers of Hua Hin property are locals.

The average per-unit price in Pattaya is Bt14.6 million, Samui Bt19 million and Hua Hin Bt5.8 million.

Condominiums are the most popular option for foreigners, because of ownership laws and shared maintenance and security expenses.

With total sales of Bt6.9 billion last year, Pattaya accounted for 44 per cent of total property sales.

North Pattaya beachfront developments such as Northpoint and Ananya - where prices are between Bt100,000 per square metre and Bt140,000 per square metre - comprise the bulk of the sales. There is interest in south Pattaya where the prices are slightly lower at Bt80,000-Bt100,000 per square metre.

As at December 2006 the average Pattaya per-square-metre price was up 29 per cent compared with the same period in 2005.

Phuket represented 38 per cent of sales of resort condominiums last year at Bt6 billion. Most were northwest-coast buildings at Mai Khao, Bang Tao and Surin beaches. Projects located in south Phuket near Kata and Karon beaches and on the east coast accounted for 25 per cent of 2006 sales.

Most Phuket properties offer sea views and beach access but only a few are beachfront. As at December, the average selling price in Phuket was up 59.3 per cent from the previous year - a strong rebound by the post-tsunami market.

With sales of Bt2.2 billion last year, Hua Hin makes up 14 per cent of the resort condominium market.

There is limited new supply but buyers like the lower average prices. Sales forerunners include beachfront developments like Las Tortugas, Baan Saunrimsai and Baan Chaan Talay, all by developers with a good track record in Hua Hin. The average per-square-metre price as at December 2006 was Bt62,990 - up 16.9 per cent from 2005.

Samui accounts for just 4 per cent of the total market although this is expected to rise as more condominiums become available.

There are five projects for sale now with an average price of Bt88,670 per square metre as at December 2006.

Sales in Phuket and Hua Hin this year are driven by the supply of completed units, which allow buyers to move in quickly with a guarantee of construction quality, while Pattaya sales are mostly off-plan.
As at December 2006, 4,129 of 6,595 units coming on the market since 2003 have been sold, according to their developers.