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Raimon Land survey shows condo market still on the rise
Condominium Focus, September 2006
An artist’s impression of a
Duplex apartment in the Northpoint Condominium project scheduled to be
launched by the end of this year. Buildings such as Northpoint represent a
shift in the buyers market in Pattaya towards premium developments.
Report by Raimon Land
Since 2003, over 5,000 condominium units have been launched on the
Pattaya market. The majority of these (72% of the total condominium market)
have been in the low-end segment, with most units priced under Baht 3
million. However we have noticed an increase in Mid-to-High developments in
the last six months, representing 18% of total units. These projects are
centrally located and accommodate permanent residents who do not necessarily
require a sea view and direct access to the beach. Prices are mainly in the
range of Baht 3 to 10 million. Examples of these developments are Nirvana
Place, Regent Pratamnak and Wongamart Residences.
Condominiums within premium developments are still limited, representing
about 10% of the overall Pattaya condominium market (but considerably more
in terms of value). The majority of units in these projects have nice sea
views, generally beachfront, and a full-range of facilities.
There are currently four premium condominium developments in the Pattaya
area, comprising a total of 521 units. This segment represents 5-billion out
of the 17-billion Baht Pattaya condominium market. Some developers have
already expressed their intention to launch projects in the premium market
before the end of the year, including Northpoint by Raimon Land, Ocean One
by Siam Best Enterprise and a luxury complex that will be developed by TCC
Capital Land in Jomtien. Developments with a combined value of Baht 15
billion are expected to enter the Pattaya premium market by the end of the
year.
There are two main indicators which suggest a radical change in the property
investment landscape in Pattaya. Firstly, Pattaya is the nearest weekend
destination for Bangkok residents (both Thais & Expatriates) and there has
been a shift of this tourism segment towards upper-range accommodations. In
2005, 1/3 of visitors in Pattaya stayed in 4-5 stars hotels, pushing up
occupancy rates in Pattaya’s upscale hotels.
Secondly, Pattaya is the regional center of the Eastern Seaboard. This
region is the fastest growing in Thailand, spurred by the opening of
Bangkok’s new international airport and the relocation of businesses to the
region.
Our field survey for the first half of 2006 reveals that condominiums with a
combined value of Baht 2.5 billion were sold in Pattaya. Of that total, the
premium market (161 units sold) contributed to Baht 1.42 billion.
In terms of location, 60% of the sales were in the Jomtien area, largely
from The Sails, La Royale Beach and Ocean Portofino.
The reason for the relatively low proportion of sales in Central Pattaya
during this period is simply that land is limited and few new units are
actually available. Projects such as Northshore, Ananya in the premium
segment and Nirvana Place, Wongamart Residence and Viewtalay Residence in
the Mid-to-High segment are almost sold out.
Of the 521 condominiums launched in the premium segment, only 30 “first-hand
units” are still available in the market. These remaining units usually
occupy inferior positions within the buildings (obstructed view, poor layout
etc.).
Based on sales volumes since Mid-2005, we estimate that the shortage of new
supply resulted in lost sales opportunities of over Baht 500 million in
Quarter 2 in the premium segment. Only 59 units were sold compared to 91
units in Q4 2005 and 102 units in Q1 2006. Consequently, demand continues to
push up prices in these condominiums with the average price of Baht 99,339/
m2, comparable to high-end condominiums in Bangkok.
Different buyers in Pattaya vs. Phuket
Pattaya and Phuket are both resort destinations, but the profile
of buyers is quite different. There are three major groups of buyers in
Pattaya. The first group are families from Bangkok who travel to nearby
resort destinations on week-ends. While Thais tend to choose between Pattaya
and Hua Hin, foreigners still favour Pattaya and its recreational
facilities. This group tends to stay in 4-5 stars hotels, but a growing
number are starting to buy property to avoid prices and occupancy issues.
The second group are foreigners who have retired and spend several months
each year in Pattaya. This group comprises mainly European (from Germany,
UK, Scandinavia) and US nationals. Because of their length of stays, hotels
are not an ideal solution for them. They tend to prefer houses or
condominiums within close proximity to Pattaya’s center.
The third group are foreigners living permanently in the Eastern Seaboard.
Some of them run businesses in Pattaya and others work in the surrounding
industrial estates. While some opt to pay extra for sea views, this segment
does not necessarily require beach front locations but convenient
accommodation with easy access to key routes and the city facilities.
Based on Raimon Land research figures from Northpoint registered members
(over 1,500 in total), the proportion of Pattaya prospects that are
currently residing in Thailand is higher than in Phuket. Over60% of the
demand is based in Thailand (both Thais and foreigners), plus an additional
10% from surrounding Asian countries.
Buyers in Pattaya are also looking for smaller units than in Phuket with the
average size of units sold in Pattaya being 96 m2 versus 135 m2 in Phuket.
Possible observations are that length of stay is generally shorter in
Pattaya (at least for visitors rather than residents) and prices are higher
so that developers tend to offer more efficient units with less area
dedicated to kitchens and terraces. Between 45-50% of buyers are looking for
studios and one-bedroom units.
Outlook
The Pattaya property market has certainly matured since 2005 with
changing visitor demographics driving changing property expectations.
Several up coming condominium developments are planned both in-town and
out-of-town and many developers are scheduled to launch new projects over
the remainder of 2006 and in 2007.
Currently 1,000 new units are expected to enter the market, worth Baht 15
billion, by the end of the year, as the demand continues to outstrip new
supply. With unsold stock at low levels, there is little risk of an
oversupply situation. Most of the new supply planned will not be completed
before 2008-2009 and in the meantime we expect a shortage of completed
condominiums.
Disclaimer: Although Raimon Land sets the highest standards for
its research, it cannot be held responsible for inaccuracies that occur. As
a result, Raimon accepts no liability for any errors and/or omissions
contained within this report. Any reliance upon the information contained in
this report shall be at the user’s sole risk.
JFCCT get together
at the Amari Watergate Hotel
Mr. Pierre Andre Pelletier,
General Manager of the Amari Watergate Hotel recently hosted a get together
party for the members of the Joint Foreign Chamber of Commerce in Thailand
(JFCCT) in the Banglumpoo room of the hotel. Shown in the photo from left to
right are: Mr. Krianglit Sukcharoensin, Mr. Karl-Heinz Heckhausen, Mr.
Maurice Bromley, Mr. Nandor G. von der Luehe, Mr. Peter van Haren, Mr. Leo
Alexandersen, Mr. Pierre Andre Pelletier and Mr. David Cumming, Resident
Manager of the hotel.
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