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Condominium growth matches demand in Pattaya’s vibrant market

March 15, 2011

The current Pattaya condominium development market is very healthy according to a recent market report by Colliers International Thailand.

The market saw its greatest supply of units last year since 1997, with around 4,700 being added, while a further 3,400 were launched. Purchases remain healthy throughout all the sectors, so the new supply is being well absorbed. “There are no concerns regarding a bubble in Pattaya as many are talking about in Bangkok at the moment,” said Colliers’ Associate Director of Research, Antony Picon. “Take up was high at around 70 per cent in Jomtien which reflected the popularity of the lower end products on the market there.”

On the back of Nova Group’s success with development, The Cliff, which sold around 70 per cent of its 427 units in just over 12 months, a number of developers have started to construct high-rise condominiums, especially in the Pratumnak area of Cosy Beach. “Several high rise condominiums are either currently under construction or in the relatively early stages of sales and marketing” said Colliers’ Senior Sales Manager, Mark Bowling.

Althought the Baht continues to be strong, foreign buyers, especially the emerging and robust Russian market continues to purchase, along with investors from established markets such as the USA and the UK. Bowling said,  “There is plenty of availability in this market segment as we see designers and architects have given much thought to innovatively maximizing limited floor space more efficiently thus reducing sales prices without sacrificing location, facilities and overall quality”.

The foundation for the condominium market in Pattaya occurred in 1992 with the development of large scale condotel style properties such as metro Jomtien. this was the result of the Condominium act in 1989 which opened the door for the development of high rise residences.

Initial demand came from foreign buyers as thais did not provide the significant engine for demand as they do now, although many were beginning to benefit from the economic boom and consequently purchasing property. the next surge in growth was the result of the economic boom that peaked in 1997 before the fall.

Beach frontage is the key driver for luxury condominiums. Prices can rise by over 100% when located by the beach, especially in Jomtien where many projects are located some distance from the shoreline.

 

A more limited but sustained level of supply came onto the market in the first few years of the new century but picked up in the latter half of the last decade. at the end of H2 2010, the total supply is approximately 44,500 units. For H2 2010, nearly 3,000 units were added to supply.

Overall just over 4,700 units were added in 2010 which represents the largest increase in supply in Pattaya since 1997.

In contrast to the Bangkok market, foreigners take up the lion’s share of lower end condominiums in Pattaya and Jomtien as many are retirees with limited financial resources and foreign Bangkok residents looking for an inexpensive holiday home. This has meant that for units below 2 million Baht there is often a dual pricing structure resulting from the 49% foreigner owner limitations.

The Russians account for over 20% of foreign visitors to Pattaya and the increasing number of signs and advertising in Russian is indicative of this. They also represent an increasingly large market for condominium developers and a number even have Russian sales staff to promote their projects. The ever warm Gulf of Thailand is now having more appeal than the Black Sea. The Chinese are a growing force in the tourist industry in the city but they represent more of the mass tourist segment of the market and as such are less likely to be buyers of property at present.

However with costs of vacation property in China itself spiraling, especially in Hainan island, Chinese may be looking further afield and what begins as a tourist destination could develop into a residential one in the future.The growth of this particular segment will be an interesting one to observe in the future. many more middle eastern and indian visitors are coming to Pattaya than has been traditionally known. many have a desire to buy property here, but are still very cautious and most have small budgets.

Having said that, foreign buyers from the Euro zone, United Kingdom and USA continue to buy property in Pattaya in large numbers. Thailand still remains good value for money compared to Europe and USA. Nevertheless spending power has been curbed with the most popular price range being between three to six million Baht. There is plenty of availability in this market segment as designers and architects have given much thought to innovatively maximizing limited floor space more efficiently thus reducing sales prices without sacrificing location, facilities and overall quality.

 

 

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