Thai Condo Market Proving Popular With Domestic And International Buyers

Thailand continues to be one of the most popular destinations for real estate investors with  Pattaya a key market for condominium purchases, it is claimed.

Thailand's economy has proven extremely resistant against the global economic downturn, with an annual GDP growth almost unheard of today amongst the traditionally richer Western countries.

Building on both its domestic and international market success over recent years, The Kingdom has committed to spending approximately US$72 billion on infrastructure projects over the next five years, to ensure Thailand remains competitive in the global marketplace.

On top of this the governments spending programme includes support to the domestic market with a range of initiatives including the development of a system of rail networks in the North, the largest of which is a 750 km line connecting Chaing Mai to Bangkok.

As the country continues to invest heavily internally, international investors are increasingly looking to the condominium market in the popular coastal resorts of Pattaya and Jomtien, either as a second home for their retirement or as an investment vehicle  for their pension fund, according to worldwide property investment specialist Knight Knox International.

Patima Jeerapaet, managing director of Colliers International believes that the introduction of a wider range of entertainment facilities, retail outlets and eating establishments in the Pattaya area has led to the increase in its popularity, amongst both international visitors and Thai nationals.

The firm estimates that approximately 5,900 units will be completed in the latter six months of 2012, particularly in the Jomtien region, as the introduction of the new Jomtien Second Road, which has opened the region up to larger scale developments which are more appealing to the lower end of the market.

ґThe Thai condo market is booming at the moment. The increase in demand for property, particularly in the Jomtien Beach and Pattaya regions, has led to us taking on an additional six new projects this year alone, all of which have been extremely well received by our investors, said Lee Chettoe, sales manager at Knight Knox International.

ґOver the past 12 months we have also noticed that investors are broadening their horizons and starting to look more further afield than the traditionally popular regions in Pattaya, towards the more tranquil area of Bang Saray; either looking to retire or for a peaceful holiday destination, while only a short drive away from the main Pattaya resorts, he added.

Rising Land Prices Forcing New Property Prices Beyond The Reach Of Many In Bangkok

Few new property developments are being launched in Bangkok as rising land prices mean that new developments are priced at levels that are only affordable for a small percentage of buyers.

As a result there has been significant price rises for the handful of developments that are seen by the Thai market as being the best located best quality projects and elsewhere buyers are seeking larger living areas, according to the latest market report from consultants CBRE.

Both the downtown and midtown markets continue to be dominated by Thai purchasers and CBRE believes that the mid market will continue to be a one bedroom market especially as extensions to the mass transit systems makes more areas accessible presenting some opportunities for condominium development especially along the purple and blue lines.

Most of the new downtown project launches in the city in the first six months of 2012 have been one bedroom developments, but it is becoming increasingly difficult for developers to acquire land at prices which make the units affordable.

 

The more expensive the units become, the smaller the size of the potential market. This is because generally the market is being driven by end users rather than speculators or buy to let investors and about 85% of purchasers of off plan units are Thais,ђ the CBRE report explains.

 

The midtown market appears to be increasingly driven by end user purchasers who are almost all Thais. This means that there is a maximum range of budgets which seem to range from one million baht to around three million baht, depending on size and location. The legal minimum size is 20 metres but few developers have built units below 25 metres and only in cases where keeping the price close to a million baht has been the objective or where there is a direct link to a mass transit station,ђ it says.

Each location has a finite amount of demand and which areas are the most popular continues to change, in some case there is fresh demand in locations that were popular two to three years ago once the units in projects that were sold at that time have been occupied,ђ it adds.

The report also shows that existing condominium supply in downtown and midtown areas reached 328,434 units. There were 1,449 units completed in downtown in this quarter.

Four projects were launched in the second quarter of 2012 in the downtown area. The number of newly launched units decreased from 2,679 units in the previous quarter to 808 units in this quarter. One bedroom and two bedroom units dominate new supply at 91%.

Central Lumpini was the area with the highest average achieved re-sales price level at 163,550 THB per square meter.