There appears to be no let-up in the appeal Pattaya holds for condominium buyers, both Thai and foreign. With units of all types available at a wide range of prices, the resort city is poised to remain a vibrant market at least for the next few years.
Pattaya had a total of 46,700 condominium units at the end of 2012. Only 590 were completed and transferred during the year, reflecting the low number of launches since the economic crisis of 2008-2009.
A shortage of builders forced some developers to postpone completion dates until 2013. However, as the formation of the Asean Economic Community draws nearer, more migrant workers from neighbouring countries are expected to fill labour shortages.
Pattaya was the most popular area for condominiums in the years prior to 2000. However, Jomtien since 2001 has shown continuous growth due to the abundance of remaining beachfront and secondary development sites.
The Pattaya City Administration in 2005 initiated improvements along Thappraya Road and introduced a new Jomtien Second Road extension. The road was designed to alleviate traffic congestion from the beach road and now there are many sois linking both roads together.
Pattaya now faces a scarcity of development sites and those that are available are becoming prohibitively expensive.
According to developers, almost 14,000 units are scheduled to be completed in 2013, including 3,900 in Jomtien and 3,400 in Pratumnak. Jomtien still has the largest share of the market going into the future with nearly 15,400 units, many of them large-scale developments along Jomtien Second Road, expected to be completed between 2013 and 2015.
New launches in the second half of 2012 decreased from the first half by around 30% and no new projects were launched in the Na Jomtien area.
The majority of projects launched in the past two years have focused on mid-price to low-end buyers, though some exceptions in the upper end of the market also report strong sales figures. Mainstream buyers, both foreign and Thai, are mostly looking for affordable holiday homes, not far from the beach, with good facilities and trusted management from a recognised developer with a good track record.
The average take-up rate in all locations rose 7% in the second half of last year from the first six months, because some new projects from listed developers sold briskly. Many projects by local developers also received good feedback from Thai and foreign buyers.
Na Jomtien showed the highest increase in the second half, more than 10%, mainly because no new condominiums were launched in the period, leaving the existing supply to be absorbed.
FOREIGN OWNERSHIP/DOMESTIC DEMAND
In contrast to the last few years when foreign buyers were the mainstay of the Pattaya and Jomtien property scene, we are seeing a remarkable entry of Thai buyers into all segments of the market.
For many years the majority of the foreign-owned local development companies struggled to sell their 51% Thai requirement. However, there is now a shift in as much as many Thai listed developers coming to Pattaya achieve good take-up rates from the Thai market and do not come close to filling their 49% foreign quota. They don't do much marketing to foreigners, and when you look at the shape of many worldwide economies, that could be understandable.
The Thai market is particularly brand-conscious and tends to follow well-known names such as LPN, Q House, Major Development and Sansiri. Other not so well recognised local developers have discovered the attraction of adding a brand-name hotel component to their project to spur sales to both Thais and foreigners.
The Russian market continued to show resilience during the second half of last year. Russians appear to have been less affected than other nationals by global economic problems, though primarily they tend to buy into the lower end of the market.
Buyers from Europe and the US have not shown as much demand as in previous years; however, buyers from Australia were notable throughout 2012 due to the strong Australian dollar.
Buyers from other big emerging markets, such as India and China, have now started to dip their toes into the water. We believe these countries could possibly become the superpowers of the future when it comes to buying property in Pattaya.
Throughout 2012 we witnessed a wide range of condominiums of all types and budgets entering the market and were amazed by the massive success of many and the incredible take-up rates in most areas. Certain projects sold out almost as soon as they were launched; others took several months to reach 50-70% sold. However, the overall results are very encouraging for the market in general and there seems to be no stopping the immense popularity Pattaya holds for both investors and owner-occupiers.
This year promises to be an interesting one as we witness many more launches and thousands of units due to be completed and handed over.
The average selling price per square metre in Wongamat remains the highest in all locations of Pattaya City. Only two new projects were launched in this area during the second half of 2012, giving it greater exclusivity.
Many large-scale projects were launched in Jomtien and most were aimed at mid-range to low-end buyers, so the average price in this area is the lowest in Pattaya City.
Most of the condominiums launched in Pattaya City during the past 18 months were in the middle to low end of the market, so the average price of all locations is lower compared with 2010.
SUMMARY AND FORECAST
The condominium market in Pattaya has remained robust over the last 18 months following the solid performance of 2011. Jomtien is the most popular area for many foreign and Thai buyers looking to buy a second home in close proximity to the beach at an affordable price. Most of the projects launched throughout 2012 and in the coming months are focusing on the mid-price to low-end market.
Jomtien, in particular, runs the risk of oversupply to investors looking for strong yields and high capital appreciation. As a lifestyle choice and for an owner-occupier, Jomtien can offer some very attractive properties at affordable prices, particularly along Jomtien Second Road.
Foreigners and Thais are almost equal in number as buyers, which helps developers to sell out projects 100% based on quotas. However, the ongoing EU debt crisis will have a negative impact on visitors coming from countries within the eurozone.
Developers should place more emphasis on the domestic market with increasing disposable income and a newfound fondness for the popular beach resort following the flooding in many areas of the capital in 2011.
Surachet Kongcheep is senior manager of research at Colliers International Thailand. He can be reached at firstname.lastname@example.org.
About the author
Writer: Surachet Kongcheep