The trajectory of Pattaya's property market is now clearly upwards, with many positive developments afoot for Pattaya City. The booming Eastern Seaboard industrial zones and optimism about the government's infrastructure investments have been key drivers of this growth.
Pattaya has emerged as a second significant business district outside of Bangkok. With a huge concentration of industrial estates on the Eastern Seaboard that stretches along the Gulf of Thailand coast to Rayong, there is steady growth in demand from corporate workers and executives for residential property. This has significant benefits for the Pattaya market.
The country's first monorail, seen as a pilot project that could be replicated in many other places, is scheduled to be completed in 2014, which will link some of the residential areas in Pattaya including Wong Amat Beach and Pratumnak Hill, making them more accessible. In anticipation of greater demand, leading Bangkok developers launched many condominium projects both near the beach and in Pattaya City last year.
Figures compiled on Pattaya condominium demand and supply from 2006 to 2012 show that the market has grown impressively, expanding at a rate of 82.9% last year alone with 13,952 units coming onto the market. The cumulative supply of Pattaya condominiums as of the end of 2012 was 30,786 units.
The largest number of new launches was in Jomtien, continuing from the previous year. This reflected the large amount of available land plots for condominium development still available compared with other areas. The total number of new launches in Jomtien last year was 4,616 units, or around 33% of the total supply.
The second most popular location was in North Pattaya/Wong Amat, with 3,882 newly launched units, representing 28% of the total, followed by the South Pattaya, accounting for 27%, and Pratumnak with 12%.
While more Thai buyers are seeking condominiums in Pattaya than a few years ago, the expat market remains vibrant. In particular, Pattaya is known in some quarters as a little "Moscow-sur-Mer"; Russians have been spending and investing heavily. Pattaya condominiums are the most preferred second home choice not only for Russians, but also for local Thais and expatriates who reside in Bangkok, while other foreigners like the resort city as a retirement and holiday home destination.
The bulk of the visitors to Pattaya are still domestic travellers from Bangkok and beyond who favour the vibrant city life and excellent golf courses over the beach for their holidays. In the main, it's "ordinary" tourists from Southeast Asia, Australia and Europe who simply love the attractive combination of sun, sea, sand and shopping on offer.
The statistics from Knight Frank show that the demand for Pattaya condominium units as of the end of 2012 totalled 15,482 units, representing a strong increase from 10,995 units in the middle of 2012. The take-up rate increased from 47.8% in the middle of 2012 to 50.3% at the end of the year.
Purchases remained healthy throughout the Pattaya condominium market, so demand during the second half of 2012 was well absorbed, with 4,487 units being sold.
Local Thais buyers have dominated the market as the biggest buyers of new units located in North Pattaya and Wong Amat, which are home to many retail outlets, fine dining restaurants, bars, and shopping malls. The Jomtien area, especially the mid-market condominiums emerging rapidly in the new second road extension (Jomtien Sai 2), has attracted more foreign buyers. They include Russians, Germans and Britons who do not insist on sea views as long as the condominium building is located in close proximity to the beach, with affordable unit prices, as a second home or holiday home.
Our research indicates that North Pattaya/Wong Amat represented the highest average selling price per square metre in Pattaya at 98,229 baht for low-rise buildings and 128,782 baht per square metre for high-rise buildings in 2012.
The trend in Pattaya condominium development in the future will be non-sea view projects; this is due to the fact that the land plots on the Pattaya beachfront are becoming scarce. While there are still some beachfront land plots available in Na Jomtien and Wong Amat, these sites are large and the land price is very high, which will be suitable for high-end condominium development. As a result, small and medium-scale developers will focus on the inland locations for non-sea view project development.
The condominium market in Pattaya this year continues to show strong growth, with approximately 6,500 units in the pipeline scheduled to be launched in the first half of the year. Jomtien is set to be the major location for condominium development, especially in the mid-range to low end sectors.
Pattaya condominium demand will continue to be bolstered by the healthy tourism industry. The number of visitors to the resort city is forecast to reach 9.02 million this year compared with 8.2 million in 2012. We expect that Pattaya condominiums will continue to be an attractive investment option for both Thai and foreign property buyers.
Risinee Sarikaputra is the associate director of research and valuation with Knight Frank Thailand. Contact risinee.sarikaputra@th.knightfrank.com.