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Published on September 21, 2007

Although the property market in Bangkok and its surrounding area has shown signs of dropping 10-20 per cent this year, property developments at the country's tourist destinations are recording strong growth of up to 10 per cent.

The main developments include resorts and villas at beach destinations such as Pattaya, Hua Hin, Cha-am, Koh Samui and Phuket.

A recent survey conducted by Ocean Property has shown, for instance, that the property market in Hua Hin and Cha-am has grown 10 per cent this year, following investments totalling Bt22 billion since July 2006. Of the total, Bt10 billion has been invested in detached housing, Bt10 billion in hotels and resorts and Bt2 billion in condominiums. Ocean Property itself has spent Bt1 billion to build the Asara Villa and Suites luxury resort in Hua Hin.

Over the past year, four detached-housing projects comprising 375 premium beachfront units have been launched in the area, and condominium projects launched in the same period offer 740 units, with prices starting at Bt80,000 per square metre.

Of the detached houses, 6 per cent are selling for Bt3 million to Bt4.9 million, 28 per cent for Bt5 million to Bt9.9 million, 51 per cent for Bt10 million to Bt24.9 million and 15 per cent for Bt25 million to Bt49.9 million.

Ocean Property is planning to launch a Bt600-million detached-housing project called Ocean Villa Hua Hin in the second half of the year, close to its new Asara Villa and Suites. It will have only 18 units, ranging in price from Bt25 million to Bt120 million.

"The project will focus on a unique market, and we've already booked seven units," says president Nusara Banyatpiyaphod.

The demand for property in Hua Hin is probably driven by the area's growing popularity as a tourist destination. The area's resorts have received 2.3 million visitors in the past year. About 80 per cent of them were domestic visitors and the rest foreigners.

"We believe Hua Hin is now the best tourist destination close to Bangkok," Nusara says.

Raimon Land has also been researching condominium developments and says sales totalling Bt6.9 billion at resort destinations in the first half of the year represent 30 per cent of condominium sales nationwide.

Pattaya is the most popular location for resort condominium projects. It has 23 projects with 3,135 units worth up to Bt15 billion. It is follow by Hua Hin with 21 resort condo projects offering 2,477 units worth up to Bt12 billion, Phuket, which has 42 projects with 1,762 units worth up to Bt10 billion, and Koh Samui, which has three projects offering 103 units with a combined value of nearly Bt1 billion.

The demand for resort condominium units is believed to follow the number of tourists visiting resort destinations. Last year, Pattaya recorded 6.11 million tourists, Phuket 4.5 million, Hua Hin and Cha-am 6 million and Koh Samui more than one million.

Plus Property CEO Maytha Chanchamcarat said demand for residential properties on Phuket had been strong ever since the tsunami almost three years ago. Home-buyers include foreigners working in Thailand and those living abroad who want a second home in the Kingdom.

Research by Plus Property, which is the property-brokerage arm of Sansiri, shows Phuket had 95 residential development projects with a total of 2,917 units and a combined value of Bt40 billion between 2003 and last September. Of these, 945 were detached houses or villas and the rest were condominiums, which included units selling for up to Bt5 million.

Half of the 2,917 units have already been sold. Ninety per cent of the buyers are foreigners, who have signed 30-year renewable leases.

The main home-buyers in Phuket are from the United Kingdom, Finland, Denmark, Sweden, Norway and Hong Kong.

CB Richard Ellis (Thailand) chairman David Simister says the Phuket and Andaman Coast markets continue to attract foreign investors.

"CB Richard Ellis introduced Kingdom Hotel Investments and the European Hotel Corp to the 26.71-hectare site they secured last year in Phang Nga, on which they plan to develop the US$115-million [Bt3.94 billion] Raffles Phang Nga Resort and Residences. Also in the Phuket area, Destination Properties concluded its purchase of the 125-room Fenix Resort in Karon last September. In addition, CB Richard Ellis is currently dealing with a number of overseas purchasers wishing to buy residences priced in excess of $3 million."

Barama Bay, a private island off the east coast of Phuket offering custom-made residences, and Trisara, a development with panoramic sea views, are two luxury projects attracting attention from wealthy purchasers. They offer the crucial ingredients of privacy, location and access to services, Simister says.

"The property markets in Phuket and other resort areas are thriving and show no signs of slowing down. Properties continue to reach new pricing points, with individual villas selling at more than $10 million and condominiums selling for up to $1.4 million in Phuket," he says.

Phuket is not only attractive to the top end of the market. Many property developments are offering good capital-appreciation prospects at several price levels, especially in newer areas like the island's east coast - as well as in Phang Nga and Krabi.

Simister says Koh Samui also has potential as a resort-based residential market. His company opened an office on the island last week. It has had an office on Phuket for two years.

Bruno Pingel, CEO of Pattaya property developer Siam Best Enterprises, says most foreign buyers are interested in Pattaya because of its proximity to Bangkok and the Eastern Seaboard, where many expatriates work. As a result, Pattaya is a prime location for property investors.

"I started property development in Pattaya seven years ago, when there were only two developers. Now there are up to 40 firms doing business here," Pingel says.

Siam Best Enterprises is currently developing six condominiums with an investment budget of Bt1.4 billion. The first four are already sold out, while the fifth and sixth are 50 per cent sold. Prices start at Bt1.8 million.

Last year, the company launched the massive Ocean One condominium on Jomtien Beach. The 91-storey building is selling units ranging in price from Bt5.5 million to Bt150 million. Construction will be completed in 2010.

The latest global real-estate-capital report from international property firm Jones Lang LaSalle says real-estate investment in Thailand was buoyant last year. Both local and international investors actively acquired assets in Bangkok and key resort destinations like Phuket, Pattaya and Koh Samui.

Longlom Bunnag, chairman and head of investments for Jones Lang LaSalle's Thai operation, says there is strong demand for residential properties at tourist destinations, particularly from foreign investors who want a second home or a vacation home in Thailand.

Somluck Srimalee

 The Nation