Firms turn to tourist hubs to lure buyers

With demand for residential properties in Bangkok and its suburbs expected to slow this year, developers are turning their attention to foreign buyers, with projects at tourist hot spots.

Most companies are homing in on Pattaya, Phuket and Hua Hin. The move is part of a strategy to manage business risk arising out of the expected slump in domestic demand.

Developers are offering projects at tourist destinations at prices higher than properties in the greater Bangkok area.

Major Development plans two luxury condominium projects worth Bt6 billion in Pattaya and Hua Hin this year: the Marrakesh Hua Hin Residences and Reflection Jomtien Beach Pattaya.

The company has expanded its investment into the tourist hubs because it sees a strong demand, especially among foreign buyers, said managing director Suriya Poolvoralaks.

Foreign buyers have evinced strong interest in making these areas a second home and are keen on buying property, he said.

The developer expects foreigners to pick up about 49 per cent of the units in projects based in Pattaya and Hua Hin.

Sansiri has launched a Bt2.06-billion residential project in Hua Hin called Baan Sansuk and has sold 80 per cent of the project's value during presales.

The demand for residential projects at tourist destinations close to Bangkok has seen strong growth, said Sansiri president Srettha Thavisin. This is the reason the company is investing in such areas, with projects focusing on the middle to upper markets.

Even local developers at places of tourist interest are eyeing the foreign-buyer segment. Phuket developer Surin Hill Development has launched a condominium project called Baan Thai Layan on 50 rai of land on Phuket's west coast, with both local and foreign buyers targeted, said deputy managing director Wanwipa Horbut.

Research by the Agency for Real Estate Affairs shows that demand for residential projects - especially condominiums, villas and resorts - shows strong potential for growth in the destinations of Phuket, Pattaya, Koh Samui, Hua Hin and Cha-am. Projects companies develop will likely see demand mainly from foreigners.

As of the end of last month, 20,101 units worth about Bt200 billion had been launched at these locations, with 47 per cent sold.

Properties in Phuket were the most expensive, coming with an average price tag of Bt22.4 million a unit. Projects on Koh Samui came next, with an average price of Bt19.2 million, followed by Pattaya at Bt8.38 million and Hua Hin and Cha-am at Bt5.64 million each. These rates are higher than prices commanded by residential properties in Bangkok, which recorded an average price of Bt2.2 million a unit.

Condominiums have been the property of choice for foreign investors, research by Colliers International Thailand shows, because Thai law allows foreigners 49-per-cent ownership of such projects. The remaining 51 per cent of the units have to be owned by Thai nationals or Thai companies.

Research by Colliers International shows condominium prices on Koh Samui are the steepest, ranging from Bt125,000 to Bt130,000 per square metre. Next comes Phuket, with prices from Bt77,000 to Bt106,000 per square metre. Prices in Hua Hin were between Bt66,000 and Bt80,000 per square metre.