Chiang Mai real estate sees aggressive growth

U Hotel in Chiang Mai that developed by Tanayong Plc.

The property market in Chiang Mai is set to boom, especially in terms of demand in the hospitality business, second homes and retirement homes for foreign investors, a survey conducted by The Nation over the weekend revealed.

Absolute Hotel Services chief executive Jonathan Wigley, who manages the U Hotel in Chiang Mai, said that a number of new hotels and resorts in the province now provide about 25,000 rooms and 70 per cent of hotels are three- and four-star hotels, while the rest are in the five-star category.

International hotel chains, such as Four Seasons, Chedi and Mandarin Oriental, are also expanding their investment in Chiang Mai, he said.

Meanwhile, Thailand's leading property developer company, Land and Houses, has expanded its business to develop residential projects in Chiang Mai for about five years and plans to invest about Bt1 billion to develop a luxury hotel in the province. Construction will begin in the second half of the year, company advisor Sangvorn Santisuk said.

He said Land & Houses plans to develop its first luxury hotel in Chiang Mai, which will have 100 rooms on a 30-rai plot on Bumrungraj Road. The project is expected to be completed in the next two years.

Tanayong managing director Kavin Kanjanapas said the company has invested in Chiang Mai because it believes  the province has potential for the hospitality business, especially due to the province's rich culture.

A number of property developers have increased their investment in the hospitality business in Chiang Mai because they see more tourists - domestic and from overseas - visiting this province. Last year, 5.4 million tourists visited Chiang Mai - 3.6 million from within the Kingdom and the rest 1.8 million from overseas - but this was a 14.4-per-cent drop from 2006.

Average spending per day for tourists visiting Chiang Mai averaged Bt2,729 a day. The average length of stay was 1.92 nights.

Central Pattana, the property arm of the Central Group, has also expanded its investment to Bt5 billion to develop its second shopping centre in Chiang Mai this year, managing director Kobchai Chirathiwat said.

The market for residential units in Chiang Mai is seeing aggressive competition as property developers, like Land & Houses and Quality Houses, have expanded their investment in the province since the past five years.

The target audience for residential projects in Chiang Mai are domestic buyers who want to buy a second home and buyers from overseas who plan to buy a retirement home in the province, Siam Zokei president Yasuo Miyazaki said.

Siam Zokei is a joint venture between Saha Group and Japanese investor Yasuo Miyazaki, focused on developing residential projects in Thailand. Its first project, worth nearly Bt10 billion, is Peak Town in Chiang Mai.

Miyazaki said demand for residential projects in Chiang Mai from foreign investors has seen strong growth, especially from Japanese investors, who want to buy retirement homes in this province due to its culture and peaceful environs.

Thanks to the huge levels of investment since last year, land prices in Chiang Mai have doubled from an average of Bt500,000 per rai three year ago to about Bt4 million or Bt5 million per rai, a source in the Land Department said.

Research conducted last year by the Real Estate Information Centre revealed that 94 new residential projects were launched in Chiang Mai, comprising 25,420 units. Of these, 12,293 units, or 48 per cent, was detached houses, 47 per cent was vacant land, 2 per cent is town houses, and another 2 per cent were allocated to commercial buildings.

The remaining 1 per cent was double-house projects.

Up to 49 per cent of projects launched offered units priced less than Bt1 million per unit.