The residential market in the Hua Hin area is showing signs of oversupply after both local and Bangkok-based developers expanded their condominium investment over the past five years.
According to a survey by Collier International (Thailand), condominium inventory supply in the general Hua Hin area will be 16,000 units next year. This would take 18 months to sell out even if there were no new residential projects launched in the location.
The survey shows some 8,800 units are expected to be completed this year, with nearly 5,000 units in the Cha-am area and about 1,880 in the Hua Hin coastal area. The remainder are split equally between the Hua Hin inland and Pranburi areas.
Many condominium projects cannot be completed by the expected date, due to a lack of construction workers, the research said.
The research also shows that many listed developers are focusing more on the condominium market outside Bangkok, with Cha-am and Hua Hin among their target locations.
LPN Development, for example, has already occupied land plots in the Hua Hin area, while another big-name developer is also looking to launch new projects in the area.The average take-up rate at the end of 2013 was about 73 per cent, around 5 per cent higher than in the previous six months. This was due to the high take-up rate at some new condominium projects launched during the year, especially by listed developers.
Some other condo developers have also launched new marketing campaigns and set up their sales booths in popular shopping malls in Bangkok in order to attract new clients.
The average take-up rate in the Hua Hin inland area was highest at around 85 per cent, because some new condominium projects from listed developers were launched in the first half of 2013. In the past year they have had high take-up rates, and some projects have sold out, said Collier.
Most buyers in the Cha-am, Hua Hin and Pranburi areas are Thai, especially in condominiums and housing development projects, while some foreign retirees own or rent condominiums or houses in the general area.
The average take-up rate of all property types in these three locations last year was roughly 72 per cent, with 68 per cent for landed development projects and 73 per cent for condominiums.
The average price of condominium and landed development projects is still similar to the previous year.Following the oversupply of condo units in Hua Hin, LPN Development has delayed the launch of three new projects, comprising 2,040 units worth Bt3.13 billion, this year.
“We have to wait and see the demand in the market,” said managing director Opas Sripayak.
However, some listed property firms have continued to launch new condominium projects in Hua Hin. For example, Property Perfect will officially launch its first six-storey project, the Bella Costa Hua Hin-Koh Tao, worth Bt1.6 billion at a starting price of Bt2.95 million per unit in the third quarter.
“Although the market has shown signs of oversupply, we have confidence that our condominium project will meet customer demand,” said deputy chief business development officer Wongsakorn Prasitvipat.
Since the company started to promote the project in April, it has sold 10 per cent of its value, he added.Quality Houses, meanwhile, plans to launch the Q-Seaside Hua Hin condominium, with units starting at Bt5.29 million apiece, in the second half of the year.
The project has 207 units in total.