Hua Hin, Cha-am see condo glut after demand drops

Real Estate December 05, 2014 01:00

By Somluck Srimalee
The Nation,

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Several residential projects in resort area undersold after numerous launches since 2012

Residential projects in Hua Hin and Cha-am have been stuck with huge stocks of unsold units after demand dropped, according to a survey by The Nation.
Presales at eight condominium projects averaged 64 per cent, even though some of them were launched two years ago.
The Energy Hua Hin by Baan Rajprasong Co, which was offered in 2012, has sold 70 per cent of 5,997 units in its first phase, which has already been completed and transferred to buyers this year. The 529-unit second phase will kick off next year.
The Trust Hua Hin by Confidence Co, a subsidiary of Quality Houses, showed presales of only 50 per cent since its debut last year. Construction has finished and units were transferred in the second half of this year.
Of the 171 units at The Crest Santora Hua Hin by SC Asset Corporation, 80 per cent have been presold since last year. Transfers will begin next year.
Malibu Kao Tao by M Talay Co, which is owned by the Malinond family, is 62 per cent sold out since 2012. 
Pairoj Wattanavorodum managing director of The Confidence Co, said the market had been oversupplied since 2012, when developers from Bangkok expanded to this resort destination.
Most of the demand comes from Bangkok, where people are looking for a condo to be their second home rather than their first home. When the economy slowed down, that directly hit demand for property in this location.
However, demand has showed signs of recovering this quarter and will better next year, if the economy grows at least 4 per cent as forecast by the government, he said.
A survey by Colliers International (Thailand) shows that the condo inventory in the general Hua Hin area will be 16,000 units next year. This would take 18 months to sell out even if no more residential projects were launched in the location.
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 rest are split evenly between the Hua Hin inland and Pran Buri areas of northern Prachuap Khiri Khan province.
Many condo projects cannot be completed by the expected date, because of the shortage of construction workers.
Many listed developers plan to launch condos in Cha-am and Hua Hin.
LPN Development has already occupied land in the Hua Hin area, but had to delay the launch of its condo project from this year to 2015 when it saw the glut in the market.
“We have to wait and see the demand in the market,” managing director Opas Sripayak said.
According to Colliers, the average take-up rate at the end of last year was 73 per cent, around 5 percentage points higher than for the previous six months. This was due to the high take-up rate at some new condo projects launched during the year, especially by listed developers.
Although the market has a supply overhang, Property Perfect launched its first condo project last month, the Bt1.6-billion Bella Costa Hua Hin-Kao Tao. With a starting price of Bt2.95 million, the project is 15 per cent booked in terms of value.
“Although the market has shown signs of oversupply, we have confidence that our condominium project will meet customer demand,” said Wongsakorn Prasitvipat, deputy chief business development officer.
Land prices rising
With the investment by listed property firms since 2012, the price of land close to the beach has more than doubled, despite the glut.
The Confidence Co’s Pairoj said land close to the beach had soared from Bt40 million per rai (Bt250 million per hectare) in 2012 to Bt100 million per rai. Land close to the main road has shot up from Bt4 million in 2010 to between Bt8 million and Bt10 million, depending on location.
“The prices of locations near the main road are rising now that the availability of land near the beach is limited,” he said.
The high prices and lack of sites have forced property firms to expand far from downtown Hua Hin to Khao Tao, said Sunchai Kooakachai, senior manager of Colliers International (Thailand) Co.
According to Colliers, seven condo projects worth up to Bt10 billion have sprung up in Khao Tao, a beach village south of the city.
Land and Houses is developing Wan Vayla worth nearly Bt3 billion and Kao Tao Bay View Resort Co the Celeste Hua Hin-Kao Tao worth Bt1.7 billion.
“This is also boosting land prices on Khao Tao since last year from Bt40 million per rai for sites in the beach area to Bt80 million per rai,” he said.