pattaya condominium market report h1 2010

8/9/2019 Pattaya Condominium Market Report H1 2010

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PATTAYA

CONDOMINIUMMARKET REPORT

P AT TAYA C I T Y CO N D O M I N I UM M A R K E T | 1 s T H A L F | 2 0 1 0


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Th Kdg Rprtco l l i e R s i n T e R n aT i o n a l | T H a i l a n D

ext srSignicant new supply is being added to Pattaya city over the course o 2010, representing a 20%increase in total supply.

Market absorption will be challenging over the next two years exacerbated by political uncertaintyand the strong baht deterring oreign buyers.

Extensive development is taking place over 500 metres rom the coast as developers tap into thelower income buyers bracket, both oreign and domestic.

Wongamat is carving out a niche as the new luxury market catering to wealthy Bangkokiansseeking a vacation home.

www.colliers.co.th

P aT Taya c i T y co n D o m i n i um m a R K e T | 1 s T H a l F | 2 0 1 0

DrptPattaya is located on the east coast o the Gul o Thailand about 165 km southeast o Bangkok.It is within, but not under the jurisdiction o, Amphoe Banglamung in the province o Chonburi.The city o Pattaya is a sel-governing municipality that covers the whole Tambon o Nong Prue,

Naklua, parts o Huai Yai and Nong Pla Lai. It is located within the heavily industrialized EasternSeaboard zone, along with Sri Racha, Laem Chabang and Chon Buri. It has a population o 556,916and covers an area o 49.37 sq km.

Pattaya city occupies most o the coastline o Banglamung (one o the 11 districts that compriseChonburi Province). It is divided into a larger northern section that spans the areas to the east oNaklua beach (the most northern beach) and Pattaya beach (the main beach), plus the Buddha Hillheadland (immediately south o Pattaya beach), and a smaller southern section covering the area tothe east o Jomtien beach, which lies directly south o Buddha Hill.

The report covers the Pattaya city area and a distinction is made between Pattaya city and Pattayabeach which constitutes part o the overall area under consideration.


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The Knowledge Report | 1st Hal| 2010 | Pattaya City Condominium Market


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Pattaya city can be divided into our zones or the purposes othis report. Below is a summary o each zone.

1. Wong AmatThis is the area to the north o Pattaya Nua. It is considered a

peaceul, more up-market location and is a relatively new areaor condominium development.

2. PattayaThis area is considered as the city centre. The section o beachrom Central Road south to the harbour runs adjacent the core oPattayas abundant nightlie area. Many sections o the beach arecovered by rented deckchairs run by local beverage vendors dur-ing daylight hours. Pattaya Nua and Klang are the areas avouredby Asian visitors, especially Chinese and Korean, while the areao South Pattaya is popular among Middle Eastern, South Asianand Russian visitors.

3. PratumnakThis area covers the main thoroughare connecting Pattaya andJomtien Beach. Many upscale restaurants have recently sprungup along Thappraya Road. This area is very popular with Scan-

dinavian and Russian visitors. Part o Pratumnak contains hillswhere more exclusive style accommodation can be ound.

4. Jomtien Jomtien beach is about 1 km south o Pratumnak Hill. The

locale is home to many high-rise condominiums, beach ronthotels, shops and restaurants. The area at the beginning o Jom-tien is considered busy, while the area located at the end o thisbeach is considered peaceul and tranquil with less trac passingthrough.

For the purposes o this report Jomtien as well as Pattaya cityends as the Chom Thian Sai Road turns to the right and car-ries on eastwards. This is also marks the dividing line betweenBang Lamung district, which contains Pattaya city; and Sattahipdistrict which consists o Na Jomtien, Bang Saray and Sattahiptown. This district remains ar less developed and is thereoreconsidered in many ways to represent a dierent market and will

be covered in a separate report.

Note: The report covers residential areas located on or west oSukhumvit road.



Source : Colliers International Thailand

suPPly

HisToRical suPPly

Growth o the condominium market dates rom 1992 with thedevelopment o large scale condotel style developments such asMetro Jomtien. This was the result o amendments to the Condo-minium Act in 1991 that allowed 40% oreign ownership which

opened the door or the development o high rise residences.Initial demand came rom oreign buyers as Thais did not providethe signicant engine or demand as they do now, although manywere beginning to benet rom the economic boom and conse-

quently purchasing property. The next surge in growth was theresult o the economic boom that peaked in 1997 beore the all.A more steady, sustained level o supply came onto the marketin the rst decade o the new century. At the end o H1 2010,

the total supply is approximately 38,550 units. For H1 2010, over815 units were added to supply.




Foreign buyers in Thailand are more attracted to resort areas thanBangkok and this accounted or the act that new condominiumunits in Pattaya outstripped Bangkok ater the CondominiumAct amendment took eect in 1991 However this changed

dramatically in 1995 with a surge in developments in the capitalcity and high rise residential buildings became part o the Bang-kok landscape rom then on.

The initial surge in supply in the city was dominated by Pattaya.However in 1997 a signicant addition was made to Jomtiensupply by the Jomtien Beach Condominiums (known as Rimhat).The two areas continued to be the main target or developments

up to the present day. Jomtien has since overtaken Pattaya dueto the greater availability o land, especially close to the sea.The Pratumnak and Wongamat areas have developed on a lowertrajectory o growth over this period.



BanGKoK / PaTTaya HisToRical comPaRison oF ToTal suPPly 1990-1995

suPPly By Zone




Source : Department o Land, Colliers International Thailand Research

Jomtien takes up the biggest share, representing about 38% othe total, ollowed by Pattaya area, at about 35%.

Condominium projects in Pattaya area are predominantly lowrise in nature and the average number o units per project isapproximately 150, which is similar to projects in the Wongamatand Pratumnak areas. The gure or Jomtien area is around

340 units as most o the projects are high rise buildings. The

pattern o overall real estate development is dierent or Pattayaand Jomtien. Pattaya contains the lions share o both hotel andretail projects leaving limited sized land space available or largerscale condominiums. Jomtien was largely spared this process inthe 1980s and 90s and as a result greater tracts o lands wereavailable or larger scale projects.

More than 8,000 units are scheduled to be completed in 2010which represents an increase o 20% in total supply. The ol-

lowing year will witness a sharp reduction in new supply whilstWongamat will uel growth or 2012.

conDominium suPPly By Zone, H1 2010

Source: Colliers International Thailand

FuTuRe suPPly




A sizable number o units will open their doors in Jomtien or2010 and will consolidate the areas status as the main condo-minium market in the city. However in 2012 Wongamat will

usher in over 1,000 new units and begin to carve out a niche as aluxury end area, distancing itsel as a market rom Pattaya.

Jomtien still the most popular location or new condominiumprojects, more than 600 units were launched in rst hal o 2010,

while Wongamat and Pratumnak ranged at around 500 units.Many o the newly launched projects in Jomtien and Pattaya are

located ar rom the beach with low asking prices. However inWongamat a range o projects are springing up, both by the sea

and urther away.

FuTuRe suPPly By Zone

newly launcHeD in H1 2010

Source : Colliers International Thailand Research

Source : Colliers International Thailand Research



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FoReiGn owneRsHiP/DomesTic DemanD

In contrast to the Bangkok market, oreigners take up the lionsshare o lower end condominiums in Pattaya and Jomtien asmany are retirees with limited nancial resources and oreignBangkok residents looking or a cheap holiday home. This hasmeant that or units below 2 million Baht there is oten a dualpricing structure resulting rom the 49% oreigner owner limi-tations. In the newly emerging upmarket residential markets oWongamat and Pratumnak, local buyers are the main driver and

there are ar ewer dual pricing policies. Residual negative con-notations regarding Pattaya remain in the domestic market andlocal buyers are attracted to the more amily orientated upmar-ket areas. In act locals distinguish these areas as being dierentlocations rom Pattaya itsel. The process o the segmentation oPattaya city is taking shape.

The Russians account or over a quarter o oreign visitors toPattaya and the increasing number o signs and advertising in

Russian is a testament to this. They also represent a large marketor condominium developers and a number even have Russiansales sta to promote their projects. The Chinese are a growingorce in the tourist industry in the city but they represent moreo the mass tourist segment o the market and as such are less

likely to be buyers o property at present. However with costs ovacation property in China itsel spiraling, especially in Hainan

Island, Chinese may be looking urther aeld and what begins asa tourist destination could develop into a residential one in theuture. The growth o this particular segment will be an interest-ing one to observe in the uture.

BReaKDown oF FoReiGn visiToRs To PaTTaya 2009

Colliers International Thailand Source: Ofce o Tourism development




Signicant numbers o retirees will come about rom coun-tries that are large markets or the Pattaya tourist industry andconsequently potential residents in the uture. With lowergovernment pension provisions expected in the era o the greying

babyboomers, many in the west may choose to live theirremaining days in a country oering them a better quality o lie.Koreans do not represent important buyers at present but thismay change in the uture.

The table shows how Pattaya as well as other resort towns inThailand are hampered by the strength o the Thai Baht against

currencies o the vast majority o oreign demand. It can be ar-gued that this actor, rather than political uncertainty is whatis deterring oreign buyers. Conversely a person who purchaseda property six years ago and then sold recently would stand tomake a signicant gain in his own currency.

The current crisis or the Euro will continue to thwart Pattayaseorts to capture a signicant share o oreign buyers or more

upmarket products. However the Chinese could be uture playersin the market as the Yuan is expected to appreciate against thedollar in the uture as the government is under pressure to relaxits currency controls.

aDDiTion oF PoPulaTion oveR 65 in selecTeD counTRies

cHanGe in cuRRency To THai BaHT




PRice

Location, launch time period, project design, unit design, acili-ties, building specication and decoration, developer, quality othe product, target group and beachront are the main actorsaecting the selling price.

Wongamat has an average selling price o around 85,000 bahtper sq m, with a number o luxury developments going or much

higher. In one development some unit prices were as high as160,000 baht per sq m, comparable with a high end unit inBangkok. The lower prices recorded in the other areas were onaccount o many projects being located over 500 metres rom

the coast.

Beach rontage is the key driver or luxury condominiums. Pricescan rise by over 100% when located by the beach. There is alsoa premium or high rise condominiums as the view rom the unitis especially important or buyers o a resort property. In relation

to Bangkok most Pattaya developments use greater quantities oglass in their construction in order to make the most o the sur-roundings.

aveRaGe sellinG PRice oF uniTs H1 2010

Source: Colliers International Thailand

aveRaGe sellinG PRice By locaTion H1 2010

locaTionaveRaGe sellinG

PRice (THB / sq m.)

aveRaGe sellinG PRice (THB / sq m.)

BeacHFRonT oTHeR aReaHiGH Rise

(> 8 sToRey)

low Rise

(< 8 sToRey)

wgt 84,980 110,000 54,000Ptt 61,000

Prtk 60,000 72,500 58,000

jt 54,000 93,000 50,000 93,000 50,000

Source: Colliers Internationa l Thailand




ouTlooK

Pattaya city is continuing its period o diversication away rom being an enter-tainment area to a larger, more amily orientated resort city. The pattern o de-velopment in Pattaya beach itsel looks set to be the emergence o higher end

condominiums and hotels in Beach road and Second road with the entertainmentscene being driven to Third road and beyond. The process o biurcation looks setto continue albeit slowly.

Pattaya city also looks to be in a process o segmentation as each area takes on itsown unique characteristics. Wong Amat and Pratumnak and the beach roads oPattaya and Jomtien beaches are likely to remain the key luxury sectors or con-dominium development while lower end products are springing up urther away inPattaya and Jomtien.

The strains on the lower end market in respect o oreigners look set to continue.As the babyboomers retire expect a surge in demand or cheaper units and barringa change in the Condominium Act or leasehold renewals, developers may startocusing on some supply being used as apartments or lease or even hotel styleaccommodation. This will allow more units to be ree or oreign buyers and alsosupply demand or cheap rental accommodation.

The real estate industry in Pattaya is showing signs o maturing. Many locally baseddevelopers are now able to display a portolio o completed projects that ensuretrust rom buyers in the market. I Pattaya continues to expand then expect anumber to consider listing on the stock market to urther enhance growth andconsolidation. Existing Bangkok based developers have limited exposure in onlythe high end segment.

The infux o new supply on the market in the next couple o years means pric-ing pressures in the mid term. Investors will be looking or attractive oers in theuture and i sentiment is bullish in the longer term then such investment could

provide opportunities or decent yields and capital gains.




conTacT inFoRmaTion

THailanD:Patima JeerapaetManaging [email protected]

Antony PiconSenior Manager | [email protected]

Surachet KongcheepManager | [email protected]

Mark BowlingSales Manager | [email protected]

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480 oFFices in 61 counTRieson 6 conTinenTs

us$ 1.9 Billion in annual Revenue

1.1 Billion squaRe FeeT unDeR

manaGemenT

15,000 PRoFessionals

Colliers International Thailand

Bangkok Ofce : 17/F Ploenchit Center, KlongtoeyBangkok 10110 Tel: 662 656 7000 Fax: 662 656 7111Email : [email protected]

Pattaya Ofce : 492/2 Thappraya Road, Nongprue,Banglamung Chonburi 20150 Tel: 6638 364 411-2Fax: 6638 364 414 Email : [email protected]

www.colliers.co.th

collieRs inTeRnaTional THailanDmanaGemenT Team

ASSET MANAGEMENTWasan Rattanakijjanukul | Manager

Nukarn Suwatikul | Manager

CONSULTANCYNapart Tienchutima | Manager

COMMERCIAL / INDUSTRIAL /RETAILNarumon Rodsiravoraphat | Senior Manager

FACILITY / PROPERTY MANAGEMENTViroj Piromthong | Management AdvisorBandid Chayintu |Associate Director

HOSPITALITY DIVISIONJean Marc Garret | Director

INVESTMENTNukarn Suwatikul | Senior Manager

RESIDENTIALPatima Jeerapaet | Managing Director

RESEARCH & ADVISORYAntony Picon | Senior ManagerSurachet Kongcheep | Manager

VALUATIONNicholas Brown | Associate DirectorThanussorn Aukkrararerksaponk |Manager

PATTAYA OFFICEMark Bowling | Sales ManagerSupannee Starojitski |Business Development Manager



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pattaya condominium market report h1 2010

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