H1 2011 (Half Year) | condominium
thailand
Pattaya City Condominium Market Report
Pattaya City Condominium Market Highlights
market indicators H2 2010 - H1 2011 Supply LAUNCHES PRICES
More units were launched onto the market for the first half of the year compared with the whole of 2010.
Around 1,000 units were supplied in Pattaya for H1 2011.
A large listed developer made a strong vote of confidence in Pattaya city with its first launch in the city with a significant number of units.
The second home market is being targeted for H1 in particular through large scale developments.
The Pattaya growth story continues apace.
TAKE-UP
New launches power Pattaya market Newly launched in H1 2011
Newly launched units in the first half of 2011 were significantly higher than the total launched in the whole of last year. This was due to two new projects being launched in the first half of 2011 with more than 1,400 units per project.
Source : Colliers International Thailand Research
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Pattaya city condominium report market | H1 2011 (Half Year) Description Pattaya is a city located on the east coast of the Gulf of Thailand about 165 km southeast of Bangkok. It is within, but not under the jurisdiction of Amphoe Bang Lamung in the province of Chonburi. The city of Pattaya is a self-governing municipality that covers the whole Tambon of Nong Prue, Na Klua, parts of Huai Yai and Nong Pla Lai. It is located within the heavily industrialized Eastern Seaboard zone, along with Sri Racha, Laem Chabang and Chon Buri. It has a population of 556,916 and covers an area of 49.37 Sq km. Pattaya city occupies most of the coastline of Banglamung (one of the 11 districts that comprise Chonburi Province). It is divided into a larger northern section that spans the areas to the east of Naklua beach (the most northern beach) and Pattaya beach (the main beach), plus the Buddha Hill headland (immediately south of Pattaya beach), and a smaller southern section covering the area to the east of Jomtien beach, which lies directly south of Buddha Hill. The report covers the Pattaya city area as well as Na Jomtien and a distinction is made between Pattaya city and Pattaya bay which constitutes part of the overall area under consideration.
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Pattaya city condominium report market | H1 2011 (Half Year) Supply Historical supply
cumulative supply in Bangkok
Source : Department of Land and Colliers International Thailand Note : Figures now include Na Jomtien area
At the end of H1 2011, the total supply amounts to approximately 45,600 units. For H1 2011, more than 1,000 units were added to supply and nearly 2,900 units are scheduled to be completed in the second half of 2011. The foundation for the condominium market occurred in 1992 with the development of large scale condotel style properties such as Metro Jomtien. This was the result of the Condominium Act in 1989 which opened the door for the development of high rise residences. Initial demand came from foreign buyers as Thais did not provide the significant
engine for demand as they do now, although many were beginning to benefit from the economic boom and consequently purchasing property. The next surge in growth was the result of the economic boom that peaked in 1997 before the fall. A more limited but sustained level of supply came onto the market in the first few years of the new century but picked up in the latter half of the last decade.
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Pattaya city condominium report market | H1 2011 (Half Year) Supply by zone
Source : Colliers International Thailand Research
The initial surge in supply in the city was dominated by Pattaya. However in 1997 a significant addition was made to Jomtien supply by the Jomtien Beach Condominiums (known as Rimhat). The two areas continued to be the main target for developments up to the present day. Jomtien has since overtaken Pattaya due to the greater availability of land, especially close to the sea. The Pratumnak and Wongamat areas have developed on a lower trajectory of growth over this period. From the year 2005
onwards, Wongamat has increased dramatically with the addition of nearly 3,000 units in the past six years and is now on a par with Pratumnak. Na Jomtien has been the laggard, primarily due to the absence of a road running along the coast and available land in more accessible locations in the city.
Condominium supply by location, H1 2011
The largest condominium supply is in the Jomtien area, representing about 41% of the total, followed by Pattaya area, at about 31%. Condominium projects in the Pattaya area are predominantly low rise in nature and the average number of units per project is approximately 140, which is similar to projects in the Wongamat and Pratumnak areas. The figure for Jomtien area is around 360 units as most of the projects are high rise buildings. The pattern of overall real estate development is different for Pattaya and Jomtien. Pattaya contains the lion’s share of both hotel and retail projects leaving limited sized land space available for larger scale condominiums. Jomtien was largely spared this process in the 1980’s and 90’s and as a result sizable tracts of land were and still remain available for larger scale projects.
Source : Colliers International Thailand Research
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Pattaya city condominium report market | H1 2011 (Half Year) Future Supply Cumulative future supply by year and location
Source : Colliers International Thailand Research
More than 2,900 units are scheduled to be completed and transferred during the second half of 2011 which represents an increase of just over 6% in total supply and more than 4,100 units are scheduled to be completed and transferred in 2012. During the years 2011 – 2013
Pratumnak is set to be the main player in the Pattaya city condominium market, due to many projects being launched in the past three years. This area is especially popular for the surging Russian market. Also most projects are located on the hill with good views overlooking the beach.
Newly launched units in H1 2011 by location and half year
Source : Colliers International Thailand Research
New launches for H1 2011 were more than double from the second half of last year. The Wongamat area contained by far the most highest followed by Jomtien area. The main reason for the number for Wongamat is due to the new project by LPN Development Plc. Jomtien’s strong showing is a result of the launch of a large new project by A.D. House Co., Ltd.
Condotown North Pattaya – Sukhumvit had an official launch on 9 May 2011 in which they sold approximately 500 units or 35% from the total 1,442 units on the first day. All units in the project are one bedroom with one size of 22.5 sq m and a starting price of THB 699,000 per unit. In addition to this they plan to launch a new project in the Jomtien area located on the beachfront road in October and later for another project in Wongamat area.
LPN Development Plc. launched its first ever condominium project in Pattaya city on Sukhumvit road in the Wongamat area. Lumpini
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Pattaya city condominium report market | H1 2011 (Half Year) Condominium Projects with Hotel Management The trend for residences with hotel management or a hotel component is taking shape in Pattaya city with four projects on the market adopting this method. The addition of such a brand adds kudos to the development as well as significant facilities and services available to unit owners and those who choose to rent. The upshot is that capital values are likely to increase with the addition of a hotel element. No.
Project Name
Location
1
Movenpick White Sand Beach Pattaya
Na Jomtien
2
Amari Residence Pattaya
Pratumnak
3
Centara Avenue Residence & Suites Pattaya
Pattaya
4
Park Plaza Waterfront
Pratumnak
Source : Colliers International Thailand Research
Demand Take-up rate of launched projects since 2010
Source : Colliers International Thailand Research
The average take-up rate for the whole of Pattaya city has increased by an average of approximately 2% from the second half of 2010. The takeup rate of three locations has increased by an average of approximately 12.5% from the second half of 2010 and the other two locations, Jomtien and Pattaya recorded significant decreases. During the first six months, three new projects were launched in the Pattaya area with approximately 700 units and most of them were put on the market in the last two months of first half of 2011. This had a direct negative impact on average take up rates in the area. A new project was launched in the Jomtien area containing more than 1,500 units, which
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made the average take-up rate in the area fall by more than 18% The average take up rate in Wongamat area was the highest with over 70% which resulted from the successful launch of the first Pattaya city project from LPN Development even though this project has a total of more than 1,400 units. No new project was launched in the Na Jomtien area but the construction progress of the current developments in this area has shown good progress which has lead to greater confidence leading to improved sales.
Pattaya city condominium report market | H1 2011 (Half Year) Foreign ownership / domestic demand In contrast to the Bangkok market, foreigners take up the lion’s share of lower end condominiums in Pattaya and Jomtien as many are retirees with limited financial resources and foreign Bangkok residents looking for an inexpensive holiday home. This has meant that for units below 2 million Baht there is often a dual pricing structure resulting from the 49% foreigner owner limitations. In the newly emerging upmarket residential markets of Wongamat and Pratumnak, local buyers are the main driver and there are far fewer dual pricing policies. Often local buyers are attracted by better payment terms compared to foreign buyers and therefore the developers financing structure can have a significant bearing on the local buying component.
The Russian market is a particularly strong one and is further increasing. Many come from the eastern part of the country where countries like Thailand are in closer proximity than the Black Sea, Greece or Turkey which are popular with Muscovites for example. Many in the east work in the energy and mining industries and can earn a great deal of money. Due to the generally poor level of English most are attracted by the Russian language infrastructure of Pattaya city with menus, signs and information in the Cyrillic alphabet as well as Russian speakers, both native and Thai to assist them.
Addition of population over 65 in selected countries
Source: United Nations population Division and Colliers International Thailand Research
Significant numbers of retirees will come from countries that are large markets for the Pattaya tourist industry and consequently potential residents in the future. With lower government pension provisions expected in the era of the greying babyboomers, many in the west may choose to live their remaining days in a country offering them a better
standard of living in a warmer climate. The Russian market, already the strongest one in terms of foreign buyers could see further growth on back of an increase in retirees in the second half of the decade. The lure of tropical Pattaya could be the prefect antidote to the severe Russian winters.
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Pattaya city condominium report market | H1 2011 (Half Year)
Change in currency to Thai baht
Source: Bank of Thailand and Colliers International Thailand Research
Pattaya as well as other resort towns in Thailand have been hampered by the strength of the Thai Baht against currencies of the vast majority of foreign demand. However in the past six months currencies have recovered although the fraught financial situation of many governments in Europe as well as the USA can add more pressure on the Euro and dollar in the future. The Australian dollar has bucked the trend with its
strong commodities sector enhancing the value of the currency. This goes some way to explaining why more Australians are buying resort property throughout Thailand, including Pattaya, as well as the prohibitive prices of coastal real estate in Australia. The average price for an apartment on the Gold Coast in Q2 2011 is 16.5 million baht.
Historical perspective
Q4 1992 1 US$ = 25.5 Thai baht It is interesting to note that the beginning of significant foreign condominium buying which took off in 1992 was also a time of a very strong Thai baht against many major currencies. The Asian Financial
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1 UK pound = 39 Thai baht Crisis led to a severe depreciation of many currencies in Asia and even now in Thailand exchange rates have still not returned fully to pre-Asian crisis levels despite the financial travails in the past few years.
Pattaya city condominium report market | H1 2011 (Half Year) Price Average selling price of total units by location, as of H1 2011
Source: Colliers International Thailand Research
2011 by around 0.5 – 10%. The average selling price in Jomtien showed the highest increase due to A.D. House launching its new project on Jomtien Sai 2 Road, with every unit in the project having a sea view from its elevated position with an average selling price of around THB 56,000 per sq m.
The average selling price in Wongamat remains the highest, although this dropped from the second half of 2010 by around 17%, due to the average selling price of the new condominium project by LPN which has been offered for approximately THB 37,000 per sq m, as the project is located on Sukhumvit road and is more than one kilometre from the beach. The average selling price in other locations increased from H2
Beach frontage and height of condominiums affect on price H1 2011
Location
Average Selling Price (THB / Sq M.)
Average Selling Price (THB / Sq M.)
Beachfront
Other area
Wongamat
70,000
96,000
50,000
Pattaya
68,200
High Rise
Low Rise
(> 8 storey)
(< 8 storey)
67,000
85,000
72,500
66,150
Pratumnak
65,000
71,500
65,000
Jomtien
55,150
122,000
48,500
66,750
43,500
Na Jomtien
60,400
115,500
36,800
125,000
44,500
Source : Colliers International Thailand Research
Beach frontage is the key driver for luxury condominiums. Prices can rise by over 100% when located by the beach, especially in Jomtien where many projects are located some distance from the shoreline. There is also a premium for high rise condominiums as the view from
the unit is especially important for buyers of a resort property. In relation to Bangkok most Pattaya city developments use greater quantities of glass in their construction in order to make the most of the surroundings.
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Pattaya city condominium report market | H1 2011 (Half Year) Forecast The entrance of LPN Development in the Pattaya city market is highly significant. While a number of listed developers have been involved in the city, LPN is the largest company in terms of turnover and market capitalisation to do so. What is more the company was instrumental in the trend of bringing down average unit sizes in Bangkok, targeting a first time buyerâ&#x20AC;&#x2122;s market that was beyond reach before and has since been emulated in different forms by many other developers. In the case of Pattaya city the market is predominantly Bangkokians looking for a cheap second home for weekends, although demand also comes from the local market and foreigners. Other Bangkok based developers are likely to follow. Many factors are falling into place that will continue to propel Pattaya forward as an international city rather than simply a resort. Growing demand from foreigners in vibrant visitor markets such as Russia and India - More Thais now purchasing property as a second home - The increasing industrialization of Chonburi province and Pattaya as a potential commercial hub - Future retail and entertainment development that will enhance the attractiveness of the city. In previous reports Colliers International was bullish about the future prospects of the city over the course of the next ten years. There is nothing to alter this viewpoint and in fact events in the past six months go some way to strengthening that positive outlook.
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Pattaya city condominium report market | H1 2011 (Half Year)
APPENDIX
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Pattaya city condominium report market | H1 2011 (Half Year) ZONING
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Pattaya city condominium report market | H1 2011 (Half Year) Pattaya city can be divided into four zones for the purposes of this report. Below is a summary of each zone.
1. Wong Amat
4. Jomtien
This is the area to the north of Pattaya Nua. It is considered a peaceful, more up-market location and is a relatively new area for condominium development.
Jomtien beach is about 1 km south of Pratumnak Hill. The locale is home to many high-rise condominiums, beach front hotels, shops and restaurants. The area at the beginning of Jomtien is considered busy, while the area located at the end of this beach is considered peaceful and tranquil with less traffic passing through.
2. Pattaya This area is considered as the city centre. The section of beach from Central Road south to the harbour runs adjacent the core of Pattayaâ&#x20AC;&#x2122;s abundant nightlife area. Many sections of the beach are covered by rented deckchairs run by local beverage vendors during daylight hours. Pattaya Nua and Klang are the areas favoured by Asian visitors, especially Chinese and Korean, while the area of South Pattaya is popular among Middle Eastern, South Asian and Russian visitors.
3. Pratumnak
5. Na Jomtien Na Jomtien beach is south of Jomtien and does not have a beachfront road and is less developed as a result .The main road connection is Sukhumvit road, which is located between 500â&#x20AC;&#x201C;1,000 meters from the beach, this area extends to Bang Saray beach in Sattahip district. Note: The report covers residential areas located on or west of Sukhumvit road.
This area covers the main thoroughfare connecting Pattaya and Jomtien Beach. Many upscale restaurants have recently sprung up along Thappraya Road. This area is very popular with Scandinavian and Russian visitors. Part of Pratumnak contains hills where more exclusive style accommodation can be found.
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