After the beach boom
- 22 Jul 2018 at 04:00
- WRITER: SURACHET KONGCHEEP
Viranda Residence Hua Hin, a low-rise condo project worth 2.5 billion baht.
The condominium market in Cha-am and Hua Hin has yet to recover from the over-exuberant building frenzy of a few years ago. Although some projects by listed developers have sold well and attracted a high degree of interest in the two beach towns south of Bangkok, they are relatively small in number.
The current slowdown is a hangover from 2011 and 2012, when a total of 16,160 new condominium units were launched, a figure that exceeded the total for the previous 10 years. A few developers who launched projects in the past two years have run into financial trouble and been unable to complete construction.
Some large projects with more than 1,000 units have also inflated the total and contributed to concerns about an oversupply. Some developers have begun to pitch their condominium projects to Chinese visitors seeking holiday homes or investment properties in Thailand, but interest among this group has yet to translate into a lot of sales.
While activity slowed dramatically from 2014-16, a slight pickup was observed last year and there are signs that it is persisting into this year. The main contributors to the revival are listed developers who have launched a total of 1,120 units. Some of the bigger names appear confident that brand recognition and a broad customer base, especially in Bangkok where some residents are looking for weekend and holiday homes, will help sales.
Only around 1,300 new condo units were launched in the two towns in 2017, but activity in the first half of 2018 suggests a positive trend could be forming again, though the growth rate will be much more modest than was seen earlier in the decade.
making an impact: The 12-billion-baht Thew Talay Estate is one of the largest resort and condominium projects in Cha-am. Photos: Supplied
The main customers in Cha-am and Hua Hin are from Bangkok and their main purpose for purchasing is for second or weekend homes. Other buyers who are already working in the area and want to put down roots are also shopping around, though most of them are more inclined to buy a detached house.
Three-quarters of the condominium units launched in Cha-am and Hua Hin, or about 19,400 in all, are selling at below 5 million baht each. The average take-up rate stands at around 71% and around 5,500 units are still available in the market.
Developers are still monitoring demand carefully, aware that for most of their customers, a condominium in Cha-am or Hua Hin amounts to a discretionary purchase and not an essential. In addition, the number of unsold units remains a concern. Those that are offering new projects are trying to stand out in the market with novel designs and features.
Concern about the overall condition of the economy could also put a brake on condo development in resort areas. Most Thai people now are awaiting new an election next year, with consumers and businesses alike hoping for a smooth transition as well as policy continuity.
In the case of Cha-am and Hua Hin, the market is still awaiting confirmation that a planned high-speed rail line will go ahead. This would make the area more attractive to Thai visitors as well as foreign tourists, especially Chinese visitors who have emerged as the main foreign buyers in the local property market.
Surachet Kongcheep is a veteran local property market expert. He can be reached at firstname.lastname@example.org