High-rise market in Pattaya shows promise

According to a new study conducted by CB Richard Ellis on the Pattaya condominium market, high-rise developments are proving the most popular, especially those that are beach-front or have good beach-views, with 45 percent of units at projects being marketed already sold. A number of recently launched projects fall into this category, including The Cove, the Spinnaker and Northpoint.

Around 30 percent of units in low-rise condominium projects have been sold. Generally, these tend to be further away from the sea and have lesser views than competing high-rise projects. Among low-rise projects, the highest sales rates were seen in units priced at or under Bt5 million in Pattaya Town.

As a result of a number of large recent launches, overall sales for Grade A condominium projects in Pattaya stands at just under 40 percent as of Q2 2008. Total existing and future supply is roughly 3,500 units. However, 50 percent of these units have been launched since the beginning of 2007, which is a factor in the low overall sales rate.

In terms of pricing, the highest sales rates were achieved in less expensive projects, those priced at or under Bt5 million. For high-rise projects, though, there appears to be a strong high-end market as well, as almost half of units priced at over Bt20 million have been sold already.

There exists a wider range of pricing for low-rise units, whereas all high-rise units covered in this survey were priced at a minimum of Bt80,000-100,000/sqm. Recent rises in construction costs, particularly the price of steel, an essential material in high-rises, have served to push up prices at both high- and low-rise developments in Pattaya.

Two- and three-bedroom units remain very popular in Pattaya, as many buyers have families or prefer the extra space. In many cases, purchases by such buyers in Pattaya are intended as second homes. A limited number of penthouse units are also available; however, sold penthouse units account for only about 1% of the number of total units sold in Pattaya.

Pattaya remains a favored destination for both local and international tourists, with a total of 6.2 million tourist arrivals in 2007. This figure represents 9.1 percent y-o-y growth, and tourist arrivals have almost doubled since 2000, underscoring the continual development of Pattaya as both a tourist destination for foreigners and a weekend getaway for residents of Bangkok. A considerable share of the activity in the Pattaya property market is driven by Bangkok residents looking for a second or weekend home.

There are a number of large high-end launches planned for the second half of 2008, and it will be instructive to see how the market reacts to these offerings. Newly released figures from the Land Department have shown substantial activity in land transactions in Pattaya during Q1 2008, which is expected to translate into increased development activity as well. As a resort destination, Pattaya is dependant on repeat, high-end tourism activity for a considerable portion of its property sales. If political concerns ease and economic conditions improve by later this year, the property sector should perform strongly going forward.

According to Ms. Linda Ord, General Manager of CB Richard Ellis Pattaya, "High rise condominiums in Pattaya tend to be located beachfront or close to the beach with good sea views and a full range of leisure facilities. As most buyers of condominiums in Pattaya are purchasing a second home or holiday home, whether they be Thai or Foreign, they want to be close to the beach to fully enjoy their leisure time, hence the preference for high rise, beachfront properties. The new high rise projects which are set to launch in the second half of 2008 are all in prime locations, either absolute beachfront or with great sea views and as such, are likely to continue to outperform the low rise projects in terms of number of sales in the mid to long term."