The property market prospects of Khao Yai, Thailand's most popular hillside resort destination, remain promising despite state authorities tightening investigations into land encroachment in low-lying areas of Khao Yai National Park.
The world's seventh-best ozone source and the country's first national park welcomes more than a million tourists a year thanks to its cool weather and several tourist spots.
Due to its close proximity to the capital, Khao Yai also attracts property buyers from Bangkok seeking a second, vacation or retirement home in a holiday destination with pleasant weather.
Property development in Khao Yai began two decades ago after Thanarat Road was repaired and extended with four lanes in 1992. Most of the developments were hotels, resorts and golf courses.
According to property consultant Colliers International Thailand Co, residential developments during the early stage were close to or within a hotel, resort or golf course. Most were individual land plots for sale.
"The property market in Khao Yai, like elsewhere in the country, was affected by the 1997 economic crisis. No new supply was launched until 2005," says Surachet Kongcheep, associate director of the consultant's research department.
Khao Yai's property market boomed again in 2007 with total new housing supply rising to 346 units from 35 and 72 in 2005 and 2006, respectively. They were either single houses or individual land plots in development projects.
Condominiums entered Khao Yai's property market for the first time in 1995 with 180 units, but no new condos were added to the market until 2006, when dozens of new condos were launched, Mr Surachet says.
Authorities have tightened investigations into illegally issued land documents and land encroachment in Nakhon Ratchasima, notably in areas near Khao Yai National Park.
The largest number of new condos launched in Khao Yai in a single year was in 2012, driven by huge demand among property buyers looking for a safe haven outside Bangkok after the great floods deluged the city in 2011.
That year marked an all-time high for Khao Yai's property market for new residential supply, with 1,800 units comprising 540 single houses and 1,260 condo units.
The market continued booming in 2013 with a large amount of new supply, but this time it was driven by a dramatic change in Nakhon Ratchasima's town planning, which limited new developments.
Mr Surachet says the boom is over after large projects were investigated for forest and land encroachment last month, with many in the line of fire.
"[Property] buyers are not confident. They will wait for more clarity or until the investigation ends as the projects that were inspected are not small ones like in the past," he says.
Authorities involved in the probe allege that Bonanza Resort's racetrack encroaches on forest land and Sor Por Kor agricultural reform land, while Kirimaya Golf Resort & Spa has problems with land ownership documents.
Mr Surachet says Khao Yai's property market, which has been weak since last year, will continue to slow down over the next few years.
A sign indicates that Dong Phayayen-Khao Yai Forest Complex is a Unesco World Heritage site. Poor management might lead to the area losing that status.
Small projects with weak finance will be frozen or closed down, while large ones with strong financial support will slow down until the market picks up.
Thammarat Nirandara, chief executive of property developer Privilege Estate Co, which developed Baan Tiew Khao residential project, says the crackdown on land encroachment in Khao Yai has had an impact on the property market.
"It's a shock. People are not confident about what will happen in the future," he says. "But in the long run, it is good for the market as only lawful projects will remain and consumers will not be cheated."
Mr Thammarat estimates that more than half the property projects in Khao Yai are probably located on illegal land.
"If the inspection is taken seriously, it is good for the future of Khao Yai as there's a risk that the national park may have its designation as a Unesco World Heritage site withdrawn," he says.
Mr Thammarat expects the peak season in October will draw people back to Khao Yai. In the near future, the new motorway from Bang Pa-In in Ayutthaya to Nakhon Ratchasima will drive the market as the second exit will be in Pak Chong district.
"Khao Yai's property market will definitely resume but government agencies should take the crackdown seriously and announce which zone or location is legal and which one is not," he adds.
Bonanza Golf and Country Club was raided by anti-encroachment officials.
Pattana Sudhirakuljai, managing director of Phupobfa Co, the property developer in Khao Yai that launched the Creston Hills luxury villa late last year, says some customers have asked the company about land investigations.
"The crackdown will help clarify which projects are legal and which ones are not," he says. "Sales are slow at the moment, but it is the low season in Khao Yai's property market."
Condo projects in which a developer's finance is not strong may be halted, but it will be not a big problem for single-house projects and individual land development projects.
Despite its project's location close to Khao Yai National Park, all of Phupobfa's land documents are title deeds. The company acquired the 200-rai plot through a bid from the Thai Asset Management Corporation in 2010.
Mr Pattana recommends buyers choose a residential unit in a project as it is less risky than buying an individual plot where no one can guarantee that the land is legal.
Bunthoon Damrongrak, head of residential project sales at property consultant Jones Lang LaSalle (Thailand), suggests property buyers or investors check the land title deeds and their origins.
To verify that it is legal land and make an audit, buyers should have the relevant authority measure, survey and position the plot.
"Developers should gain buyers' confidence with a guarantee to return their money if the project is found to be located on illegal land," says Mr Bunthoon.