In the hills or by the sea, Accessibility is the key
Investors can rest assured that resort and retirement destinations that claim proximity to natural attractions and increasing ease of transport, like Hua Hin, Khao Yai, Phuket and Chiang Mai, will continue to boom
The Thai market today offers an increasing number of options for resort homes and retirement destinations. There is a clear choice: Hua Hin, Pattaya and Phuket are at the forefront of beach destinations, while Chiang Mai and Khao Yai are the top choices for those seeking the hillside resort experience. Each category is unique in character, cultural heritage and the type of tourist and buyer it attracts. The common denominator that has been key to the development of these locations is accessibility.
Hua Hin, Pattaya and Khao Yai are smaller towns within driving distance of Bangkok, while Phuket and Chiang Mai are bigger resort cities that most people reach by air. We will take a look at each market to better understand their nature and what they offer.
Chiang Mai has long been the key destination in the North. Characterised by a rich cultural heritage, many of its properties features the region's arts and culture. The Four Seasons and Mandarin Oriental resorts are prime examples of this. Chiang Mai has traditionally attracted Thai artists seeking a permanent home or a retirement residence and those who prefer a quiet environment while still having access to the amenities of a developed city.
The Chiang Mai property market is emerging and there is now a development pipeline, including condominiums within the compound of the Mandarin Oriental Dhara Dhevi. As it is a young market, the locations for development are not yet clearly defined and we are seeing a variety of emerging locations. Several residential locations are likely to be heavily influenced by major planned retail centres, most notably Central Festival Chiang Mai (opening in 2013) located at the intersection of the super highway and Doi Saket Road and the Promenada (expected completion next month), located on the main road linking the super highway and 700 Years Road.
Hua Hin is another key destination with which Thais are well acquainted, in large part because of its historical connection to the royal family. Arrivals to this small seaside town totalled nearly two million in 2011. The primary market is local Thais who buy condominiums as resort homes, with a particular focus on beachfront projects. Scandinavian long-stay tourists who escape their home countries' long winters make up another significant segment. This group has the potential to develop into purchasers of affordable retirement homes. Lastly, Hua Hin attracts a combination of Thai and foreign tourists year-round, visiting both leading international hotels and local boutique resorts.
The main draw of Hua Hin has been its boutique charm, ease of access, availability of amenities such as golf courses and hospitals, and a growing retail market. The retail scene is evolving, with the latest development, Bluport (scheduled opening 2014), setting a new benchmark. The retail evolution will also continue to spur tourism and the property market.
With an already established resort home market, Hua Hin as the potential to further develop into a full-scale retirement and permanent-home market for affluent Thais and Europeans who may look for villas and housing projects located inland and close to the beach and amenities.
One of the keys to expanding Hua Hin's market will be accessibility. While it is already relatively accessible by car, there is room for improvement. The existing airport could be upgraded to handle chartered international flights from Europe, and the planned high-speed train from Bangkok would be a draw if it materialises.
Also emerging as a tourist and residential market is Khao Yai. The charming area three hours north of the capital can be likened to Italy's Tuscany with its vineyards and hillside setting. Khao Yai remains a seasonal market, with the cooler months being the peak season. There are few permanent residents other than the local community as infrastructure and amenities are limited. It does, however have the potential to develop in the same pattern as Hua Hin.
Over the past two to three years, Khao Yai has seen an increase in the number of quality hotels, but has yet to see the entry of international chains, which would be a catalyst for growth. With Khao Yai's exceptional air quality and a national park listed as a Unesco World Heritage Site, the property market is now beginning to offer residential investment opportunities in projects such as Kirimaya and Che Elpend. Investment options will almost certainly grow alongside the destination's amenities, retail and infrastructure development and, of course, greater accessibility.
Phuket is undoubtedly the country's leading international resort market for attracting foreign tourists and investment given its ability to deliver the "sea, sand and sun" factor. With a true resort island feel, Phuket has a global tourism profile with its wide range of trendy restaurants, beach clubs and marinas. Its main draw is quality beaches that surpass those in Hua Hin and Pattaya.
Phuket has a mature resort property market, but prime west coast development sites are now scarce. The market offers both mid-market to low-end affordable condominiums targeting local residents, as well as top-end luxury villas where the buyers are very much driven by lifestyle. New high-end projects with prime locations and a more affordable price range will continue to attract buying interest. The island has also grown consistently in terms of tourist arrivals _ 4.2 million last year _ and its infrastructure is facing pressure to keep up with growth levels.
The last key destination is Pattaya, a resort city that offers variety for everyone. Initially known for its nightlife, Pattaya has evolved into a market that offers something for everyone and is the most visited resort in Thailand. With several international hotel chains, from five star to budget, and residential projects covering all price points and segments of the market, Pattaya attracts a balance of local and foreign visitors and investors, with Russians leading the market in the foreign segment.
The key to Pattaya's success has been connectivity, as it is the closest beach destination to Bangkok and reachable by car in just over an hour. Buyers in the Pattaya market are a combination of those wanting resort homes and a growing number of permanent residents from the business community attracted by its proximity to Bangkok and the Eastern Seaboard.
Thailand offers options for everyone interested in resort or retirement locations. The catalyst for growth for many of these destinations has been accessibility. We believe that with the government's plan to develop a high-speed train system, these markets will have even greater growth potential.
The proposed lines include Bangkok-Nakhon Ratchasima (Khao Yai), Bangkok-Hua Hin, Bangkok-Chiang Mai and Bangkok-Pattaya-Rayong routes. Travellers from Bangkok will be able to reach Chiang Mai in less than three-and-a-half hours, Khao Yai in less than one-and-a-half hours, Hua Hin in a little more than an hour and Pattaya in less than an hour. In addition, expansion plans will also increase capacities at both Phuket and Suvarnabhumi airports. The improved accessibility will surely have a positive impact on these already highly desirable destinations.
Aliwassa Pathnadabutr is the managing director of CBRE Thailand. She can be reached at firstname.lastname@example.org; Twitter: @CBREThailand; Facebook: www.facebook.com/CBRE.Thailand.
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Writer: Aliwassa Pathnadabutr