The property market in Hua Hin and Cha-am is expected to heat up in response to the "Thailand Riviera" tourism development plan, according to Plus Property, an integrated property brokerage and management agency.
The plan approved by the cabinet earlier this year calls for expanded tourism infrastructure in four provinces that make up the Thailand Riviera: Phetchaburi, Prachuap Khiri Khan, Chumphon and Ranong. Hua Hin, the best-known destination in the area, will be highlighted for its "Royal Coast". More convenient land, sea, air and rail transport links are expected to attract more visitors in the long term.
Condominiums are the most in-demand residential properties in Hua Hin and Cha-am, according to Plus research, with as many as 90% of purchases made for self-use as vacation homes.
The Khao Tao-Khao Takiab seaside community at the southern end of Hua Hin town is currently the most popular location among buyers, given the charming way of life that still endures and proximity to the main town. This has resulted in a yearly increase in land prices of 10-15%. Condominium prices in the area have risen by 41% over the past five years, and the rental yield averages 4-5% per year.
A survey by Plus showed that of 12,592 condo units offered for sale in Hua Hin and Cha-am over the past four years, the take-up rate stood at 76%. Currently, 3,028 units remain on the market and are expected to be sold within nine months. The average selling price stood at 140,000 baht per square metre, although beachfront projects within Hua Hin town can reach 250,000 baht per square metre. This reflects the fact that land in this location can cost up to 150 million baht per rai. Overall, average selling prices have risen by 14% in the past five years.
Tourism remains the key driver of the Hua Hin economy, with visitor numbers expanding by 4-5% a year. Thais make up 80-90% of all tourists, while foreign visitors are led by travellers from Britain, Germany and Scandinavia. Chinese tourists, meanwhile, are becoming a major market, with numbers rising by 10% a year on average.
Tourism revenue has been rising by 7-8% a year, while the hotel occupancy rate in Hua Hin stands at 67.3% and is growing by 4% a year on average.
Most condo sales in the Hua Hin-Cha-am area are to people who want units as vacation homes and for renting out; purchases for price speculation are limited.
Location remains the main factor influencing buying decisions, which explains the popularity of Khao Tao and Khao Takiab, where most projects are either on the seaside or within walking distance to the beach; all offer sea views.
Land prices in Khao Tao-Khao Takiab have been soaring by 10-15% a year. Consequently, the average selling price of condos there has reached 130,000 baht per square metre, up 41% over the past five years. But almost no new projects have been introduced in the past four years, as land plots have grown scarce. According to Plus forecasts, any new project that enters the market could be priced at 150,000 baht per sq m or more.
Among the new projects still on sale, the take-up rate has reached 90% and only 32 units remain in the market. The price of newly launched condo projects in the area has grown by 54% over the past five years.
"There is little worry over speculation in the condominium market in Hua Hin, because purchase demand for residences was as high as 90%," said Anukul Ratpitaksanti, managing director of Plus Property. "The type of project most popular as vacation homes is the modern tropical low-rise condominium. The emphasis is on large room sizes that can accommodate families."
Letting rooms in Hua Hin and Cha-am provides an investment yield of 4-5% a year, depending on the room size, the rental period and location of the project, according to Mr Anukul.
"A room that is in a good location and is rented out during the tourism seasons will continuously attract tenants," he said. "This is especially true for the first and fourth quarters, or during long holiday periods when foreigners frequently seek to rent for almost a month."
The occupancy rate of condo rooms put up for rent stands at 52% and shows a tendency to increase every year. Room types favoured by tenants include studio, 1- and 2-bedroom units.