Condo markets at tourist locations take a nosedive
published : 4 Nov 2014 at 06:00
newspaper section: Business
writer: Kanana Katharangsiporn
Condominium markets at major tourist destinations have shrunk, with Pattaya and Chiang Mai faring the worst after foreign demand shrivelled following the start of martial law.
Surachet Kongcheep, associate director of property consultant Colliers International Thailand, said foreign buyers were delaying their purchases until martial law was revoked.
Pattaya and Chiang Mai saw a large number of new condo projects open in the past two years, but sales slumped during the political crisis.
Hua Hin fared better, as demand was mostly from Thais.
In Pattaya 3,800 new condo units were launched in the first nine months, down by 70% year-on-year, as a condo glut remains.
In Phuket 2,860 new condo units were launched during the same period, down 40% year-on-year.
"A key factor in reviving property demand at tourist destinations is revoking martial law. The property market and tourism business could recover next year if it is revoked," said Mr Surachet.
Charlie Warner, chief executive of publishing and organising firm Exact Trading Co, agreed martial law dampened foreign property demand at tourist destinations.
Russians, the main buyers in Pattaya, have put off purchases, but they were replaced by Chinese buying second homes or for investment.
"Chinese buyers would purchase the whole floor as they saw good, stable property prices with which they could bargain," he said.
"They prefer the Wong Amat area, where Chinese buyers account for 10%."
Some Chinese investors bought a unit via Chinese financial institutions, while some China-based property agents brought potential buyers as a tour group to visit project sites in Pattaya, said Mr Warner.
To increase sales at major tourist destinations, Exact Trading will host the Thai Property Expo from Nov 7-9 at the Conrad Hotel, where it will introduce 30 property projects in Pattaya, Chiang Mai, Hua Hin, Khao Yai, Koh Chang, Koh Samui and Phuket.
Mr Surachet said the Bangkok condo market was sluggish in the first nine months, with the sales rate dropping to 54% from 61% last year.
"Though some condo projects sold out in a single day, these were few and far between, as the overall market was not good," he said.
Some large developers launched projects only at prime locations near mass transit stations, postponing projects in secondary locations until next year.
From January-September, 34,540 new condo units in Bangkok were launched.
In the third quarter new units totalled 11,700, down by 8% quarter-on-quarter, while the sales rate was 59%, down from 64% in the same period last year.
The average condo price in the third quarter was 91,550 baht per square metre, up 8% year-on-year.