The charms of Pattaya remain intact for not only among tourists but also property developers now that the playing field has shifted.
An artist’s conception of the 21-storey Orion Urban Retreat in Pratamnak. Developed by a Russian developer, the project has 292 units priced from 1.9 to 12.2 million baht each.
Foreign developers launching condominium projects in Pattaya, 130 kilometres southeast of Bangkok, are no longer individual investors but large property companies.
This trend shows that large foreign investors see potential in Pattaya's property market as the resort city has drawn foreign tourists every year, says Risinee Sarikaputra, director for research and consultancy at the property consultant Knight Frank Chartered (Thailand) Co.
"Foreign tourist arrivals to Pattaya have increased in numbers in recent years. Some have turned to be property buyers, particularly the new rich from emerging countries with strong economic growth such as India and China," she said.
A Chinese developer has formed a joint venture with the owner of Bangkok's Twin Towers Hotel. They plan to develop a condominium, hotel and retail project in the second half of this year on a large plot near the newly opened tourist spot Mimosa Pattaya and opposite what is to become the production facilities of the US-based Universal Studios.
"In the past years, most foreign developers were individuals or a group of friends of the same nationality who had grown to love Pattaya," she said.
These developers included those from the West like Europe and the US before the 2008 sub-prime crisis, followed by Russians and Israelis in the following years.
The trend changed this year with the entry of large international developers led by Universal Plus Development Co.
One of its major shareholders is the 41-year-old Indian property developer Universal Group of Companies, a global leader in international markets.
Ms Risinee said Universal Group, with a successful track record of foreign investments, entered the Thai market with two condo projects _ Seven Seas Condo Resort Jomtien and Savanna Sands.
Another large foreign developer in Pattaya is the Russian developer Baikaljilstroi Construction.
"Baikaljilstroi is a leading developer in the Russian republic of Buryatia. It decided to expand into Pattaya with its first new project in Thailand, drawn by the high growth of the economy and property market," she said.
The Russian company was looking to invest in Asia, especially Singapore. It ended up choosing Thailand because Singapore's property market is at its peak while Thailand's has more room to grow.
It chose Pattaya instead of Bangkok because the capital has been more prone to political unrest in recent years. Pattaya is also closer to Suvarnabhumi airport, with many facilities and entertainment spots attracting foreign tourists.
Baikaljilstroi launched the Orion Urban Retreat condo project in Pratamnak through Orion Development, a subsidiary in Thailand.
"These Russian and Indian developers came with their compatriot buyers in tow. They often hold marketing campaigns in their home countries just like they do here," she said, pointing to the fact that many billboards advertising condo projects in Pattaya are now in Russian, Indian and Chinese languages.
To successfully sell a condo project in Pattaya, an equal mix of Thai and foreign buyers is necessary, she said.
While the Real Estate Information Center early this year warned of a possible oversupply in Pattaya's condo market, recent research found a healthy take-up rate even as supply increased in the first half of this year.
Knight Frank said Pattaya's condo market remained relatively strong in the first half following last year's solid performance.
From January to June this year, 10,153 units from 20 projects worth a combined 26 billion baht were launched, bringing the total supply to 40,939 units, while the average take-up rate in all locations increased to 51.7% from 50.3% in the second half of last year.
Ms Risinee said seven of the new condo projects were by foreign developers.
As one of the popular seaside locations, Pattaya is conveniently linked to major destinations in Asia. The government's infrastructure investments, especially the upgrade of U-Tapao airport's annual capacity to 5 million passengers and the planned high-speed rail link, will help to drive traffic to the resort city.
It is also an international business hub for the upcoming Asean Economic Community, attracting foreign investors. The number of international and local tourists has been increasing steadily.
As well, Pattaya has a promising future as a key market for Thai condominium development. It is riding on the property boom, with 1,890 residential units scheduled for launch this quarter.
Emerging locations from Jomtien to Na Jomtien are set to be major development sites thanks to a second 400-metre road that runs parallel to Jomtien Beach Road and many new attractions such as Jomtien Market.
Two water parks _ Ramayana, the biggest in Southeast Asia, and Cartoon Network Amazone, due to open later this year _ and the Grand Kingdom shopping mall will attract shoppers and families with young children.
Thais are also keen on Pattaya's condos, particularly those in North Pattaya and Wong Amat, attracted by amenities such as mushrooming restaurants, retail outlets and shopping malls.
More tranquil condominium projects in Jomtien are very popular among Russians and Scandinavians looking for affordable condo units as a second or vacation home.
As of June 30, there were 40,939 condo units in Pattaya. Of the total, 10,153 were from 20 projects launched in the first half, rising by 32.9% from the end of 2012.
Of the new supply, 42%, was in Jomtien, with Seven Seas Condo Resort Jomtien developed by an Indian property developer being the largest.
Located on a 15-rai plot on Soi Chaiyapruk 350 metres from the beach, the project consists of eight low-rise buildings with eight floors each, totalling 1,450 units.
Trailing Jomtien as the location of choice was the North Pattaya/Wong Amat area with 3,114 units launched during the period or 30% of the total new launches. The location is considered a peaceful area favoured by Thais.
It is also a new area for condo development for both local and Bangkok-based developers. The largest project in this area was Supalai Mare@Pattaya, a 35-storey building with 1,154 units.
In South Pattaya, 1,800 units were launched in the first half, representing 18% of the total. As a busy area due to many shopping malls, restaurants and entertainment spots, South Pattaya is more crowded and not as attractive for residential development as other areas.
The total number of new launches in Pratamnak was therefore a mere 992 units or 10% of the total.
This year also saw many listed developers entering Pattaya's condo market. SC Asset Corporation and Quality Houses launched projects in South Pattaya, while Sansiri, Supalai and NC Housing favoured North Pattaya.
Although these new projects were quite a distance from the beach, the areas are quite convenient due to proximity to many facilities.
Four of the five listed developers planned to develop high-rise condos, while NC Housing will build a low-rise project.
Pattaya condo demand as of the end of the first half totalled 21,614 units, representing a take-up rate of 51.7% compared with 50.3% by the end of 2012. There were 5,682 units sold in the first half of this year.
Strong demand was in budget condos with unit prices ranging from 1-2 million baht for compact size of 25-30 square metres. Buyers were Thais working in Eastern Seaboard, people living in Bangkok wanting a second seaside home and Russians wanting an escape from the winter in their home country.
The selling prices of condominiums in Pattaya vary according to location and view. There are some high-rise projects located further from the beach that still boast sea views.
The highest selling price was in North Pattaya, an area favoured by Bangkok residents.
Most of the condominium projects in the area near the beach, providing sea views, sold for more than 130,000 baht per sq m. Others in North Pattaya with no sea views sold for 55,108 to 71,250 baht per sq m.
Most sea-view projects being launched in the first half of this year were in the Jomtien and Pratamnak areas. The selling prices of new sea-view condos in Jomtien ranged from 91,372 to 140,000 baht per sq m.
The average selling price in Pratamnak increased to 89,010 baht per sq m during the period from 77,610 baht last year.
About the author
- Writer: Kanana Katharangsiporn
Position: Business Reporter