A star in its own right, Hua Hin continues to make its mark as a prime resort for all nationalities.

Hua Hin and its surrounding seaside destinations – from Cha-am in the north to the beaches of Pran Buri in the south – have all felt the impact from the global financial crisis.

Political problems have also slowed the property market on the western coast of the Gulf of Thailand, as has stricter enforcement of foreign ownership rules.

For many decades, Cha-am and Hua Hin have been favourite tourist destinations for Thai people as the tranquil beaches are within a short drive from Bangkok. Foreigners are also increasingly fond of Hua Hin.

“It is a conservative tourist destination. We have a walking street, a night market, a lot of activities and a variety of food. Most of all, both Thai and foreign tourists feel very safe when they visit as a Royal Palace is located here,” said Hua Hin deputy mayor Suvit Reanroongruang.

Due to the royal presence, Hua Hin has been the preferred vacation destination for Thai nobility and affluent residents and also European tourists, especially retirees.

Property developments run from guesthouses, local three to four-star hotels, to internationally branded five to six-star hotels and boutique resorts.

Holiday home development started in the 1990s when most were low-rise condominiums located near or on the beachfront.

Due to limited beachfront land and high prices, some low-rise condominium developments escaped south to Pran Buri Beach.

A few villas were seen surrounding golf courses on the west of Phetkasem Road, the main road from Bangkok to southern Thailand.

Hua Hin property development froze after the 1997 economic crisis and resumed in 2002-03 during the country’s economic recovery.

Condominium supply in Hua Hin and the surrounding areas continued increasing from 2003 and showed a sharp rise in 2007, according to a study by the property agency Knight Frank Thailand.

Raimon Land’s Condominium Focus Thailand reported condominium launches from 2003 to the first quarter of 2008 totalled 21 projects with 2,514 units.

Hua Hin is a leading option for potential property investors as 27% of all projects introduced last year were in resort areas, and they recorded total sales of 6.3 billion baht, the report said.

It also noteworthy that while Pattaya had received more interest from residential developers in recent years, Hua Hin remained attractive due to its more relaxed atmosphere, more affordable prices and faster development completion schedules. This appealed to Thai buyers.

Despite a lull in launches in 2006, Hua Hin sprang back to life last year with the introduction of 640 units from several prominent Bangkok developers. Only Sansiri Plc, a large SET-listed developer, launched a total of 360 units from three condominium projects last year and another 283 units in the first quarter of 2008.

SET-listed Major Development Plc (MJD) launched a 122-unit condominium last year and a 402-unit project in the first quarter of 2008, signifying their confidence in Hua Hin as a resort location.

Total condominium supply accumulated from 2003 through the first quarter of 2008 accounted for 4,326 units, 57% of which were in Hua Hin, followed by Cha-am with 23%, Khao Takiab 9%, Khao Tao 8% and Pran Buri 3%, according to the research by Knight Frank Thailand.

From the cumulative supply, there were 2,737 units sold as of the end of March 2008, meaning a take-up rate at 63%. Units sold in 2007 totalled 939 out of a total of 1,786 units launched or a take-up rate of 53%.

Political instability, the September 2006 military coup and the Bangkok bomb blasts at the end of 2006 did not negatively affect new condominium projects in Hua Hin and surrounding areas.

Investors appeared to be confident in Hua Hin’s tourist potential as Knight Frank recorded a large jump in supply from 2006 to 2007.

Cumulative units sold in the reporting period also increased from 1,656 units in 2006 to 2,595 units in 2007.

Local demand absorbed the rising supply and potential competition from the resale of newly completed developments, and Hua Hin condominium prices jumped 14.6% from an average 62,991 baht per square metre in 2006 to 72,063 baht last year, according to Condominium Focus.

Knight Frank found an average unit price in the first quarter of 2008 ranged between 9.8 million and 13.9 million baht, rising by 17% over the end of 2007. The highest selling price was now 180,000 baht a sq m from Major Development’s Marrakesh, a new project for which some local property brokers now report sluggish sales.

The highest-priced beach condominiums, possibly reflecting a more expensive location, recently sold at 125,000 to 150,000 baht per sq m.

“The offering price of beachfront land in Hua Hin is now quoted at 80-90 million baht per rai while development is restricted by regulations. Beachfront plots are suitable for the affluent wanting to have a beachfront villa,” said Sunchai Kooakachai, assistant sales manager in the Hua Hin branch of the high-end property agency Engel & Volkers (Thailand).

The lack of beachfront land and higher prices pushed Hua Hin property development to lower beaches including Khao Tao, Khao Takiab, Pak Nam Pran Buri and recently Khao Sam Roi Yod.

While beaches from Khao Tao to Pran Buri are mostly Thai favourites, hillside locations in the Khao Hin Lek Fai area west of Phetkasem Road, another side of Hua Hin beach, have been popular among foreign buyers.

“[The Hua Hin property market] has largely dropped now. Normally in October, there are a lot of tourists and walk-in foreign buyers visiting property brokers’ sales offices. It is a poor mood due to the political situation and the global economic crisis,” said Mr Sunchai.

He added that new projects slowed while existing ones sped up sales and development. Four or five property brokers, all owned by foreigners, closed due to a lack of business.

Besides external factors, stricter rules for foreign ownership caused projects to hesitate launching and delayed foreign buyers from making decisions. Establishment of a company holding land was more difficult as it required higher registered capital and shareholders were examined thoroughly.

According to Land Offices in Hua Hin and Cha-am, property transactions slowed. At the Cha-am Land Office, not one foreigner has visited to complete a transaction since the political problems and global economic crisis flared. Hua Hin saw no new condominium transfers from early in the year until now.

Revenue from property transactions in Hua Hin dropped by over 50% from last year and some individual property transactions declined by 50% largely due to economic conditions and stricter rules, said an official at the Hua Hin Land Office.

“Thai shareholders in a joint-venture company [set up to hold land] are scrupulously examined to prove that they are not nominees. Despite coming into effect in late 2006, the stricter rules just tightened this year,” Mr Sunchai said. “Even when buying a property for a company office, the shareholders must be examined.”

Warodom Charnintranan, the Hua Hin branch manager of the property broker Plus Property Co Ltd, said no new low-rise residential projects had been launched since shareholders of suspect companies were being investigated more closely.

Stricter rules for foreign ownership of property shifted foreign demand from hillside houses to condominiums. As a result, a lot of inland condominium projects have launched since last year.

“Inland condominium prices are more affordable not only for Thai buyers but for foreigners. The prices for beachfront units are double those for inland,” he said. But since August 2008, property demand has dropped 70%, largely from a decrease in foreign purchasing.