Resorts, luxury condos still holding their own

Amid the current political turmoil, most of the resort properties and high-end condominiums in Bangkok are still doing well depending on their location, design and price point.

Robert Collins, managing director of the property agency Savills Thailand, said that as tourism performance remained very positive, this translated into a positive resort market.

”Thailand remains the holiday destination for the region, particularly for Singapore and Hong Kong, where the concentration of money is. Thailand’s resort destinations are a short-haul flight,” he said.

The booming tourism industry has led to greater demand for condominiums and villas because not everybody wants to spend their holiday in a hotel room, especially families with children.

”We certainly see that resort locations in general are really unaffected by any political environment, be it positive or negative,” said Mr Collins. ”It has very limited effect. It’s more in terms of international buying. The state of the economic markets in Hong Kong and Singapore will have greater short-term impact.

”The long-term buying trends in Europe remain quite robust because they tend to be an older demographic. It’s not impulse buying. These are long-haul visitors that have planned for this type of investment.”

Also, despite the fresh round of demonstrations in Bangkok, Mr Collins does not expect any decline in the values of premium grade-A condominiums over the next 18 months, irrespective of the wider economic or political situation in the short term.

Typically, he said, property prices in Bangkok were very slow to adjust to any downward pressure and in fact his company was seeing the opposite, with upward pressure evident.

”There is immense private wealth internationally that wasn’t there to the same extent after 1997-98 _ privately held money that is not immune to oil prices and food prices but is sitting there waiting to be invested. Those types of investors are quite keen to invest in specific types of premium-grade property in emerging markets and Thailand is on the radar for a lot of those buyers and they are supporting these prices.”

Mr Collins also observed that not a lot of people equate oil prices with buying condominiums.

”It’s not an issue and we certainly see that on the one hand, oil prices and food prices are rising, but at the same time premium-grade property in Bangkok is purchased on the most part without debt,” he explained. ”These buyers are not seeking mortgages domestically. We don’t see a correlation between the two in terms of the property market declining on the upper end.”

But descending a few rungs of the ladder to the mid-market bracket, one would see that domestic demand is quite flat. ”We are not seeing prices come down but prices are not expected to go up in the short term.”

In the resort markets, Mr Collins noted that while the more established foreign developers were focusing on Phuket, Samui and Pattaya, they are still looking at Hua Hin, a market currently dominated by Thais. However, smaller foreign developers, particularly from Scandinavian countries, have carved out a niche developing houses on hillsides away from the sea in Hua Hin.

Mr Collins also sees a potential oversupply of hillside villa developments geared toward foreigners because Thais are unlikely to buy that type of development for a Hua Hin holiday home.

A recent entrant to the Hua Hin condo market is Malibu Kao Tao, which is being developed by M. Talay Company Ltd, a joint venture between broadcasting tycoon Pravit Maleenont and the Maneeya Group. Covering approximately 15 rai of land with 83 metres of beach frontage, this project has four villas that have already been sold, plus 72 units of Malibu Island condominiums ranging from 140 to more than 300 square metres, and Malibu Mansion with 78 units ranging from 97 to more than 290 sq m.

Other well-entrenched Thai developers in Hua Hin area include Sansiri Plc, Charn Issara Plc, plus the 72-rai Boathouse Hua Hin development managed by former Bank of Ayudhya chief Praphaisith Tankeyura, which has several villa-style houses and four tropical garden condominium buildings.

Savills points as well to another low-rise condominium, Modena, which is expected to be launched south of Hua Hin in the Pranburi area shortly.

”Pranburi is really seen as the next frontier that is receiving a lot of interest. Hua Hin is so successful that it allows sub-markets in Cha-am and Pranburi to benefit,” said Mr Collins.

In terms of rental yields in Hua Hin, Mr Collins mentioned that on weekends and long holidays it was quite difficult to find a hotel room in the resort and those landlords who have the right distribution network and management company to manage holiday rentals should be able to generate income.

However, he cautioned that a lot of new property was in the pipeline and securing long-term leases would become very competitive, but this was cushioned by the increased levels of tourism.

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About the author

Nina Suebsukcharoen Nina Suebsukcharoen
Nina Suebsukcharoen is a senior journalist with The Bangkok Post, Thailand's first English language newspaper and specialises in the property and real estate sector.
Other posts by Nina Suebsukcharoen ( 18 )

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