Developers wait for properties to be absorbed before building more
Anyone who is a regular visitor to Pattaya will be well aware that the condominium market in the city has been thriving for the last few years with just short of 74,000 units now available in the city, 10% of those being completed and registered in 2015 and 2016 alone.
35% of the units are in the Jomtien area of the city, Pattaya City accounts for 29% of units, with Wongamat and Pratamnak both registering 14% each of the total units available in the ever-growing city.
With land in limited supply, especially in highly sort after areas close to the beach, developers realised that they needed to limit supply with demand for units situated further away from the beachfront areas proving less popular. Although units were continuing to be launched – around 2000, 2016 was the slowest year in terms of development for six years.
There are several factors that can be attributed to the slowdown but perhaps the most significant was the fall of the Russian Rouble in 2015 sparked by falling oil prices. Russian visitors at this time were the largest group of visitors to the city, many of whom were interested in purchasing condominiums and although the number of tourists from Russia increased in 2016, this did not translate into condominium sales. This when coupled with the number of units that had been built in the previous five years at an average of around 15,000 per year created developer
This caution displayed by developers is no doubt understandable but it should be stressed that the uptake of properties was still 83% with much of the excess of completed units being eaten up thanks in a large part to the tax and transfer breaks that formed part a government lead stimulus programme in the early months of the year.
The popular and fashionable Wongamat area to the north of the city had the lowest number of available units although this could be attributed to number of properties launched. Many of the properties in this area enjoy beachfront locations so naturally proved to be very popular. Jomtien still enjoys large take-up rates, seemingly unaffected by the large number of launches whilst Na-Jomtien had the lowest take-up – perhaps with the market in the area becoming saturated.
There has been a notable increase in the number of Chinese and Japanese buyers although at this stage they cannot offset the loss of demand experienced by the decline in Russian buyers. This has led to developers concentrating on the sale of completed units rather than starting new projects although this could start to change towards to the end of 2017.
The price of condominiums continues to rise with a 5% increase noted in 2015 compared to the previous year with the average price being THB82,500 per square metre. Developers are now trying to restrict increases to protect a slowing market.
The average price in all locations of the city in 2017 is expected to remain the same or perhaps see a marginal increase on the previous year.
Not surprisingly, Wongamat and Pratamnak are still the most exclusive areas, certainly in term of price with many units selling for in excess of TB130,000 per/sqm. Average prices rose steeply in Pratamnak in 2016 with some new projects starting at over THB100,000 per/sqm.