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Why Invest in Real Estate in Pattaya and Thailand?

No one puts it better than American literary great Mark Twain when he said, "Buy land, they are not making it anymore." Land investment is one of the most stable medium to long-term investments that you can ever find. Gains from investing in land are plain to see. Besides being a very tangible asset that you can see and use, land values rarely depreciate.

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Land has always been – and still is – one of the best forms of investment. Land is a finite resource. With Thailand being a small country, supply will eventually run out and prices could skyrocket. Lastly, investing in land is solid and easy to understand. Compared to investing in precious metals for example, land prices are very transparent and it is very clear when the prices are going up or down.

(Bangkok Post 16 June 2008:)

Condominium Resale Values Going Up

Bangkok Post
The tourism industry continues as the main driver behind interest in Thailand's resort condominiums, with holiday destinations close to Bangkok receiving the most attention, especially from international buyers lured by attractive prices.

Thailand's seaside resorts; namely, Pattaya, Phuket, Koh Samui and Hua Hin, where more than 30% of the country's luxury condominium inventory is now located, have experienced 9.5% annual growth in international arrivals since 2003, and these strong figures are supporting resort property expansion.

A surge in condominium launches during the second half of 2007 reversed a slowdown that began in mid-2006 and propelled the year-end tally to 2,415 new units. Of these, 67% were located in Pattaya, 26% in Hua Hin, 4% in Phuket and 3% on Koh Samui.

Pattaya's strong performance was boosted by impressive economic expansion along the eastern seaboard and its proximity to Bangkok and the new Suvarnabhumi Airport.

Luxury condominium launches in Pattaya are trending towards both inland projects with sea views and those with beachfront locations, a reflection of buyers seeking affordable properties regardless of whether or not they have direct beachfront access.

Located three hours southwest of Bangkok, Hua Hin remains attractive due to its relaxing atmosphere, more affordable prices, appeal to Thai buyers and faster development completion schedules. Hua Hin sprang back to life in 2007, with the introduction of 640 units from prominent Bangkok developers, many of whom are launching new projects this year.

Lacklustre demand in Phuket and Koh Samui was linked to hesitant developers baulking at external factors such as currency exchange rates and possible amendments in the Foreign Business Act to make residential property rights more restrictive for non-Thais.

Should the government's policies on foreign ownership change to allow a higher percentage of foreign ownership, developers will likely introduce more projects in Phuket and Koh Samui to satisfy international demand.

In spite of the deceleration in the rate of new resort development launches in 2007, combined sales value leaped 12% year-on-year to 17 billion baht on the take-up of 1,789 condominium units.

Pattaya's luxury condominiums sold 544 units worth 6.6 billion baht in 2007, compared to 1,609 launched, for an average of 12.3 million baht.

The average price per square metre (per sqm) in Pattaya climbed 10% over 2006 to 96,332 baht per sqm, the highest among all resort areas, followed closely by Phuket at 95,181 baht. Samui units averaged 87,420 baht while those in Hua Hin jumped 14.6% to 72,063 baht.

Of the total resort condo sales in 2007, 27% of the units sold were priced over 100,000 baht per sqm, and 21% between 80,000 and 100,000 baht per sqm. Units in the 60,000 to 80,000 baht per sqm range commanded 29% while those under 60,000 baht made up 23% of the total.

Beachfront or seaview developments are now priced over 100,000 baht per sqm

It should be noted that very few of the beachfront or seaview developments are now priced under 100,000 baht per sqm, and sales at the top 10 most exclusive projects averaged 123,715 baht in 2007.

Of all developments launched since 2003, 1,814 units or 23% were completed as of December last year. Of the remaining 6,177 units, 3,632 were still under construction and 2,545 units were in the planning stages.

These figures demonstrate that there is still very little supply in completed condominiums, as well as a limited number of completed projects in Thailand's resort locations.

This situation has lifted resale prices, allowing developers to increase the prices of units in new projects while opening the door for investors seeking impressive short-term capital gains.

Foreign buyers accounted a significant portion of condominium purchases in Thailand's resort areas in 2007, though the most active markets have changed.

Russians rose from outside the Top 10 to head Raimon Land's 2007 buyer chart, followed by Thais, British and Australians. Germany and China also moved higher while the US and Swedish markets started to slide.

Russians, Thais and British lead Pattaya's property market, and Phuket is commanded by Russians, British and Australians. Hua Hin remains a predominantly Thai destination, with emerging international interest now making up 20-30% of acquisitions.

In 2008, look for more players and new groups of buyers in Pattaya, with limited completed stock driving up prices. Hua Hin will continue to exhibit strong local demand, with prices increasing in both resale and off-plan projects.

Phuket and Samui will remain vulnerable to external factors. New supply in Phuket will push demand, and look for new areas on the mainland adjacent to the island, now being referred to as Greater Phuket, to open up. Koh Samui will remain a niche market leaning toward branded real estate.

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Qualified legal advice from reliable lawyers

There are pros and cons in every approach used to buy land or purchase property in Thailand. Whether you choose company formation or seek a lease arrangement to buy land or purchase property, it is important to seek qualified legal advice from reliable lawyers who have experience with Thailand's land law as it relates to non-Thais. Such lawyers are available at KBS Interlaw Co., Ltd.

For more information contact us at info@kbs-properties.com
or by phone at 08 65 23 22 30 (English, French, German)