In 2019, the overall supply of newly launched condos in the Pattaya market surged significantly, reaching 15,545 units, the highest in the past five years. However, it was observed that supply continued to outpace demand considerably, as the purchasing power of Thai buyers remained sluggish, relying heavily on Chinese buyers. The sales of newly launched projects last year were not particularly high, resulting in over 25,000 unsold condos still available in the market. Therefore, this is something that developers need to be cautious about when considering new projects in Pattaya, where there is still a large amount of unsold inventory. 

        Mr. Patrachai Taweewong, Deputy Director of Research at Colliers International Thailand stated that the momentum from various infrastructure investments, which have progressed and become clearer, along with the development plan for the Eastern Economic Corridor (EEC) that the government has been vigorously promoting, as well as plans from major private developers preparing to develop large mega-projects in the area, will be significant drivers that will revitalize the condominium market in Pattaya in the future.

 

Graph of New Condominium Supply in Pattaya by Half-Year and Location from the First Half of 2011 to the Second Half of 2019

          Overview of the Condominium Market in Pattaya during the second half of 2019 revealed that the supply of newly launched condominiums reached 10,592 units, an increase from approximately 4,953 to 5,639 units in the first half of the year, representing a 113.85% increase. This resulted in a total of 15,545 newly launched units in 2019, the highest in five years.

          The condominium market in Pattaya still has a significant amount of previously completed units available for sale. The launch of more than 10,000 new condominium units in the second half of last year reflects the market's resurgence after a slowdown over the past 4-5 years, likely due to the push for the EEC development plan and the progress of various infrastructure investments.

            The signing of the Map Ta Phut Industrial Port Phase 3 (Phase 1) and the high-speed rail connecting three airports, along with the development of U-Tapao Airport and the Eastern Aviation City, valued at 290 billion baht, as well as the government's continuous and serious economic stimulus measures, and the plans for large mega-projects from several private developers looking to develop in the area, are all positive factors that enhance investor confidence in 2019 and beyond. In the Pattaya condominium market during the second half of the year, over 5,100 new units were launched by developers from China, who are interested in developing condominium projects in Pattaya to meet the demand from Chinese investors, who have become the main buyers in the Pattaya condominium market.

            Foreign Purchasing Power in recent times, especially from Chinese and other Asian buyers, has shown that in the past 1-2 years, Chinese customers have become the primary buyers in the Pattaya condominium market. Most developers are trying to attract these foreign customers to invest in their projects through local agencies and agencies from Bangkok, compensating for the sluggish purchasing power of Thai buyers due to the overall economic downturn and the impact of the new LTV measures, which have delayed the purchasing decisions of those looking for a second home for vacation. However, the influx of foreign purchasing power, particularly from Chinese buyers, has resulted in the foreign quota of most condominium projects in Pattaya reaching 49% in all areas, with only a few projects remaining in Jomtien and Na Jomtien.

New Condominium Launches in Pattaya from the First Half of 2012 to the Second Half of 2019

 

          Jomtien and Na Jomtien Areas in the second half of 2019 remain the most sought-after locations for developers to launch new projects, as land prices are still relatively low compared to central Pattaya or Wong Amat, and there is still a significant amount of potential land awaiting development. Many developers are working on large condominium projects, some with over 2,000 units for sale, and currently, this area still has over 50 condominium projects available for sale. Many developers have decided to temporarily halt sales and construction of their projects in the Jomtien area due to various negative factors, including funding shortages and sales not meeting expectations. Some have announced the sale of their projects to larger developers for further development, and many projects have changed hands and are preparing to be redeveloped by larger operators in the area.

 

          Pratumnak remains another popular area for developers to launch new projects, but most are small to medium-sized projects. In other areas such as Wong Amat and Pattaya City, there have been relatively few new condominium projects launched in the past 1-2 years due to limited land availability and relatively high selling prices, unlike the Jomtien area, which has attracted developer interest due to the opening of new roads (Jomtien Second Road), facilitating the development of large real estate projects, including condominiums, from 2010 to 2013, most of which were large projects developed by foreign developers. Wong Amat remains a popular area for high-end clients, and currently, there is relatively little unsold inventory in this area, making it desirable for developers seeking land for new projects to meet this demand, especially beachfront land. However, due to the current scarcity of available land for development in this area and the high prices, some developers have begun clearing land and preparing to launch new projects in the future, which are expected to be well-received by customers upon official launch.

          Large developers such as Asset World Corp. Public Company Limited are preparing to develop a large mixed-use project in the heart of Pattaya, which is set to begin construction in 2020 and is expected to be completed in 3-4 years to meet the demand from clients following the EEC development plan that the government has been vigorously promoting. Additionally, several large investment groups are looking for land to develop large mega-projects in Pattaya, and these factors are all expected to significantly stimulate the condominium market in Pattaya in the future.

Average Sales Rate of Condominiums in Pattaya in the Second Half of 2019

          In the second half of 2019, although the average sales rate in the Pattaya condominium market was around 73%, a slight increase from the first half of the previous year, it was noted that there were still over 25,000 unsold condominiums in the market across all areas of Pattaya. This number increased from approximately 1,600 units in the first half of 2019. In the second half of 2019, over 10,000 new units were launched in Pattaya, many of which were large projects, resulting in a significant increase in the remaining inventory in the condominium market. The Jomtien and Na Jomtien areas continue to have the highest number of unsold condominiums, with some projects launched in the past 1-3 years having over 1,500 units per project. The area with the least unsold condominiums is Wong Amat, due to very limited land availability, resulting in few projects launched in the past 1-3 years, with only 580 units remaining for sale at the end of the second half of 2019.

 

        For popular condominium projects that have met sales targets in Pattaya, most are still projects that guarantee rental returns, with attractive income return rates such as 5% for 3 years, 6% for 5 years, or 7% for 3 years. However, some developers in Pattaya guarantee rental returns of 10% for 10 years, making them very popular among investors and foreign buyers. The guaranteed rental returns provide buyers with better returns than bank deposits.

 

With a large number of unsold units in the market, concerns have arisen among developers, leading many to temporarily halt project development, while some have opted to sell land and projects to new developers. Currently, there are more than 10 condominium projects that have halted sales and construction in the area, and some projects have changed their formats and are being resold by new developers.

 

Average Selling Prices of Condominiums in Pattaya in the Second Half of 2019 by Location

        The average selling price of beachfront condominiums is higher than that of projects located further from the beach, with some projects priced over 160,000 baht per square meter in Wong Amat and more than 130,000 baht per square meter in other beachfront areas. The average selling price of condominiums in the Jomtien area is the lowest due to the abundance of mid-range projects available for sale, especially along Jomtien Second Road, where some projects have starting prices below 50,000 baht per square meter, while some beachfront projects are selling for over 120,000 baht per square meter.

 

The average selling prices of condominiums in all areas in the second half of 2019 are expected to remain stable or decrease by about 10-20%, especially for completed projects with unsold units in the market. For new projects, developers are also unable to significantly increase selling prices, as there remains a large number of unsold condominiums in the Pattaya market. Therefore, many developers are trying to maintain selling prices throughout 2019, but it has been found that for projects that guarantee rental returns to buyers, developers tend to set selling prices significantly higher than the market average, as the interested customer group focuses on purchasing for investment and expects rental returns. Developers are bringing in well-known hotel chains to manage rental operations, ensuring customers receive guaranteed returns on their investments, and most hotel chains involved are well-known 3-5 star hotels popular among tourists.

 

Although in 2019, the overall supply of newly launched condominiums in the Pattaya market became very active with a new supply of 15,545 units, the highest in five years, it was found that demand did not increase significantly, especially the purchasing power of Thai buyers, which remains sluggish. The market continues to rely primarily on foreign purchasing power, particularly from China, and it was observed that the sales of newly launched projects last year were not very high, resulting in a significant increase in unsold inventory in the market, which is something that developers need to be cautious about. Nevertheless, Colliers International Thailand's research department predicts that the momentum from various infrastructure investments, which have progressed and become clearer, along with the development plan for the Eastern Economic Corridor (EEC) that the government has been vigorously promoting, will lead to a potential resurgence in the popularity of the condominium market in Pattaya in the future.

 

Thank you for the information from: Colliers International Thailand Research Department