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PATTAYA CITY CONDOMINIUM MARKET REPORT | H2 2013


Research & Forecast Report Pattaya | Residential H2 2013

PATTAYA CITY CONDOMINIUM MARKET REPORT / H2 2013 Highlights Approximately 16,980 units were launched in 2013, around 4.5% less than in 2012.

A mere 800 units were completed and transferred in H1 2013, but nearly 7,100 units were completed in the second half, making the total number of units completed in 2013 the highest on record.

A large number of Pattaya and Bangkok based developers continue to cast a strong vote of confidence in the Pattaya market.

The average take-up rate and average price in H2 2013 were a little lower than in H1 2013, due to the many condominium projects launched in the second half.

Most listed developers have already launched their condominium projects in Pattaya City, all of which have achieved high take-up rates, especially the mid-range projects.

Political protests in Bangkok, in December of 2013 and continuing into 2014, also affected the property market in Pattaya City, as many foreign tourists cancelled their hotels booked during the Christmas and New Year period.

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Research & Forecast Report | H2 2013 Pattaya Residential Report | Colliers International


Newly launched units in H2 2013

Source: Colliers International Thailand Research

There were approximately 9,580 newly launched units in H2 2013, around 30% higher than in H1 2013. There were 16,980 new condominium units launched in 2013, nearly 5% lower than in 2012.

Many well-known developers from Bangkok have entered the Pattaya market in the past one to two years and some listed developers launched their projects in Pattaya City in 2013.They have received positive feedback from local buyers, especially the Thai market.

Historical supply, H2 2013

Source: Department of Land and Colliers International Thailand

The total condominium supply in Pattaya at the end of 2013 was approximately 54,650 units. Although only 800 units were added to the market in H1 2013, nearly 7,100 units were completed and transferred in H2 2013. The total number of condominium units supplied to the market in 2013 is the highest on record for Pattaya City.

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The labour shortage is still the major obstacle in the construction industry, and is causing delays in completion of some condominium projects in Thailand, including some in Pattaya.

Research & Forecast Report | H2 2013 Pattaya Residential Report | Colliers International


Historical supply by zone, H2 2013

Source : Colliers International Thailand Research

Pattaya proved to be the most popular area for the condominium market in the years prior to 2000. However, from 2001 onwards, the Jomtien area has displayed continual growth due to the abundance of remaining beachfront and secondary development sites. Pattaya, to the contrary, now faces a scarcity of development sites and those that are available are becoming prohibitively expensive. During 2005, the Pattaya City Administration initiated improvements to be made along Thappraya Road and introduced a new Jomtien Second Road extension. The road was designed to alleviate traffic congestion from the beach road and now has many sois linking the roads together.

With the introduction of this new road, we have witnessed the entire area opening up and becoming available for large-scale resort-style mass development, mostly appealing to the lower end of the market. The Jomtien and Na Jomtien areas still have a lot of land available for development, while most of the Wongamat, Pattaya and Pratumnak areas are already developed, so land prices are high. more than 15,000 condominium units are expected to be completed between 2014 and 2015 in the Jomtien area.

Condominium supply by location, H2 2013

Source: Colliers International Thailand Research

The largest condominium supply is in Jomtien, representing about 41% of the total, followed by Pattaya and Wongamat with approximately 27% and 13%, respectively. The Pattaya area was home to the majority of the Pattaya City condominium market from 1990 to 2000, but due to the limited plots of land, developers are moving south. Jomtien is the new location for

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property development, especially around the Jomtien Second Road, which officially opened in 2005. Thus, the total share of the Jomtien area has increased to become the largest share of the Pattaya City condominium market. In the past, most luxury condominium projects were located in the Wongamat area, but during the past few years many luxury condominium projects were launched in all areas of Pattaya City.

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Future supply Cumulative future supply by year and location, H2 2013

Source: Colliers International Thailand Research Note: Developers’ expected completion dates

According to claims by developers, approximately 27,830 units are scheduled to be completed and transferred in 2014. From 2013 to 2016, Jomtien will continue to be the main player in the Pattaya condominium market, particularly in the mid-range to low-end sectors.

Most large-scale condominium projects were launched in the Jomtien area during the past few years, some with more than 1,000 units; the Jomtien area still has a lot of available land waiting for development in the future.

Newly launched units by location, H2 2013

Source: Colliers International Thailand Research

Approximately 2,900 condominium units were launched in Pratumnak in H2 2013 and nearly 2,770 units were launched in the Na Jomtien area. Approximately 16,980 condominium units were launched in 2013, and many are still available in the market, so considerably less were launched in some locations, which displays that a lot of new condominium units were launched the past few years causing an oversupply, especially the Jomtien area.

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The majority of condominium projects launched in the last 12 months have focused on mid-range to low-end buyers, though there are some exceptions concentrated at the upper end of the market also reporting strong sales figures. Mainstream buyers, both foreign and Thai, are mostly looking for an affordable holiday home, not far from the beach, with good facilities and trusted management from a recognised developer with a good track record.

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Demand Take-up rate of launched projects from2010 to 2013 by location, H2 2013

Source: Colliers International Thailand Research

The average take-up rate of all locations, as of H2 2013, was approximately 71%. The average take-up rate in the Pratumnak and Wongamat areas decreased more than 5%, due to the new condominium projects launched in H2 2013. Na Jomtien has shown the lowest take-up rate in H2 2013, due to the many new condominium units launched in the area.

Wongamat is still highest in average take-up rate, as no new condominium projects have been launched in the area, and some projects were already completed and ready to transfer.

Foreign ownership/domestic demand In contrast to the last few years when foreign buyers were the mainstay of the Pattaya and Jomtien property scene, we are seeing a remarkable entry into all segments of the market from Thai buyers. For many years, the majority of the foreign-owned local development companies struggled to sell their 51% Thai requirement. There is now a massive shift as we witness many Thai developers coming to Pattaya, who successfully sell well to the Thai market but do not come close to filling their foreign ownership quota, vice versa some foreign owned development companies are finding it difficult to sell their Thai allocation through over-supply in a competitive market, as Thai buyers tend to have a loyalty towards brand name Thai developers. Many Thai developers appear to be finding international sales difficult to attract in Pattaya, having rested on their reputation in Bangkok without a clear perception of how Pattaya and the foreign market works. Too many foreign buyers, the big name Bangkok developers are unheard of and often their marketing is not even foreigner friendly. This is changing somewhat and many of the Thai developers are realising that to be a success in Pattaya they cannot rely solely on the local market and are attempting to address the situation, gradually. The Thai market is particularly brand-conscious and tends to follow well-known names such as LPN, Q House, Major Developments and other listed developers, such as Sansiri and Supalai. Other lesser known Pattaya-based foreign developers have discovered the attraction of adding a brand name hotel component to their project, which adds prestige and desirability, and sales to both Thais and foreigners have been encouraging.

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The Russian market continued its resilience during the second half of the year and it appears that they are less affected by global economic problems than other nations. European, British and American buyers have not shown same high the demand of previous years. Emerging markets such as China have now started to invest in an increasingly large scale in the Pattaya market. Strong interest from this economic powerhouse continues to grow rapidly from both Hong Kong and mainland China. We believe that India and China could quite possibly become the superpowers of the future when it comes to buying property in Pattaya, overtaking the Russian market and increasing exponentially year on year well into the future. During the latter part of the year, we witnessed a wide range of condominiums enter the market and were astonished by the massive success of many. Although take-up rates dropped in certain areas, sales figures remain strong despite an over-supply. Certain projects have been almost sold out as soon as they were launched, while others took several months to reach 50 to 70% sold. However, the overall results are very encouraging for the market in general and there seems to be no stopping the immense popularity that Pattaya holds for both investors and end users. There are warning signs that investors should consider if entering the market for the first time. In our opinion the sheer number of project launches is too great for the number of actual buyers and unless a project has something special to offer a client such as a unique location, the project could potentially suffer from delays or cancellation. However, with the guidance of a reputable local agent such as Colliers International, who can provide unbiased advice, there are still many possible sound investments to be made by early bird investors.

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Price Average Selling Price psm by Location, H2 2013

Source: Colliers International Thailand Research Note: The year completion is expected by developers

The average selling price in Wongamat remains the highest, compared to all other locations in Pattaya City. Most condominium projects in the Wongamat area are luxury projects and are almost complete or ready to move in. Most condominium projects in the Jomtien area are midrange to low-end projects, targeting the budget buyers group. The

average price in the Na Jomtien area was significantly higher than in H1 2013, due to some new condominium projects launched in H2 2013 with high prices of more than THB100,000 psm. Other locations are still similar to H1 2013 or different by only around 1 -2%.

Beach frontage and height of condominiums effect on price H2 2013

Source: Colliers International Thailand Research

Beach frontage is the key driver in attracting higher prices for luxury condominiums. Prices can rise by over 100% when a project is located by the beach, especially in the Wongamat and Na Jomtien areas. The average selling price of a high-rise project is higher than that of a low-rise, due to the increased construction costs. The privilege of

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having a sea view from all units also commands a premium. However, certain low-rise projects with an emphasis on facilities, such as a large themed lagoon swimming pool or amenities one would expect to find in a resort, will often command higher prices, due to the extra land costs incurred by the developer.

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Summary 2013 and Forecast 2014 Nearly 16,980 condominium units were launched in 2013, around 4.5% lower than in 2012, although many government agencies and property experts were concerned about over-supply, especially in the Jomtien area. Due to many factors affecting the property market in Thailand, especially political problems, the number of new condominium units launched in 2014 may be lower or similar to the number of units in 2013.

sectors after discovering greater competition and narrowing margins. Most new condominium projects launched in 2012 and 2013 are midrange to low-end, so the average selling price in all locations still remains similar or slightly lower than in the previous year. But some new luxury projects with hotel management were also launched in some locations, especially Jomtien and Na Jomtien, with an average price significantly higher than other projects in the area.

Some of the demand in Pattaya City is from foreigners, who came to Pattaya City a long time ago and bought or looked for condominiums and houses as a second home or for a long stay after retirement. The majority of foreigners in Pattaya City are Russian, especially in the past few years, and the quickly emerging foreign groups are Indian and Chinese.

Many cost factors directly related to construction, such as materials and logistics fees increased, so the average price in 2014 will probably increase by around 5 - 10%. Land prices across Pattaya and Jomtien are now becoming prohibitively expensive as zoning and EIA regulations play a major part in what can actually be built.

Most listed developers have launched their condominium projects in Pattaya City already and have created a hugely competitive market, which should benefit buyers. All of them also have achieved high takeup rates, especially the mid-range projects. Local developers are also still strong in the market, particularly those with a good reputation and excellent track record; others have looked to diversify into other

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Political protests in Bangkok, in December of 2013 and continuing into 2014, also affected the property market in Pattaya City, as many foreign tourists cancelled their hotels booked during the Christmas and New Year period. In addition, if political issues are still not resolved within a few months, the Thailand property market including Pattaya City, will probably be affected.

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APPENDIX

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Description Pattaya is a city located on the east coast of the Gulf of Thailand about 165 km southeast of Bangkok. It is within, but not under the jurisdiction of Amphoe Bang Lamung in the province of Chonburi. The city of Pattaya is a self-governing municipality that covers the whole tambon of Nong Prue, Na Klua, parts of Huai Yai and Nong PlaLai. It is located within the heavily industrialised Eastern Seaboard zone, along with Sri Racha, Laem Chabang and Chonburi. It has an estimated population of 556,916 and covers an area of 49.37 sq km.

northernmost beach) and Pattaya Beach (the main beach), plus the Buddha Hill headland (immediately south of Pattaya Beach), and a smaller southern section covering the area to the east of Jomtien Beach, which lies directly south of Buddha Hill.

Pattaya City occupies most of the coastline of Banglamung (one of the 11 districts that comprise Chonburi Province). It is divided into a larger northern section that spans the areas to the east of Naklua Beach (the

Pattaya City can be divided into five zones for the purposes of this report. Below is a summary of each zone.

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The report covers the Pattaya City area, as well as Na Jomtien, and a distinction is made between Pattaya City and Pattaya Bay,which constitutes part of the overall area under consideration.

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Wongamat This is the area to the north of Pattaya Nua and is considered a more peaceful, up-market location and a relatively new setting for condominium development. Wongamat Beach is considered the finest in Pattaya and boasts several of the higher-end luxury hotels and condominiums. Limited beachfront land should ensure that prices increase in tandem with the popularity of this area with both Thais and foreigners. Pattaya This area is considered as the city centre. The section of beach from Central Road south to the harbour runs adjacent to the core of Pattaya’s abundant nightlife area. Pattaya Nua and Klang are the areas favoured by Asian visitors, especially Chinese and Koreans. A large number of expat employees also prefer this location due to easy access to the main highways. The area of South Pattaya is popular among Middle Eastern, South Asian and Russian visitors. The area along Soi 15 Second Road is enjoying resurgence in popularity among buyers. Pratumnak Located to the south of Pattaya and bordering Jomtien, Pratumnak is considered a quiet residential area with a mix of luxury villas, high-

and low-rise condominiums. The Pratumnak area features two beaches, Cosy Beach and Haad U Thong, which are popular with Russian and Scandinavian visitors. Restrictions on condo development, limited availability of land and desirability of the area should ensure that property prices in Pratumnak will steadily rise. Jomtien Jomtien Beach is about 1 km south of Pratumnak Hill. The locale is home to many high-rise condominiums, beachfront hotels, shops and restaurants. The area at the beginning of Jomtien is considered busier, while the area located at the end of this beach, known as Na Jomtien, is considered to be much more peaceful and less congested. Na Jomtien Na Jomtien Beach is south of Jomtien and partially does not have a beachfront road and is less developed as a result. The main road connection is Sukhumvit Road, which is located 500 - 1,000 m from the beach; this area extends to Ban Amphoe Beach and Bangsaray in Sattahip District. Note: The report covers residential areas located on or west of Sukhumvit Road.

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RESEARCHER: Thailand Surachet Kongcheep Associate Director | Research EMAIL surachet.kongcheep@colliers.com

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Pattaya City Condominium Market Report H2 2013