Steady price rises steer condominium boom

Solid returns from rental yields or capital gains is the main attraction for international investments in high-end condominiums in Pattaya, Thailand.

In a new research report on the resorts city, the company found that condominium and land prices in Pattaya had risen by 52% from 59,000 baht/sq. metre in 2004 to 89,842 baht in 2007.

The company also noted continuous growth in new housing construction permits since 2004, which grew to 3.9 million sqm. approved in 2006, indicating a healthy property market. Of the total, the percentage of permits issued for high-rise residential construction tripled to 21% in 2006 from 7% in 2004.

The luxury condominium market began in 2004 with the launches of 465 new units, followed by 1,049 units in 2005, 1,395 units in 2006 and 2,268 units in 2007. This translates into 440% growth in the 4 years period.

Mr. Cornick viewed that the growth in condominiums and real estate in Pattaya was backed by a thriving economy and a populace brimming with retirees, tourists, expatriates and prosperous businessmen. Condominiums attract international investors as they are the only type of property in Thailand that a foreigner can own 100% freehold.

”Pattaya continues to attract astute property investors, who believe today’s market conditions offer the opportunity to lock into excellent future returns, either from rental income or through capital growth,” he said, adding that Raimon Land alone received between 700 and 1,000 new inquiries every quarter for its Pattaya developments.

The report cited an example of Raimon’s 187-unit Northshore launched in 2004, for which resale value brought returns exceeding 30% in 2005 before rising to 40-50% in 2006. The original selling price range of 70,000 to 90,000 per sq m rose to 132,479 baht in 2007 and the latest resale that occurred in January reached 180,000 baht.

12 months rental contracts range from 500-650 baht per sqm., or a 6-10% annual return on investment.