Tourism growth supports real estate boom in three areas, survey finds

Chiang Mai in particular is experiencing property sales of up to 82 per cent of available supply as its numerous tourist attractions have contributed to foreign media labelling the city as one of the most attractive for real-estate investment in Asean. 
Moreover, Chiang Mai province has plans to develop an airport in San Kamphaeng district, while a planned high-speed railway will also drive real-estate prices even higher in the future. 
Anukul Ratpitaksanti, managing director of Plus Property Co, revealed the results of a survey by the agency’s research division. The survey, conducted last year, found that average accumulated sales in Chiang Mai, Chiang Rai and the Khao Yai area of Nakhon Ratchasima province had reached an average of 79 per cent of supply. The northern tourism cities of Chiang Mai and Chiang Rai showed higher demand than other areas. 
Data from the Tourism Authority of Thailand showed that the number of foreign travellers in these areas increased by an average of 13 per cent between January and September 2016 compared with the same period of the previous year.
In Chiang Mai province, among 179 real-estate projects, sales of up to 82 per cent were found from a total supply of 27,709 units. Overall demand increased 7 per cent, with good response to detached homes priced at less than Bt10 million. 
Sales were best in the Chiang Mai city area, with good sales even in outlying areas due to demand from Bangkok buyers, who often purchase property as vacation homes. Average market saturation of 5.7 units per month per project was found for properties costing between Bt7 million and Bt9.99 million. Further research found that the supply of detached homes in the upper market – those costing between Bt25 million and Bt50 million – showed a response rate of 79 per cent, with most projects in this category located outside Chiang Mai city, near natural tourism attractions. 
These are generally purchased as premium vacation homes because of demand for larger space and living areas that are close to nature. Some of these homes were found to be worth more than Bt30 million, such as in the Mae Rim zone. It is evident that there is currently good demand for premium properties.
The survey found that Chiang Rai experienced sales of 76 per cent of the province’s total supply of 4,161 units, with a market saturation rate of 2.6 units per month per project and most demand coming from local residents purchasing property for personal housing. 
There is good response for properties priced at less than Bt3 million per unit with locations in highland and lowland areas of Chiang Rai city. There is also good response in the condominium market for one-bedroom units priced from Bt40,000-Bt60,000 per square metre. 
The province’s condominium market has demonstrated a saturation rate of 6.6 units per month per project, while the detached-home and townhouse markets have saturation rates of 1.9 and 8.2 units per month per project respectively. 
Meanwhile, real estate in the Khao Yai area showed a supply of 5,078 units, with demand of 72 per cent. Condominiums continue to represent the biggest market, with new supply showing an average response rate of 87 per cent, or 11.7 units per month per project, as of the 2016 survey. 
Demand was best in the price range of Bt60,000-Bt80,000 per square metre, with most demand coming from non-residents looking to purchase properties as vacation homes or for investment. 
“The real-estate market trend for Chiang Mai in 2017 shows a likelihood of demand growth, partly from the development of local infrastructure projects,” Anukul said. 
“There is also a trend of increased foreign demand for real estate in Chiang Mai, which is a popular city for foreign nationals. Foreign media outlets, such as The Huffington Post in the United States, have ranked Chiang Mai as one of the best real-estate investment locations in Southeast Asia. 
“New supply is expected to be generated through major developers, including both horizontal and vertical projects, which may account for up to 80 per cent of market share. 
“There is an emphasis on investments in city areas, which feature a full range of conveniences, as well as areas close to nature, such as the Mae Rim zone. 
“In the province of Chiang Rai, we expect the real-estate market to be stable, much like in 2016. Despite delays in horizontal and vertical projects during the end of 2015 and 2016, there is still new supply in the market from small local developers. However, most real-estate projects in the province are focused on local customers, resulting in a static market. 
“As for real estate in Khao Yai, there is yet to be any significant recovery after authorities inspected land rights in many areas in 2014 and 2015. This resulted in some projects remaining under investigation and large property developers delaying new projects or cancelling sales for existing projects. 
“Customers who wish to purchase vacation homes in this area are mainly Thai nationals. With about 20 horizontal and vertical projects expected to be completed in Khao Yai in 2017, the real-estate trend for the area remains stable,” Anukul said.