Hua Hin wrestles with oversupply of condo projects

Most of the projects have seen sales of between 30 per cent and 50 per cent of total units, while the rest are in the presale process.

"The season for sales of residential units in Hua Hin is only three months a year – between March and May – as a result condominium projects for sale in Hua Hin will take a year to a year and half before they are sold out," Property Perfect Plc’s chief business development officer Wongsakorn Prasitvipat said. The company has launched its first condominium project, Bella Costa, in Hua Hin worth Bt1.67 billion.

The project has recorded presales worth Bt350 million of total project value. About 90 per cent of customers are locals and the balance 10 per cent are foreign buyers both from Asia and Europe.

Pairoj Wattanavorodum, the managing director of The Confidence Co, which has launched its condominium project the Trust Hua Hin in 2013, said the condominium market in Hua Hin had been oversupplied since 2012 when developers from Bangkok expanded to this resort destination.

Most of the demand comes from Bangkok, where people are looking for a condo to be their second home rather than their first home. When the economy slowed down, it directly hit demand for property in this location.

However, there were signs of demand recovering in the last quarter of last year and will do better this year if the economy grows by at least 4 per cent as forecast by the government, he said.

The Trust Hua Hin is a ready-to-stay condominium, half of whose total 671 units have been sold.

Jones Lang LaSalle (Thailand) Co Ltd’s managing director Suphin Mechuchep, who is now a sales agent for Bella Costa Hua Hin, said that the main demand to buy residential property in Hua Hin comes from locals and Scandinavian countries, and less from Asia. However, investors from Asia such as China, Singapore and Hong Kong are now interested in expanding their investments in Hua Hin, as the local traditions are appealing to Asian buyers.

"We see an increasing demand to buy residences in Hua Hin from Asian buyers. Earlier, most of the demand came from Scandinavians over the past five years," she said.

Other condominium projects for sale in Hua Hin, which were launched since 2012, also recorded presales between 40 per cent and 60 per cent on average till now.

According to a survey by The Nation early this week, Energy Hua Hin by Baan Rajprasong Co, which was offered in 2012, has sold 70 per cent of its 5,997 units in its first phase, which has already been completed and transferred to buyers last year. The 529-unit second phase will kick off this year.

Of the 171 units at The Crest Santora Hua Hin by SC Asset Corporation, 80 per cent have been presold since last year. Transfers will begin this year.

Malibu Kao Tao by M Talay Co, which is owned by the Maleenont family, is 62 per cent sold out since 2012.

A survey by Colliers International (Thailand) shows that the condo inventory in the general Hua Hin area will be 16,000 units this year.

This would take 18 months to sell out even if no more residential projects are launched in the location.

Some 8,800 units are expected to be completed this year, with nearly 5,000 units in the Cha-am area and about 1,880 in the Hua Hin coastal area. The rest are split evenly between the Hua Hin inland and Pran Buri areas of northern Prachuap Khiri Khan province.

Meanwhile, Plus Property Co Ltd, a property management and agency arm of Sansiri Plc, believes that the demand to buy residential property in Hua Hin began recovering in the last quarter of last year and estimates that the absorbtion rate will go up to 73 per cent on average a year.

Sansiri Plc is one of the property firms that has launched more condominium projects in Hua Hin. At present, the company has seven condominium projects for sale in Hua Hin.

 

Land prices rising

With the investment by listed property firms since 2012, the price of land close to the beach has more than doubled, despite the glut in demand for property.

Property Perfect Plc’s Wongsakorn added that the company had bought land to develop Bella Costa Hua Hin seven years ago at Bt20 million per rai but now land prices at the same location, located close to the beach, are valued at Bt100 million per rai.

Bella Costa Hua Hin is located at Hua Hin Soi 105 or Khao Tao, which is close to the Pran Buri National Park.

Confidence Co’s managing director Pairoj said land prices close to the beach had soared from Bt40 million per rai (Bt250 million per hectare) in 2012 to Bt100 million per rai. Land close to the main road has shot up from Bt4 million in 2010 to between Bt8 million and Bt10 million, depending on location.

"The prices of locations near the main road are rising now that the availability of land near the beach is limited," he said.

The high prices and the lack of sites have forced property firms to expand far from downtown Hua Hin to Khao Tao, said Sunchai Kooakachai, a senior manager at Colliers International (Thailand) Co.

According to Colliers, seven condo projects worth up to Bt10 billion have sprung up in Khao Tao, a beach village south of the city.

Land and Houses is developing Wan Vayla worth nearly Bt3 billion and Kao Tao Bay View Resort Co is developing the Celeste Hua Hin-Kao Tao worth Bt1.7 billion.

"This is also boosting land prices on Khao Tao since last year, from Bt40 million per rai for sites in the beach area to Bt80 million per rai," he said.