Pattaya reels in big investors
Boosted by a thriving economy and a population brimming with rich retirees, working expatriates and prosperous business people, the once sleepy fishing village of Pattaya is now attracting savvy residential investors taking advantage of luxury condominiums launched on the market.
Investors from Asia and Europe make up the bulk of the money pouring into Pattaya, snapping up newly released projects off plan and finished products, which is feeding a strong resale and rental environment.
Pattaya is just a two-hour drive south from Bangkok (and about 90 minutes from the city's new international airport) on the Gulf of Thailand's booming port area known as the eastern seaboard. The rapid expansion of the eastern seaboard into Thailand's main port and industrial area has seen the need for an across-the-board rise in accommodation standards.
The developer believed to have started the growth in Pattaya's luxury residential market is Raimon Land. The company launched the city's first real gradeA condominium project in 2003 with Northshore that has seen resale capital gains reach up to 80 per cent, according to figures in the company's Why Invest...Pattaya research document.
With that success, Raimon Land chief executive Nigel Cornick recently announced three new projects in the resort city, the beachfront Northpoint (to be constructed by global conglomerate Bouygues) The Edge and the downtown The Lofts Southshore.
'With more than 6 million tourists a year and growing by another million visitors every two years, Pattaya is Thailand's premier tourism destination and among the top resorts in Southeast Asia,' Mr Cornick says.
'The opening of Suvarnabhumi International Airport, located closer to Pattaya, has further played a key role to attract more businesses to the eastern seaboard.
'Thailand's Board of Investment is regularly approving new projects within and around the boundaries of Pattaya, consequently attracting more employees to the city.
'Pattaya is no longer just a tourist area, it is now an authentic city with permanent residents and communities of foreign retirees, local business owners and workers from nearby industrial estates.'
The evidence of Pattaya's rapid rise in the residential market can be seen in the figures. Raimon Land's Why Invest...Pattaya document says the average price paid for gradeA condominiums, in terms of square metres, has vaulted 52 per cent from the 59,000 baht (HK$14,469) achieved in 2004 to an 89,842 baht average last year.
The research also says upper-tier luxury developments in the gradeA sector are fetching up to 150,000 baht per square metre, which leaves Mr Cornick in no doubt as to the investment strategy of the Stock Exchange of Thailand-listed Raimon Land.
'We have a total of 38billion baht invested in projects in Thailand, of which 12.7billion baht is invested in Pattaya, representing one third of all Raimon Land investments in Thailand,' Mr Cornick says.
'So I think as a developer, this provides a fairly strong indication of where we think the property market is headed.'
CB Richard Ellis Pattaya office general manager Linda Ord says Raimon Land's Northpoint and the villas at Baan Talay, White Sand Beach and La Royale will be four of the projects in Pattaya that will be attracting the most interest from luxury home and condominium buyers this year.
She also agrees that Pattaya is fast gaining a reputation for quality housing products and losing its image of the past as a cheap, seedy destination known only for its nightlife.
'Several of the new upmarket developments coming online can be favourably compared to the luxury developments in Bangkok in terms of build quality, design and interior finishes.
'Although prices remain lower in Pattaya, they are gradually rising to the levels of the Bangkok luxury market and we see this trend continuing also,' she says.
Ms Ord adds that infrastructure development in Pattaya is also helping to raise value of housing projects in the city and attract wealthy international and foreign investors. 'The opening of the new airport, a wide range of shops, cinemas, health services, and golf courses, has broadened its appeal as a convenient leisure home location and has increased Pattaya's attractiveness to prospective long-term residents,' she says.
'We are seeing more people buying houses and condominium units in Pattaya as retirement and second homes.'
With the boom Pattaya and the eastern seaboard is experiencing, Bouygues-Thai has opened an office in Pattaya - its first outside Bangkok - and its managing director Jean-Marie Verbrugghe says he believes that Pattaya is the first region outside of Bangkok that is using international construction standards, another tick in the right column for Pattaya.
With its improving infrastructure, the presence of international developers and a proactive government that is supporting sustained development of the property market, Pattaya is changing its image from a playground for soldiers on leave to one of an upmarket destination where home buyers can get value for money, and investors can maintain solid rental yields from the rising population.
