Demand for condos, branded residences in Phuket and Pattaya surges

All roads are leading to Phuket and Pattaya for the real estate sector these days driven by the purchasing power of tourists who have been pouring into Thailand since the Covid-19 situation eased.

Phuket’s rapid recovery in 2023 brought in 388.017 billion baht in tourism revenue from a total of 11,300,498 tourists. Its situation has been enhanced by the government’s plans to enhance Phuket's potential, including infrastructure development for transportation along the Andaman coast.

In the first quarter of this year alone, major real estate conglomerates have poured over 56 billion baht into investments in Phuket, Pattaya, and Hua Hin.

Prasert Taedullayasatit, president of the Thai Condominium Association, describes the status of the real estate business in tourist cities as “global property”.

"The government should prioritise leveraging the real estate sector to drive the Thai economy, which could create over a million domestic jobs and utilise more than 90% local materials. This would contribute to the Thai economy growing by 2.9 times, accounting for 8-12% of GDP,” Prasert said.

Phattarachai Taveewong, director of Research and Communication at Colliers Thailand, stated that in the first quarter of 2024, Phuket saw the launch of 12 new condominium projects with a total of 3,338 units valued at 25 billion baht. These projects were developed by Bangkok-based developers in collaboration with local developers, including Sansiri, AssetWise, Origin Property, Habitat Group, and CG Capital.

Compared to previous years, where the average number of new condominiums launched annually was around 2,000-3,000 units, the increase in tourists and investment from both the public and private sectors has significantly driven the growth of the condominium market in Phuket. It is expected that 2024 will see over 8,500 new units.

Currently, there are over 87 condominium projects in Phuket with a total of 25,591 units, of which 16,905 units (66%) have been sold.

“Foreign buyers account for 49% of sales in most projects, and if additional interest arises, developers offer long-term lease options (30+30+30 years) to increase sales opportunities for foreign buyers, who are a major driving force in Phuket's market," Phattarachai said.

According to a report by C9 Hotelworks, a leading hotel consultancy group, the expansion of the tourism sector and the potential of Phuket have led to the development of numerous luxury branded residences. This has attracted a significant influx of foreign investors, making Phuket the largest branded residences market in the world. The total value of these projects has exceeded 80 billion baht, breaking historical records, and is expected to continue growing.

Currently, Phuket has 26 branded residence projects with a total of 4,258 units. Out of these, 17 projects with 3,283 units are available for sale.

Layan Beach is the top emerging location, boasting the highest number of branded residence units at 1,322, accounting for 31% of the market share. This is followed by Kamala Beach and Bang Tao Beach.

"Post Covid-19, many Thai real estate companies have resumed their investments in Phuket. This resurgence is attributed to the revival of the resort and tourism markets. Additionally, there is increasing demand from high-end property buyers, both Thai and foreign, who are looking to relocate to Phuket or believe that investing in branded real estate is a safe investment," said Bill Barnett, managing director of C9 Hotelworks.

After pausing lending during the Covid-19 crisis, Thai banks have now resumed providing loans for new hotel projects. This resurgence is primarily driven by the bustling real estate market in Phuket, characterised by active buying and selling and rising rental prices. In addition, real estate developers are now blending hotel and real estate businesses, hoping that leveraging well-known brands will boost the value of their sales.

“One factor influencing the development of hotel projects is the skyrocketing land prices across the island. This has forced developers to adjust their strategies by integrating hotel operations with real estate to enhance sales value. For instance, bringing in famous hotel brands to manage and concurrently sell residential units," Barnett explained.

Yuthachai Charanachitta, CEO of Onyx Hospitality Group, stated that in line with Onyx Group's investment plan over the next 3-5 years, they aim to develop 4-5 hotel properties in Phuket, encompassing all of Onyx's brands: Amari, OZO, Shama, and Oriental Residence. There are also plans to develop these properties into branded residences.

Additionally, the EQ brand, a luxury resort brand from Malaysia, will see Onyx Group partnering with Malaysian investors looking to expand their portfolio in Thailand. They have chosen Phuket as their initial destination.
In the first quarter, the real estate market in Pattaya too showed signs of recovery, with three new condominium projects launched, comprising 4,493 units valued at 16 billion baht. It is expected that in the remaining three quarters of 2024, over 3,000 new condominium units will enter the market, potentially bringing the total number of new units launched this year to over 7,000, the highest in the past five years.

On the hospitality side, Wallapa Traisorat, CEO and managing director of Asset World Corp (AWC), stated that the company is currently developing more than 8 hotels in Pattaya, with 5 of them located within the mixed-use Aquatique project in downtown Pattaya. The total investment for these projects exceeds 20 billion baht. The aim is to promote wellness tourism, water sports, and large-scale entertainment-retail complexes.

Suwanna Buddhaprasart , CEO of Land and House Mall & Hotel Group (LHMH), stated that LHMH Group is continuously expanding its investment in large-scale hotels in Pattaya. They are preparing to open 2 new hotels, with a total investment of approximately 9 billion baht. When combined, the 4 hotels of the group in Pattaya will have more than 1,800 rooms.