2018 THAILAND PROPERTY REPORT
Thai Government’s Tourism Initiative to create a ‘Thailand Riviera’ will increase Hua Hin real estate & property values quickly.
The Tourism Authority of Thailand’s plan for investing billions of Thai baht into the rebranding (as the new Thailand Riviera) and large-scale infrastructure projects for central Thailand has been underway for several years now. However, the official plan was approved earlier this year, spurring many infrastructure upgrades. Several new projects are currently underway throughout Pranburi, Hua Hin, and other areas in the Prachuap Khiri Khan, Petchaburi, Chumphon & Rayong provinces.
Large-scale Infrastructure Projects Throughout Hua Hin & Pranburi
With anticipated increased tourist traffic and overall population growth to the Hua Hin & Pranburi areas, one can already observe large-scale construction projects well underway. Some of the current infrastructure upgrades include: widening of local highways from 2 lanes to 4; new beachside boardwalks in Pranburi & Khao Kalok; new highway overpasses to accommodate increased railway traffic; bicycle pathways from Hua Hin all the way to Khao Tao; new parks and allocated green space in Hua Hin; new Pranburi ferry terminal capable of transporting automobiles across the gulf of Thailand to the Pattaya area (and possibly the Suvarnabhumi airport area); and a new luxury marina project in Khao Kalok, Pranburi.
New Small Businesses Opening Up
These construction projects have encouraged a plethora of new businesses to open up recently throughout Hua Hin & Pranburi. Often, these businesses are targeting the younger, “hip” Bangkok crowd, as well as Chinese & Western visitors accustomed to higher-end products and services. We are now experiencing an increase in specialty cafés serving gourmet coffees, more western-style grocery stores, small boutique hotels, farm-to-table restaurants like Boutique Farmer’s (already capturing the attention of Bangkok’s well-to-do crowd), alongside major investments in theme parks and upscale hotel chains, such as Vana Nava and the Holiday Inn. And of course, we can’t forget that the Hua Hin international airport just recently initiated operations with Air Asia this year with more airline carriers expected to join soon.
Research from Plus Property indicates that as much as 90% of recent sales are second use, vacation homes for families, both for international and Thai buyers.
With the Thai government officially committed to bringing the high-speed rail system to Hua Hin (and throughout Thailand), Hua Hin & Pranburi become very attractive property investment locations for those who either live in Bangkok or are flying into Bangkok from overseas. With estimated speeds of 250 km/hour, the high-speed train is projected to deliver passengers from Bangkok to Hua Hin & Pranburi within an hour or less. Investment in vacation homes & condo units along the Hua Hin and Pranburi “Royal Coast” is expected to increase substantially in the near future.
Real Estate Prices Still Increasing For Off-Plan Projects & Re-Sale Owners Begin To Drop Prices
In 2018, we saw a significant rise in property prices around the Hua Hin and Khao Takieb neighborhoods. Typical land prices for condos have increased around 10-15%; however, available raw land in the Khao Takieb area remains quite scarce. Investment property for vacation rentals continues to be in hot demand for foreign buyers, as property taxes remain low in Thailand compared to their home countries. With Hua Hin & Pranburi as popular tourist destinations, ROI for Thai investment property is lucrative considering the low income tax & low property tax requirements, coupled with low maintenance and labor costs. Net rental returns are usually higher than can be expected in countries like the USA, the UK or throughout Europe. That said, with Thailand’s overall economy down from 2017, good deals can be found in the re-sale sector of the market, as property owners lower their asking prices in order to compete with off-plan developers.
Hua Hin Vacation Rentals Still Strong
While there is some controversy and confusion about Airbnb condo rentals in Thailand, it is still legal to rent out private (stand alone) villas and houses via Airbnb, as long as a property owner is not operating more than 4 properties under one business entity. Condo developments have the right to allow or deny owners to use their units for short-term rentals. Before purchasing a condo as a rental investment, it is recommended to check first with the juristic body if Airbnb-style rentals are allowed in the condominium. If managed properly, a well-maintained, western-style, 4 bedroom home can yield around 70,000 THB per month, averaged over a 1 year period. A 3-4 bedroom, well-constructed house can be purchased for between 6 – 8 M THB, with 10 – 14% ROI (if rentals are managed directly by the owner). For “hands off” property owners, the ROI may be closer to 5-10%, after property management & maintenance fees are paid.
Condominium prices in the Hua Hin area have risen 41% over the last 5 years. As the land prices continue to increase, developers are forced to recoup their initial investment by building smaller units, thus allowing for more overall units. Developers are also charging higher prices per square meter. Currently, the average price for a new condo is approximately 120,000 – 140,000 THB per m2. Beachfront condo developments charge a premium for the location with some beachfront units selling for as much as 250,000 THB per m2. Better deals can be found by purchasing older resale units, as they are generally more spacious (and in some cases, better built), since they were constructed when the land prices were less expensive and developers could allocate more space to communal areas and charge a much lower price per square meter.
Tourism is still the main driving force for Hua Hin’s economy, with Thais making up the majority of visitors to the seaside town. The majority of foreign visitors tend to be from the UK, Germany, France and Scandinavia, although more Australians and North Americans are starting to discover the Hua Hin and Pranburi areas. Chinese property investors are a relatively new segment of the real estate buying market, growing at about 10% per year.
Luxury Off-Plan Developers Moving South Of Hua Hin
Location seems to be a major factor for most real estate investors opting to purchase condo units directly on the beach, or at least within walking distance to the beach in popular areas such as Central Hua Hin, Khao Takieb or Khao Tao. Pranburi is quickly becoming a development hot spot with areas like Pak Nam Pran, Khao Kalok, Dolphin Bay gaining in popularity with both tourists and property investors. Some developers (like Golden Sands Beachside Villas & White Beach Villas) are building stand-alone luxury pool villas within walking distance to the beach, as the land prices are still more affordable, allowing for larger and more luxurious style homes at affordable prices.