The top end holiday homes market is seeing movement after the overall market effectively closed down during the crash period, say experts. A real return to action in the middle market is not expected for another three to five years, but prices have bottomed-out, meaning now could be a good time to buy.
Executive director of CB Richard Ellis James Pitchon says that the market for large developments of purpose-built holiday homes in the Pattaya/Jomtien and Hua Hin/Cha-am areas dried up by the mid-90s, with little movement since then. However, he says that over the last two years there’s been a boom in luxury villa accommodation on Phuket, in particular for long-term leases selling for up to US$1 million, primarily to overseas purchasers. "Obviously, this is not a mass market. Overall [the mass market] is not a liquid market – liquidity is lower than in Bangkok."
Managing director of Cushman and Wakefield Apisit Limlomwongse says he’s seen some increase in mid-market activity since 2000, with Hua Hin, Cha Am, Pattaya, Rayong and Khao Yai being the more popular places. "Increasing numbers of both Thais and foreigners are now looking to buy a weekend home due to inexpensive prices," Mr Apisit says. "It’s a good time to buy, as prices of good properties have bottomed out. Hua Hin is currently at the top of the list for a weekend home because there is not much oversupply, compared to Pattaya or Khao Yai."
With the expansion of Hua Hin airport and the opening of more international hotel brands, Mr Apisit describes the upside potential of Hua Hin as "very good".
Prices vary based on location and quality of development. Current prices of Hua Hin and Cha-am condos ranges from Bt20,000 to 45,000 per square metre, depending on the development’s quality. For Pattaya, prices start at around Bt15,000 and range up to Bt35,000 for better quality condos.
Other costs also need to be factored in. Firstly, a payment into a sinking fund – of around one to three per cent of the sale price – is usually required when purchasing a condo, and is used for repair and maintenance of common areas. Buyers should also expect to pay an average monthly maintenance fee of approximately Bt20 to 30per square metre for these condos – so the maintenance cost for a 35 square metre condo, for example, would be Bt8,400 to 12,600 per year – excluding cleaning costs. The costs of annual repairs, such as repainting and replacing fixtures like water heaters, should also be considered. Allow Bt1,000 to 1,500 per square metre per year.
According to associate director of Colliers International’s research and consulting division Mr Suttipan Kreemaha, the prices of good quality villas on Phuket are selling locally for up to Bt10m each, although this rises to around Bt18m if the property has a docking bay for boats. Maintenance fees on such properties are not insubstantial – expect to pay around Bt15,000 per month for a top end villa with docking bay.
Cushman and Wakefield’s Mr Apisit advises potential buyers to initially consider how frequently they plan to visit their weekend home: if it is not often, it may be better to stay at a hotel.
Other recommended actions he suggests are:
* Check to see whether the management provides quality services. Central services such as fitness centres, restaurants, laundry and swimming pools provided in a weekend home are usually not as good as in a quality hotel.
* Check the state of the resale market in the case you find yourself needing to sell.
* If the property is not located on a public road, ask for a legal document confirming that the property can be accessed from the public road.
* Ensure there is a fire protection system in place.
* Avoid buying off the plan unless there is a system to protect your deposit. This may be an escrow account, where the buyer deposits money with a middleman, usually a bank, but the developer cannot withdraw that money until they have completed their duties as stated in their contract.
* Check the finished product. For instance is it furnished, semi-furnished?
* Before buying a piece of land, ensure that the law allows you to build on it. In some areas like Hua Hin, construction is forbidden in designated areas.