Beachfront Condos considered a worthwhile investment in Hua Hin
With the building boom that has been going on for the past seven years or so, it is no surprise that the condo market in Hua Hin is oversupplied. It does not look like supply will drop soon either as some very large new projects are in progress. For anyone looking to buy in the popular royal beach resort town for investment purposes or for anyone hoping for value appreciation in the future, with such a glut of condos on the market any increase in value seems uncertain. However, there are still high demand areas.
Out of the total 19,444 condos in the market, 8,666 condos are available, meaning average sales of condos in Hua Hin and Cha-am is low at around 55%. according to the Knight Frank Chartered database. Our statistics show between 2008 and 2010 the annual sales of condos in Hua Hin was 800 to 900 units per year. This grew to approximately 1,800 to 2,000 units from 2011 to 2014.
Assuming that there is no new large supply, the market may take four to five years to clear the condos currently on the market as long as demand for condos stays at the same level as the previous four years. With 52% of the units unsold, Cha-am has the least demand with 6,524 out of the total of 8,666 unsold condos. The majority of unsold units in Cha-am are studios and one bedroom units with no sea views that are located on or near the beach but the units face inland and cost below two million baht each.
The locations in Hua Hin that are worth investing in seem to be between Soi 1 and Soi 85 on the beach side of Phetchkasem Rd. Only 399 units are available on the odd-numbered sois that branch off Phetkasem Road toward the beach. The area is very convenient with a full range of facilities and amenities. Khao Takiab further south of the town centre is also popular, with 606 units available for sale. Local building rules and regulations mean projects in Khao Takiab are low rise though.
One and two bedroom units going for three to five million baht each are seen as ideal for investment. Only 12 condos currently fit this description according to our research though, and selling prices are at least 80,000 baht per square metre. One bedroom units are generally comfortable, with sizes starting from 37 square metres, which are larger than comparative Bangkok condos.
Ocean view condos are considered the best investment, with average selling prices growing at a much faster rate. In 2014, the average selling price of an ocean view condo was 130,932 baht per square metre, representing a compounded annual growth rate (CAGR) of 6.6% since 2007.
The average for no ocean view condos was half as much, at 64,454 baht per square metre, while units with partial sea views averaged 74,219 baht per square metre. The scarcity of beachfront land and concerns about an oversupply of no ocean view condos has brought about the growing gap in prices between the two condo types.
Selling prices of studios in the Hua Hin and Cha-am area range between 1.3 million and 5.6 million baht, whereas one bedroom units range from two million to 15 million baht. Two bedroom units range from 3.2 million to 19 million baht and three bedroom condos from 4.6 million all the way up to 60 million baht.
The minimum prices of condos of every size in Hua Hin are higher than in Cha-am, Khao Takiab and Khao Tao. Studios in Hua Hin start at 1.9 million baht, one bedroom units at 2.8 million, two bedrooms at 4.9 million and three bedroom units from 13.5 million baht.
Recently the condo market has expanded to capture new demand from middle class Thai buyers as well as from affluent Thai families from Bangkok. In comparison to Phuket, the Hua Hin buyer market is not as diverse with the majority of buyers being Thai and 25% foreign nationals. However, Since last year we have started to see seen more foreigners interested in Hua Hin condos, especially from Hong Kong, Singapore and Taiwan. Most are looking for two bedroom units.
The condominium market in this area is becoming more competitive, but only in certain locations. Investors are wise to do their homework and should seek to buy in a market where there is a lack of supply. Developers, meanwhile, should be cautious about where they launch projects, especially in Cha-am where the huge amount of new units has led to the highest competition.
Credit: Bangkok Post