The Pattaya property market showed signs of life to end last year, but uncertainty from global events could quickly bring the positive momentum to a halt in 2020. Colliers International Thailand found the number of new condo projects launched in the second half of 2019 hit a five year high as developers were preparing for the benefits of the Eastern Economic Corridor (EEC) project to kick in.
The government-backed plan has moved forward with several infrastructure projects now either completed or close to being finished. These were expected to bring an influx of foreign investment to the region with a report from Colliers citing this as reason to believe the Pattaya property market would recover.
The consultancy found that 10,592 new condo units were placed on the market in the second half of last year, an increase of more than 113 percent from the previous six months. This was the first time since the first half of 2012 that more than 10,000 condo units were launched in Pattaya during a six month span. Overseas developers played a huge role in this surge of supply.
“Supply of more than 5,100 newly launched units have been developed by Chinese developers who were interested in developing condominium projects in the Pattaya,” Colliers Thailand research noted.
Foreign demand still key driver of Pattaya property market
However, these developers had been targeting overseas buyers, a group that could be retreating in light of the spreading coronavirus outbreak that is harming tourism and the global economy.
“Chinese buyers have become the main clients of the Pattaya condominium market. Most developers have been trying to attract them through both local agencies and agencies from Bangkok in order to substitute the Thai purchasing power that slowed down from the overall economic downturn and from the impact of the new LTV measure in the past years,” the reported found.
A lot has changed between the end of 2019 and now. Many developers were able to sell out their 49 percent foreign quota at condominium projects in Pattaya during the second half of last year because of strong demand from Chinese buyers, according to Colliers Thailand. That is unlikely to repeat itself in the current half in light of global events.
COVID-19 derails recovery momentum
Early estimates from the Real Estate Information Center (REIC) paint a disappointing picture for the Eastern Seaboard property market in 2020. With tourism having ground to a halt and the economy expected to contract, demand and supply will be affected.
According to REIC estimates, residential transfers will drop by almost 12 percent in 2020 with transfer value predicted to decline by 21.5 percent year-on-year. The condo market will be hit the hardest since it is reliant on foreign investment.
There will be a drop in the number of new condo units launched in the EEC. Developers are only expected to bring 6,557 units to the market in 2020, the REIC reported. Assuming a return to normalcy by the end of the year, things could bounce back in 2021. In the meantime, some investors will look to take advantage of developers offering aggressive discounts.