Quality matters in Khao Yai holiday home market
Khao Yai's holiday home market has become more active in its high season, with several major condominium and villa development projects are actively running promotional campaigns to boost sales. While those campaigns are driving the interest, buyers' decision making will continue to depend a lot the quality of products that each of these projects offers, according property consultancy JLL.
Khao Yai saw a big real estate boom between late 2000's and early 2010's when a lot of new condominium and villa projects were launched in response to the fast-growing interest from middle-class and high net worth Thais looking to have a holiday or retirement home near Bangkok.
However, the actual demand has been lower than interest, and thus failed to keep pace with the fast growth of supply. As a result, the market has seen a marked slowdown in both construction and marketing activity since 2014.
Most of the resort condominium and villa projects that have been active in Khao Yai are those that have recently been re-launched or opened new phases. Some examples include Swan Lake (approx. 150 condominiums), Bella Del Monte (approx. 50 villas), Zen Next (approx. 70 condominiums) and Akas (approx. 100 condominiums and 8 villas).
Prices of condominiums and villas in Khao Yai vary greatly from THB 5 million to THB 35 million for a condominium unit and THB 15 million to above THB 100 million for a villa. However, observations by JLL show that condominiums priced between THB 12 and THB 15 million are selling best while villas priced between THB 20 million and THB 40 million have seen the strongest demand.
Bunthoon Damrongrak, Head of Residential at JLL, says "Prices of the best selling residential units in Khao Yai are generally higher than the average for major holiday home markets across Thailand. This implies that the majority of buyers in the hill resort market have exceptionally high purchasing power."
"As there is some correlation between pricing and quality, the prices of the best sellers also reflect buyers' willingness to pay more for premium products," says Bunthoon.
"Sales performance at Swan Lake is a prime example explaining the case well," says Bunthoon. "It has been Khao Yai's most successful condominium project in 2017 in terms of sales. The project has enjoyed a strong sales rate at 80%. While prices of units start from THB 9 million, most of the units that have been sold are priced between THB 12 and THB 15 million," he continues.
In fact, one of the major challenges that buyers have experienced in a number of holiday home markets in Thailand is the scarcity of quality supply. Khao Yai is no exception.
"Khao Yai is a niche market dominated by affluent middle-age Thai buyers who purchase units for own use and put a great emphasis on quality of products. That said, future condominium or villa development projects in Khao Yai are likely to be in the prime segment where demand concentrates," says Bunthoon.
However, whilst buyers in Khao Yai generally have high purchasing power, they are small in numbers. In order to best capture demand in this niche, any developers planning new projects must make sure they truly understand what prospective buyers are looking for," Bunthoon concludes.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 91,000 as of March 31, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.
About JLL Thailand
The firm’s operation in Thailand began in 1990 and today is the country’s largest international property service provider with 1,600 employees and more than five million square metres of property and corporate facilities managed. In Euromoney Real Estate Survey 2018, JLL was voted as Thailand’s number one overall real estate advisor for the 8th consecutive year and also won top votes for agency/letting, research and valuation in the same survey. The firm was also named Thailand’s five-star winner in the commercial property consultancy and commercial real estate agency categories at the International Property Awards Asia Pacific 2019/2020. For more information, visit jll.co.th.