Luxury property market in Pattaya.

Eastern Seaboard dynamism drives Pattaya property.

Dynamic economic growth along Thailand’s Eastern Seaboard is fuelling the luxury property market in Pattaya and driving its development as a high-end lifestyle destination.

As the city’s economic fortunes rise, so too does the demand for top quality accommodation and facilities, and this has attracted the attention of property investors seeking solid long-term returns as well as many of Thailand’s property development leaders.

The world-class construction conglomerate Bouygues recently opened an office in Pattaya, the company’s first move outside of Bangkok, demonstrating its confidence in the Eastern Seaboard and its future potential for further growth.

The Chon Buri and Rayong areas have a gross domestic product that is climbing faster than in any other region in Thailand. According to the National Economic and Social Development Board, in 2006 the eastern region was the second wealthiest after Bangkok and its vicinity, with a 12% annual growth rate from 2005.

Rayong led the Eastern Seaboard’s annual Gross Provincial Product with 527,366 million baht (an increase of 18% year-on-year), followed by Chon Buri with 407,364 million baht (an increase of 9% year-on-year).

This has given rise to a substantial middle class and established a platform for strong long-term gains, creating a fertile ground for property investors looking to secure lucrative long-term rental agreements for their Pattaya portfolios.

Rental demand in Pattaya is being driven by people with business interests in the area or those who work for international companies that are establishing bases on the Eastern Seaboard.

These companies all have management who need somewhere to live, and this not only generates potential renters but also a large pool of potential buyers with a number of options. They can live in Pattaya for the lifestyle, sell their investment at a higher price or achieve solid rental rates for it.

Rental yields have been averaging 6-10% per year with monthly rates between 500 baht and 650 baht per square metre (psm), while investments are returning sustainable capital gains. Northshore, the first project in Pattaya or our company, Raimon Land, has seen values soar by 70-80%, and it has set a benchmark for the Pattaya market, which no one thought could be achieved. It also demonstrates where Pattaya is headed and where I believe it will continue to go.

The speed of capital appreciation has been staggering, especially when talk of achieving 75,000 baht per square metre was considered unrealistic in 2005. In 2007, Northshore achieved a high of 132,500 baht, although a resale occurred in January 2008 for a seafront unit that reached 180,000 baht psm.

The reason for the skyrocketing rates is largely due to a very limited supply of existing high-quality condominiums. Prices are set to continue to rise and no more than 1,000 to 1,200 units that have currently broken ground will be completed over the next three years.

The emergence of the Eastern Seaboard as Thailand’s most economically energetic region has also brought a more demanding landscape for developers in which investors need to be wowed by high-quality standards in construction, design and finishes.

Pattaya is among the first region’s outside of Bangkok that is seeing new high levels of construction, as evidenced by Bouygues local subsidiary BouyguesThai’s new operation. The company is overseeing the building of Raimon Land’s 374-unit Northpoint in north Pattaya.

From a design point of view, much of what is available is form over function stressing aesthetics rather than effective, practical design. However, high-end investors are looking for functionality in a modern design and many developers are responding accordingly.

Along with the rise in the quality of residential construction, the area’s economic boom is lifting standards across the board in Pattaya as it develops into a destination that can cater to affluent, well-travelled visitors.

All indicators point to continued sustainable economic growth on Thailand’s Eastern Seaboard, and the region’s ongoing rise in prominence will be met by continued demand for highquality residential properties, presenting an excellent opportunity for savvy investors seeking strong rental yields and impressive capital gains.