KHAO YAI: SLIPPING DOWN FROM PEAK STATUS
Residential property market in the hill country north of Bangkok has slowed down over the past two years and will continue to do so
Sales of residential property in Khao Yai have decreased significantly compared with the heady days of 2010-13, largely because most of the residences launched in the past few years remain on the market. At the same time, the number of landed development projects has decreased dramatically during the past four years because the verification of land ownership is proving difficult in areas where a lot of land is supposed to be reserved forest.
In the past four years, significantly more condominium projects were launched than any other category of housing, because condominiums tend to be developed on smaller plots and verifying land ownership tends to be less of an issue. In addition, condominium units tend to sell for less than landed development projects.
This year, 260 condominium units have been launched so far in a single project by a listed developer in the Khao Yai-Wang Nam Khieo area. Many other developers have postponed new projects or phases of existing ones while they wait to clear existing inventories. Some condominium projects also stopped construction or were cancelled because of low takeup rates.
Thanarat Road has been the most fashionable area for residential development in Khao Yai. The residential market saw brisk sales in 2010-11, followed by slow growth in 2014 and a return to an uptrend in 2016.
The areas along the Kudkla-Pansuk and Khao Yai-Wang Nam Khieo roads have been a focus of fresh development during the past 10 years, after both sides of Thanarat Road proved to be very popular with buyers — mainly affluent consumers from Bangkok. It continues to show dramatically higher growth rates than the other two locations, and will remain popular due to the many nearby amenities and residential, hotel and retail projects now on offer.
Condominiums have grown in popularity during the past few years, largely because many buyers seeking residences in Khao Yai are looking mainly for weekend or holiday getaways. They thus want more affordable options than landed housing units. Condominium units are also more convenient and easier to maintain, and most buyers in Khao Yai are purchasing second homes.
House and villa developers will continue to launch new projects, however, as condominium activity levels off until the new supply can be absorbed. In addition, house and villa development suits the environment and terrain better than condominium development.
The average take-up rate of all residential categories in Khao Yai was 68%, an increase of four to five percentage points from the same period last year, largely due to a new condominium project that has sold well.
In contrast, house and villa projects have sold slowly during the past few months. The average take-up rate in the area along Thanarat Road was 77%, the highest in the Khao Yai market, and reflects the larger number and variety of residential units available in the area compared with other locations.
The main buyers in Khao Yai are Thai residents looking for a second or weekend home not far from Bangkok and in more peaceful surroundings with better weather than beach cities such as Pattaya, Cha-am and Hua Hin. Khao Yai is not the first choice for most domestic tourists, except during winter towards the end of the year.
The average take-up rate this year and in the future may show growth similar to that of last year. Many developers are attempting to sell more units by hosting marketing events and directly contacting clients via other marketing channels. They are attempting to revive interest among many prospective buyers who have been deterred by frequent reports of disputed land ownership and encroachment on public lands.
The average price in each residential category has increased only slightly from last year, except for completed projects, largely because of low demand and an excess of available units still on the market. Residential units selling for more than 20 million baht might not be worthwhile investments because many lower-priced units remain available.
The average price for housing projects along the Khao Yai-Wang Nam Khieo Road was the highest, at around 16.16 million baht, because of the many luxury villa developments and golf courses in the area, where some units sell for more than 50 million baht per unit.
The average price of housing units along Thanarat Road was still lower than those of other locations, because some projects in the area start at less than five million baht per unit, and most developments in the area are mid-market to high-end projects. Most condominium projects along the Khao Yai-Wang Nam Khieo Road are high-end or luxury developments, reflected in the highest average price in the area. The starting price of some condominiums was more than 120,000 per square metres, and some projects are asking more than 155,000 baht.