Building hopes on EEC
New jobs and infrastructure projects to be developed in special zone is expected to spur housing demand in three provinces, writes Kanana Katharangsiporn
The government’s muchtouted Eastern Economic Corridor (EEC) is set to spur residential demand in the three eastern provinces where it will be located, driven by the expectation of new jobs and infrastructure development projects.
Chon Buri deputy governor Pawat Lertmukda said the EEC, which is designated to cover a combined 30,000 rai in Chon Buri, Rayong and Chachoengsao provinces, will undeniably drive demand for housing units as there should be a large number of new jobs employed in the 10 targeted industries.
The EEC is intended to be a special zone accommodating investment in 10 targeted industries promoted as clusters by the government. The 10 industries are next-generation cars; smart electronics; affluent, medical and wellness tourism; agriculture and biotechnology; food; robotics for industry; logistics and aviation; biofuels and biochemicals; digital; and medical services.
The EEC is an enhancement of the Eastern Seaboard that has been the region’s powerhouse for manufacturing and trade.
“Chon Buri’s potential is strong as its economy is driven by tourism and industrial estates,” Mr Pawat said in a seminar titled “New opportunities for residential development being driven by the EEC”, held earlier this month.
The National Economic and Social Development Board reported Chon Buri’s gross provincial product (GPP) grew by an average of 6.8% a year over the past decade. In 2015, its GPP amounted to 809 billion baht, up by 8.5% from 2014, while the industrial sector grew 7% to 403 billion.
“The potential GPP will be much larger with the EEC as there will be more than 100,000 new jobs in Chon Buri because of massive investment in the 10 targeted industries,” he said.
The EEC’s development plan calls for new development of infrastructure projects in Chon Buri including U-tapao airport, Sattahip commercial seaport, Laem Chabang port, Map Ta Phut port, a high-speed rail eastern route, a doubletrack railway, and upgraded highways and motorways.
Wason Khongchantr, managing director of property consultant Modern Property Co, said the infrastructure projects would help boost the tourism industry while Board of Investment promotions would stimulate the industrial sector.
“Growth of the tourism and industrial sectors will stimulate housing demand in Chon Buri,” he said. “People in all three EEC provinces have pinned their hopes on the project.”
Mr Wason said the residential sector in Chon Buri and Rayong has deteriorated the past two years because of the country’s economic slowdown and too many residential projects, particularly for condominiums in Chon Buri.
According to the company’s research, single house and townhouse sales in Chon Buri as of the third quarter last year dropped 22% from the same period in 2015. The largest decline was in Sri Racha district with a drop of 34% because of oversupply.
Sri Racha also saw the largest number of unsold single houses and townhouses in the province with 8,253 units remaining, accounting for 41% of total unsold units (22,637 units).
However, Little Tokyo had the highest sales rate at 73%, followed by Bang Lamung district (Pattaya) with 70% and Muang district with 65%. The average sales rate of single houses and townhouses in the province was 69%.
In Chon Buri, the bestselling segments included single houses priced between 3-5 million baht a unit in the three districts, townhouses priced 1.5-2 million baht a unit in Sri Racha and Muang, and 1.26-2 million baht in Bang Lamung.
For the condo segment, outstanding supply comprises 101,451 units from 300 projects, the second-largest number following Bangkok. Of the amount, 16,367 units or 16% remained unsold.
About half of the unsold condo units were in Bang Lamung with 8,014 units, as there was an oversupply in Pattaya.
Bang Lamung was also the district with the largest number of outstanding condo units with 57,506, making up 57% of the total in the province. The sales rate in the district was the lowest at 66%, while the province’s average was 84%.
The condo sales rate in Chon Buri in the third quarter last year shrank by 40% year-on-year. The largest drop was in Sri Racha (a 58% decline), followed by Muang (50%), Bang Lamung (33%) and Sattahip (29%).
“The condo market in Bang Lamung district improved last year as the Chinese were buying for real demand, to acquire condo projects for rent, or to turn them into hotels,” said Mr Wason.
He said the proposed EEC would affect land prices in the three provinces, which already rose the past few years because of speculation.
In Pattaya, land prices this year have doubled on average from 2011, a year before the property market boom in the provinces.
“The great floods that hit nationwide drove up property demand in Pattaya. Land prices have risen 10-20% per year from 2011-2017,” said Mr Wason.
The highest land prices are on Liab Hat Pattaya Sai 1 Road at 500,000600,000 baht per square wah this year, followed by Pattaya Sai 2 with 250,000400,000 baht.
“The recovery in the Chon Buri property market last year was helped by the tourism sector, which has continued growing. In Rayong, the market picked up again in the first quarter this year because of growth in the industrial sector,” he said.
Mr Wason said Chachoengsao is an emerging location as the residential supply remains low. Attractive locations in the future will be those near high-speed train stations and new towns.
Nattanun Kunajirakul, president of the Rayong Real Estate Association, said the EEC would help spur residential demand in Rayong for both locals and non-locals with high purchasing power.
Pluak Daeng district is a popular location for residential development as it is close to Sri Racha. Most of the supply is in lower-priced units, mainly townhouses and condos.
The bestselling segments in Rayong are two-storey single houses priced 2.53.5 million baht a unit and townhouses priced 1-1.5 million baht a unit.
“There were around 8,500 units of single houses and townhouses and about 1,200 condo units remaining for sale as of 2016. The EEC will have a positive impact on the Rayong property market,” she said.