Hua Hin is 200 kilometres from Bangkok, but it might as well be a world away. The beach resort town of fewer than 100,000 people has been historically popular with the Thai royal family and is currently a relatively popular retirement spot. Its six kilometres of beach make it a favourite holiday destination as well, and the city boasts a moderate tourist industry — though not on the level of Phuket or Koh Samui. This despite years of rumblings that it would be the Next Big Thing. So what’s going on in Hua Hin and why aren’t more of us flocking there to buy a condo or villa?
Hua Hin is something of an anomaly within the Thai investment market, as property there, dominated by condominium units, has little in the way of rental value — value in the sense of yields. The majority or purchasers use their units as vacation homes, which accounts for the comparatively low number of foreign buyers (around 25 to 30 percent). An April 2013 Knight Frank market report noted one-bedroom units priced less than THB2 million (HK$500,000) were on the upswing. And though rentals have not traditionally been the point of a purchase, that may be changing. “Recently, some buyers purchase condominiums to generate rental income; this is because there are not many hotels in Hua Hin,” executive director and had of residential at Knight Frank Frank Khan stated in the report.
Hotels may be hard to come by but condo supply in Hua Hin increased by 35 percent between 2011 and 2012, scattered almost equally between Cha-am and Inland as the prime locations, and the north and Khao Tao making up most of the difference, with Thais remaining the largest buyer segment at 75 percent. But between 2010 and 2012 prices rose 2 to 6 percent depending on area with the south experiencing the most growth, and only Khao Takiab dropping in value (1 percent). South Hua Hin is the toniest location, with prices sitting around THB12,800 per square foot (HK$3,200).
If there’s a downside to Hua Hin, it’s also its upside. Hua Hin is, “Historically Thai-orientated weekend retreat. But that’s changed over the years with the construction of new hotels and people who want a quieter life,” theorises James Pitchon, head of research and consulting at CBRE Thailand. “So we’re seeing the snowbird market — Scandinavian retirees who come over for the winter months. It’s for people who want something a bit quieter than Phuket, or Pattaya or Koh Samui,” he says. And though the city has been developing into a tourist spot under the radar for the last few years, “It’s still a two-and-a-half hour drive from Bangkok. It’s not like Phuket where you can fly in from overseas, or Pattaya, which has a slightly shorter road distance and nearer a major airport.” Hua Hin’s isolation is both a blessing and a curse.
Though Hua Hin’s condo market is still focused on Thais, expats working and living in Bangkok and retirees — and not the broader overseas investor sector — Knight Frank forecast strong growth for established developers and expected new launches all through 2013. With land becoming scarce in prime locations (leading to rising prices), developers may shift their attention to Cha-am and Inland where land is still available. “Developers should balance the supply and demand in the Hua Hin condominium market, as the target groups are not diversifiable. Developers should also be cautious if they continue to develop large numbers of units, risking oversupply and subsequently decreasing prices,” cautioned Knight Frank.
But as other Thai hotspots fill up and tourist arrivals rise, Hua Hin is in a position to offer an alternative, as Pitchon pointed out, that a large sector of tourists like. Though major multinationals such as the Hyatt, Anantara, Hilton and InterContinental already operate there is always room for more personal choices. And even with a steady stream of developments coming on line, it’s anyone’s guess as to whether popular villas are on tap any time soon. Finishes Pitchon: “It’s growing as a destination slowly and steadily and I think that’s quite good. You’re not looking at over-development and it’s less commercial than Pattaya.”