After Covid-19 hit the condo market, investment property developer Habitat Group decided to shift to low-rise houses focused on branded residences and vacation homes in Pattaya, aiming to increase its low-rise portfolio from 20% to 40% in a few years.
Chief executive Chanin Vanijwongse said the company spent time revising its plan as the condo market turned sluggish in 2020-21, degraded by the pandemic shortly after a slowdown in 2019.
“Two years ago we had no new project launches despite owning a lot of land banks because all of them were supposed to be for condo projects,” he said.
“Before the pandemic, we were aggressive with land purchases for new condo development as our condos had good sales.”
Habitat slowed its pace, shifting course midstream to adapt to the market.
NEW HORIZON
“We will change to low-rise housing development from high-rise in order to diversify risks and reduce the needed capital,” said Mr Chanin.
“We need to diversify our segments, focusing more on local, real demand.”
Low-rise housing development is more flexible than condo development as it can be divided into phases. If any phase has poor sales, housing design and size can be changed to attract customers.
The pandemic also changed homebuyers’ behaviour, he said. More demand for private areas has made space a more important factor than location as many businesses can be done online from home.
“We need to balance risks, not relying too much on condos,” said Mr Chanin.
“Foreigners were the target buyers for our condos, but they disappeared during the pandemic. Financial institutions did not give project loans to condos as they lacked confidence.”
In 2023, the company plans to add two new products — branded residences and vacation homes — as it aims to increase its portfolio of low-rise houses from 20% to 40%, with condos dipping to 60% over the next few years.
“From our land plots on hand, we will continue to launch new condo projects, but at a slower pace,” he said.
“Some were already sold. Some will be shifted to low-rise houses if feasible, while other plots must wait for the right time.”
Mr Chanin said a change in the company’s portfolio will be apparent in 2025, as condos will account for 70% of the total next year.
All new plot purchases will be allocated to low-rise projects, he said.
“The branded residences will be pool villas at a four-star level. They don’t need to be five-star or six-star as some buyers want to pay 10-15 million baht for a branded pool villa, not 30-40 million for a five-star,” said Mr Chanin.
He said the firm’s first branded residence project is slated for Pattaya as there are no branded residences there purely for residence. Existing branded residence projects are investment properties.
“New branded residence projects are coming to Pattaya, developed by large investors, but they will be at five- or six-star levels,” said Mr Chanin.
Vacation homes is another new product planned for launch next year.
The first location is Pattaya as it wants to tap Bangkok-based buyers looking for a second home and expatriates or Thai executives working in the industrial sector in eastern provinces.
“Vacation homes priced at 10-20 million baht is our target. It doesn’t need to have a hotel brand as we will use design to attract buyers with real demand,” he said.
“This product is not new to us. These homes were the first ones we did in Pattaya and we are returning to that segment.”
PATTAYA HOME BASE
Pattaya is the company’s flagship location where it has developed seven projects worth a combined 5.36 billion baht since 2013.
Habitat Group was founded in 2012.
“All of the projects were investment properties that offered a guaranteed yield of 5-7% per year for 3-5 years,” said Mr Chanin.
“The first was The Ville Jomtien, a pool villa project we acquired and continued development on as this type of product was rare in Pattaya.”
The market bought its investment property, with the first project selling out in two years. Habitat then launched six more projects from 2015-19.
One project was a pool villa, with the rest low-rise condos. All six properties were managed by hotel chains including X2, Best Western and Wyndham, pinning locations from North Pattaya to Na Jomtien.
“Pattaya 10 years ago grew very fast, but land prices were not as high as in Bangkok,” he said.
“The segment we captured was a blue ocean, unlike Bangkok where competition was very high.”
After launching a sixth project in Pattaya, Habitat shifted to four low-rise condo projects worth a combined 4.4 billion baht in Bangkok in 2018-19.
They were in Asok, Sukhumvit Soi 39 and Thong Lor sois 8 and 13.
“In 2018, the Bangkok condo market was good before slowing down in 2019,” said Mr Chanin.
“During the pandemic, foreign buyers left while local demand pivoted to low-rise houses. Condos in Bangkok in 2020-21 cut prices by almost half in some locations.”
However, the pandemic also brought Habitat an opportunity. Early last year, a low-rise condo project in Na Jomtien next to its fourth project in Pattaya — Best Western Premier Bayphere — was offered for sale.
Habitat took over that project by the end of 2021 and renovated it to add larger rooms and two-bedroom units to tap families, differentiating the property from nearby hotels targeting couples.
Launched in March 2022 and now 50% sold, the project was renamed Bayphere Premiere Suites, comprising 119 units sized between 30-120 square metres and priced from 4.5 million baht with a guaranteed yield of 7% per year for two years and 14 days of free stay a year.
“The tourism sector in Pattaya is recovering after the reopening. We expect it to reach 40-50% of the 2019 level by the end of 2022, climbing to 70-80% next year as the average hotel occupancy is now 60-70%,” he said.
“Foreign travellers are coming back.”
