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Thailand Real Estate News

Tax incentives lift everyone's mood
2008-07-01

Amid concerns about higher costs of construction materials, the tax incentives announced in early March have come as good news to the property market this year. Analysts expect it to improve significantly from 2007, a sluggish year due to lower confidence.

The Finance Ministry led by minister Surapong Suebwonglee has essentially revived the tax incentives that proved successful in spurring the property market in 2003 when they were used by former prime minister Thaksin Shinawatra.

The property sector, according to the National Economic and Social Development Board, contributes 7% of the country's gross domestic product. It serves as an important economic multiplier, leading to consumption of construction materials, employment of labour and the creation of general consumption ranging from furniture to appliances. Significantly, 90% of property spending involves local content.

Prior to the effective date of the tax incentives on March 29, many developers had been concerned that unit transfers slated for March would be delayed as buyers would wait to take advantage of the breaks.

Some decided to reduce transfer fees from 2% and mortgage registration fees from 1% to 0.01%. These two major reductions would allow developers to prevent a drop in earnings during the first quarter.

Even so, firms expect profits to improve for the rest of the year as unit transfers accelerate on pent-up demand. Developers' profits will also improve as they benefit from a reduction of the special business tax to 0.1% from 3.3%.

The result could be a windfall for developers that have housing to sell and transfer before the tax incentives expire in one year. This will include pre-built units and low-rise housing that can be built in just four to eight months.

However, the condominium segment might not share in the spoils as big high-rises take up to two years to build. As well, condo developers are facing stricter Environment Impact Assessment (EIA) rules and more zealous enforcement of other building laws.

Anant Asavabhokhin, chairman and managing director of Land & Houses Plc, the country's biggest residential developer, said the resulting construction delays would be exacerbated by higher construction costs, especially steel prices that have risen more than 40% from last year.

Many developers last year stockpiled thousands of tonnes of steel so they could control costs and maintain unit prices but the inventories have almost run out.

Despite higher costs, developers are reluctant to raise selling prices too much as they might scare off buyers or lose market share to rivals who do a better job of controlling their costs. Even so, increases of 5-10% are likely.

Helping the market will be the long-delayed start of work on new mass-transit projects that increase the potential of several neighbourhoods in the capital. Buyers, meanwhile, can expect lower interest rates in line with the steep reductions made in the US, although the size and pace of cuts locally could be more modest, given concerns about inflation.

Also enhancing buyer confidence is a new regulation on escrow accounts that is finally expected to be enacted this year. The new law will, however, affect smaller developers as they cannot use downpayments as cash flow.

Many developers this year have resumed investment after limiting budgets last year. Some are focusing on condominiums near mass-transit routes and extensions, while others will develop more single houses and townhouses.

Recent data suggest that the property market this year will grow by 5-10% from last year, when newly registered units totalled 74,221 in Greater Bangkok, down 5% from 2006.

Among total new registered units last year, the Real Estate Information Center said condominiums in Bangkok rose 23% to 14,316 and accounted for 37% of all housing units built by developers.

The number of newly registered horizontal units dropped by 5.2% to 57,992. The largest decrease was in single houses, which fell 10% to 38,599. The proportion of single house dropped from 55% to 52%, while condominiums remained steady at 22%, up from 12-15% in 2003-05.

However, fewer condominium projects have been launched since early 2008. Most are from large developers, as newcomers and smaller operators faded away from the market. The main reasons were stricter loan approvals by financial institutions and more concerns about EIA approval.

Overall, signs are good for a property market rebound. The consumer confidence index rose in the first two months of the year and many developers experienced much better sales in January and February than in the same period last year.

"It's all about confidence," said Prasert Taedullayasatit, chief business officer of Preuksa Real Estate Plc. "The property market depends on confidence. The clearer political situation can restore confidence."

However, some developers need attractive campaigns and promotions, including events at project sites, to boost sales and encourage customers to speed up their decisions.

Thai Condo Market Surges
2007-07-28

Thailand´s condominium market is enjoying continued growth this year despite a slowdown in the economy and the property sector overall, according to a leading industry executive.

Anupong Aswapokin, president and chief executive officer of Asian Property Development Plc, said the overall property business for single houses and townhouses this year had been negatively affected by the economic slowdown. He said the public has reduced its spending and is taking fewer risks. Although interest rates are low, that in itself is not enough to encourage people to buy property.

Continued oil price hikes had made consumers aware to spend carefully and a campaign to reduce the consumption of energy, especially oil has also made an impact. To reduce oil consumption, many more people are paying attention to condominiums, making condominium market expand despite the property business slowdown.

"This year, the property business is rather sluggish because the economy is expected to grow only 3. 5-4 per cent. Most consumers have slowed their decision to buy property. Still, it is believed investment in the business sector will recover when the political situation is clear, the general election is held as scheduled, and the new government is formed," he said. Mr. Anupong projected the demand for property by consumers would grow no less than 10 per cent this year.

The number of condominiums, single houses and townhouses is expected to be less than 70,000 units. However, he said, the private sector viewed the Thai economic strength should count more on local consumption than exports.

Article courtesy of Asia Property Report

Thai real estate goes green
2007-07-05

Thailand’s real estate developers are increasingly taking on hues of green, as a traditionally conservative industry begins to embrace eco-friendly practices. The impetus seems to be coming largely from changing public opinion about environmental footprints, carbon emissions, and global climate change. What are Thailand’s developers doing, exactly? And what kinds of consumers are attracted to green initiatives?

The shift among developers in Thailand appears to represent a microcosm of a larger regional trend. At a recent building conference in Hong Kong devoted to environmentally-friendly practices, participants discussed ways that the building industry might embrace green spaces and sustainable development. "It’s a matter of urgency that the ways in which buildings are built and used are reviewed as part of the solution to global warming, because buildings consume so much energy,” said Angela Tam, who has written about sustainable development. “It makes sense for the industry as well as the community.” As world-wide awareness of climate change grows, developers across the region are changing to reflect consumers’ interest in the issue.

One of the most prominent examples of green design in Thailand is Ocean One, a 91-story construction that will soon break ground Pattaya. The condominium and residential project was recently cited in a Wall Street Journal article about eco-architecture in Asia. The developer, Bruno Pingel’s Siam Best Enterprise Ltd., says that Ocean One will boast a slew of green design features, from a water recycling system to energy-efficient air conditioning. Even the elevator will be designed to generate the power needed to light the observation deck. Construction on Ocean One is slated to begin in a few months, and a completion date has been targeted for 2010.

A shift in designing the built environment in Thailand has been spurred on, in part, by outside influences. “We’re finding that especially in the resort areas, it’s largely driven by foreign demand,” says Henri Young, Raimon Land’s Director of Marketing. “People are coming here from parts of the world where environmental concerns are important. Energy consumption is the main priority,” he says.

Important design elements, according to Young, include factors such as the use of shading for cooling purposes. Recycling water is another central technique. Young points to The River, the mammoth residential construction going up on the banks of Bangkok’s Chao Phraya, as one that will incorporate multiple aspects of environmentally-friendly design. It will contain a water-cooled air conditioning system, he says, with central tanks pumping water throughout the building. “We tend to use international standards -- for example, the air conditioning system in The River would be required in Australia.”

While foreign consumers are keen to buy into green developments, how has public opinion among Thais changed? “We’re taking the initiative that Thai market will become more and more aware” of the issue, Young says. “It’s an evolution. 15 years ago in Australia, where I’m from, environmental concerns weren’t at the forefront. But then at the personal level people became more involved. It started with households, then it went national. We think the same transformation will happen here.”

In a bid to ensure that the verdant trees of the Raimon Land logo are an accurate reflection of their own green principles, the company has undertaken steps to model sustainable practices closer to home. The firm is working with the Plant-A-Tree Today (PATT) Foundation, a UK charity. “We’ve taken a corporate initiative to offset our own emissions,” Young says.

Charlotte Filleul, Phuket Sales Manager at CB Richard Ellis, says that developers in Thailand are “realizing that certain buyers will appreciate” green design. Developers in Thailand are “started to turn their attention to the issue,” she says. While developers in the Kingdom might not be as environmentally conscious as their counterparts in other countries, she says, CB Richard Ellis tends to be forward-looking, as they’re headquartered in the United States.

CB Richard Ellis is involved with several eco-friendly projects in Phuket. The Laguna Phuket is a past winner of the Green Leaf Award, given by the Tourism Authority of Thailand to organizations dedicated to preserving Thailand’s environment. Built on a former tin mining area, The Laguna Phuket has adopted energy conservation measures and environmentally-sensitive practices.

Another green project is Phuket’s upcoming Village Coconut Island, where motorcycles and cars will be banned and where foliage will be used, when possible, rather than fences or walls. In addition, plants and trees moved to construct villas are re-planted elsewhere or moved to an on-site nursery until they’re needed for future use. And West Sands Phuket will feature organic gardens and solar energy. At Hidden Oasis, another future Phuket development, rainwater will be collected for use in watering, and all exterior lighting -- in addition to hot water heating -- will be provided by solar generators.

Like Raimon Land, CB Richard Ellis is aiming to practice what they preach: at the end of May, their corporate headquarters announced the company’s goal to become carbon neutral by 2010. The firm also said they plan to assist their clients with carbon reduction programs.

Bangkok’s War On Air Pollution: A Success Story

Utter the word Bangkok to someone who’s not familiar with the city, and you may well evoke some unsavory descriptions. It’s sweltering, people say. Or it’s crowded. Or the traffic is nightmarish. Depending on your perspective, those might all be valid complaints. But the Thai capital is often subject to a largely undeserved reputation: that it’s highly polluted.

While it may be true that the City of Angels is not on par, in terms of environmental controls, with some other Asian cities, many people fail to recognize that the city has come a long way in the last ten years. In fact, as an International Herald Tribune article headlined “Bangkok´s template for an air-quality turnaround” pointed out a few months back, the steps that Bangkok leaders took to lessen air pollution might well serve as a model for improvements in other cities.

The change in Bangkok has been brought about by a group of dedicated policymakers who instituted a series of efforts aimed at cleaning up the air. All taxis, for example, were switched to run on liquified petroleum gas. And tax incentives have helped to rid Bangkok of masses of highly-polluting two-stroke motorcycles over time. And while the Kingdom didn’t even have emissions standards before 1992, its protocols are now similar to those in European countries. Remarkably, air pollution has been lowered despite a 40 per cent increase in the number of vehicles over the last ten years. Air pollution levels in Bangkok are now better than in other Asian metropolises such as Shanghai, Beijing, New Delhi, and Jakarta, though the air here is still dirtier here than in places like Singapore and Tokyo.

Other measures that have helped include the construction of the Skytrain and the MRT. This has lessened the number of cars on the street as commuters opt for public transport. And Bangkok’s ample green space -- which, seen from up high, often constitutes a greater area than one might expect -- is also beneficial. And geography favors the Thai capital, too: the city is not in a valley, where smog might sock it in. And there are no coal-fired power plants nearby to spew pollution.

Article courtesy of Asia Property Report

Rulings may ease Thai troubles
2007-06-03

Thailand’s real estate and business players are optimistic that Wednesday’s rulings by the country’s Constitutional Tribunal will bring some much needed stability to the economy.

In a converse ruling that took nearly 12 hours to read, the Constitutional Tribunal, comprised of nine senior judges from the Supreme Court and the Supreme Administrative Court, cleared the country’s oldest political party - the Democrats - of election law violations charges. The former ruling Thai Rak Thai party (TRT), founded by ousted Prime Minister Thaksin Shinawatra and having 14 million members, wasn’t so lucky, and was found guilty of breaking election laws and ordered to be disbanded.

Business players were pleased there was no outright violence after the rulings, believing it will increase confidence among consumers and investors.

Robert Collins, managing director of Savills Thailand, says he’s already seen signs of the positive sentiment this decision has made on the market.

“The day following the ruling we were on site in Phuket with a HK based buyer who was very pleased with the decision as political stability is now seen closer to hand,” said Collins. "This is another step to hopefully realising a positive outcome at the next election. We are confident that the strong economic underpinnings of the Thai economy will become apparent soon and that the real estate market will continue on the recovery that we have experienced during the last few months.”

Teerachon Manomaiphibul, assistant managing director of Property Perfect, was quoted in the Thai media as saying he hoped that investment would return to Thailand in the second half if the election schedule was kept.

"Then the property market should recover next year after we know who will form the government and what are their economic policies," he said.

It’s been a rough few months in the Thai real estate industry, with many foriegn buyers taking a “wait and see” stance over fears of the political situation and economic moves by the military junta that were perceived as protectionist and “anti-foreigner.”

The Finance Ministry earlier this week downgraded its economic growth forecast for 2007 to 3.8-4.3% from 4.0-4.5% as consumer spending and business investment have fallen off due to the political uncertainties that have snowballed since last September’s coup.

Santi Vilassakdanont, chairman of the Federation of Thai Industries (FTI), told Thai press that business and investor confidence would now pick up following the court rulings.

"It’s a good sign that there was no rallies or chaos after the ruling. It shows that politics and the economy should be back on the right track soon," he said.

The court ruled Wednesday that the Democrat Party did not malign ousted Premier Thaksin Shinawatra nor urge voters to cast a "no" vote in last year´s election. It also found the party not-guilty of using a smaller party to trick the Thai Rak Thai in election law violations, and ruled it had not obstructed a parliament candidate from registering in a southern constituency.

"There are no legal grounds to disband" the Democrat Party, a judge read.

But the Tribunal´s verdict said that the TRT has committed misconducts which broke election laws and undermined national stability and democratic standards, warranting its dissolution. The Tribunal also revoked the voting rights of the party´s some 110 executives for five years. The revocation involve former party executives, including Thaksin Shinwatra, who has been out of the country since the September coup.

Although the verdict has left supporters of the TRT calling foul, analysts say it could help restore political stability ahead of December elections, and give the economy a much-needed boost. But people are closely monitoring the political situation in case the dissolution of the TRT unleashes more political chaos, which could disrupt the charter-drafting process and general election.

On Thursday, more than 1,000 supporters of Thaksin protested the court ruling that banned his party and barred its entire leadership from politics for five years, saying the military-appointed tribunal lacked legitimacy.

In the wake of the ruling, Thaksin sent a handwritten letter to his party and supporters, urging them to continue their political activities for the benefit of the country.

"As a founder and ex-leader of the party until the coup, I would like to apologise to members and all supporters for this unexpected turn of events," he said, criticising the expulsion of party executives as out of all proportion to the accusations against them.

The letter was read out by Thaksin’s lawyer, Noppadol Pattama, at a press conference in Bangkok.

Article courtesy of Asia Property Report

Sailing in Thailand
2007-04-04

Sailing is a timeless pleasure and it is also the perfect way to enjoy Thailand's marine treasures and is environmentally sound too. Trips can be as relaxing or demanding as you want. You can charter a crewed yacht and lay back as you sail away; or if you are a more experienced sailor, charter a bareboat yacht and have the excitement, challenge and rewards of sailing it yourself.

Phuket is Thailand's premier sailing destination, attracting the cream of Thai society's as well as the international sailing crowd. From September to May when the weather is at its best, there is a migratory fleet of yachts anchored at Nai Harn Bay at the southern end of the island and Chalong Bay to the southeast.

Phuket's marinas have a huge variety of vessels for charter, from old wooden schooners to sleek fibreglass cruises and state-of-the-art powerboats. Find them at Laem Phrao Yacht Marina, Phuket Boat Lagoon and the Yacht Haven. As well as established yacht agencies, informal arrangements can also be made at Jimmy's Lighthouse, a restaurant at Chalong Bay that serves as headquarters for the yachting fleet.

Phuket is also home to one of the most popular sporting events on the yachting calendar, the Phuket King's Cup Regatta, taking place on the weekend closest to HM the King's birthday. Yachts arrive from Australia, Europe, Hong Kong and Japan to spend a few weeks cruising through the Gulf, down to Malaysia and enjoying practise runs around the Similans before heading to Phuket for the races.

In Pattaya, the Royal Varuna Yacht Club, founded in 1957, holds almost weekly regattas for the smaller beach launched sailboats. The Ocean Marina Yacht Club in Jomtien Beach, just south of Pattaya, offers jetty, pontoon berths, and onshore facilities for skippers and crew members with hotel, condominium, cocktail lounge, twin restaurants, tennis courts, and roof-top swimming pool.

Sailing a yacht competently requires skill and experience; don't overestimate your capabilities as a sailor when chartering a bareboat yacht. If you are heading out on a longer expedition, make sure you check out the weather and tides, especially in the stormy season from June to October. Be well-prepared with communications equipment, first aid, water and food. Article courtesy of Thailandmanual.com

The allure of resort properties
2007-03-30

According to Bank of Thailand statistics, tourism contributed 9% to the country’s GDP in 2005 and international tourist arrivals reached 13.4 million in 2006. Historically, tourists stayed in hotel accommodation, but following a global trend there is growing demand for villas and condominiums - particularly for long-stay tourists. There is also a growing demand from tourists to own their own resort properties in Thailand.

“Resort property development is an extension of the tourist industry and is an important element in attracting high income short and long-term stay tourists,” says David Simister, chairman of CB Richard Ellis Thailand.

Spain is a good example of a country that has leveraged its popularity as a tourist destination to become the most favoured location for second homes in Europe. Spain attracted 56 million tourists in 2005.

The UK Government’s Survey of English Housing reports that 231,000 British households own property overseas with 27% of this number owning a property in Spain. Ownership of a second home is also popular in many other countries in Northern Europe and Scandinavia with Spain being the most popular country to purchase an overseas property.

But costs in Europe are increasing both for property and general living expenses while at the same time the quality of living is increasing in Thailand.

Everyone can fly long haul, flying has become more and more affordable and distance is no longer a barrier. The emergence of low cost carriers within Asia has grown dramatically and it is feasible to fly from Hong Kong or Singapore to Phuket for the weekend. It is also feasible for someone to live in Europe and fly to Thailand several times a year to use their holiday home.

Although individuals had constructed holiday homes in Phuket for a number of years, the first significant development targeting foreign purchasers was the Allamanda condominium launched in Bang Tao Bay Phuket in 1991. The majority of purchasers were based in Hong Kong and Singapore.

The financial crash in 1997 halted development in resorts but activity resumed in 2000 and has been growing rapidly ever since.

Simister believes that there are significant benefits to local economies from second home developments. Owners and people who rent properties stay longer and visit more frequently. They are significant users of services including retailers, maintenance companies and other locally based businesses. Local authorities benefit from property tax charged on rentals.

Meanwhile, ownership of property reduces volatility in visitor arrivals as there is an incentive for owners to use their own property rather than choose an alternative destination.

But Simister says there are challenges in the growth of resort property development - especially protecting the environment so that a destination remains attractive without restrictions that are so onerous that development is not feasible.

In terms of the Thai resort property market, there are obstacles in the way of its growth, including tight restrictions on foreign ownership and a prohibition on lending to foreign property purchasers. Currently, under Thai Law foreigners are allowed to buy up to 49% in area terms of a condominium. Foreigners are not allowed to own land and the maximum length of lease is 30 years, although developers can offer options to renew extending the lease term to 90 years.

In many resort areas there is not enough local demand for high-end resort condominium units and so developers are unable to sell the 51% Thai quota of the building. The main option open to the developers is to offer 30 year leases, plus options to renew, on the Thai quota condominium units.

Thirty year leases are not as attractive as freehold titles or longer term leases, says CBRE. They are relatively illiquid because of their short length and so there is a limited secondary market in resales. Currently foreign condominium purchasers are prohibited from borrowing money locally to purchase a condominium as the foreign ownership regulations state that all funds used to purchase a condominium must come from overseas as foreign currency.

In the past many other countries in Asia were equally restrictive but now other countries are opening up their property markets and although Thailand has had a head start and has a natural advantage in attracting overseas property buyers this position will be eroded as other countries offer more attractive packages.

Malaysia has limited regulations on foreign ownership of property. Foreign ownership is regulated by the Foreign Investment Committee (FIC). Any acquisition of property by a foreign interest requires the approval of the FIC however this is a formality and rarely is approval withheld. The only restriction is that the property should be valued at more than 150,000 Malaysian Ringgit (the equivalent to Bt1.5 million). Foreigners are allowed to borrow locally to fund property purchases. Malaysia is also promoting a special programme under “Malaysia My Second Home.” The Malaysian government grants a 10 year visa to citizens of all countries providing they open a fixed deposit at a Malaysian bank in the amount 300,000 Malaysian Ringgit (about Bt3 million) and the right to buy up to two houses priced at more than 150,000 Malaysian Ringgit each (Bt1.5 million baht).

Vietnam offers overseas buyers 50 year leases and China offers foreigners a maximum leasehold period of 70 years for land intended for residential use.

In Singapore there is no restriction on foreigners owning freehold condominiums but the only freehold landed property that is available for foreigners is on Sentosa Island.

CBRE says this is why the Thai government needs to change its stance, or it risks losing its advantage over other regional markets.

“Thai government policy has been to focus growth in tourism on quality not just quantity with the objective of increasing the amount spent by individual tourists and extending the length of stay,” says the company. “The sale of resort property to tourists will achieve both those goals. Resort property sales will be a key catalyst in upgrading the type of long stay tourist from back packer to billionaire.” Article courtesy of Asia Property Report

Minor International makes major plans
2007-03-29

Thai listed firm Minor International PLC announced it is stepping into the luxury residential property market with two high-end developments – one in Bangkok and the other in Koh Samui.

The development plans are part of the company’s aim to expand its hotel, food and residential businesses over the next four years. The company has earmarked Bt10 billion for its expansion plans.

The 14-unit Samui Beach Residence will be part of the company´s Four Seasons Hotel on Koh Samui, which opened February 1 at Laem Yai peninsula. One unit, worth Bt100 million, has already been sold.

The Bangkok property will be located on Ratchadamri Road, next to the company’s Four Seasons Hotel. Following the trend toward mixed-use properties, it will have 250 hotel rooms on 30 floors and 75 residential units on 20 floors. Construction has already begun, with the project scheduled for completion in 2009. Units will start at Bt25 million.

According to chief financial officer Pratana Manomaiphiboon, most of the Bt3.5 billion the company has set aside for 2007 will be used to development of the as-of-yet unnamed Ratchadamri project. Pratana, during a meeting with investors at the Stock Exchange of Thailand, said the investment will come from the company´s cash flow and the exercise of 250 million warrants by next February.

Minor offers a hotel-management service through its Anantara brand for four hotels in Hua Hin, Chiang Rai, Samui and the Maldives. The number of hotels under its joint ventures and management contracts will increase to over 30 in 2010 due to new openings in Sri Lanka, Bali, Vietnam, India, China, Dubai and the Middle East.

Last year, Minor opened three properties under different brands in the Maldives and also opened two hotels in Thailand: the Four Seasons Tented Camp and the Four Seasons Samui.

Minor´s food brands include The Pizza Company, Swensen´s, Sizzler, Dairy Queen, Burger King and its Asian fast-food chain, Le Jazz. The group will open 70 to 80 new outlets per year in Thailand, China, the Middle East and Southeast Asia. Article courtesy of Asia Property Report

Wooing the ’grey’ segment
2007-03-28

Retirees contemplating a move to Thailand might well feel nervous about purchasing property in the Kingdom. The current political situation is somewhat volatile, and proposed changes to the Foreign Business Act have raised questions throughout the industry. But there´s more to the story than that - and the resort home market still boasts a significant upside for both buyers and developers alike.

Now more than ever, Thailand is wooing foreign retirees, and their continued investments in Thailand reflect a global second-homes trend. The news service DPA recently observed that Pattaya alone reported sales of more than US$230 million (Bt7.95 billion) in beachside condominiums last year, many of them snapped up by foreigners. And properties are also selling briskly in many of the Kingdom´s other beach resorts, such as Phuket, Samui and Hua Hin.

More developers, as it happens, are targeting retirees who are considering staying in Thailand permanently or seasonally, rather than those who want to use their investments as vacation properties to be occupied only a few weeks at a time.

It´s plain to see that the Kingdom´s positive attributes remain as attractive as ever. First, and quite obviously, no amount of governmental turmoil will change the fact that Thailand enjoys year-round warm temperatures by virtue of its tropical climate. While their counterparts in Europe, North America, and Eastern Asia shiver through the winter, retirees in Thailand can relax at the beach and bask in the sun.

"Our season is opposite Europe´s, so it´s a great place for European retirees," says Charlotte Filleul, Phuket Sales Manager for CB Richard Ellis. "When it´s winter in Europe, they can come here. When it´s rainy season here, they can go back to Europe."

But perhaps most important, the cost of property in Thailand - as well as the overall cost of living here - remains much lower than in European and Caribbean hotspots. Norbert Witthinrich, managing director of Phuket-based real estate agency and development company SEA Property International, says that Thailand is "one-third of the cost of most other international holiday destinations." He also notes that the Kingdom´s hospitable people are another selling point. "Thailand provides very friendly and service-minded people," he says, pointing to his home turf of Phuket, specifically, as an advantageous location. "Phuket is a very safe place and Thailand is a democracy," he says. "Phuket offers also a lot of activities, like sailing, golfing, etc. - and all for an attractive price."

In addition to the warm weather and overall affordability, Thailand has the benefit of offering top-notch medical care, a notable factor for aging populations who choose to spend a significant amount of time in the Kingdom. Thailand is an international leader in the medical tourism world; the country´s most renowned facility is the private Bumrungrad International Hospital, located in central Bangkok. It´s Asia´s first internationally accredited hospital, a sprawling, world-class operation that last year treated 400,000 foreign patients from over 150 countries. In a recent article called "Medical Meccas," Newsweek magazine said Bumrungrad provides "world-class medicine at developing-world prices."

Another characteristic working in Thailand´s favour centres on transportation. For foreign retirees, getting to the Kingdom from abroad has never been easier. In addition to top-tier service from Thai Airways, Bangkok is a regional aviation hub, and visitors who touch down at Bangkok´s new Suvarnabhumi airport can easily connect via domestic service to their destinations within the Kingdom. (Suvarnabhumi, which opened in September, has faced its fair share of unexpected hiccups; the old airport, Don Muang, is scheduled to re-open soon, and it´s hoped that this will ease congestion at Suvarnabhumi. Officials say this will be a temporary arrangement while problems at the new airport are fixed.)

A significant player in the bid to attract retirees is the Bangkok-based Thai Longstay Management (TLM), a company that is 30% owned by the Tourism Authority of Thailand. The group offers qualified tourists the TLM Privilege Card, which provides for priority service in airport immigration lines as well as airport transfers. And perhaps most significantly - depending on the level of paid membership - foreigners can receive one-year multiple-entry visas. Packages cost between Bt6,000 and Bt72,000.

So how might the potential changes to the Foreign Business Act - which would restrict provisions that allow foreigners to own freehold property - figure into retirees´ plans to settle in Thailand? Some analysts project that the market for condos - which would be unaffected by tightened laws - might become more attractive. There are also concerns that Thailand might lose out to nearby Malaysia and the Philippines, two nations that are also keen to attract foreign retirees. Last December, in an attempt to boost economic development, Malaysia relaxed its laws that govern foreign ownership of residential property. And in the Philippines, the government has expressed its desire to attract one million foreign retirees by 2015.

Witthinrich, however, says that economics, plain and simple, will continue to make Thailand as attractive as ever. "I see a very strong group from Europe over 50 years old," he says. "They are selling their homes in Europe…and buying a villa or condo here that´s double the size for half of the price, and they use the profits to retire earlier. This group is growing…and of course all developers see this. I believe that a villa or condo project that brings all the facilities together that people this age need will be very successful."

Indeed the statistics are on Thailand’s side. Retirement overseas in warmer climates is increasing. For example, the UK department of Works and Pensions reported that 660,000 UK born people received a pension overseas in 2005.

CB Richard Ellis believes that the trend of owning property and retiring overseas is going to grow, and Thailand is still in a strong position to benefit from this trend as it is already well-recognized as a tourist brand and is therefore well-positioned as the preferred location in Asia to own a second home. Article courtesy of Asia Property Report

Thai resorts set to boom?
2007-03-21

With the traditional resort property hotspots of Samui, Phuket and Pattaya receiving so much attention from investors in recent years, it’s not surprising that prices are skyrocketing and beach front land is becoming scarce.

This means that - as the tried-tested-and-true formula witnessed in global real estate markets dictates - there will always be savvy investors looking to get an early start on the next big thing.

The key to developing in emerging markets is that there has to be some degree of facilities already in place, says Robert Collins, managing director of Savills Thailand.

“The tourists have to pave the way to the destination,” he said. “For these emerging markets, accessibility is the key because the kind of buyers than can afford the more expensive properties are already travelling a great distance to get to Thailand. The last thing they want to do is get into a taxi or bus at the airport in Bangkok and travel another four or five hours to get to a resort and get a ferry ride and another taxi. Developers need to bear in mind how people are going to get to that resort. People will make the effort but it has to be priced accordingly.”

Property Report took an in-depth look at three destinations that have indeed already laid the groundwork and are now starting to attract major interest from buyers: Koh Pha Ngan, Krabi and Koh Chang.

For those in the know, these resorts are certainly not new destinations on the travel or property trail. But it’s only been in recent years that they’ve been starting to make a name for themselves on a more international scale, as intrepid investors shy away from the pricier traditional hotspot areas. And, notably, the big name property management firms have yet to move in, a sign they still fit under the up-and-coming banner.

Koh Chang development limited With its mountainous jungles, waterfalls, unspoilt beaches and relatively quiet atmosphere, Koh Chang is an eco-lover’s dream. Located in the eastern part of the country in the Gulf of Thailand, over 80% of this island is part of the Koh Chang National Marine Park, a fact some say will prevent it from being over-developed with hotels and residences.

The island’s western region is where most development is taking place, due mainly because that’s where the more picturesque beaches lie.

Siam Royal View was one of the first developers to build a large-scale project on the island; a high-end 360-rai villa and bungalow development north of the popular White Sand Beach. Prices start from as low as Bt2.8 million for a one-suite bungalow up to Bt17.1 million for a 732sqm villa. David Walton, sales and marketing director of Siam Royal View, says the first phase of the project sold out during the high season last year and construction has already begun. One key to the company’s success is the accessibility of Koh Chang, he says.

“We’ll be offering secure parking for residents on the mainland and a taxi service with our own speedboats specifically for residents. So literally they can be door-to-door from Trat airport to their homes in 30 minutes.”

This keeps in line with Savills’ Collins comments that high-end buyers aren’t interested in lengthy commutes to their holiday homes. Bangkok Airways offers a three flight a day service from Bangkok to Trat. So for Bangkokians, the 45-minute flight makes for an ideal weekend.

“We’re very pleased by the fact we’ve had a very consistent level of inquiry from Thai nationals, a lot of them coming from Bangkok. As a guestimate I’d think that over 50% of sales has gone to Thais, which is very encouraging for us,” says Walton.

Other notable developments taking shape on the island include Tranquillity Bay, an exclusive residence comprising 74 one, two and three bedroom condominiums, all of which will be fully furnished. Additionally there will be 10 luxury pool villas.

Siam Royal View’s Walton says it’s doubtful other large developments will follow in their footsteps, due mainly to the tight restrictions placed on the island.

“If you look at the current projects and current developments already in place on the island, you’d have to say pretty much 10% of the island is already developed or under development. I believe what we’ll continue to see are one-off small developments where something effectively has been taken down and replaced. But nothing on a big scale.”

Walton says Koh Chang’s geography is quite peculiar in that all the developments lie directly on the coast. Because the island slopes to a high point of about 743 meters above sea level very quickly, it doesn’t give developers a lot to play with.

“You’re not going to get highways built on Koh Chang. It would be impossible in engineering terms and even if it were it would be prohibitively expensive. I think the island is pretty much going to remain what it is, which in my view is a good thing.”

Other governmental restrictions will keep the island from becoming too developed. The maximum height allowed for buildings is three stories and anything built directly on the beach front in terms of residential property is limited to one storey only, meaning it sits under the palm fringe.

Also, the island isn’t home to rows of nightclubs and bars or the amenities that attract the truly wealthy such as luxury shopping or high-end restaurants. This means that those looking for wild nights in the fast lane would be better off taking their cash west to Pattay. But for those looking for a peaceful and relaxing getaway, few destinations in Thailand can offer a more suitable setting.

High-rollers beginning to eye Krabi Of our three featured destinations, Krabi is perhaps the best known on the global travel circuit, thanks to its international airport and the presence of a few five-star resorts. But it’s only been in the past two years that property development in this province has really followed suit – albeit in limited numbers.

Bordering the Andaman Sea, this coastal resort province attracts countless visitors thanks to its natural attractions such as white sandy beaches, coral reefs, caves, waterfalls and giant limestone cliffs. A number of carriers offer direct flights from Bangkok daily, and there are also direct flights from Singapore.

And for property investors, it has the infrastructure to support its growing popularity. “Krabi really benefits from having the best of the resort airports in the country. It’s a new airport that’s way ahead anything else,” says Savills’ Collins. “The road network is practically new throughout the entire area and is way ahead of other locations. This is where Krabi really is ahead of the game. It has the infrastructure in place, what it lacks, if anything, is there isn’t enough supply in Krabi.”

There are only about seven notable developments being built in Krabi at the moment. Of those, the really high-end ones are Amatapura (represented by Savills), The Cove, LeKiri and Phulay Heights. “It is a coincidence that Lekiri, Krabi Sunset, The Cove and Amatapura launched at almost the same time , says Ekaraj Intravisit, managing director of Le Kiri. “Maybe everyone can see it is time to reveal the charm and beauty of this Emerald to the world´s eyes. For me, deciding to buy this land took me a very short amount of time.”

Le Kiri features eight spacious villas ranging in size from 606-808sqm. The project is located on the beachfront at Nammao Bay. Prices range from Bt15 to 18 million for villas and Bt7.5 million for Triplex apartments with private swimming pool. Phulay Heights’ 52 villas lookout over Phang Nga Bay In Klong Muang.

Krabi’s largest project is The Cove, at Haad Yao. More than 1,000 rai is being developed into more than 1,200 residential condos and villas, branded hotels and an 18-hole golf course.

Collins says more development for Krabi is eminent, but there are restrictions in place that will limit the quantity and volume of the developments that can go ahead. “Everyone’s looking at Krabi now. In terms of property you can buy, Amatapura is without a doubt the top development. I think Amatapura has the potential to become the role model for krabi in years to come.”

This project on Laem Pho features 29 beachfront villas and is 60% sold. It received a lot of attention from Hong Kong buyers following its launch last year and prices range from Bt25-40 million baht.

“We’re seeing a strong trend towards Krabi in preference to Phuket these days, and definitely the sales rates for Krabi seem to be slightly better than Phuket,” says Collins. “As much as anything the environment is less developed so far and the pricing is reflective of the fact it’s a relatively new market and can’t match the Phuket market. And I think that’s possibly a reflection that Phuket and Samui are overpriced rather than Krabi is cheap.”

Koh Pha Ngan learns from Samui The name “Koh Pha Ngan” is by no means foreign to world travellers, but until recently, it was spoken primarily among the backpacker set, drawn to its rowdy all-night Full Moon Parties held every month.

Today, the hippies still come, but the island is opening itself up to high-end property development as well, as more people look to escape the crowds of Samui for Koh Pha Ngan’s less crowded beaches and laid-back atmosphere.

Companies such as WOW Properties, KP Properties and Sage Land and House offer a number of residential property development projects and land, most of them situated in exclusive and secluded headland locations with spectacular views and remote locations that certainly rival what many see as the overdevelopment on Samui.

Land prices on Koh Pha Ngan are still comparatively low, and beachfront land is by no means scarce. Prices vary greatly depending on the location, with the average price for hill plots going for about Bt1.5 million while beachfront land goes for an average of Bt4 or Bt5 million, depending on the quality of the land, of course. Land plots with prime views obviously command much steeper prices. There aren’t any notable large-scale developments going up as of yet, but many of the island’s residents say it’s only a matter of time.

“Things are moving but the developers are cautious, waiting to see what happens in the next few months,” said one surveyor who asked not to be named.“Compared to Koh Samui our infrastructure is actually a lot better. Koh Pha Ngan has learned an awful lot from Koh Samui. The people in power are quite proud of the fact that we built our roads wide already and with big drains so we don’t have to dig up the sides of people’s houses to put in the storm drains. Once you get to Koh Pha Ngan, the only place you can really land is Tong Sala, so there’s no need for a massive highway network.”

Article courtesy of Asia Property Report