Sales in Pattaya, Phuket also slow
Property Thailand: Sales Pattaya, Phuket and Koh Samui drop. Samui market in dire straits
Bangkok Post April 12 2007
KANANA KATHARANGSIPORN: The property market on Koh Samui is facing so many problems that some developers may dump their projects and offer them wholesale in overseas markets, while sales in Phuket and Pattaya have slowed due to capital controls and changes to the Foreign Business Act. Wasant Kongchan, deputy managing director of the property consulting firm Agency for Real Estate Affairs (AREA), said property sales and investments in the three tourist destinations slowed in the first quarter as foreign buyers were concerned about changes to Thai law.
Besides the nominee curbs and capital controls, Samui faced problems of land rights documentation and new environmental rules banning construction on land more than 150 metres above sea level.
Samui had 100 projects on sale worth around 60 billion baht, with only 10% offered in the overseas market. ''Buyers were not confident in the land rights documents,'' he said. ''Some projects may need to offer discounts of up to 100%, but they are overpriced by up to 300%.''
According to an AREA survey in March, the three areas had 175 resort properties with 9,721 units, worth 151 billion baht. Only 37% of the units had been sold. Pattaya had 43 projects with 4,975 units, Phuket 73 projects with 2,792 units and Samui 59 projects with 1,954 units. The lowest sales were in Samui at 26%, followed by Pattaya (37%) and Phuket (47%). But the residential market remained buoyant with 63% of units sold. There were 193 new residential projects in the three destinations with 21,284 units worth 61.58 billion baht.
AREA managing director Sopon Pornchokchai said the three locations still had strong potential but Samui faced more challenges than the others. Phuket's average housing price was 3.52 million baht a unit, higher than 2.83 million in Bangkok, due to a lack of low-priced townhouses or condominiums.
In the first quarter of the year, the average land price in Phuket was 25 million baht per rai.
SETBACKS FOR INVESTORS
Foreign developers on Samui suspend work
New height restrictions and uncertainty in amended act blamed
Source: The Nation April 11- 2007
Property developers from the UK and Scandinavia have announced the sale of nearly Bt6 billion worth of their projects on Koh Samui, following a new city plan and a lack of clarity in the amended Foreign Business Act.
Research by the Agency for Real Estate Affairs indicates the new city plan on Koh Samui will mandate that property projects cannot be constructed higher than 150 metres above sea level. As a result, British and Scandinavian property developers planning projects higher than that must suspend them.
"Foreign investors have expanded investments on Koh Samui since 2004 to develop resort-property projects. Most of them bought land from local owners, and some plots did not have land titles, but rather only an authorisation certificate allowing people to make use of the land, not the right to sale and develop a property project. As a result, up to 10 property projects developed by foreign investors must be suspended and have been announced for sale to other investors," said Wason Khongchantr, the agency's managing director.
The project land on Koh Samui may be discounted 10-20 per cent from the average price of Bt5 million a rai for a sea-view location.
Meanwhile, demand for resorts and villas has shown only slight growth since last December, because foreign investors have adopted a wait-and-see attitude about whether the amended Foreign Business Act would affect their ownership in property projects. As a result, most foreign buyers have delayed decisions about buying new residential projects on Koh Samui and at other resort destinations.
Wason added that new resort-property projects at three tourist destinations - Pattaya, Phuket and Koh Samui - numbered 175 and were worth Bt151.04 billion. Of these, 73 projects launched in Phuket are worth Bt70.73 billion total, 59 projects on Koh Samui are worth Bt38.01 billion and 43 projects in Pattaya are worth Bt42.29 billion.
Sales of resort projects at the three tourist destinations began slowing last December after the Bank of Thailand announced a 30-per-cent currency guaranty and the government an-nounced its policy to review the Foreign Business Act, especially regarding nominee firms, Wason said.
With the market trend, land prices on Koh Samui and in Pattaya and Phuket have been stable this year compared with last year.
Last year, sea-view land prices on Koh Samui recorded double growth, from Bt2 million a rai to Bt4 million. Land prices in Pattaya increased 30 per cent, from Bt10 million a rai to Bt14 million. And Phuket's land prices rose 12 per cent, from Bt7.8 million a rai to Bt8.9 million.
"Both foreign and local investors must wait and see what the government's policy will be in the Foreign Business Act, because this will have an effect on demand for residential projects in resort destinations, 50 per cent of which is from foreign investors," Wason said.
Foreign property sales drop in Phuket
Strong baht, legal hurdles hurt market
Source: Bangkok Post June 22 - 2007
The political situation, stronger baht and changes to the foreign ownership law have slowed down property sales to foreign buyers, according to the Phuket-based property broker and consultant Andrew Park Co Ltd.
Graeme Laird, the company's president and chief executive, said property agents in Pattaya, Samui and Phuket discussed the situation and agreed that business had been bad since last year. ''The baht has been stronger by 15% in the past 18 months and the new enforcement of the nominee laws hurt nominee buyers. The worst is the political situation that was uncertain since mid-last year,'' he said.
Currently, the company is managing sales for The Crest Phuket, a luxury freehold condominium project worth 630 million baht that is scheduled to be launched on June 28 in Phuket.
Owned and developed by a Thai tourism entrepreneur, the project is located on a six-rai site between Kathu and Patong beaches, about 1.5 km from Patong Beach. About five rai of the plot were formerly a non-performing loan asset that the owner acquired in 2005.
With a total investment of 400 million baht including the plot and construction, The Crest will have 22 two-bedroom duplex units sized at 127 square metres and priced between 22 million and 26 million baht; and eight two-bedroom poolside condominiums sized at 248 sq m and priced from 10-13 million baht a unit, or about 80,000 to 95,000 baht per sq m.
Mr Laird said the owner had demolished the old villas and would build eight semi-detached villas instead. Construction started in May 2007 and will finish in October 2008. Sales are expected to close within the completion period, said Mr Laird.
Without the negative economic factors, he said, the 49% quota to foreign buyers would have been sold this year.
''After completion and if there are any units remaining, the owner will set up a company to own them and allow long-term leasing to foreign buyers,'' he said, adding that the company would stimulate sales with a 5% discount from the launch of the project until Aug 31.
Mr Laird said the company was in talks with developers to sell another two projects in Phuket. One would comprise 14 completed villas on Bang Tao Beach worth 300 million baht. Another is in the design process.
Meanwhile, another property agent, CB Richard Ellis, is managing sales of Shangri-La's Phuket Resort and Spa with 50 villas scheduled for completion in early 2009.
''Buyers from across Asia and worldwide are already spotting a great investment opportunity with the private villas,'' said David Simister, the chairman of CB Richard Ellis Thailand.
The villas will be sold on a leasehold basis in accordance with both current and proposed foreign ownership laws in Thailand . It will be located at the Layan end of Bang Tao beach on Phuket's west coast.
CBRE estimated that well-managed rental properties in Phuket produced annual returns of 6-8% a year. Phuket also continued to offer buyers the potential for capital appreciation.
Although there is often a small risk associated with an off-plan purchase, the risk in this case would be insignificant given the operation and management by the Shangri-La brand and the endorsement of a reputable developer, CBRE said.
Related: Warning for buyers of Samui land -