Koh Samui Heads Upmarket
It may be 10 to 20 years behind Phuket, but Koh Samui will be a high-end tourism destination within five years and land prices are likely to rise by 50-100% in the next three years, said a broker based on the island.
”Investors are seeing Samui as a new investment destination since the entry of super-luxury hotel chains including Four Seasons and [the soon-to-arrive] W Hotel, Conrad and Banyan Tree,” said Chaiyakarn Sudampanthorn, CEO of Thailand Estates Corporation Co Ltd.
After the 2004 tsunami in Phuket, land prices in Samui doubled and have since been rising by 15-30% per year.
Over the past three years, most of the property sales on the island have been to individual Thai investors. Some were developers, some were land speculators while some bought residential units to rent to foreigners with an average yield of 5-8% per year.
However, rapid development has also brought problems, including land purchases by foreigners through local nominees, and scandals related to titles improperly granted for reserved land.
”After the nominee problem, land demand dropped. But it is likely to resume due to the arrival of more Thai investors and developers,” Mr Chaiyakarn said, adding that about 70% of the land in the island was owned by Thais and 30% by foreigners.
”Foreign developers have gone. They were not confident in the situation due to bad news about Samui property. Foreign buyers turned to choosing Thai developers and will consider their background first.”
Mr Chaiyakarn said the Samui property market had suffered since the September 2006 coup that ousted Thaksin Shinawatra. There are now 20 foreign brokerage firms on the island, down from 65, and most are from the UK.
”Foreign buyers are concerned about whether they get a house or not, the law on property ownership, the policy on money transfers and bringing money in and out, while foreign investors are concerned about politics, policy, government stability and the exchange rate,” he said.
Mr Chaiyakarn’s company, formerly Samui Estate Corporation, plans to expand its brokerage franchise business throughout the country’s beach destinations within the next three years, starting in Pattaya and Hua Hin.
Franchisees would spend 500,000 baht as a franchise fee and the company would install an IT system and provide operational support. It has a list of 100,000 prospective foreign investors and buyers worldwide, 20,000 Thai investors, 900 international agencies and 250 agencies in Bangkok, Pattaya, Phuket and Samui.
As the Phuket real estate market focused on high-end villas priced at US$1 million and up, his company sees potential in managing and marketing mid-priced real estate ranging from five million to 40 million baht. It set up a subsidiary, Phuket Estate Corporation, six months ago to serve this segment.
The subsidiary is managing sales of two projects: SeaStone Villas with 24 villas priced at 7.5 million baht each, and Baan Wana worth 600 million baht, launched on Monday, with 17 villas and 23 condominium units priced from 15-25 million baht and five million baht respectively.
Currently, the company is managing sales of property projects in Samui worth a combined 2.5 billion baht. One of them is The Sea, developed by Sinthoranee Property, with six villas and 15 low-rise condominium units worth 480 million baht.
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