| CB Richard Ellis
Thailand : 17 January 2008 |
Growth in tourism creates the market for resort real estate and
increases in tourism bring in both more buyers and fuel demand which in
turn creates price rises, according to international property consultant
CB Richard Ellis. 2007 was a year of robust growth for the tourism
industry in Thailand’s
resort markets. Arrivals to Phuket alone totaled 5.47 million, a third
of total tourist arrivals to Thailand. Samui, Asia’s emerging “boutique” resort island, is also seeing
significant growths. In 2000, there were only 600,000 visitors to the
island compared to 1.5 million in 2007.
Phuket has outperformed itself in terms of hotel occupancy and arrivals
even in last year’s low season. From a highly seasonal tourist
destination, worldwide appeal has transformed Phuket into a year-round
destination, with a 70% average annual hotel occupancy. This high season
is undoubtedly one of the busiest Phuket has seen.
Phuket
International Airport currently handles up to 287
international flights per week, while many hotels and airlines remain
fully booked until March this year.
Samui, Phuket’s boutique rival, has also experienced an inflow of
visitors as the island’s accessibility has improved resulting from
Bangkok Airway’s expansion. The airline now operates daily direct
flights to Hong Kong and
Singapore and twenty flights
to Bangkok.
Further growth is expected as higher capacity aircrafts are now able to
land in Samui. THAI Airways planes will also be able to operate two
daily flights between Bangkok and Samui
and opening Samui Airport to two main carriers. The aircraft
seat capacity on international flights is expected to rise by 62% to
accommodate the increasing demand. This could produce over 2 million
airport arrivals in 2008.
“The improved airlift in Samui will be a key factor in supporting the
growth of its property market. CB Richard Ellis expects increased demand
for homes here,” said Ms. Prakaipeth Meechoosarn, CB Richard Ellis Samui
Manager. CB Richard Ellis remains confident in the long term prospects
of the Thai resort property markets. In 2007, CB Richard Ellis opened
two new offices in Samui and Pattaya as part of our plan to expand our
resort property network throughout
Thailand.
2007 land prices continue to rise although there were reduced numbers of
individual transactions mainly due to the Foreign Business Act (FBA)
uncertainty in Q1 2007. In Phuket, there were no significant changes in
the number of completed land transactions, however transaction values
from Q1 to Q3 2007 totaled an estimated of THB 6,900 million, a 6.7%
reduction compared to Q1 to Q3 2006. A similar trend is reflected in
Samui whereby the monthly average transacted value is estimated at THB
413 million in 2007, compared to an average of THB 450 million in 2006.
Post election, reports of viewings and bookings of resort properties
from our agency team shows a clear uplift in transactions.
Land price in Thailand’s coastal areas continues to
grow unabated and indicate the strength of the market and long term
prospects. The Treasury Department’s recent appraisal of land value
shows that land prices in Phuket have increased on average a 160% in the
past four years, with Samui prices following closely. Beachfront plots
on Phuket’s west coast are transacting at THB 21 up to 50 million per
rai, with the exception at Patong which has recently achieved THB 200
million per rai. Samui beachfront land prices are also trailing closely
at THB 15 million per rai.
“There is sustained interest in the Thai resort properties market
reflected through the ever increasing number of enquiries through our
three resort offices. We are seeing more activity in Phuket this high
season and our sales team is busy with closing sales,” said Ms.
Charlotte Filleul, CB Richard Ellis General Manager - Resort Property.
Phuket’s property market is no longer confined to the regional market.
The increasing focus on luxury developments has extended the island’s
appeal to the global market. The growth of Phuket’s yachting and marina
industry is a key part in drawing in the well-heeled investors and
positioning the island as the yachting capital of
Asia. Phuket now has a total of 800 yacht berths and five
marinas. There are currently at least five luxury yachts cruising in
Phuket this week. The
international lifestyle Phuket offers is clearly driving the growth of
its luxury property market.
Out of the 124 villa projects actively marketing in Phuket, the high-end
market (over USD 1 million) still accounts for less than 15% of the
total supply. The supply of luxury villas is actually limited, but there
is a growing number of projects on the drawing board which as they come
to the market will offer more choices to buyers who are searching for
their right property. CB Richard Ellis has at least 500 serious
enquiries for property in the USD 2 to 5 million price range, where
potential buyers have not yet found their ideal property.
The market has performed well at this end with little unsold completed
properties.
Cape
Sienna on the Kamala
shoreline is one of CB Richard Ellis’s most successful sole agent
projects in 2007. All 10 villas have been booked prior to launch.
Saisawan on Bangtao beach is another unique villa project
launching in 2008. Saisawan is designed to provide the ultimate beach
lifestyle for the elite global market. The four bedroom villas feature a
private 25 meter infinity pool, private gym and spa and a personal
butler service. The development scores highly on all criteria- sunset
views, absolute beach frontage, accessibility and design.
Phang Nga, part of Greater Phuket is also becoming an important centre
of development as it is an attractive alternative to some of Phuket’s
busy beaches. An increasing number of developments are being planned
along this part of Andaman’s serene coastline, from Natai beach just
across the Sarasin Bridge from Phuket and expanding up to
Thai Muang. The beauty of the area and its proximity to Phuket International Airport are strong pulling factors for
International and Thai investors who are banking on Phang Nga’s boom.
In 2007, CB Richard Ellis has completed three major land transactions in
the Phang Nga area. A 193 rai site was acquired by Kingdom Hotels
Investment through CB Richard Ellis for Raffles Resort and Residences.
Other land deals completed include the Thai Muang Golf Course, one of
the biggest transactions in the Phuket area this year. This vast 1,000
rai site will be re-developed into a mix-use resort.
“Phang Nga is a hot destination for investors this year. There are
several prime sites still available and suitable for large scale resort
developments at prices that are significantly cheaper than Phuket.
Beachfront land in Phang Nga is priced in the region of THB 5 to 20
million per rai, depending on location and size. In Phuket, it is very
rare to find a beachfront plot for sale as most prime sites are already
occupied and developed,” said Ms. Khanitha Jarukirati, Associate
Director of Investment and Land Services at CB Richard Ellis Phuket.
Samui is also catching up with Phuket in the luxury villas market.
Whilst 70% of the villa supply in Samui is priced below USD 1 million,
CB Richard Ellis is witnessing more developments launching in the USD 2
to 3 million price mark. As the luxury villas sector in Samui emerges,
there is evidence that prices are moving to a level that is up to par
with Phuket, at least for the top end of the market.
Another positive move for the Samui market is the entrance of
professional local developers backed by foreign joint venture partners.
Previously, many of the developers in Samui were smaller players and are
often under funded. The arrival of international hotel brands such as W,
Conrad, Four Seasons, and Park Hyatt is adding credibility to the island
and attracting quality investors. Samui has been traditionally
associated to a low key beach destination, however this is changing
rapidly.
In the coming years, CB Richard Ellis expects an increasing supply of
branded residences. In Phuket, branded residences under development
include Shangri-La Villas in Bangtao. Other developments in the pipeline
include TAJ Exotica in Koh Lone, Park Hyatt and Capella in Emerald Bay, Four Seasons in Rawai and Dusit and
Raffles Residences in Phang Nga. Samui is following a similar trend with
the launch of The Estates at Four Seasons and Conrad Residences. One of
Samui’s most exclusive developments to launch in 2008 through CB Richard
Ellis is W Retreat and Residences with prices ranging from THB 65 to 205
million. Another branded residence under planning is Park Hyatt located
in Thong Krut Bay.
Whilst there appears to be an influx of branded residences launching, in
fact the volume each year is quite limited. The exclusive nature of
branded residences often impose restrictions in the volume of unit and
such projects demand a thorough design development phase, hence CB
Richard Ellis does not expect all projects to hit the market at the same
time period. With a steady flow of projects launching and a sustainable
level of demand, the market is expected to perform well and absorb the
new supply in the long term. The association of luxury brands to
residences will also help strengthen Phuket and Samui’s position in the
international resort property market.
Looking ahead in 2008, CB Richard Ellis expects a long term growth in
the Thai resort property markets. The general election held on December
23rd 2007 marks the return to democracy and puts the country
back on the path to economic and political progress. “The property
market has been subdued in 2007. Although the general election is not a
miracle cure to Thailand’s
problems, we do expect a clear and positive policy towards foreign
investment from the democratically elected government. This should play
a significant role in bringing confidence back to the market,” concluded
Mr. David Simister, Chairman of CB Richard Ellis Thailand.
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