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Niche player doing well despite global problems

source: Bangkok Post Nov 24 2008 Austrian developers' focus on European retirees has paid off. This seaside resort seems little affected by the political problems shaking Thailand and the financial troubles besetting the world. But a closer look would show that the real estate market has been affected, though some developers are doing better than others. At The Falls, the price of a leasehold house starts at around 5.5 million baht and it is houses not the condominiums that are selling well, although penthouses are winners here as everywhere else. Among the latter are two Austrians, Paul Derstroff and Michael Ruess, who are developing the 70-rai The Falls Hua Hin estate on the hillside of Khao Takiab through their Swiss-owned company Vital Residence Ltd. Their niche concept of an estate for European retirees is helping them in these uncertain times. Mr Derstroff thinks that other developers also still have buyers to go by what he has heard from property agents. But the increasing number of projects has made the market much more competitive. ''But for us we don't compete with these projects, we are concentrating on the target group, it's a niche and buyers want to move to Thailand,'' he said. The Austrian duo are not the only foreign developers in Hua Hin. There are also Scandinavian housing developments up on the hills behind the market as well as a project called Modena being developed by a Danish businessman farther south in Pranburi. There are far more foreign developers in Thailand's other key resorts - Phuket, Pattaya and Samui. However, like most of them, The Falls is being developed with the company's own capital without any banking support, but it does benefit from having obtained Board of Investment (BoI) privileges. While one might expect that the global financial downturn would lead to buyers asking for bigger discounts, this does not seem to be an issue Mr Derstroff has to tackle. His company's leasehold houses and condominiums are modestly priced compared to the much steeper prices at some developments in other resorts, especially in Phuket. Mr Derstroff and Mr Ruess with Kwandee Preecha, sales and marketing manager of The Falls. At The Falls, the price of a leasehold house starts at around 5.5 million baht and it is houses not the condominiums that are selling well, although penthouses are winners here as everywhere else. To spur condo sales, the developers are considering selling the units on fractional basis. ''Some people don't live here all year round so may be two people could buy one apartment together,'' reasons Mr Derstroff. They are also unperturbed by the growing popularity of mixed-used de velopments, pointing out that the retirees who buy residences at The Falls would have all the services and facilities of a five-star hotel. So far The Falls has recorded 20 re servations with eight or nine contracts signed and more people visiting the company's new office in the Hua Hin market. It appears that those who made up their minds during the soft launch in the middle of the year will be paying around 7% less than those who jump in during the high season when the official launch gets under way. As the development has attracted a mixed bag of international buyers, including people in Japan, Oman and Germany aside from those in Switzerland and Austria, marketing will be carried out in Hong Kong and Singapore. Land prices in this area are far from cheap. Mr Derstroff estimates that beachfront plots in Hua Hin cost as much as 50 million baht a rai and similar plots in Pranburi five million. Plots farther from Hua Hin beach but offering good sea views are obtainable for two million baht.

 

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