Koh Samui’s luxury niche
by Jules Kay -
Property Report Thailand
July 2008
Despite the global credit crunch and economic
instability in Thailand, property experts say Koh Samui
has managed to surmount its recent obstacles to become a
thriving niche market based on solid market fundamentals –
including an increase in Thai investment.
At recent property seminar held on the penultimate day of
the 7th Koh Samui Regatta in June, John Birt, CEO of Samui
Villas and Homes, outlined a number of reasons to be
positive about the island´s property market in the years
to come.
According to Birt, the arrival of major, branded mixed-use
developments on Samui is a sure sign that the island will
continue to draw investors, particularly at the high end
of the market. "The Four Seasons residential villas are
already 75 per cent sold out, I believe", he said, "and
with other major players like W Hotels, Conrad, the
Oriental Group and Banyan Tree building in various parts
of the island, the future looks very positive.”
In addition to these branded developments, Birt also
pointed to a recent increase in land purchases from major
Bangkok-based Thai investors, a rarity until recently as
Thai buyers traditionally prefer locations with easier
access to the capital. He cited a fall in stock market
prices and reduced interest rates on bank deposits as
possible stimulation for an increased interest in land
acquisitions. Major purchases such as a recent sale in
north Chaweng Beach that achieved a reported Bt100mper rai
seem to support the theory that confidence is still high
on Samui.
Since the lull caused by the 2006 military coup, many of
Koh Samui´s property developers have been working to
consolidate the island´s appeal as a high-end niche
market. Major international developers like Dhevatara
Properties raised the bar by committing financially to
projects before pushing sales and this in turn attracted a
new breed of investor with deeper pockets and higher
expectations. Birt said that with beachside properties
very difficult to come by in competitor destinations like
Phuket, Samui is now taking the lead in luxury villa
construction and often achieves higher prices for
properties than its big sister. In addition, with
financing virtually non-existent for foreigners in
Thailand, except on selected developments, the market is
still largely driven buy cash purchases. "I saw two
private jets parked at the airport the the other day,” he
said. "These kinds of investors are not going to be
directly affected by a global downturn. People who pay
cash tend to use spare cash."
Despite such optimism, Koh Samui´s infrastructure still
falls far short of expectations, particularly the island´s
roads. However, there are signs of a more concerted effort
on the part of the local authorities to address this issue
with road widening and drainage projects in crucial areas
such as around the airport. John Birt believes the arrival
of big international brands and reputable developers will
stimulate property companies to "show more substance", and
added that "everything that´s wrong can be fixed". In
fact, his company is currently in the process of
implementing a number of measures to reduce both its own
and its guests´ carbon footprint buy installing
energy-efficient devices, recycling systems and
comprehensive waste management policies. The concept of a
green island is beginning to emerge as an important
differentiator for Samui, especially since the Tourism
Authority announced that it was switching its focus to Koh
Phangan for international, eco-tourism publicity
campaigns.
Obviously, in a resort destination like Samui, the
property market is heavily dependent on tourism to
generate customers and with a year on year increase
expected for the foreseeable future, especially once the
new branded resorts begin operations, the outlook is
bright. According to the Tourism Authority of Thailand
(TAT), at the end of 2007 Koh Samui had 403 accommodation
establishments offering 14,405 rooms, a substantial
increase on the 360 hotels with 13,290 rooms in 2006. This
is expected to rise to 15,500 rooms by the end of this
year. Meanwhile, Bangkok Airways offers 3,600 seats daily
to Koh Samui from a rangedomestic and international
destinations, including Bangkok, Singapore, Hong Kong,
Krabi, Phuket, Chiang Mai and Pattaya (U-Tapao). The
company´s average load factor is 85 percent, which means
Bangkok Airways brings in more than 3,200 passengers per
day. On the Bangkok-Samui route alone, the airline
operated 21 daily flights with 2,058 seats last year at an
average cabin factor of 90 per cent. Capacity on this
route is expected to increase this year, with Bangkok
Airways planning to replace its 125-seat Boeing 717
aircraft with 144-seat Airbus 319 planes. Thai Airways
also fly daily to the island using the 149-seat B737
aircraft; this has not only increased capacity, but also
spread the island´s fame internationally, which has
resulted in a more diverse customer base.
In terms of new residential developments, the island is
awash with new high-end projects. At the more boutique end
of the market, there are luxury villa developments like
The Lotus Terraces in Bang Por, an exclusive beachfront
project of six villas and five terraced homes by the
beach, and The Sea, boasting six boutique villas and 15
condominium units. Meanwhile, larger villa developments
include the Horizon Villa project, built by Profmil, the
island´s largest construction firm and featuring 65 luxury
villas on 43 rai of land just a two minute walk from
Choeng Mon beach. Then there´s the spectacular Koh Samui
Country Club, with Woods Bagot architecture comprising
luxurious hotel apartments and eight villa residences, set
around a club house with complete facilities for sports,
fine dining, spa and wellness treatments.
With the scale of investment now reaching an impressive
level on Koh Samui, John Birt and many of his fellow
property professionals believe the reasons to be cheerful
are considerable.
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