Koh Samui Real Estate

Island to compete for foreign investors - South China Morning Post, Nov 2007

The idyllic island of Koh Samui, south of Bangkok in the Gulf of Thailand, has long been a haven for backpackers, but in recent years ultra-luxurious hotel complexes have given it a much higher profile.

The increase in profile and demand from a more affluent sector of society has led to the opening of Samui to property developers for high-end residential projects.

This "opening" of the island has led to significant upgrades of its international airport - hosting five direct flights a week from Hong Kong - and there is also about to be a long-awaited boost from central government budgets for further infrastructure projects.

Real Samui's director ,Matthew Smith said most signs indicated that Koh Samui would soon be competing with its more established rivals for foreign investment.

"Koh Samui has recently achieved the required number of Thai registered residents needed to attain 'city status'," Mr. Smith said. The benchmark for city status is 50,000 residents. That meant that the area would soon receive its own budget directly from Bangkok, instead of relying on a small percentage of the budget of the Suratthani province, he added.

The budget changes each year as it is calculated by a population head count, but when Samui gets its city status the budget is expected to increase by at least 50 per cent.

"The result of this will be a much needed injection of money to contribute toward the infrastructure and future sustainability of the island."

Mr. Smith added that from an investment standpoint, the most important advantage Koh Samui enjoyed over more established resort areas in Thailand was the fact that it had a far less mature property market.

"The Koh Samui property market is much newer than these long established destinations, so there is far more potential for real estate price rises and hence the growth potential is far higher," he said.

In 2006, the number of new condos in Pattaya was 1,350, Phuket 859 and Hua Hin 582, but Samui had only 142.

"Despite Koh Samui being less established than centre's such as Phuket, it is rapidly developing into a high-end boutique destination attracting reputable developers and famous hotel groups."

Mr. Smith said a second important factor to consider was the way Samui's strict building regulations and zoning laws continued to protect the beauty of the island and preserve its coastline.

Raimon Land chief executive, Nigel Cornick said he believed Koh Samui would soon be competing with Phuket for investors and this environment saw the island as a solid long term performer in terms of return of investment.

"Samui is a fast-emerging market with over 1 million visitors in 2006." Mr. Cornick said.

"The limited airline services on the island serve as a tourist quality filter. It is a popular destination for wealthy people from Britain, the United States and Australia and is an alternative to Phuket for younger, trend conscious travelers.

"Samui is in the early stages of condominium development, making it too early to gauge reliable market prices and trends. However, Raimon Land research indicates prices in Samui appear to be around the same range as similar quality developments in Phuket."

Mr. Smith says completed top-end beachside developments are now fetching 13,000-20,000 baht per sq. ft.

Lynx Developments marketing director, Rodney Waller said the high volume of transactions and the surge in property values during the three to four years immediately before September 2006, had led to Samui being referred to as among the top investment locations in the world.

"The market for lifestyle buyers has certainly thinned out since the coup but transactions are still going through. While the Phuket property market is highly developed and mature, the Samui real estate market is its fast developing, up-and-coming rival." "