The property markets in Samui are the most vulnerable to a global financial shock as most of the buyers on the islands are foreigners, said developers at a real-estate seminar held June 6 at Centara Grand Beach Resort, Koh Samui.
The one-day real estate seminar, supported by Raimond Land, focused on the property markets and business in Thailand and Koh Samui. The seminar covered topics and information about property projects such as condominium in town and in holiday destinations at the same time giving participants information and helpful insights for investing in property business on Koh Samui and other tourist destinations.
Nigel Cornick, Raimon Land chief executive, discussed the opportunity for investment and the result of the research over condominium project in Thailand and the golden opportunity for investing. John Birt managing director of Samui Villa and Home and Gary Bisty from Mayer Brown JSM also took part in the seminar as lecturers.
According to Nigel Cornick, the property business is facing different threats to make the market fallout “there are already signs some overseas buyers have trouble transferring their purchases being affected by the credit crunch”
While the fallout remains relatively small for Thailand’s resort-home market today estimated to be worth Bt17 billion in sales last year, Cornick said there are signs tougher times may be hitting in the months to come.
According to him, Koh Samui compared to other destinations is the most vulnerable because all buyers are foreigners while Pattaya, for example, is sheltered from the full brunt of a fallout as a third of purchasers are Thai. It is reported that global credit crunch, sparked by the US sub-prime crisis in August last year, may hurt the market when the contagion widens further, said several developers who joined this seminar.
Samui Villas & Homes managing director John Birt expressed his confidence over the luxury housing in Samui as he believed it should be spared, but not the middle segment. Many of the transactions here are all cash. Local banks do not provide financing to foreigners. “At the luxury end, most buyers do not need to take out bank financing because they have the cash, but the worst of times also bring opportunities” said Birt who has 19 years of experience in Samui housing.
The latest development on the island was seeing Bangkok punters buying inland plots recently, he added. As only beachfront property commands interest, inland properties are much cheaper.
The local punters have decided to bet on Samui land “as they consider Thai stocks as hopeless and low bank deposits being much worse,” Birt said. With soaring inflation, some speculators assume land is a safe hedge.
However developers and financial experts suggested that in times of inflation, it is more important to hold cash as land can be highly illiquid.
Facing many threats, the number of new resort projects though continues to rise. According to the research done Raimon Land, sales of Pattaya units last year fetched Bt6.7 billion, while those in Hua Hin were valued at Bt6.3 billion, Phuket sales were worth Bt3.2 billion last year, while Samui recorded Bt800 million.
The tourism industry continues as the main driver behind interest in Thailand’s resort condominiums, with holiday destinations close to Bangkok receiving the most attention, especially from international buyers lured by attractive prices.
Thailand’s seaside resorts; namely, Pattaya, Phuket, Koh Samui and Hua Hin, where more than 30% of the country’s luxury condominium inventory are now located, have experienced 9.5% annual growth in international arrivals since 2003, and these strong figures are supporting resort property expansion.
A surge in condominium launches during the second half of 2007 reversed a slowdown that began in mid-2006 and propelled the year-end tally to 2,415 new units. Of these, 67% were located in Pattaya, 26% in Hua Hin, 4% in Phuket and 3% on Koh Samui it added.–
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