Buyer's market on Koh Samui

As some foreigners look to sell, good deals are available, while more mid-market developments are in the pipeline

NINA SUEBSUKCHAROEN

The Punnpreeda Hip Resort, on Samui's Bang Rak Beach, is developing villas for sale adjacent to the hotel site, priced from 17 million baht.

Lingering political uncertainty, the amendment of the Foreign Business Act and the central bank's now-eased 30% capital controls have taken their toll on the property market on the resort island of Samui, say local real estate professionals.

But with some foreigners growing disenchanted and bailing out, buying opportunities exist at good prices, says Chaiyakarn Sudampanthorn, managing director of Samui Estate Corporation.

A lot more supply has entered the market over the past six to seven months and foreigners seem to want to sell up and move on. Mr Chaiyakarn noted that this has led to those selling in a hurry losing as much as 10-20%.

"It's not easy to find a new buyer and this is actually an opportunity for Thais to buy," he said.

Lower prices mean Thai buyers who previously found real estate prices on Samui unaffordable can now snap up good real estate. They could also acquire some good land plots because large tracts of prime land have been taken over by foreign investors.

"Anyway they are starting to release the land, they are willing to sell at negotiable price, so it's time for Thais to buy," Mr Chaiyakarn said.

While investors might be apprehensive about buying real estate on the island in light of recent land scandals, Mr Chaiyakarn said transparency and professionalism had improved.

Local authorities brought in a computer system in January to build up a database of all land titles including Sor Kor 1 deeds, which is a notification form of land possession and shows and maintains existing rights to a particular plot.

"There shouldn't be a problem, they invested a lot in the centralised computer system _ 3-4 million baht."

Even so, Samui Estate advises prospective buyers to hire a lawyer to check all the papers and not forgo due diligence.

The poor environment has led to very few projects being launched in the past six months. Among those that have entered the market are Laan Dara, which is offering 47 land plots for sale in the Chawaeng area with prices starting at five million baht for 200-square-wah plot.

Also on the market are pool villas developed by the owners of Punnpreeda Hip Resort, close to the hotel on Bang Rak Beach to the north of the island, with prices starting at 17 million baht. The high-end Infinity condominium project in the Mae Nam-Bang Por area is also going ahead, with a 151-square-metre unit costing 9.6 million baht.

Lynn Development project director Peter Dempsey (left), joins sales director Alan Richardson (centre) and Samui Estate marketing director Adam Stanborough at the Amara Gardens resort townhouse construction site.

Chaiyapat Songkijworakul, Punnpreeda's sales director, said Samui's property market was suffering from a lack of support from the government. He suggested that the authorities look at certain aspects of the law dealing with property ownership by those foreigners who are only buying units to live or retire in and not large tracts of land for development.

"Just as Thais want to live abroad, foreigners too want to live in Thailand," he said.

Even though it might seem that foreigners are developing a lot of property on the island, Mr Chaiyapat observed that Thais too are undertaking a lot of development and sometimes joining with foreigners as shareholders.Another recent change on Samui is the debut of resort townhouse projects, with ringing a swimming pool and with other facilities. Mr Chaiyakarn noted that these are becoming very popular and are selling fast. One example is Lynx Developments' Amara Gardens at Choeng Mon beach to the north of the island.

Foreigners who simply want retirement homes deserve more support, says Punnpreeda sales director Chaiyapat Songkijworakul.

Adam Stanborough, Samui Estate's marketing executive, noted that in southern Spain, a popular holiday and retirement destination for Europeans, most of the development consists of townhouses and apartments because building and maintaining a villa is expensive.

He likes condominium developments because these are turnkey products that are easy to rent out.

One reasonably-priced condominium that is about to enter the market lies close to the Central Samui Village hotel to the south of the island. Mr Stanborough expects there will be 74 units priced in the range of five million baht.

His advice to developers is not to overcharge because they might end up with something that cannot be sold.

Mr Chaiyakarn said that lower-end products, in the range of five million to 10 million baht, were attracting the most attention. Thai buyers appear not to care for resort townhouses and mostly opt for the more conventional variety, priced at 2.5 million baht on average. Shophouses on the island cost from 4-7 million baht.

Both resort townhouses and condominiums can be rented out, with 6% to 8% annual returns depending on location, according to Mr Chaiyakarn.

However he said the trend in Samui was similar to that in Pattaya, where landlords often get leases of three to six months