REAL ESTATE
Thailand's Up-and-Comers
By Thailand Property Report
Mar 5, 2006, 01:58

Although the property markets in Thailand’s major resort areas continue to attract the lion’s share of foreign investment, that doesn’t mean development isn’t happening elsewhere. In addition to Thailand Property Report’s usual coverage of Samui, Phuket, Pattaya and Bangkok, this month we explore three up-and-coming locations: Koh Pha-ngan, Krabi and Hua Hin.

Independent spirit on Koh Pha-ngan

Since Thailand Property Report ran a feature on Koh Pha-ngan earlier this year, the property market has continued to expand. James Cook follows up on developments in the new frontier.

It’s fair to say that on Samui, Koh Pha-ngan and Koh Tao, the biggest tourist boom in the three islands’ history began immediately after the Tsunami. Almost 12 months later it has yet to subside, and the resulting visitor diversification provides a wealth of opportunities for property developers, particularly with regard to niche markets such as those now flourishing on Koh Pha-ngan.

Although a large percentage of investors have previous experience of the island, there is certainly no shortage of adventurous souls willing to brave the challenge of buying and building in an unspoilt but ultimately minimally serviced paradise. Proximity to Koh Samui obviously helps, and there are a number of companies now operating on both islands, particularly in the construction sector. Legalities are also largely handled elsewhere, yet with some stretches of pristine beach land and a wide choice of spectacular cliff-side locations still to be snapped up, few people complain about a half-an-hour boat ride to civilization.

Landowners on the island are generally local families with limited experience in dealing with the systems and conventions involved in property sales. Foreign agents are therefore an important link in the chain, and the more established ones, such as KP Properties, now enjoy continuous demand. Kevin Cawood, General Manager of KP

Properties, explained the current status of the market.
“Our company now has developments in Tong Nai Pan, Thong Sala, Sri Thanu and Mae Haad,“ he says. “These mostly consist of single rai plots providing water, electric and access.”

According to KP, the average prices for grade B land (hillside with sea views) on Koh Pha-ngan are around 2.3 million baht per rai in the North, 2.5 million baht per rai in the east, 2.8 million in the south and 2.4 million in the west. “Grade A land on the beach,” Cawood says, “is subject to the individual pricing of the sellers as this land is already quite rare.” Meanwhile, the annual land price of both grade A and B land is increasing at an average of 30 to 50 per cent.

Despite some recent big budget projects, infrastructure is still a big issue, even on Koh Samui, and on Koh Pha-ngan public utilities such as water, electricity and roads are still basic. The isolated nature of the island’s many bays is both an asset and a curse - more of the latter when it comes to providing amenities. The provincial government recently released 70 million baht for an artificial water reservoir in the northeastern area and the road from Tong
Sala to Haad Rin is almost finished, complete with efficient drainage. The government of Suratthani also says it hopes to have an outer island ring road completed within three years.

The head of the Koh Pha-ngan District Office, Khun Ponlert Chokjai, and his colleagues at the municipality are keen to improve access and public services. “We are still waiting for budgets to be approved,” he explained. “As well as road improvements we have also asked for money to deal with waste disposal and prevent mud-slides during the wet season.”

Unfortunately, the annual budget for infrastructure is only around 40 million baht so special centrally funded work is also required to help things move swiftly. “We have initiated several co-operative projects with local businesses,” says Khun Ponlert. ”These are essential with a limited public budget, and besides, most government inspired development only works with co-operation form local business people.”

Because of the lack of access, most residential developments are in locations that enjoy the best roads such as the northwest of the island around Haad Salad and Chaloklum Bay. The coastal mountains further south offer spectacular views and dramatic, tropical locations, but lack of access still makes construction in this part of the island difficult at best.

Khun Nopporn Sukkoh is an architect for I.D Studios, a Samui based company that has worked on several projects on Koh Pha-ngan. He explained the situation further. “Building is much more difficult than on Samui,” says Khun Nopporn. “Transporting materials is expensive and the whole process takes more time. There is also quite a labour shortage and as a result labour prices are much higher than on the mainland.”

According to Khun Nopporn, these limitations, combined with landowners’ general reluctance to sell mean that large-scale developments are unlikely at the present time, which is good news for the small scale developers and independent investors looking to carve out a niche.

Natural materials such as wood and stone remain popular, and an altogether more ecological approach to building so far seems to suit the location.

At another of the island’s property agencies in Haad Rin, Sage Land and House, American entrepreneur Charlie C. Solares and his associate Pafi Nunyakpe work on the principle that lifestyle rather than profit drives many people to build a home in paradise.

“We offer one-and-a-half rai plots in quiet locations and our buyers are generally experienced individuals who want to build just one house,” says Solares. “There are still only three developers on this island, and the property sector is certainly growing at a slower, more considered way than it did on Koh Samui. We can learn a lot from the mistakes made in other destinations.”

However with prices rising sharply on Samui, Koh- Pha-ngan also represents a cheap alternative, and Solares believes that one way to protect against overdevelopment is to stress the pristine nature of the island to newcomers. “With too much overspill from Samui both prices and client numbers will quickly go up,” he says. “The island then has to choose the best way to maintain a balance. In my opinion we need to make the clean, unpolluted nature of the Koh Pha-ngan our major selling point.”

With an independent spirit and a relatively unspoilt natural environment, it seems that Koh Pha-ngan is set to develop its own distinctive style - influenced, but not unduly affected by the prevailing attitudes and approaches in neighbouring locations.

Time for a ‘tree change’ in Krabi

Thailand’s decentralisation policy - with certain political debates aside - is in a state of developmental evolution reflecting worldwide trends and challenges. In the traditional sense of the term, decentralisation aims to disperse populations from large cities to less developed areas and allocate more administrative power to local governing bodies. Kerrie Hall examines Krabi’s “tree change”.

As with the popular “sea-change” movement of the 1990’s, trends are now moving toward a “tree-change”, with rural regions becoming more desirable as home bases. Developers in southern Thailand’s Krabi province have recognized this trend and are moving in to change the face of this previously quiet agricultural backwater fuelled by burgeoning tourism growth. Krabi, together with Phang Nga and Phuket provinces accounts for one quarter of

Thailand’s tourist revenue.

A debate ensues between the green-minded and the pro-development investors. The attraction of Krabi province - located just two hours drive from Phuket - is the raw and dramatic beauty of its mountains, limestone karsts, beaches and over 130 islands that draw new residents keen for a laid-back lifestyle with the conveniences and benefits of a regional centre.

Many in Krabi prefer a sustainable long-term future with well-drafted environmental practices rather than copycat the explosion of Phuket’s unplanned growth over the past 20 years. Krabi has its own cultural and scenic charms and yet areas such as Ao Nang are taking on an appearance that mirrors other well-worn tourist beats elsewhere in the country’s south.

In June 2005, a joint city and regional planning team from Chulalongkorn University, the Thai Public Policy Institute and UC Berkeley (USA) visited Krabi with the aim of designing a strategic plan for developing sustainable tourism.

The Berkeley team, led by David Dowall, a professor of city and regional planning, and assistant professor Karen Chapple, reported "over-concentrated and undiversified tourism development" and "widespread negative environmental impacts of unplanned tourism development".

Dowall says with the long-term growth of the area visitation is likely to treble and now is the time to develop long-term strategies for guiding future development in the region.

World-class infrastructure, however, is Krabi’s strongest factor with good roads, plentiful water and a reliable electricity supply. Upgraded highways, communications networks, sewerage and water systems are also being completed. The new Krabi airport, with its international terminal and expanded runways can now accommodate direct international flights taking the region into a new realm of tourism potential. Arrivals are expected to increase by over 100 per cent, with the addition of direct daily flights from Singapore, Malaysia and European capitals during the tourist high season.

While signs of rampant development aren't yet over apparent, indications do point to the Krabi region property market rapidly increasing in momentum. Prior to the December 2004 tsunami, property prices in the region increased between 20-100 per cent every year for the last five years, says Robert Reynolds of legal and real-estate firm Krabi Consultants.

While Phuket continues to evolve into a market primarily for mid- to high-end buyers, Krabi province benefits from another realm of buyers now looking for more economical or isolated property.

"The people who buy in Krabi are generally not the same as the Phuket market," says Reynolds. "Krabi attracts older people and families who want a quiet existence. They don't want traffic jams and over-development - that's what they're trying to get away from."

Brand name hotel resorts such as Hilton, Sofitel and Central group have followed the lead of the Sheraton Krabi Beach Resort by moving into the Ao Nang neighbourhood and helping to fuel property growth. A number of luxury residential properties such as Asian Tropical Homes’ Cove at Krabi promise international standard five-star gated villa communities in the area.

Local investor Chuan Phukaoluan - past mayor of Krabi and a prominent local businessman - is developing Hat Nappatani, a billion baht mega-development on 150-rai (24 hectares) of hillside land behind the Ao Nang beachfront. The five-year project will create a new city core for the greater Krabi Town area, with large commercial, resort and residential zones. The site is surrounded by 90 square kilometres of prime land for future residential developments.

For many foreigners, living close to the beach remains their dream. But, with very little beachfront or seaview land available on Krabi's coastline, Koh Lanta Yai is attracting the attention of homebuyers. This rapidly developing beach resort island, 60 kilometres from Krabi International Airport, is now set to become established “as a [post-tsunami] model of economic and social harmony paired with forward-thinking natural resource management”.

An agreement to develop the island under United Nations Development Programme (UNDP) guidelines was signed in May 2005. Emphasising support to local government, the project will mobilise community leaders and the private sector to design and implement plans for developing the island in a sustainable, eco-friendly, tourism-smart, culturally sensitive way.

The partnership of local organizations will focus on the preservation of Koh Lanta’s cultural heritage. The rebuilding plans consider the island’s unique mixture of Chinese, Muslim and Sea Gypsy peoples as a golden opportunity for cultural tourism. The project will catalogue and study indigenous knowledge, including traditional ways of life, native arts, heritage, food and culture. Special attention will be paid to knowledge that promotes livelihoods in harmony with nature.

“Koh Lanta is rich in biodiversity as well as cultural diversity where Chinese, Muslim and Sea Gypsy communities have lived in harmony for generations,” remarked Committee Member and Secretariat to the Project Preeda Kongpaen. “As for natural resources, Koh Lanta has abundant forest land, beautiful beaches and plentiful marine resources. Koh Lanta’s unique identity, diversity and natural resources must be properly preserved and managed by the people of Koh Lanta.”

As a next step, the partnership will devise an island-wide community development strategy based on nature and cultural heritage that can be integrated into a broader district plan.

“This progressive project is in line with current government decentralization policies,” said Lanta District Chief Officer Prasith Phuchutwanitkul. “Local empowerment will eventually spread to all areas of the island facilitating community participation in making choices that affect the lives of everybody on Koh Lanta.”
International research, writes Craig Emerson, an Australian federal parliamentarian and author of a forthcoming book on regional centres, has identified the availability of a pool of creative talent as the most important determinant of the prosperity of the world's cities and regions. New ideas from creative people are the dominant source of modern prosperity. The new thinking is that, instead of trying to attract businesses through tax breaks, regional centres should try to attract creative people and the businesses will follow.

“What do creative people look for in a prospective location? They seek an open-minded culture where new ideas are welcomed. They seek a street culture of coffee shops, wine bars and music. They seek jogging tracks where they can exercise and give their minds a rest.”

Pockets of Lanta Yai and Ao Nang districts already embrace forward thinking urban planning theories. With the right strategic actions, Krabi province could well be on its way to become one of the world’s greatest regions.
Foreign investors falling for Hua Hin

For decades Hua Hin has been a favourite holiday destination among Thais. In recent years, however, this ‘royal resort’ has been growing in popularity among foreign property investors. Karla Cripps takes a look at what’s attracting buyers.

Tell most Bangkok-based Thais you’re heading to Hua Hin for a few days and you will usually receive a response that can be viewed as a cross between envy and nostalgia. Because of its royal roots, this seaside resort has long held a special place in the hearts of Thais, however Hua Hin’s charm has only begun to cast a spell on foreigners in recent years.

First, a bit about the town’s history, which might explain why so many Thais wish to own a second home here. Hua Hin is Thailand’s oldest beach resort, and was the original holiday destination for royalty and jet-setters, who would escape from Bangkok's unbearable heat every summer on a procession of elephants. And with the arrival of the railway in the early 1920s, and Thailand's first hotel - the historic Railway Hotel, now under the Sofitel Central banner - the tourists kept coming and wealthy Thais began building their weekend holiday-homes here. Close to the railway station, which welcomes the Orient Express every week, is the Royal Hua Hin Golf Course, Thailand's oldest course, where guests first teed off in 1926. In 1928, King Rama VII built his Klai Kangwon Palace here, which now remains an official royal residence in frequent use.

Today, while investors in the area’s property market remain predominantly Thai, Hua Hin and nearby Cha-Am (18 kilometres north of Hua Hin) are attracting a steady stream of foreign buyers as well.

“Most buyers in this area are Thai nationals who prefer a 2-bedroom getaway within close range of Bangkok, although interest from expatriates is increasing, boding well for the future of this market,” says a recent report from Raimon Land.

Located a 2.5 hour drive from Bangkok, the greater Hua Hin/Cha-Am area is a diverse market, comprising seaside condos, luxury homes, golf-course properties and expat-dominated housing villages.

According to Raimon Land research statistics, there were 87 new units launched in the Hua Hin/Cha-Am area during the third quarter of this year - 27 units at the Vimanlay in Cha-Am and 60 new units at the Boathouse Hua Hin – bringing the total number of developments underway to 14, a total of 1297 units.

Raimon says one property that is attracting a fair bit of interest right now is Quality Houses’ Cha-Am Long Beach project. The project consists of two pre-built towers with a total of 106 units. All units are 3-bedroom types spanning 150 m˛ each and start at 8.25 million baht.

Meanwhile, in the third quarter of this year Boathouse Hua Hin opened sales at its first condominium phase, which consists of 98 units. These units range from 93 m˛ to 226 m˛ and include two and three bedroom layouts. Prices start at 4.8 million baht.

Another recent launch in the area is Prime Nature Group’s Prime Nature Villa, with 50 high-end units priced at 15-25 million baht. The 2 billion baht project on 102 rai of land will comprise 28 villas on the hills and 29 lakeside villas priced between 20 and 80 million baht each. The project will also have two seven-storey condominium and seven three-storey condominium buildings, housing 32 units total priced at 15-35 million baht each. Fifty percent of the construction of the first phase of the project has been completed with 25-30 per cent of the units sold in pre-sales. Prime Nature Group plans to officially open sales at the project early next year.

In fact, most projects launched in Hua Hin/Cha-Am last year are now nearly sold out (80 - 100 per cent), with the general take up rate in the third quarter at 62.9 per cent, up from 59.7 per cent. The majority of supply is located around Cha Am, while beachfront land in Hua Hin is becoming scarcer, driving some supply further south to Khao Tao and Pranburi, according to Raimon Land Research.

“Units in current developments are going for not less than 45,000/ m˛, usually with limited sea views, and located far from the beach,” says Raimon, adding that units with good sea views have increased in price to over 60,000 – 65,000/ m˛.

And the outlook for 2006 looks good for both investors and developers - provided the later studies the market well.

“Some developers with successful experience in Hua Hin have already announced new projects for 2006, including Charn Issara and Sansiri,” says Raimon. “The Hua Hin market has become more competitive, with more choice given to potential customers. A beachfront site on an outstanding location, plus a clear understanding of the Thai upper-class market will be essential to enter the market next year.”

Much of Hua Hin’s attractiveness to property owners can be attributed to its close proximity to Bangkok. The completion of a new expressway from Bangkok to Cha Am in the next 3-4 years is expected to reduce travel time by an hour, making Hua Hin as close to Bangkok as Pattaya and a strong alternative for those seeking a less lively destination for a weekend away from the city.

The area’s tourism market has been heating up in the past few years as well. In 2004, 600,000 visitors came to the Hua Hin area to stay in luxury hotels and resorts. Since the start of 2005, luxury hotels in the area have reported occupancy levels of nearly 100 per cent on the back of high demand from Thai families and foreign residents of Bangkok.

In an interview earlier this year, Silachai Surai, Tourism Authority of Thailand director for the Hua Hin region, said that with its temperate climate and expansive beaches, Hua Hin was an obvious choice to promote as an alternative to the Andaman resort areas hit by the tsunami. But while the disaster did indeed trigger an influx of tourists, he says much of this increase can be attributed to "a lot of marketing". "Right now, we are seeing success," he said.

In line with the area’s growing popularity on all fronts, Hua Hin is attracting at fair bit of commercial development as well. Seacon Square is in charge of the design and construction of a 200-million-baht premium lifestyle mall in Hua Hin. The four-storey retail outlet, located on a five-rai plot, will have total retail space of 15,000 square metres and parking space for 200 cars.

Space bookings will be made available by the end of this year and the centre should be opened to the public by the end of 2006.

Many chain retail outlets have already opened outlets in Hua Hin this year, including Tesco Lotus Express, Starbucks, Watsons and, in October, a three-storey Index Living Mall outlet. The outlet has 9,000 square metres of retail space, offering decorative items and furniture as well as food and beverages, and parking for about 100 cars, filling a well-needed gap in terms of home interior options for residents.

But overall, Hua Hin just hasn't gained the interest enjoyed by its counterparts in Phuket, Samui and Pattaya – mainly because it doesn't have the world-class beaches, amenities and yachting facilities that tend to attract global investors. But the nightlife and general atmosphere of the town is far less rowdy than that found in some of
Thailand’s other resorts, which happens to be a high selling point for both tourists and residents here.
And this laid-back atmosphere is unlikely to change. TAT’s Surai because the king and queen receive many international visitors at the palace, this will ensure the town is kept under control, given the security implications and the Thais' love and respect for the monarchy.

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