Property news

[Gabor 296]

http://www.property-report.com/archives.php?id=182&date=0603

 

http://www.manager.co.th/IHT/ViewNews.aspx...D=9490000037600

Edited May 2, 2006 by Gabor

[Shit_Happens 31]

Thanks for posting these links. They are very interesting.

[deanjames 0]

Very interesting, thanks Gabor

[Dungheap 243]

Interesting read Gabor, but when was the last time a real estate report from someone inside said, "the market is expected to decline"???

 

Not a flame amigo, but these reports are self-serving from an agent's perspective. Almost everyone I know who owns property in Patts forecast eternal growth, i.e. rainbows leading to gold, while observers say the market is saturated.

 

I favor the later, especially when quality new condos with ocean views cost $3-400,000 to buy, but can be rented for a mere $1200-1500 a month.

 

Each to their own.

Edited March 21, 2006 by Dungheap

[Gabor 296]

Dungheap, these articles are not my personal opinion. Just an interesting read. I'm not a oracle.

[Gabor 296]

Is all news good news?

 

Simon Dyson

 

It is often claimed by marketing executives that there is no such thing as bad publicity. Thailand has certainly been given the opportunity to test this theory over the last 18 months. Simon Dyson looks at the country’s current international image and asks how the international media affects the Thai property market.

 

 

Since the Tsunami shook Thailand’s tourism sector at the beginning of 2005, the foreign press have been keeping a close eye on events in the ‘land of smiles’. The possibility of further natural disasters now consistently shares both column space and airtime with health concerns raised by the spread of Avian Flu, security issues stemming from the civil unrest in the south and personal safety worries following the murder of a Welsh student on Koh Samui.

 

Some observers suggested that the swift and strong response to Katherine Horton’s murder actually stemmed from concerns that tourism and investment would suffer if the country didn’t take a firm stance on security. In January this year, the Tourism Authority of Thailand released figures indicating that visitor numbers could drop by as much as a third in the wake of the tragedy, this despite a series of campaigns to attract new nationalities and rebuild Thailand’s image as the world’s favourite holiday destination.

 

Thailand’s resilience in the face of adversity is, however, well known, and neither economic nor social ills have damaged the nation’s global popularity. In fact, according to experts such as Andrew Chant, a prominent British journalist based in the region, negative press reports do very little to diminish the country’s appeal as a holiday destination.

 

“Thailand is still basically thought of a beautiful country with warm, friendly people,” he told Thailand Property Report. “ There may be a longer term change due in people’s perceptions, but this has more to do with the type of tourism Thailand attracts rather than isolated reports in the media. Sad events such as the Katherine Horton murder can have a temporary, localized effect, but the number of visitors to this country still keeps going up year after year and I don’t think that will change.”

 

In terms of the property market, Phuket was seen as Thailand’s most obvious economic casualty after the Tsunami. As the country’s principle high-end destination, with major investments in place and plans for considerable expansion imminent, the initial concerns were very real. Yet even after prolonged negative world interest, investors were not deterred, and the market on Phuket continued to flourish. Investment bounced back quickly and the vast majority of people soon realized that this was a freak occurrence.

 

Larry Cunningham of Phuket One Real Estate believes the international press coverage ultimately aided the island’s recovery. “Phuket was covered every day in the international news for a month,” he explained. “People who didn’t even realize in which country it was suddenly knew; those that didn’t realize it was an island learned that, too. And people also heard about the kindheartedness of the Thai people. On television you could see the support people got, and that impressed many viewers. Phuket has rebounded. We’ve never been as busy as we are today.”

 

On the political front the picture may not be as rosy. Reports of corruption and political instability in Thailand do not exactly encourage investor confidence, but so far such bad press has been largely offset by a fast-growing economy, the promise of cheap materials and labour and a wealth of interior and structural design talent. Even with a much-criticized and comparatively hostile approach to foreign ownership and residence Thailand continues to appeal to wide range of foreigners from around the region and beyond as a place to live, work or retire. This, in turn, stimulates continuous expansion in the property sector and flies in the face of negative media reports.

 

Security concerns, however, can be much more devastating when it comes to foreign interest, as was demonstrated by the mass exodus following the Bali bombings. In the eyes of the world, political unrest in South East Asia has now become the rule rather than the exception. Yet until now Thailand has managed to avoid any major terrorist attacks or civil crises, at least in those areas frequented by foreigners. Laurent Cesar, Sales Director with Samui Estate Corporation, has a background in national security. He feels that despite recent bad press about the island, the only real threat to the burgeoning property market on Koh Samui would be an act of terrorism. “The damage that would occur would be irreparable and it would last for a considerable length of time, as was the case in Bali,” he said. “If you compare Samui with Bali, you see that despite the murder reports, security concerns have made little or no impact on the market here. Had there been a terror attack rather than a single murder, property markets would definitely have been seriously affected.”

 

Personal safety is also a consideration for visitors and investors in Pattaya, where the local media seems to constantly print and air stories about tourist robberies, muggings and gangland shootings. Clayton Wade, Managing Director at Premier Homes Real Estate Co., Ltd, believes such coverage is unjustified. “I have lived in Thailand for over 15 years with 12 of those years in the Pattaya area,” he said. “Yes, you do read in the local newspapers and hear on local television that there are more and more young Thais on motorcycles in Pattaya stealing purses from tourists and carrying handguns. But you really are not that aware of any notoriously high crime levels here at all. I am from the United States and there is not one major city there that I could say that you could walk anywhere day or night.”

 

According to Mr. Wade, as far as the property sector is concerned at least, Pattaya is on fire. Beachfront condominium re-sales have more than doubled in the past 24 months, and the new luxury condominiums currently under construction will sell for prices that are triple the level just two or three years ago. Houses and condominiums are being built up and down the Eastern Seaboard from just north of Pattaya all the way down the coast to Bangsarey. Investors and developers are arriving from every corner of the globe with stars in their eyes. “As locals in the real estate business here in Pattaya, we couldn´t be happier or more excited about the future of Pattaya´s property sector,” says Wade.

Back on Samui, where despite incredible growth the property sector is still in its early stages, some developers are concerned by recent negative media reports. Rutger ‘Mike’ Langaskens, sales and marketing manager for Profmil Co. Ltd, feels there is too much bad press about Thailand, especially in Europe. “The succession of both major and minor incidents such as the tsunami, southern unrest, murders and so on has had an effect, of course,” he affirmed, “although I feel that the property market in general has not been hurt too much. Property sales have not suffered, but short-term rentals have dropped, especially in the tsunami affected areas. Also, part of the market share lost in Phuket has shifted to Samui. “

 

Indeed, Samui has enjoyed an unprecedented boom in its property market of late, mainly because it avoided most of the larger regional problems and therefore escaped much of the negative media attention. However, there remain other, less obvious factors that can also damage a destination’s image, and this year Samui has received a lot of criticism for the deterioration of its environment and lack of public services.

 

Rune Theilsby, MD at Tropical Luxury Living, is particularly concerned that factors such as increasing pollution and traffic congestion will put investors off Samui. “The image of Koh Samui is going down, rapidly,” he said. “There is garbage everywhere. Just about everyone I meet asks me what is happening to this island. I don’t think the media has such a bad influence. My biggest fear is how the local government is taking care of the island. The environment is one thing that we can control, and it needs to be done now.”

 

Despite such concerns, it seems people from all over the world still flock to Thailand’s diverse destinations and property investors therefore continue to see the country as a major opportunity. Popular tourist locations are often characterized by sensitive issues that attract media attention, but with the sheer numbers of tourists still coming to these shores, it is clear that by comparison, there are far fewer problems facing Thailand than are apparent in many other destinations.

 

http://www.property-report.com/archives.php?id=399&date=0604

[Gabor 296]

Thailand Property Report - May 06 -

 

Robert Collins, Managing Director, Agency and Investment Services, Savills (Thailand) Limited

Originally from the UK, Robert Collins has been in Thailand 12 years. He recently left Jones Lang LaSalle, where he was Head of Commercial Markets, to take up his current position at Savills (Thailand) Limited. He is also a board member of the British Chamber of Commerce Thailand with a special interest in real estate affairs.

 

Savills has been absent from the Thai market for some time. Why come back now?

Savills under the previous trading name, First Pacific Davies, never actually closed down in Thailand. It went from being one of the largest firms in the field here for some time, particularly throughout the ‘90’s. Then following the ‘97 crisis it effectively downsized to a property management business, which traded very well following the crisis period.

 

After the company changed its name to FPDSavills, it combined the strong UK client base of Savills with the strong regional client base of First Pacific Davies. That combination together with the emerging Thai resort market created a very strong demand for access to high-end properties and that helped ignite a new level of interest from the firm in reinvesting in the Thai business on the agency side, which happened in the second half of 2005. The company never actually closed down, but certainly shrunk down to a different level.

 

Would it be fair to say that the company was treading water until this revival?

I think so, though there was never any intention of leaving Thailand altogether. The property management business is reliable and steady by nature, although it, and a lot of the other property companies in Thailand, went through a long hard slog after ’97 and quite a few went bust. The intention was always to come back, just at the right time, with the right people to really make the most of the market. The absolute dominance of the Savills brand in residential internationally really ties in with the way Thailand’s growing. The company was a far cry from where it was in the heyday of the early to mid ‘90’s – now there’s a huge push again.

 

Have you found it difficult re-entering the market?

No. We were lucky that several other companies had either scaled back considerably or left the Thai market after ’97. The competitive environment has really funnelled down to two or three companies in the field. Having been in Thailand already in the agency sector for 12 years before making the move to Savills, we were able to hit the ground running. The hardest thing we’ve found so far is that the FPD name is still widely known in Thailand, whereas the Savills name is seen as a new entrant. It’s been an educational process, but as soon as potential clients and former clients more familiar with the FPD name see who we are and get some exposure to the Savills brand, there’s an instant level of acceptability, which has helped.

 

So where’s your client base coming from?

There’s a strong office leasing community that’s on the most part quite familiar with the FPDSavills name and has worked with us elsewhere in the region. Local developers are proving to be a little bit slower, but we are getting there and have picked up 10 sole agency projects already on the residential side. From the purchasing side of the business we have a very high level of recognition and have had a good response to advertising. For launches overseas, particularly in Hong Kong and Singapore, we’ve had an exceptionally high level of brand name recognition, which is helping make customers readily able to work with Savills in terms of purchasing property in Thailand. This in turn is making it easier for developers to select Savills as their selling agent, because they can see that we have an international reach.

 

How will you differentiate yourself from the competition?

On the residential marketing side for the resorts, our main point of difference to some of the competition is that we are a subsidiary of the UK Savills PLC and are not a franchise business. The offices work as an integrated network, which gives us huge advantages in marketing. Thai resort property is of particular interest to buyers stemming from Hong Kong, Singapore and London. We have offices in all three locations and are able to link in daily for the marketing of projects in Thailand.

 

What do you think of the standard of research in Thailand generally?

What’s missing in the most part in real estate research in Thailand is that it’s not very forward looking and it’s very difficult to find research which is seeking to anticipate what’s going to happen in the market. A lot of it is very historical and more concerned with reporting what’s happened and where the activity has been, with very little focus on forward thinking and really trying to help developers figure out where the market’s going. For property research companies to have an edge they really need to start looking at things from a different angle. People don’t want to pay just for statistics; they want advice and guidance on what to do, where the market is going, where the threats are, where the oversupply is coming from and if there is an oversupply or undersupply, what does it actually mean and seeking precedent from other markets around the world to interpret that information. That at the moment is lacking.

 

Should companies share information more?

Definitely. What we are lacking is a more open environment where people can attribute research from other companies and make comparison to give clients a more balanced view on perspective. After ’97 the barriers went up between companies to some extent on co-operation. But hopefully as the market matures again, co-operation should hopefully improve going forward.

 

What’s the most interesting sector of the market for you right now?

The resort business. We’ve just come back from marketing a project in Krabi in Hong Kong, which received an overwhelming response. For a two-day exhibition we had well over 100 people attend and a very high level of sales was achieved. We expect the same from Samui, which is extremely popular in Hong Kong.

 

Properties at the right price point will continue to sell relatively straightforwardly. Phuket is still of interest. Pattaya is a fantastically strong market. The key thing is for developers to make sure that they are providing a product that people actually want. Doing the research and making sure that they know the target market is critical in Pattaya. But there’s such a strong interest in Pattaya that it really is set to run and run for some years yet.

 

You’ve been very positive on Pattaya recently. Is it the most exciting resort market for you right now?

We’re close to launching several projects in Pattaya and the research that we can see and discussions with existing developers there show a very clear pattern of high sales, increasing capital values and demand that comes from a very diverse demographic. The tourism industry is booming, the proximity to the new airport and the increase in new hospitals and schools all contribute to making Pattaya a very strong leisure and investment target. You’ve got a strong domestic customer base and a regional one, particularly Hong Kong, and interest from the UK and other parts of Europe. It’s such a broad spectrum of buyers that it has almost everything going for it.

 

Will it ever escape the more negative aspects of its reputation?

In reality some of the negative aspects are its selling points. If you took away all of the perceived negative aspects, Pattaya would change too fundamentally; a lot of the heart and soul of Pattaya stems from its diversity. The key to making it work is marrying the negative with the positive and to create an environment that can be more family orientated. It’s a cosmopolitan environment and that’s the appeal of the place.

 

Is there any value in promoting Jomtien separately?

Yes. It is already going down the road of being a separate market to an extent. The real emerging market that has already branded itself as being near Pattaya is Bang Saray, which is already able to promote itself as offering a better natural environment. They are very good values achievable for properties there and quite a few interesting developments in the pipeline and Bang Saray will become a very well known brand over the next two years.

 

Do you realistically see any crossover between Pattaya buyers and Phuket buyers, or will they always be completely different markets?

Pattaya and Samui are closer together. Pattaya and Phuket aren’t twinned in the same respect. Phuket appeals to a different set of demographics. Phuket is such a big place that it really appeals more from a leisure/tourism perspective than somewhere to live and work, whereas Pattaya has a greater ability for people to use it as a base to work from. There is a definite synergy between Samui and Pattaya that is developing. A lot of the developers are the same and the target market is a lot more UK-centric, which again is proving to be quite significant.

 

Do you see any divergence in price?

Pattaya values are going up and there is definitely a trend emerging for increasingly expensive houses in Pattaya. Pattaya’s high-end condominiums are already achieving value almost on a par with the premium end in Bangkok. It is to be expected that we’ll see a few more super high-end condominiums in Pattaya, but low rise rather than high-rise. If they are truly well-located with Grade A finishes, they will surpass Phuket condominium values. I think it’s unlikely that we’ll see villas homes in Pattaya exceeding the premium end in Phuket. However there is strong demand for high-end villas in Pattaya and the million dollar price point has already been exceeded and they’ll be quite a few at that price point over the years. Phuket values will continue to rise quite comfortably, but Pattaya’s really catching up.

 

Where do you think is the best place to buy purely from an investment perspective?

Each market has its gems. Krabi is the emerging market, arguably with the nicest environment, the best natural surroundings, a fantastic airport, very good infrastructure and it provides an idyllic destination for a quiet holiday home in Thailand. Values have only just started and the level of development is negligible. If you are touring around Krabi, you won’t see any agent signboards. It’s clearly the next market that is about to hit the big time.

 

Samui has quite a large number of interesting projects dotted around, which will continue to see strong capital growth and perform very well on resale. Pattaya in particular has a few very good investment grade properties coming online, that will not only rise in value quite quickly from the launch, but will also achieve strong rentals as soon as they are completed. Each of the markets has its own plus points, but there is definitely clear evidence that each market also has projects that don’t work and don’t perform well. So it’s important for buyers to really do their due diligence and take the time to tour the markets and understand what they are looking at, because there are developments that have not got good title, or construction permits aren’t clear enough and people really do need to do their homework.

 

Could Krabi develop to be a superior property investment location to Phuket?

At this point in time Krabi could go two ways. If the local administration maintains the control they have now and does not allow the hawkers and umbrellas to control the beaches, it could put Krabi in an amazing position. The road network is seemingly brand new and if they can maintain that control and attention to detail then Krabi could become the leading destination for high-end holiday makers and investors looking for an environment where you genuinely have nice beaches, fantastic views, good facilities and, right now, a low starting point. The potential for capital growth is enormous; it’s shades of where Phuket was 20 years ago.

 

You’ve said ‘Savills will seek to identify areas in which the BCCT may interact with the Government on property related issues, particularly with regard to foreign ownership of real estate, and property financing for overseas purchasers.’

 

How is this going?

If the laws were changed to allow a greater volume of condominium ownership and it went from 49 per cent to 75 per cent, it would have a dramatic effect on the Bangkok market in particular. Foreigners would rather buy with freehold title than set up a company to own a condominium. As a board director at the British Chamber with a particular focus on real estate matters, I am seeking increased interaction with the right bodies in the government to try and revive some of the laws that were considered in 1997, but never got approved. One of which was that new buildings in certain locations, particularly Pattaya, could have 100 per cent foreign ownership in special cases. If the Thai market slows down more than it already has, then those laws should be looked at again to help avoid any wider downturn. At this moment in time, there’s not much appetite from the government to amend those laws, so it does require a wider pressure group.

 

The recovery that we saw from 2001 onwards allowed the government to change their track and the need for increased foreign ownership was not as necessary as it was perceived as being two years earlier, therefore ‘if we don’t have to do it, then we won’t’. If we were to get back to a situation where an oversupply in a certain market, particularly the Bangkok condominium sector, started to affect Thai developers again, which is possible from 12 months time onwards if the market doesn’t recover sufficiently from local demand, then Thai developers may start placing pressure on the government to increase the foreign quota.

 

http://www.property-report.com/archives.php?id=449&date=0605

[The Mook 105]

Looks like an industry piece designed to entice buyers. I'd like to see as many comps as possible and how long a condo stays on the market before even considering it. I'd also like to see the price range, and unsold inventory levels. This is what determines value: at what price a place trades, how long it takes to sell, & if it sold at it's offered price, above it, or below it.

[Shit_Happens 31]

Thanks for posting this info Gabor. Keep it up