Before
the turn of the millennium, the biggest brand on Koh Samui was probably
Bob Marley, but massive economic growth and major developments in
tourism have led to a significant increase in global interest and
investment. As is often the case, it was the retail sector that led the
brand invasion with golden arches, superstores and high street
pharmaceuticals taking over from street stalls and family-run corner
shops. More recently, the hospitality sector followed suit with
mainstream hotel chains and now, largely on the back of big name
resorts with mixed use strategies, the island’s property industry has
expanded to include international, corporate agencies and developers.
In
the coming months, well known firms such as CB Richard Ellis, Savills
and Raimon Land will all begin to exert their influence on Samui,
either representing or developing projects that will eventually
transform the island’s residential landscape. The advent of “Brand
Samui” may mark the beginning of a new phase in the island’s evolution
and could stimulate the recovery that many feel is now desperately
needed.
“What’s coming online now around Samui is very
different from before,” says Robert Collins, managing director of
Savills, Thailand. “Many of the new projects under way will prove even
more significant for the island than the construction of new golf
courses and the arrival of new airlines. Resort brands offer an
international seal of approval.”
Having begun sales and
marketing for two major new villa/condominium projects on Samui -
Infinity and Peregrina Bay - with international sporting celebrities
already on the client list, Savills will also represent the new Conrad
Koh Samui Residence, which launches in Hong Kong and Bangkok this
October. Robert Collins says that despite a difficult 12 months for the
island, his firm is now confident that Samui is showing real signs of a
sustainable recovery. “Our involvement has come on the back of client´s
needs,” he said.
“Sophisticated international investors demand
quality representation on the ground and, more importantly, they
recognize the need for pro-active marketing overseas. Larger brands
will begin to pull investors away from non-branded products and
experienced, regional sales teams like ours offer a more co-ordinated
marketing and PR strategy to target suitable clients. Particularly at
the higher end.”
This shift will also mean a more stable,
reliable property market on Samui, with high value completed properties
slowly taking over from off-plan sales, and professional management
contracts providing buyers with guaranteed yields. Companies like
Dhevatara Properties, with three luxury developments in separate
locations, all constructed without the need for pre-sales, set a
standard for others to follow. As a result of such projects, the
island’s reputation for high-risk, high return investments may soon
change.
“Many of the local agents that focused on land sales
have been running on pilot lights for several months now,” says
Collins. “These firms are likely to move into re-sales as the bigger
brands take over.”
Another major company that’s keen to
capitalize on the island’s new found global status is CB Richard Ellis,
a firm that boasts over 350 offices in 58 countries worldwide and plans
to add to this in September on Samui. Like Savills, CBRE will arrive
with a branded product to represent, namely, W Samui, an integrated
development with a hotel component and “W Residences,” which will offer
a limited number of exclusive villas for sale, also to be managed under
the W Hotel brand.
“What’s
exciting on Samui is that, until now, there have been no real brand
investments.” says Charlotte Filleul, General Manager of Resort
Properties. “The island is going through the same stages seen in most
resort destinations, moving from a straight tourism market to a
retirement and residential location. W Residences, and other products
like it will improve quality through competition.”
Despite its
global reach, CBRE still sees the initial client base for Samui
projects coming from regional destinations like Hong Kong and
Singapore. However, Filleul believes the market is expanding rapidly to
attract other international investors from places like Europe and the
US, and that these buyers will demand high quality services. “CBRE has
the experience and resources to advise people on how to negotiate
unfamiliar territory,” she said. “This will be a key factor as stronger
marketing draws more investors from outside Asia.”
Obviously, in
the current political climate, issues such as ownership and legal
structures are particularly important when investing in Thailand and
the larger agencies have the experience and contacts to keep in touch
with the situation and advise their clients accordingly. “The arrival
of established brands can only create better services,” said Filleul.
“There’s still plenty of room for improvement on Samui and even the
local agents appreciate the need for a more international approach.”
But
it’s not only property agents that are keen to take advantage of
Samui’s enduring appeal. Major developers are also looking to get a
foothold in the island’s predicted recovery. Individual investors
spearheaded the initial boom, which is one reason why Samui now enjoys
unique opportunities for high-end villa rentals, but there were very
few large-scale developers prepared to risk anything beyond small,
gated communities and those that did so worked exclusively off-plan.
The
above-mentioned Dhevatara Properties was the first company to challenge
this approach, marketing completed properties direct to clients in the
West. Now, other large firms like Raimon Land, one of Thailand’s
biggest luxury residential property developers, are also planning to
invest on the island. “Samui is a niche market that offers something
different,” says Henri Young, the firm’s marketing manager. “We have
two large sites currently under due diligence with a view to developing
branded condominium projects. There are very few condo developments on
the island at present, and local developers are less keen than before
to build themselves, so now is a good time for us to invest.”
Despite
a general shift toward the south of the island for many of the newer
high-end villa projects, Raimon Land plan to build their projects
closer to the airport and main tourist centres. Young believes that
although peace and tranquility is an important factor for buyers, most
people also appreciate proximity to major attractions and services.
“The north coast offers a good combination of relative seclusion and
easy access to the best restaurants, shopping and nightlife,” he said.
“We are also looking at the area around Lamai Beach. The south of the
island is certainly attractive, but this suits longer term projects.”
Whatever
the location, experts like Young believe it is essential to market
Samui’s uniqueness internationally and also to match that with products
that are distinct from those found in other destinations. Like many of
his counterparts, he is not concerned by recent bad press and sees
events like the popular Samui Regatta and plans for a second golf
course as a positive indication that the island will attract
increasingly high net worth clients. Although it is unlikely that
developers like Raimon Land will treat the island as a primary market,
their involvement will certainly mean a further increase in branded,
quality developments.
So what does this mean for the island’s
existing property companies? The more established firms will certainly
look to become involved in the brand revolution, while others may
switch to focus more on resale and rental services. John Birt heads up
Samui Villas and Homes, perhaps the island’s most established sales,
development and villa rental agency, and one of the few Samui companies
that is actually expanding beyond the island’s shores to Phuket. He
worked with most of the big name developers and agents before setting
up shop on the island, and does not see their arrival as a threat.
“Brands will obviously benefit Samui in terms of global reputation,” he
said, “but beyond specific projects, I’m not sure there’s enough
product to justify large agencies establishing themselves here. Resort
properties offer comfort for investors, but it should also be
remembered that in Thailand, management and service contracts are only
valid as long as the owners remain the same. Several large resort
brands have changed hands in recent years, this is certainly worth
bearing in mind.”
Such concerns have to be addressed if Koh
Samui is to shake off its reputation as a high-risk investment option
and become a global brand destination. Corporate investment will
certainly add value as the island bids to become a branded residential
destination. However, practical considerations such as infrastructure
improvements and legal clarity will also come under increasing scrutiny
as the major players move in to stake their claim.
