Thailand's villa rental market  

For the world's discerning travellers, nothing carries quite the same prestige as spending a holiday in a luxurious private villa somewhere exotic.

And who can blame them? With such added perks as personal chefs, butlers and drivers at your beck and call as you relax by a private infinity pool in your five-bedroom retreat, that 5-star resort down the beach suddenly pales in comparison.

Villa owners in Europe, the Caribbean and the US have been capitalizing on this mindset for decades, but it is a trend that has only really started to catch on in Thailand in recent years, partially because the country's high-end villa sales market itself is still in its infancy compared to other global resort markets.

Thailand's villa rental market is for the most part limited to two areas: Koh Samui and Phuket. Hundreds of travel agencies and rental firms specializing in villas around the world are beginning to take an interest in these two destinations, which has translated into an increase in the number of local firms turning to villa management as a way to offset the recent sales slump that has enveloped the country.

It's a trendy market. It's the next best thing to having a private house, says Marc Ribail, chief operating officer of villa management firm Samui Villas & Homes (SVH), noting that in the last six months, property sales on the island have been down, so quite a few firms are going into property management. Hence, there are now three or four decent companies that have begun offering villa management among their services, he says.

But unlike most firms, which expanded their services to include rental management under their umbrellas as a means of diversifying, Samui Villas & Homes (SVH) initially set out in 2001 solely as a villa management company, only later entering the sales market to cater to the growing number of clients that wished to purchase a holiday home there. The firm recently announced it's expanding with a branch in Phuket that will focus on villa management there as well.

Ribail says when the company was created in 2001, it managed only three properties, but things quickly grew from there.

At the beginning of 2006 we had 25 and now we have nearly 50 so it's definitely an emerging market, he says. In some respects we're still kind of creating history and track records in Samui. If you look at Phuket, they've been doing this for a much longer time, so they have a bench mark they can rely on. We've just started making a bench mark now.

Ribail says when the tsunami hit in 2004, SVH received a dramatic increase in business as holiday-makers shied away from Andaman destinations, however competition and Phuket's resurgence has caused the market to take a breather.

"There's a bit of a slow-down this year, because of the recovery of Phuket. The first quarter has been difficult but the rest of the year looks much better," he says. "The offerings are increasing but demand is the same. So basically the competition is increasing," says Ribail.

A similar trend is emerging in Phuket, where there are now dozens of firms offering villa management services. Allan Mossop, managing director of Phuket Island Property Services (PIPS), says they've definitely seen an upswing in the property rental market in the last year, but it's been a long time coming.

The last five years has been a challenge for most folks because Thailand is not a traditional holiday home destination like say the Mediterranean or the Caribbean. But we've been making serious inroads. If you go online and look at the international rental sites, the number of properties featured for Thailand has increased dramatically as has the number of inquiries.

Mossop feels that more people are travelling to Thailand as repeat visitors and are starting to feel more comfortable and don't feel that they have to go stay in a more protected environment of a hotel.

Holiday rentals are very popular with families, knowing that they're going to be in a property that's got a private pool and a kitchen, which means they're able to take care of their kid's requirements better. If you're travelling with your family, it's a little inconvenient to have the young ones on the fold-out couch.

PIPS deals with the mid-to upper segment of the rental market. Mossop says that in the low season villa rates range from US$250-500 a night for a three-bedroom villa, but in the high season rates can go for between $600 to $2500 a night, depending on the size of the villa. With rates like these, it's not surprising villa owners are jumping to put their properties on the rental market when they're not in use.

But half the battle is attracting interest. According to Mossop, the most important thing for villa owners to consider before putting their property on the rental market is whether their agent able to make their property available to a wide selection of other agents.

For a long time PIPS was the only company in Phuket actively marketing the full-service rental projects we represent with 50 other agents locally nationally and internationally, he says. A lot of the property management companies or rental management companies are only able to take their straight 10% and they are not able to market a home to other rental companies which is a major factor.

Indeed villa owners have a lot to consider before renting out their property, and this includes whether or not they're even in a position to do so. SVH's Ribail says before they'll even take a villa into their portfolio they consider several factors.

The first is location. It has to be situated either on the beach or inland with absolutely stunning views. If you look at Phuket, Bali, The Phillippines or Malaysia, there are not as many properties directly on the beach as there are here. So the guests want to pay a bit more to be on the beach rather than sitting in the hills. So because of that location is very important for us, he says. We try to keep the level of standards equal among all houses in our portfolio. So even though they're all individual, if one house doesn't have a range of amenities or facilities that matches our portfolio we recommend the owners upgrade.

SVH offers clients two brands to choose from the Signature Collection or the Boutique Collection. The higher end villas in their portfolio on average go from US$700-900 per night for a 4-5 bedroom villa, which includes 5-star facilities and amenities, however rates can go as high as US$2,000 a night.

Most agents agree that while these prices may sound a bit lofty for your average traveler, when you consider the rates being charged in 5-star hotels for a single room with no privacy and added costs tacked onto nearly everything, it's no surprise people are looking for new alternatives.


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