Condos provide solutions on Koh Samui 
With the recent
application of stricter foreign ownership regulations on Koh Samui, it
comes as no surprise that the first condominium projects have broken
ground over the last year. Unlike Phuket and Pattaya, the island has
not yet been a major target for this type of development, mainly
because of strict adherence to Samui's restrictive building code, which
limits a building's height to 12 metres. But things may be about to
change.
In Thailand, a foreigner can personally own a building,
but not the land it sits on. Therefore an apartment within a
condominium provides an obvious solution to the foreign ownership
issue. In a condo building, a foreigner can own 49% of the total floor
area, not 49 out of 100 units, either as a lease or by setting up a
legal vehicle to own the freehold title. After it has been properly
registered, the condominium juristic body then owns the land title.
Along
with legally owning it, another advantage of buying a condominium is
that by definition it is generally a managed property. An owner can
use it and then lock it up while away knowing that the building and
common areas will be looked after. Alternatively, they can leave it
under contract management and have it generate income in their absence.
Condos
are also the most cost effective way to use land, especially in places
like Samui where various limitations apply. The emphasis here is on
linear rather that vertical construction, which means some interesting,
innovative designs will soon appear to challenge the limits of the 12
meter rule.
Impacts on Samui's property market
According to
industry experts, in the future, Koh Samui will see more large,
professional developers from Bangkok taking on medium-sized, low-rise
developments. These developers will come in with the initial financial
means to build and develop the projects. This is because sensible
buyers are becoming increasingly wary of developers who use staged
payments to build properties. Recent investor behaviour show that
people are now much less interested in paying in advance for something
that isn't built yet. This trend will shake out the amateurs in the
marketplace and slowdown the island's land value inflation, says
Robert Collins, Managing Director of Agency and Investment Services,
Savills (Thailand) Ltd. Also, because of the restrictive building code,
other professionals believe smaller top-end developments will prosper. There is a future continuing market on the island for small and
medium-sized condo projects especially in resort, villa and condo
combinations, he said. This is because of the 12 meter rule.
Large-scale developers will pass on building on the island, says John
Birt, Managing Director of Samui Villas and Homes.
Another
factor that will inhibit large-scale developments on Samui is the
island's cash market. Investors still prefer to use cash on hand with
no financing, which means no leveraged market where banks and building
funds are buying into the developments. In places like Bangkok, where
condominium developments are financed or bought on plan with a small
down payment, it is easier to walk away from since there is not a
massive financial risk. On Samui, however, few foreigners will ever
get local bank financing to build. The combination of a cash market
and the building code will have a positive effect on the future condo
marketplace on Samui, affirmed Birt. This indicates that the island
will not suffer from the kind of boom and bust scenario that can result
from a leveraged market.
Current projects
Casavela
Expected
to be complete by October 2007, Casavela in Laem Set is marketed by
Samui Villas and Homes and will have 32 units in three buildings
incorporated onto a 6 rai (2 acre) hilltop location along with two
separate villas. All the units are designed to have a sea view from
every angle and the facilities include swimming pools, a business
center, gym, sauna, a children's playground, BBQ deck, central
kitchen, laundry service, housekeeping, CCTV and 24 hour security. Two
bedroom, two bath 144 square metre residences will cost 13,100,000
baht, while the three bedroom, three bath 221 square meters apartments
are Bt19,800,00.
Visit www.casavelasamui.com
Peregrina Bay
Due
to open in mid 2008, Peregrina Bay, with Savills (Thailand) as property
managers and sole marketing agent, is a luxury low-rise development in
Laem Set, and has six duplex condominiums, two beach front villas and
four garden view and ocean view villas. The property is on a secluded
beach and each condo will have its own ocean-view swimming pool. Each
unit runs for Bt25 million, covers 423 square meters, has three
bedrooms and is being billed as providing quality of living on par or
exceeding the more expensive villas for sale on Samui. Ex-England coach
Sven Goran Eriksson has famously invested in this project.
www.peregrinabay.com
Kirikayan
Kirikayan,
available through Samui Estate Corporation, is located in the hills on
the north side of the island one kilometre above Maenam. The developer
promises that unlike many projects set back from the beach, their
location will not require driving on poorly maintained mountain roads
as they have put in their own access. The project has 18 two-bedroom
apartments and penthouses available that run from 125 to 240 square
meters and start from Bt6.3 to 9 million. The company guarantees a
spectacular ocean view, an exquisite spa that should rival the top
resorts on the island and private and communal swimming pools. They
expect to complete construction in December 2007.
www.kirikayan.com
These
three projects represent the beginning of a new era on Koh Samui as
developers look for attractive, high-end alternatives to large-scale
housing developments. In years to come, the strap line for the island's
property market may become "the condo is king".
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