The owner of these hotels are running business without initial environmental evaluation (IEEs) or environmental impact assessments (EIAs) or were built without necessary construction permits from local authorities. There are also apartments, guesthouses and condominiums that offer daily accommodations and other services that fall under the Hotel Act.

“I would like to bring both of these groups into the system and have them legally registered. I have been working on a policy to help achieve this and I held a meeting with the [illegal] operators to inform them of my efforts – I will help them make it right. I admit that in the past, the government sector was lax in terms of enforcement, so now I need to compromise with them – both for their benefit and ours,” said Governer Augkaradacha.

For a start, the government would benefit from increased tax revenue from these businesses. Second, it would be good for them in terms of marketing and in obtaining investment funding. Hotels with no legal registration documents are ineligible to apply for investment through proper channels. Some must seek loans from informal funds or sources that charge high interest rates.

News by Phuket Gazette

Demand from foreign buyers was little bit increase since local customer was absent. More foreign workers in Hong Kong and Singapore were return to Thai market due to Asia economic stays strong. Erawana market research shows sales in the first half of this year were 25% up year-on-year. The company wished for 5,4 billion baht sales this year rather than 4 billion baht record last year. Mr Piya, , a former Bangkok Bank executive, said Phuket market will remain for next 12-18 months but still lower than the peak of 2006 when sales were up 10 billion baht.

However it shook by 29 failed projects of the total of 168 projects due to it disturbed consumer confident who paid substantial down payment. They are unable to get refund on their villas and condos. Further it will influence the total recovery of Europeans on their financial crisis. Mr Piya said his company would launch 15 villas at Tanode 3 in the Laguna area worth 300 million baht by the end of this month. Erawana launched the five-villa Peykaa worth one million baht each earlier this year. Currently it has 20% in sales from both projects and expects to have 150-200 million baht in sales per year. Established in 2005, the company has developed 11 residential projects worth close to 1.5 billion baht in Phuket comprising more than 120 villas with prices in the range of 15-20 million baht apiece.

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“We are extremely proud of having been selected and appointed as the consultant to the owner for this 1,500 million baht five-star resort owned by truly experienced and professional developers,” said Mr Rauter.

“Mai-BS (Thailand) will work with the owners and current team as consultant to select the right management company for this stunning property, to ensure best use of space in all areas of the hotel, to ensure best comfort for guests and employees through modern and efficient designs in all areas of the resort,” he added.

Mai-BS has inked a deal for Phuket-based Yangrangsi Co Ltd to develop the project at the south end of Patong. The site is located after the Amari Coral Beach resort, with views overlooking Patong Bay, local analyst Bill Barnett wrote in his thephuketinsider.com property website. The hotel, which has yet to be named, is scheduled to open year-end 2012 with 100 pool villas and 250 rooms, said the company press release.

The resort will be managed by an international-brand management company to be announced by the end of this year. Facilities at the 100-rai resort will include three themed concept restaurants, a freshwater lake covering about seven rai and a conference room. The resort spa will feature up to 16 treatment rooms built in a lush, rocky area. A natural waterfall will flow right through the center of the spa facilities, the developers say.

“We will do our best to ensure not to cut any trees for this development,” said Yangrangsi Managing Director Narachai Chumsri.

“The overall concept, setting, landscape and business plan of the resort will make our guest experiences the best in Phuket. We will also build a brand-new employee condominium where we can house our high quality employees to give best comfort to our people.”

“We are fully aware that our hotel will be only as good as our employees; therefore we must focus at all times on people development, career opportunities and on the creating of a working atmosphere where people feel comfortable,” he added.

News by Phuket Gazette

Demand for luxury villas for the remainder of 2009 will probably remain constant, according to the Phuket Luxury Villa Market Report from C9. The firm predicts that 2010 will remain fairly steady as the supply of luxury villas won’t change much, but the overall market should see significant growth in 2011.

C9′s Managing Director Bill Barnett noted that supply and demand fundamentals for the high end are continuing to strengthen and excess supply is being absorbed. “While market recovery prospects are being set back to 2011, there has continued to be a gradual upswing in activity, driven primarily by earlier than anticipated momentum in many of the financial source markets where potential overseas buyers originate from,” said Barnett.

The Phuket luxury villas market has seen a slowdown in new properties under construction. This will help to drive increased value for buyers and sellers in the coming months and years as there won’t be enough properties to meet demand. The property dynamics look at more ocean front or view villas, hotel managed units and buyers who keep coming back to Phuket.

Banks are not lending money to potential buyers, he said. ”The wheels are not turning for real estate on Phuket,” he said. ”Most of the problems rest with the banks, who are being very strict with loans.”

Many developers will be hoping the market picks up, along with tourism, in the 2009-2010 high season. He expects the hiatus in sales to last for at least six months and perhaps up to a year. If tourists do not return in the high season, the outlook for property on Phuket will be dour, he said.

However, many projects with in-house funding, especially those aimed at the Thai residential market, appear confident of the future and are going ahead with construction. It’s a critical juncture for those who think the island property business needs to slow down anyway.

This week, the Governor, Wichai Praisa-nob, told the visiting British Ambassador, Quinton Quayle, that he thought Phuket has enough development. Khun Wichai, whose background expertise is in land titles, has previously said that he prefers Phang Nga province’s balance with nature to the more developed Phuket model.

Projects aimed at expat buyers are suffering to the same extent, if not worse, than developments aimed at Thai buyers. One expat property expert told Phuketwan this week that cash flow problems were even forcing developers to sell their show homes, in some cases at a vast discount. ”This is a no-win situation for the show house buyer,” he said. ”They may have picked it up at a reduced price. But if the lack of other sales continues, they will be left as the only house on the development. If sales pick up slowly, they may end up being surrounded by houses under construction for perhaps the next decade”.

Over Songkran, the Thai new year, Prime Minister Abhisit Vejjajiva declared a state of emergency in greater Bangkok, where rioters burned buses and occupied government buildings. Two people died, and 120 were wounded. The demonstrations in Bangkok have cost the tourism industry an estimated 100 billion baht, or $2.8 billion. The state of emergency was lifted last week.

Advocates of the Phuket market have long described it as “bulletproof.” But they are starting to pick their words more carefully. Sondhi Limthongkul, the leader of the “yellow shirt” protest movement that shut both the Bangkok and Phuket airports late last year, narrowly survived an assassination attempt in Bangkok earlier this month in which he was shot in the head, his car riddled with bullets.

For Phuket property, “Teflon-coated” is gaining traction as a less-violent descriptor.

However it is worded, the theory is being sorely tested. The airport closures came at the start of high season here, which runs from November through April. Though tourists are still coming, their numbers are drastically down, and risk-averse Japanese, Korean and Chinese visitors canceled en masse. “You can’t call it a high season; more of a better low season,” said Peter Schreck, a German who started a dive shop, Absolute Diving, in November near Phuket.

The problems are taking a toll on Phuket’s luxury property market. Already, several projects have been scrapped, and numerous developments are on hold.

Across the road from a sign pointing to “Tomato Beach,” construction on Shangri La’s Phuket Resort & Spa stands idle, a watchman and a guard dog the only signs of life. The development, which would have had a residential component, is stalled indefinitely, as its backing came from Lehman Brothers, which is now defunct.

The land for the Four Seasons resort and luxury villas planned for Rawai, at the southern tip of Phuket, is for sale and the project in jeopardy because it too had financing from Lehman. The Amalfi project planned by Raimon Land, a Bangkok apartment developer, has not gotten off the ground.

Lersuang Group idled three large developments after it ran into financial trouble. Other projects are going slowly, with delays of at least six months at Jumeirah Private Island and at the Yamu, a development designed by Philippe Starck. Both sit off Phuket’s east coast. “Developers who are partway in are slowing down,” said Charlotte Filleul, the general manager of resort property for the Phuket office of CB Richard Ellis. “A lot of those that were on the drawing board are never going to get off the drawing board.”

Sales at Richard Ellis are down 50 percent compared with a year ago and were particularly slow in the first three months of this year. Whether as a result of the political situation or the financial downturn, buyers “don’t have the same confidence,” Ms. Filleul said.

It is hard to gauge prices accurately. Foreigners are not allowed to own land directly and often complete deals offshore or through Thai partnerships. But Ms. Filleul said that although she had more than 20 multimillion-dollar villas for sale on Phuket — more than usual — sellers had not been telling her they were desperate to raise cash. “It’s not distressed selling,” Ms. Filleul said. “Sellers are not willing to drop prices. Buyers are looking for a 50 percent discount.”

At the Royal Phuket Marina, a development around a marina for luxury yachts, there have been no property sales since Lunar New Year, in late January. “People are not in the mood to buy second homes,” said Gulu Lalvani, the chairman of the Royal Phuket Marina and the founder of Binatone Electronics, a maker of cordless phones.

Mr. Lalvani retired in Phuket 10 years ago after having fallen in love with the area in 1991 and bought a villa at the Amanpuri resort. But he grew bored in retirement and started developing property, buying 190 hectares, or 470 acres, of marshy land where a shrimp farm had stood. The marina is now built, with berths for 100 yachts, and the company has sold 82 high-end condominiums around it.

Mr. Lalvani himself has a lavish home, the Grand Villa, at the entrance to the marina. It covers 1,900 square meters, or 20,000 square feet, in a main house and four guest cottages, with space for three yachts in front of its huge expanse of lawn. Behind the home, there is a five-car garage that houses a vintage red MG convertible, a classic purple-and-black Singer convertible and a black Rover town car.

But the house remains at the end of a dirt road and next to a building site. Adjacent to his home, Mr. Lalvani’s company is continuing construction on four stand-alone villas, although only one has sold so far. There are also several apartments unsold in the first phase of the development, and a second phase of the project that would extend the marina dramatically is on hold. Many of the shops in the 8,000 square meters of retail space stand empty.

Mr. Lalvani says he can afford to wait for the market to rebound before he continues the marina expansion, as he has incurred no debt on the project. He has invested $120 million of his own money in it, and like every foreign buyer in Phuket, he has had to pay cash. Although some Thai banks claim they offer mortgages to overseas citizens, local expatriates say that is window dressing, and no such mortgages ever get approved.

Phuket’s boosters hope the fact that it is a cash market will be its salvation. They say that discourages speculation and means that most villa owners are wealthy, with a Phuket home as part of a portfolio of four or five properties.

Written by ALEX FREW McMILLAN
Published on THE NEW YORK TIMES – www.nytimes.com

Their niche concept of an estate for European retirees is helping them in these uncertain times. Mr Derstroff thinks that other developers also still have buyers to go by what he has heard from property agents. But the increasing number of projects has made the market much more competitive. ”But for us we don’t compete with these projects, we are concentrating on the target group, it’s a niche and buyers want to move to Thailand,” he said.

The Austrian duo are not the only foreign developers in Hua Hin. There are also Scandinavian housing developments up on the hills behind the market as well as a project called Modena being developed by a Danish businessman farther south in Pranburi. There are far more foreign developers in Thailand’s other key resorts – Phuket, Pattaya and Samui. However, like most of them, The Falls is being developed with the company’s own capital without any banking support, but it does benefit from having obtained Board of Investment (BoI) privileges.

While one might expect that the global financial downturn would lead to buyers asking for bigger discounts, this does not seem to be an issue Mr Derstroff has to tackle. His company’s leasehold houses and condominiums are modestly priced compared to the much steeper prices at some developments in other resorts, especially in Phuket. At The Falls, the price of a leasehold house starts at around 5.5 million baht and it is houses not the condominiums that are selling well, although penthouses are winners here as everywhere else.

To spur condo sales, the developers are considering selling the units on fractional basis. ”Some people don’t live here all year round so may be two people could buy one apartment together,” reasons Mr Derstroff. They are also unperturbed by the growing popularity of mixed-used de velopments, pointing out that the retirees who buy residences at The Falls would have all the services and facilities of a five-star hotel.

So far The Falls has recorded 20 re servations with eight or nine contracts signed and more people visiting the company’s new office in the Hua Hin market. It appears that those who made up their minds during the soft launch in the middle of the year will be paying around 7% less than those who jump in during the high season when the official launch gets under way. As the development has attracted a mixed bag of international buyers, including people in Japan, Oman and Germany aside from those in Switzerland and Austria, marketing will be carried out in Hong Kong and Singapore.

Land prices in this area are far from cheap. Mr Derstroff estimates that beachfront plots in Hua Hin cost as much as 50 million baht a rai and similar plots in Pranburi five million. Plots farther from Hua Hin beach but offering good sea views are obtainable for two million baht. These prices do not appear affect the Austrian duo’s commitment to Hua Hin as they intend to stay here 30 years if not more if possible. ”We see a big future in Europeans and other foreigners. They retire and they want to move to a warm country. This market is getting bigger and bigger – we follow the atmosphere in Europe and people there want to retire sooner than later.”

Thailand outshines other retirement choices within Europe or close to the continent is several ways. Many of them find southern France and Spain far too expensive with an apartment there costing three to four times what it does here. While Bulgaria and Turkey are other countries they tend to focus on, Mr Derstroff mentioned that they are not of everybody’s taste with the infrastructure also lagging behind Thailand’s. ”I think the quality of life is much better here than there and many clients come straight from Spain because Spain is too expensive.”

Foreigners also feel more secure in Thailand. ”We feel that this is a really safe country. We come from Austria and for me this is one of the safest places in the world. I feel the same here as I do in Austria, it’s very safe and I can walk around everywhere.” As far as Mr Derstroff is concerned Thailand outshines all its regional competitors too. ”When we sit and discuss with friends there is always the question of showing one option to Thailand and in the end there is no option because compared to the other countries Thailand has always been the way it is for the past 30 years. Tourists who come here know regardless of what government is running the country it is business as usual, still the same country and the same people.”

Mr Derstroff noted that everyone saw the current financial crisis coming because the financial heavyweights were selling and reselling mortgages until nobody really knew who was financing what. While it is now necessary to reboot the system and change things somewhat, in his opinion the big shock is wearing off in Europe after the authorities took strong action to support banks and financial institutions and even took over the very weak ones.

”Basically, there is a secure feeling that the whole situation is under control and we have seen people becoming more confident about the economy and starting to spend money again.”

Written by Nina Suebsukcharoen
Featured on The Bangkok Post

Word then spread that a group of investors planned to buy a huge plot in the area to develop a five-star hotel and villa estate. But Mr Hamal said these investors were now rethinking their plans because Phang Nga’s regulations prohibit hotels from having more than 80 rooms, which would not enable the planned scale of development. “Phang Nga is a different administrative zone and they have different regulations, although earlier they did allow developers to build any number of hotel rooms.”

He argues that this restriction has no economic logic because some projects require more rooms to generate the desired return on investment and achieve the level of service needed to ensure success. “I think the authorities have to be more diligent and understand the logic of economies of scale,” said Mr Hamal. It is in the face of such problems that the Serenity Development Group – an American company in a joint venture with partners in Hong Kong as well as a Russian – is currently looking for a plot on Phuket’s west coast.

While sentiment has been unsettled by intensifying global financial turmoil and Thailand’s political problems, Mr Hamal remains optimistic about Phuket’s medium- to long-term future. “I do not see a direct impact on the Thailand or Phuket property markets because it seems that Thai banks’ exposure to troubled US investment banks is not that significant,” he said. “However, we have to wait and see what ripple effect the crisis will have on the property market. The biggest worry is that, as a result of this financial meltdown, there will be fewer people with disposable cash to invest in lifestyle resort properties.”

Mr Hamal expects the repercussions of the credit crunch to cause sales to slow down over the next nine to 12 months. “But I don’t see this impact being that significant over the long term. I think Phuket remains globally competitive. It still has room for growth and prices are more likely to rise over the long run.”

In fact, declining property values and the worsening health of financial systems in US and Europe could benefit Asia – where Thailand and Phuket are prime magnets for investment – because Americans and Europeans might prefer to invest in a growing market, he said. “The important thing is that Thailand finds a good solution to its current political crisis and that it does more to facilitate foreign investment – for example, by allowing 100% freehold ownership of condominiums by foreigners and extending the lease term from 50 to 60 years.”

He added that one of Phuket’s strengths was that speculative property purchasing was rare, and most buyers purchase resort properties for lifestyle and investment. This differs from Vietnam where most buyers have been speculators. “In Vietnam even the locals were doing exactly the same thing. They were not buying one unit, they were buying five to 10 units in one project.”

Serenity Terraces, located at Chalong Bay, is among the projects on the island that seem well insulated from Western financial problems, he said. It has reported 65% sales in a two-phase development of 52 pool villas and freehold condominiums costing from US$300,000 to $1.1 million. The developer recently celebrated the completion of the first phase and the second one is due to be finished early next year. Outrigger Serenity Terraces Phuket guarantees that investors who enter its rental program will earn a 6% annual return.

Mr Hamal said property developers in Phuket looked for a minimum 20% return on their investment to undertake this type of a project. “But this is only if you are lucky,” he said. “Not everybody makes that kind of money – 20% on their investment. Actually, a lot of developers have not made any money at all. It depends on the rate of sales and how soon they are able to complete their projects.”

Written by Nina Suebsukcharoen
Published on Bangkok Post – bangkokpost.com

Over 65% of the development, which features 52 resort properties, including freehold condominiums, has been sold already. Property sales have continued despite political infighting in Bangkok and global financial disruption.

“These have had little or no impact on sales and inquiries,” said Serenity Terraces’ Project Manager, Mr Izzy Ben Natan. “Investors have made their decision based on the medium and long term, both of which remain very bright.”

Mr Ramesh K Hamal, CEO of Green Heritage Group, which handles the development management, marketing and sales for the property said: “Because of Phuket’s natural beauty, climate, affordable cost of living, easy access, superb tourism services and infrastructure such as schools, hospitals and department stores, the island is relatively immune to political and economic setbacks.”

When the Outrigger Serenity Terraces Phuket opens, it will start earning a guaranteed 6% annual return for investors who have entered its rental program. In addition, buyers may benefit from capital gains, which have been over 20% a year in Phuket for the last five or so years.

The 52-unit US$26 million mixed residential-resort beachfront property, with spectacular ocean and island views, offers a variety of freehold condominiums and absolute beachfront pool villas. Prices range from US$300,000 to US$1.1 million. The property is scheduled to open in April 2009.

The completed Phase One includes the communal areas, fitness suite, clubhouse, villas and duplexes, as well as the condominium apartment show suite. To date, 32 units have been sold or reserved, only 20 remain.

Residents started moving-in in September. “They will soon be able to enjoy superb 5-star resort-style personalized services,” said Mr Hamal. “Our philosophy is that luxury without service is meaningless. That’s why award winning luxury resort operator, Outrigger Enterprises Group, has been brought in to provide the service and maintenance element for our buyers.”

Phase Two is due to be completed early next year, with the project’s soft launch planned for March 2009.

The majority of investment buying Phuket villas in Outrigger Serenity Terraces Resort has come from overseas, with 70% of buyers coming from the UK, Scandinavia and America. Thailand has one of the strongest capitalized banking systems in the region, according to Fitch (Thailand), a ratings agency. Local banks’ dependence on domestic deposits have also helped insulate them from the current economic downturn in America and Europe, bolstering the Thai property market.

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”If SC were to have resort developments in tourist destinations outside Bangkok, it would be over the next few years, not in the next year. This may be the family’s own investment,” said SC vice-president Kree Dejchai. The property consultant Colliers International estimated the project would require an investment of at least 10 billion baht, excluding land cost. The market price for land plots on Mai Khao beach is 10-12 million baht per rai.

Mai Khao is emerging as an attractive area to local and overseas investors as land prices are lower than for other beachfront locations on the island. Patong beach, for example, can command 30-40 million baht per rai and available plots for new development are scarce. Mai Khao is only a 10-minute drive from the airport and most of the land is still held by local people who do not want to wait for price appreciation.

In the past decade, there was no new development on Mai Khao except for the JW Marriott Hotel. Minor International Plc, which owns the JW Marriott, plans to launch the luxury villa Anantara at rates of 20,000 baht per night next month. By the end of the year, it will develop a four-storey building housing a Villa Market supermarket and high-end restaurants to support its guests.

The family of former Prime Minister Thaksin Shinawatra, who fled to England last week claiming his pending court trials in Thailand would not be fair, bought the Phuket plots through its representatives late last year. A Dubai-based group also spent US$60 million to acquire 180 rai on Mai Khao from Thai owners and it plans to invest another $250 million to develop a Venice-style hotel. As well, a Hong Hong-based investor is taking up 380 rai, and a joint venture between local and foreign investors is taking another 100 rai to develop a five- to six-star hotel and luxury villas.

SC Asset, meanwhile, will be sticking to its core business of mid-market residential development in Bangkok for now, according to Mr Kree. This year the company plans to launch five new projects worth 2.1 billion baht, comprising two single-house projects and three townhouse estates. After launching Vista Park Vibhavadi 2 early this month, only seven of 37 units remain for sale. The prices of three-storey townhouses range between 5.9 million and 6.9 million baht each. The company plans a similar project in the Chaeng Watthana area to tap rising demand from people working at the new government centre.

SC Asset reported a first-half net profit of 280 million baht, down 10% year-on-year, on sales of 1.91 billion baht, up 17%. Last year, its recorded high profits because of it had extra earnings from investments in three subsidiaries. SC’s net profit in the second quarter 129 million baht, up 21%, on revenue of 958 million baht, up 34%. Revenue in the second quarter included 757 million baht from sales of units and 199 million baht from rentals. The company plans to launch a resale service for its customers in order add value for its products. SC shares closed on Friday on the Stock Exchange of Thailand at 8.00 baht, up five satang, in trade worth 8.73 million baht.

Written by Kanana Katharangsiporn
Published by Bangkok Post – bangkokpost.com