Samui ready for global challenge

Samui ready for global challenge
NINA SUEBSUKCHAROEN

Samui _ Thai resort property players got a taste of the growing challenges they face at a recent exhibition in London, where some Malayaian rivals even made pointed remarks about the country's current political and security situation.


The Samui Estate booth (left) in London drew hundreds of inquiries but no sales yet, says managing director Chaiyakarn Sudampanthorn (above).


Chaiyakarn Sudampanthorn, managing director of Samui Estate Corporation, acknowledged that the Malaysian exhibitors might have scored some points, because it cannot be denied that Thailand is currently facing problems.


He was among the exhibitors at A Place in the Sun, London's biggest overseas property show, at the end of March. And while competition for foreign buyers' money is intense, he believes Thailand still holds strong appeal, helped by new opportunities for property ownership.


A key to future success could be Thailand Second Home, a new venture initiated by Thai Longstay Management (TLM) and officially launched on March 21, with His Royal Highness Crown Prince Maha Vajiralongkorn presiding over the ceremony.


Foreign members of Thailand Second Home have the opportunity to acquire perpetual leaseholds via 30-year registered leases pursuant to Thai law. Other benefits of a 500,000-baht lifetime membership include a one-year multiple-entry visa, extendable every year.


Mr Chaiyakarn said Thai participants at the London show used the programme to spur foreign investors' confidence amid competition not just from Malaysia but also Vietnam and Indonesia.


"They're very interested in Thailand Second Home because it's guaranteed by the Tourism Authority of Thailand and is a government-backed project," he said.


It seems that Samui Estate Corporation's strategy paid off because even though it did not sell any property it did register interest from 600 to 700 participants. Another Thai participant, Siam Royal View, sold two villas on Koh Chang.


This was the second time that Mr Chaiyakarn had participated in A Place in the Sun, which is held twice yearly with the next one scheduled for Sept 28-30. This time around, he said, British buyers were cooler to Thailand, with those who were piqued generally asking about Thailand's problems and outlook.


"Investors know everything and are becoming negative about Thailand. They are saying no to Thailand. I had to use [Thailand Second Home] _ only then were they interested in coming in and asking what is for sale."


Mr Chaiyakarn said property priced between 60,000 and 100,000 (approximately 4.2 million to 7 million baht) was attracting the majority of the British buyers. Countries such as Bulgaria and Turkey are competing by offering property for sale in this price range.


Thai developers who price their property in this mid-market _ by UK standards _ bracket, have potential for sales to British buyers. That's not to say that more expensive real estate will not sell, but such developments generally pass through the hands of international real estate agencies such as CB Richard Ellis and Savills.


"I am entering and looking at the middle market, which is much wider," said Mr Chaiyakarn.



Adam Stanborough, Samui Estate Corporation's marketing executive, observed that some countries, Bulgaria and Turkey among them, were offering extremely low deposits with mortgages also available for the buyer, something Thai companies cannot offer at present. "They offer mortgages at very competitive rates to get the clients into the country _ the banks are promoting it."


However, Mr Stanborough pointed out that the beauty of Samui overrides everything that Bulgaria and Turkey have to offer.


"Remember, Bulgaria just joined the EU so that is a big advantage for them to sell property to investors because it rises in price, but then if you look at Bulgaria and Samui where would you rather stay?


"Bulgaria is cold, it's got a very high crime rate. You have to look at why Bulgaria is cheap; you have to look at why these different places are cheap.


"You leave Heathrow, the stress from Heathrow, you get that stress everywhere in Europe. As soon as you arrive here in Thailand, the one thing you notice is the hospitality that you won't find in these countries."


Mr Chaiyakarn drew attention to Dubai where the government is promoting foreign investment by giving those who have bought a condominium or other type of property a resident visa.


Britons are able to buy property in all corners of the world because property prices in their country have appreciated so much in recent years that banks offer 80% of the difference on refinancing.


Mr Stanborough gave the example of a property that was previously appraised at 200,000 and is now worth 400,000. Upon refinancing the owner is able to get an additional 160,000 and it is this money that is used to buy property abroad.


But because buyers have to service the loan they would want a return on their investment. For example, if they invest in property in Malaysia, they can average an 8% annual return for 10 years, against interest rates at home of only 3.5%.


Mr Chaiyakarn urged Thai authorities to offer a solution to foreigners who have bought property in Thailand and are facing problems, chiefly the nominee issue. "The government hasn't offered them a solution and they are going to be investigated, but there is no way out for them," he said. "Give foreign investors a solution instead of giving them a hard time because they can't find a way out."