Samui welcomes the big brands

Samui welcomes the big brands
By Jim Clarke

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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.