Thursday, January 24, 2008

Beachfront land prices to rise 15-20%

Beachfront land prices in the three key resort destinations _ Phuket, Samui and Phangnga _ will increase by at least 15-20% this year, mainly due to increasing demand of well-heeled tourists, according to CB Richard Ellis (CBRE). Beachfront plots on Phuket's west coast are currently going at 21 million to 50 million baht per rai, with the exception of Patong beach, where prices have reached 200 million baht per rai.

''It is very rare to find a beachfront plot for sale as most prime sites are already occupied and developed,'' said CBRE chairman David Simister.

Samui beachfront land prices are trailing Phuket's at around 15 million baht per rai, while beachfront land in Phangnga is priced in the region of 5 million to 20 million baht per rai, depending on location and size.

Land prices in 2007 continued to rise from the year before for Thailand's three major beach destinations, although individual transactions fell due primarily to uncertainties about proposed amendments to the Foreign Business Act and political concerns.

Transaction values for the first nine months of 2007 in Phuket were estimated at 6.9 billion baht, down 6.7% from the same period the year before.

For Samui, transactions averaged 413 million baht per month through the first three quarters of 2007, or 3.71 billion baht, down from 450 million per month or 4.05 billion the same period in 2006. Values for Phangnga were unavailable.

''For this year, the number of tourist arrivals will be the key driver to boost the property business,'' Mr Simister said.

The Tourism Authority of Thailand estimates that tourist arrivals should rise by at least 10% this year.

In Phuket, arrivals by air last year totalled 5.47 million, up from 4.49 million the year before. Samui recorded 1.5 million visitors, up from 1.2 million. Arrivals in Phangnga also increased in 2007.

Mr Simister said growth in Phangnga should continue to increase as a number of prime sites remained available for development at relatively lower costs when compared with Phuket and Samui.

Phuket would continue to appeal to the upper end of the market, thanks to world-class facilities. The island has five marinas to appeal to high-end tourists, and more than 500 private jets landed on the island last year.

Around 124 villa projects are for sale in Phuket, with unit prices ranging from $2 million to $5 million. Luxury villas account for less than 15% of total supply.

In Samui, 70% of the villas on the market are priced under $1 million. CBRE says greater development is expected at the $2 to $3 million level in the future.

Mr Simister said more professional local developers with foreign partners were expected to enter the Samui market this year. Development to date has been led mostly by smaller companies.

The arrival of international hotel brands such as W, Conrad, Four Seasons and Park Hyatt would also benefit the property market in Phuket, Phangnga and Samui.

In the next two years, CBRE expects the supply of global branded residences to jump sharply. In Phuket the residences under development: Shangri-La Villas in Bangtao. Other developments in the pipeline include Taj Exotica in Koh Lone, Park Hyatt and Capella in Emerald Bay, Four Seasons in Rawai and Dusit and Raffles Residences in Phangnga.

Samui is following a similar trend with The Estates at Four Seasons, Conrad Residences. CBRE is marketing W Retreat and Residences with prices ranging from 65 million to 205 million baht per unit.

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