Could The Worst be Over for Koh Samui?
Consolidation is often used as a euphemism for crisis and the word has tripped from many a tongue in the last few months on Samui. It is clear that the property sector remains in a slump and will only emerge from its depths when full confidence returns to the global market, but judging by the planned activity on Samui in 2010, the glass is half full. New market investors have gone some way to sustaining the (albeit low) volume of sales and although a once steady flow of potential buyers is no longer guaranteed, those with deep enough pockets have continued to push forward. “Our Horizon Homes project has moved along at a rapid pace,” said Alex Armitage, managing director of Horizon Group. “All the infrastructure is now finished and there will be 15 villas fully completed by March 2010. We have seen a big pick up in sales over the last 4 months compared to a year ago.”
This positivity is echoed by several other developers on the island. Porawan Piyakraivudh, a partner behind the Infinity Samui project, which is 80 percent sold out and due for launch in March, believes the worst is over. “We have seen the market stabilise in terms of demand and supply, which indicates that it is ready to pick up anytime.” he said. “There is undeniably a lack of completed new supply in 2010 and 2011, following a series of withdrawals and suspensions of projects on the island. This provides a platform for the Samui market to grow and new entrants have to be more creative to draw new demand into their products.”
The Samui property market managed to avoid total meltdown thanks to a strong and diverse regional investment network. Physical and financial connections with Hong Kong and Singapore continue to drive the private villa market, while a rise in the number of Asian and Eastern European visitors has helped many hotels survive the crunch.
Economic concerns certainly caused a reduction in the number of visitors to Koh Samui this year, with some hotel occupancy rates down by as much as half. But as a result of the slowdown, room prices were cut and deals offered for the upcoming January to March high season. In some cases these represent discounts of 30-40 percent and tourism operators have already reported increased demand for Samui from places like Germany, Russia and Scandinavia. The Tourism Association of Koh Samui forecasts 1.1 million foreign visitors will arrive on the island in 2010, generating a revenue of Bt12-13bn.
More than 20 new properties, with over 1500 rooms and 300 plus villas have been, or will soon launch on Samui and these include several major international brands. “Koh Samui remains a focus for hotel chain investment,” said Gary Pearmain, CEO of Project Pacific Group. “Most of these brands have chosen to develop mixed usage properties where investors can purchase a private villa in the grounds of a 5-star branded facility. The future of the island in many respects is already secure, as the five star brand investment continues to attract new and return visitors alike, which will drive the demand for private second homes.”
Such options will certainly appeal to investors in search of guarantees during uncertain times and the larger, corporate chains are keen to take advantage of this. Conrad Samui Residences is one major project going ahead full steam which is expected to be completed by the end of the year. The development comprises a 65-key hotel plus 32 residential pool villas, ranging from two to three bedrooms and situated on 63 rai of beachfront land in Phang Ka, on the southwest coast. Owners will have access to a range of Conrad Koh Samui’s resort facilities and a secluded private beach.
W Hotels is another big name brand almost ready to launch residential options on Samui with a full scale resort, plus four private villas scheduled to launch in April. The development is located on a 65-rai headland site between Maenam and Bophut and sets new price points for Samui’s luxury villa market, with pre-launch prices starting from US$1.95m. Owners will enjoy added lifestyle benefits such as 24-hour concierge services and in-residence dining, grocery shopping and delivery, not to mention private in-home catering and personal chef services.
The first wave of second home investments on Samui pushed the island close to the top of the private villa destination list in Asia. With around a hundred luxury residences now completed, many of them available as holiday lets and more rolling out in the coming months, the options for pampered tropical living are tempting and varied. Individual investors seem to be raising the bar ever higher, and some of the latest additions to the scene can only be described as super villas. “We have recently added some impressive properties to our management portfolio, some for sale, others as holiday rentals,” said Marc Ribail, COO for Samui Villas and Homes. “New villas like The Cove, an exclusive property in Choeng Mon, give new meaning to the term Resort Residence. It´s totally exceptional and offers everything that a 5-star resort can, and more.”
YL residence No.17 is another example of a Samui super-villa. An expansive 10-bedroom, gated, private resort-style residence on the south coast with a full suite of facilities and activities, as well as an onsite restaurant, pool, bar, games room, club house and entertainment centre.
Communications Director Desmond Skene Catling believes properties such as this will draw increasing interest in 2010. “Samui now attracts plenty of global attention and thanks to its coastal geography can also offer a number of impressive and exclusive beachside options,” he said. “YL Residence caters to an elite international clientele in search of absolute privacy, luxury and bespoke services. The size and scope of the property also means it appeals to corporate clients for events and this is certainly is an expanding market on Koh Samui.”
In order to service and build on this high-end investment, the local authorities on Koh Samui are taking a long, hard look at infrastructure issues. With a new team in charge and better budgets promised from Bangkok, work is already being carried out that will see major improvements to public roads, the water supply and waste management systems.
Muensilp Poolsawat, advisor to the Mayor´s office, believes 2010 marks the beginning of a new era for the island, with a more sustainable and considered approach to development that matches Samui´s international status. “The government is fully aware of the need for better standards and services to support the island´s growth and to realise its full potential,” he said. “Plans and projects are already under way, including laying tarmac on the roads and improving drainage systems to reduce flooding in certain areas. But it is also important to make sure that the local population benefits from change. It is not only about building new structures, but also new relationships to guarantee common goals.”