According to published reports property developer Thanasiri Group is set to list through an IPO on Thailand's Market for Alternative Investment. A spokesman for the firm has stated that the funds will be used to expand projects which include a heavy weighting in Phuket.
Currently Thanasiri own a 100 rai plot in Kamala near to Fantasea which will be developed in mixed use stages for hotel and residential segments. Within other parts of the island there are plans in Pa Klok on the east coast of the island for 98 mid range residential units on 19 rai and second development of 79 condominiums.
Listed Thai development firm Raimon Land has announced the launch of it's entry into the shared ownership market with it's Private Residence Club's located in Bangkok, Phuket and Pattaya. The properties have been named The Heights Private Residence Club, Northpoint Private Residence Club and The River Private Residence Club.
The Private Residence Clubs will initially include three of Raimon Land's properties in Thailand's most sought-after destinations. Each home within the Clubs is divided into saleable fractions of 1/13th. This fraction entitles owners to enjoy a minimum of 21 days per year at the Club in which they purchase as well as unlimited use of space available time. Additionally, owners will have access to a greater network of properties through The Registry Collection and IFA Collection. Ownership is in perpetuity and can be sold at any time. While fractional ownership is an emerging segment, re-sales remain an untested market, though there is a historical trend in Thailand on the re-sale of golf memberships.
The IFA Collection consists of a luxury portfolio of international properties developed by IFA Hotels & Resorts, a major shareholder in Raimon Land and an international specialist in the development of mixed-use resorts.
Raimon's news comes at a time when the firm has been looking at a flat overseas buyer market and needs to find a strategy to create sales revenue and improve cash flow. There remains wide market sentiment that other developers in the country are closely looking at the fractional market and other launches will be in the pipeline
Shared ownership sales for Phuket represented USD61.2 million for 2008, validating the sector's stability despite the economic downturn, according to recently released comprehensive research study into the industry.
The Phuket Shared Ownership Market Report (<link>https://c9hotelworks.com/downloads/phuket-shared-ownership-market-report-october-2009.pdf*download full report here</link>) compiled by leading Thailand based hospitality consulting firm C9 Hotelworks, showed the business model is a natural accompaniment to the destination's tourism industry which is well on the way to recovery into the third quarter of 2009.
Noted industry analyst and C9 Hotelworks Managing Director, Bill Barnett, said: “With a total customer base of 22,498, the developing industry, while still in its early years, is the sleeping giant of the island's hotel and property market.”
“The emergence of fractional ownership of properties and yachts is becoming a notable component of the real estate landscape on the island.”
Laguna Phuket Managing Director, Michael Ayling, said the Laguna Holiday Club vacation ownership unit over the past five years has gone from strength to strength, despite volatility in the tourism and real estate sectors.
Currently, the total market size according to the report is 554 accommodation units, with vacation ownership holding 87% of the market share in the first half of 2009, and fractional sales moving up 13%.
Research data also indicates an emerging yacht fractional base with USD2.8 million in sales turnover despite programs only starting in 2007.
“The 2009 trend marks a continued shift with 68% of volume from point based systems versus week based programs in the core segment. Brand pricing by international affiliates are on the uplift reaching a 62% premium,” Mr. Barnett said.
He added that while consumer spending is in retreat and 2009's revenue will fall short of the previous year, there is a greater emphasis on lower entry points, financing options and an increase in domestic customers. These factors look to provide sound performance during difficult times.
A bill is pending before the Thai Parliament could pave the way for class action lawsuits in the country if passed. The current Consumer Case Procedures Act has seen uplift on real estate related complaint's; while a full blown class action scenario could find it's way into the property industry.
With the current economic downturn litigation over non-delivery of units or titles are topping the list of property buyer's grievances.
The US Internal Revenue Service (IRS) has announced its tax amnesty program will wrap up October 15th for taxpayers to who have unreported overseas bank accounts and income. This marks continued pressure by both the OECD and initiatives by the UK and US Governments to hit offshore tax havens.
Back of the recent landmark court case of Swiss banking giant UBS who were forced to disclose the identities of US citizens who held private offshore bank accounts. There is more detailed information at the site www.irs.gov and the current amnesty program has been ramp up to create a more comprehensive understanding of how American's abroad shelter offshore funds.
As we continue to post from time to time reader's opinions, here is a note in from luxury specialist Nick Anthony and his views on the market for the coming high season:
PHUKET: AN END TO THE MEXICAN STANDOFF
After an eerily quiet 9 months in actual deals, despite a busy constant stream of interested surprisingly very wealthy clients visiting Phuket throughout the GFC, we see a thawing in negotiations.
There was a “Mexican standoff” for most of 2009 in Phuket, as sellers reduced prices back to a long term “fair valuation” a reduction of around 30% from the peak highs however flush buyers have been seeking distress pricing and a further 30% discount!
The result was virtually no transactions.
THE DEVELEPORS
Developers are still paying virtually the same price for construction materials, project managers and labor. Quality sea view land is only getting scarcer in Phuket and there is no increase in our availability long term. Also most projects went into the GFC under duress from 2 years of political storms and Thailand issues, so had escaped the worst of the speculative excess.
THE SELLERS
Tough lending requirements (read virtually zero financing) meant owners saw little need to panic and lose a prime asset at a time of low liquidity. Tourism is off some 20% over 2008 but there has been a steady slew of renters and we know of one 6BR villa that has maintained 85% occupancy all year at USD800 – 4,000 a night so it's not all bad. As many of you will be aware we cancelled low season this year and have been blessed with true summer weather all year. We have had about 5 storms, and rarely rains for more than a half an hour. Today, as the Philippine storm blows through it's a spectacular blue sky October day, and I am battling to get this out so I can go to the beach!
THE BUYERS
Phuket was fortunate in that the market, as an all cash one is made principally of end users and an increasing number of permanent residents still escaping capital cities. Solid Global entrepreneurs and retirees continue to choose Phuket over other destinations as their Asian base. There have always been very few banker type buyers, as their vacation times are too precious, so the meltdown of investment banks and their workforce/bonuses have had little impact.
Q4 OUTLOOK
As we enter the fourth quarter there has been a marked thawing in the frost and intransigent negotiations that have frustrated all parties throughout 2009 are now going through. Buyers, with bullish regional equity rebounds, a relaxation in general global business and a back to R&R mentality for the well healed has meant buyers have started writing cheques again.
Developers, despite not being able to reduce prices dramatically are being realistic, sellers of luxury homes are getting fair value prices, leaving buyers with a great long term asset, yield possibility and medium term capital appreciation of 20-40%. Competition of services offered continues to be the buzzword from buyers, with rental programs, solid property management and access to boats and beach clubs all being offered.
GOOD ADVICE
Today's buyer is savvy, seeks value, is well informed on the range of property and is looking for representation from an agent that vets properties and developers carefully, represents quality developers with experience and balance sheets to match their bravado and require an agent prepared to do battle on their behalf with their interests at heart.
Agencies that are seen as a “sellers” agency listing all properties at the highest possible price and are not tough on ensuring that the stories told are the same as the plans being built will lose customers trust and find the Mexican standoff continuing into 2010.
Developers who have shown financial strength this year and have made solid construction progress will be signing deals this quarter and we may well find that the luxury market in Phuket, by end of Q1 2010, moves to an UNDER SUPPLY of new quality developments. This could well surprise many people.
I recommend buyers take advantage of this fluidity to lock in deals and negotiate payment terms and interior packages. The GFC has been the background of Phukets' musical chairs in 2009… as that song ceases into 2010 buyers will have to move quickly to make sure they are not left standing, or in this case, without a long term value priced roof over their head.
Any fool can buy expensive real estate (with a good bank manager); the smart money is well advised and is backing Phuket.
Graham Doven together with key group of respected developers including Paul Moorhouse of Layan Gardens, Dan Simmonds who heads Laguna Phuket's property division, Lars Ydmark from Dewa and Chris Gordon of The Village, Coconut Island have joined together to launch a Singapore Phuket Select 'Getting Back on Track' event. Scheduled for November 14th and 15th at ones of the Lion City's best addresses the Grand Hyatt, the show will feature 20 companies promoting not only real estate, but yachts, property rentals, spas, and hotels.
This is an important initiative to help the island keep in the public eye and generate interest for not only property but tourism in general in one of our most important markets. There is still available for companies who wish to participate and they can email [email protected]
I recently had the chance to catch up with Richard Balderson who heads up the Phuket based Premier and Property Leisure Group and chat about the developments in their vacation ownership offering. Opened in 2007 the company has 7 units at Club Lersuang though they have no connection or affiliation to the developers of the project.
Overseas demand has been strong and key market such as the UK, Europe and Australia is seeing the group now expand its product line and look at opening a new sales and marketing outlet soon. Richard has been a long term player in the industry and worked for a number of years at one of the leading player Laguna Holiday Club here on the island.
Aside from offering stays here, Premier is affiliated with Dial An Exchange who provide exchanges at other properties within its network. Certainly shared ownership is growing in sales velocity here despite a troubled property market; buyers are attracted by lower pricing points and taking a view on purchasing in moderation.
Speaking recently at a Thailand Property Conference in Bangkok I was able to speak to Dan Tantisunthorn who heads research at Jones Lang LaSalle, and was able to update trading in the nations capital. “Despite the global recession and political issues sales prices have continued to rise with prices going up by 1.2% in H1. With reduced demand and cash flow a key consideration though discounting is evident in the market in the range of 5-15%; with some developers offering add on's like free furniture packages, cars or consumer appliances. By the end of 2009 expected completions at 46 projects representing 11,180 units will enter the market.”
“Looking forward large scale increases in supply, poor economic conditions and an increase in purchaser loans from 15-20% is hitting demand. While the Government has proactively stimulated domestic initiatives, buyer sentiment is anticipated to rise for the last half of the year. Back of a stock market rally and positive economic data a number of developers are now teeing up new project launches.”
Additionally Dan pointed out “that the continued property development was changing face as it tracked mass transit extensions and new routes (airport link, BTS, MRT). The short term tax incentives to buyers on mortgage borrowing and transfer fees are slated to expire in March 2010.”
Certainly Bangkok's broader market is set to perform considerably better back of domestic demand while resort markets such as Phuket who rely on overseas buyers will see little relief from the current slump.
