The growing segment of shared ownership covering timeshare, vacation ownership and fractional ownership has crystallized into 'The Alternative Ownership Conference for Hotels and Resorts '(AOCAP) which will be held at Millennium Resort Patong on October 12 and 13th. One of the organizers Bryan Lunt of the Absolute Group has been a key sponsor which includes Property Report Thailand, Registry Collection, yooPhuket and Limcharoen Hughes & Glanville.
Speakers include industry expert Richard Ragatz, Desmond Hughes, Joseph Hickman from Interval International, Greg Anderson of RCI, Paul Ashburn BDO Richfield and thephuketinsider.com's Bill Barnett. The event comes at a time when many property developers are looking at options to increase sales volume in the flat real estate market; so the conference presents an excellent eduational opportunity. More details are available at http://www.aocap.org
2009's Q2 GDP results are rolling in with Germany and France now moving into positive ground, with touts that the recession is over for them. Like the rainy London weather the UK outlook still has clouds, with key economists saying the sun won't shine until early 2010. Reports from Singapore, Hong Kong and China all point to upswings but as always the mainland's figures remain so cryptic, that it's anyone's guess if the beast is overheated or still on a bull run.
Near to home property prices in Singapore look to be back to 2007 pre black October events and prices are swirling upward. As I just returned from Bangkok where the city is abuzz over the launch prices of 250,000 per square meter for the Ritz-Carlton Residences housed in Thailand tallest building which is coming up in Sathorn District. This comes at the same time when many listed property firms are seeing increases in share prices, but for many unemployment and political uncertainty continue to create on of those old hazes that came when they burnt our the rain forests in Indonesia.
Here in Phuket it appears not only is the weather catapulting from sunny days to torrential rains but that burned out tsunami buoy still needs a new battery. At last word bubble boy just left town and is currently on a cross country bike ride across China.
Despite continued restrained demand in the broader property market Phuket luxury villa transactions hit THB 3.5 billion in the first half of 2009.
According to the Phuket Luxury Villa Market Update Mid-Year Report (<link>https://c9hotelworks.com/downloads/phuket-luxury-villa-market-update-september-2009.pdf*download the full report here</link>) released by leading Thailand consulting firm C9 Hotelworks, sales volumes for units priced upwards of THB 65 million baht outperformed other sectors by significant numbers.
C9's Managing Director Bill Barnett said supply and demand fundamentals for the high end are continuing to strengthen given that excess supply is being absorbed while macro issues are constraining demand for new product launches.
"While market recovery prospects are being set back to 2011, there has continued to be a gradual upswing in activity, driven primarily by earlier than anticipated momentum in many of the financial source markets where potential overseas buyers originate from" Mr Barnett said.
According to the research, the existing inventory of luxury villas is valued at THB 10 billion with 92 units currently on the market. For the period of January – June of this year 19 properties sold; while the resale market emerged with over THB 1 billion in transactions.
"Mixed use hotel managed projects provided branding premiums with a 55% uplift in achieved pricing per square meter," Mr Barnett added.
"Developers are seeing a stabilization of gross margins despite upward cost pressure on labor and commodities such as timber. From our discussions with quantity surveyors materials such as steel are now back to levels similar to the first half of 2008; while construction volume remains low there is no expectation that pricing will drop."
The report concludes that continued tight equity and debt market will limit new developments while barriers to entry highlighted by limited ocean or beach front land indicates positive long term stability. Resale's, rentals and an emerging fractional ownership market are tapped to drive wider demand in the near to medium term.
If anyone has seen the musical Man of La Manca then they are familiar with the epic sound bite being that karaoke favorite 'The Impossible Dream.' Indeed taking a twist on Cervantes tale of Don Quixote waiting for his turn at the table during the Inquisition perhaps someone should adapt a version for property developers in the titanic like Spanish property market. While the US meltdown has its 'Entourage' like mentality, the Latin version comes complete with voice over's and subtitles.
While being part of the Euro zone Spain has been on a consist downward spiral during the recent global recession. Unemployment is now forecasted to possibly breach a gasping 20%. Reports have written that by mid 2009 over 1,000,000 vacant properties litter the country and over half of these being in resort destinations. While for most of this decade the industry has been in boom town mode, expectations are for market values to drop by 20-30%.
With inventory on hand, developers are now openly discounting at high levels just to have any cash flow and for many the old adage comes that you can't bank margins, but only hard cold cash. It's a property market in free fall and expectations for many are further depreciation is inevitable.
For those sitting here in Phuket, many football fans prefer the Premier League to La Liga; with even David Beckham going AWOL from Real Madrid. But to answer the question what relevance does it have for island real estate, well the answer is plenty. In a market which continues to rely on foreign buyers, two of the primary markets have been the UK and Scandinavia. These are markets we share with Spain and with huge discounts on offer, the ability to finance and close proximity, then yes the globalization effect is going to hit these shores without a doubt.
Hopefully there are lessons to be learned here by the Spanish meltdown and greater fundamentally sound thinking must come into play. But in the meantime that's a whole lot of empty resort real estate sitting as a prime competitor to our relatively tiny market.
In the beginning came the pool villa ala Amanpuri and Banyan Tree with tropical contemporary design borrowing a bit of lanna Thai with a dab of total privacy, and boom a design icon was born. That was the 90's and even today on the cusp of its second decade of popularity remains the luxury villa design of choice amongst the jet set of Phuket property owners.
That brings us to the infinity pool, which somehow crept up on us and became such an overnight sensation that it's hard to remember when they become the aquatic escape of choice. It seems to be the consensus that they also date back to the 90's when they etched themselves into our collective Robinson Crusoe memories. For longer then I care to remember the far away gaze into nothingness and chiseled edges of infinity have graced the covers of more coffee table books, travel guides and upscale magazines.
Looking at today's downsized, hybrid driving, more modest approach to unassuming upscale living the pressing question remains what comes next in tropical pool design? Infinity pools while lovely to look at with those cascading water falls require a nearly constant flow of electricity to pump and recirculate water goes wosh into thin air as evaporation during the moving process takes away yet another valuable resource. This is bad news for mother earth and after that Al Gore movie and worries that the entire nation of the Maldives is about to be Atlantis, there might be cause for concern.
As for what's next it's going to be interesting seeing how things pan out or if the design perhaps has the staying power of those villas who kind of go hand in hand in a yin and yang sort of way. There always is the no pool option, relying on the kindness of friends or strangers, or what many consider the last solution – public pools. Last but not least the biggest pool of all, the ocean is an option what with global warming going the way it is, we might all be swimming soon.
It's the day after the sensational headline which has stirred controversy alleging that '90% of beach front land in Phuket is controlled by Foreigners through illegal nominees.' Today the Bangkok Post has provided a follow up with quotes from the Phuket Land Office who has asked not to be named, but confirmed that all land on the island is legally owned by Thai's and land titles legally issued.
Based on the Thailand Research Fund who released their report on Sunday, it highlights that foreign land holdings are concentrated on Patong and Rawai beach. The Post spoke to Patong's Deputy Mayor Chairat Sukhabal who confirmed all land ownership in his area was legal. Most land in Patong he stated was owned by families including Ekwaniches, Yitengs, Pachanthabuts, Keesins, Somnams, Jirayus and Tantiwits.
We checked the Thailand Research Fund's website www.trf.or.th and the report has not been listed. The website of the fund details is activities as follows:
"The TRF was established in response to the 1992 Research Endowment Act. It is a juristic body that enjoys being part of the government system but outside the government administrative bureaucracy. This freedom allows great efficiency in research support.
Realizing the importance of research to national development, the Anan Punyarachun Cabinet in its April 23, 1991 meeting agreed to create a working board comprising the Minister of the Prime Minister's Office (Dr. Phaichitr Uathavikul), the Minister of Science, Technology, and Environment (Professor Dr. Sanga Sabhasri), and the Minister of Industry (Professor Dr. Sippanondha Ketudat) to investigate the overall picture of research in Thailand in order to promote useful research results.
The Cabinet approved the idea of Research Endowment Act in June 1991, and the Act was passed and published in the Government Gazette on April 2, 1992.
Later on, the Cabinet appointed the chairman and members of the TRF Policy Board. On March 30, 1993 the TRF Policy Board appointed the Director of the TRF and the operation of TRF started. A year later, the Cabinet appointed the chairman and members of the Evaluation Board which will follow-up and evaluate funded research projects."
As to exactly who the the organization is, it's listed under the Prime Minister's office as a Public Organization along with the Thailand Public Broadcasting Service, Designated Areas of Sustainable Tourism Administration, Thailand Convention and Exhibition Bureau and The Office for National Education Standards and Quality Assessment.
Its interesting to note that another of these organizations DASTA (Designated Areas for Sustainable Tourism Administration) who were holding hearing in Phuket over the proposed Saphan Hin mega project made news headlines when quotes were made by an attendee that majority of land in Phuket was owned by foreigners.
For the Bangkok Post if appears they have taken a print and be damned approach to the tabloid cover story one day and a smallish follow up the next. Reading the furor of comments on both the Post's web site and local blogs this is a highly emotional issue which has continued to propel the issue into the media focus.
The cover story in today's Bangkok Post which quotes a leading research body as saying Foreigner's own 90% of Phuket beach land certainly has struck an ugly cord of anti overseas ownership of land in the country. The study which was put together by the Thailand Research Fund quotes a professor from Sukhothai Thammathirat University who says these holdings are using Thai nominees.
Much of the current controversy stems from the recent reports of foreign parties looking to enter into the rice and farming business in the country, whereas Prime Minister Abhisit Vejjajiva recently told the media the existing Foreign Business Act explicitly forbid this and any violations would result in revoked land titles.
Viewing the Bangkok Post story it's disappointing to see such as one sided story hit page 1 which clearly is aimed at sensationalism. No facts or supporting documents have been presented, no investigations by the Post journalist's and no responsive comments from legal foreign land owners of beach front property. It clearly is a step backward to the days of the Foreign Business Act two years ago which plunged the property business into a serious flattening of demand.
Viewing the claims by the report, factually speaking there is little beach front land available in Phuket as a large portion of the areas have roadways constructed on it such as Patong or Karon. Go to Bangtao and Laguna Phuket has legal title to its large-scale land holdings though the Thai Government's Board of Investment scheme. Looking at Mai Khao Anantara and Marriott are owned by Thai listed firm Minor. Local owned hotels such as Kata Thani, Thavorn, Sri Panwa, and Sala have considerable areas. Even more material is the expansive Sirinath National Park which covers much of the west coastline of Phuket and has no land owning on it.
It's disappointing to see the Bangkok Post publish this type of tabloid sensationalism, and certainly it will only further hamper efforts to encourage foreign investment during the current recession and property downturn. If the reports are correct then the Post should publish evidence of the 90% of these nominee details rather then flame an issue which only damages the countries reputation amongst the investment community.
READERS – POST YOUR COMMENTS ON THIS STORY – Do you think foreign land ownership should be allowed in Thailand, share you opinions with us!
As the thephuketinsider.com is in the Philippines it's interesting to view trading comparisons in the residential condo market. According to industry analysts there are over 100 new projects currently in the pipeline. Leading property firm Colliers is reporting that the residential market is showing signs of recovery with notable increases in volume in Q2 of this year. Market estimates are at the beginning of this year there were 60,000-80,000 condominium units in Manila.
Other key trends commented on have been the growth of the secondary resale market, which is displacing new unit sale and an active rental segment with the country experiencing a positive economic uplift. Absorption rates are expected to be under fire with the new round of product launches and the question of discounting remains widely speculated on. As for the moment though the real estate sector is riding high on a positive trading environment and feel good atmosphere of purchaser and investors.
Perhaps a key in this market that separates comparisons to Phuket is that strong domestic demand is present along with relatively good liquidity in the buyer's pools. Whereas our island relies strongly on overseas buyers for resort grade property, breaking into the Thai domestic market remains an elusive objective yet to be widely tapped into.
