A new Thai government planning regulation has been issued for Phuket. Legal firm Baker & McKenzie have issued a summary and analysis of the implications which we are reprinting with permission:
RECENT DEVELOPMENTS
On 7 July 2011, the Ministerial Regulation to Implement the Phuket Province Town Planning Regulation B.E. 2554 (the "2011 Regulation") was published in the Government Gazette. This regulation replaces the Ministerial Regulation to Implement Phuket Island Town Planning Regulations B.E. 2548 (the "2005 Regulation"). It extends the laws on town planning and land utilization to all land in Phuket province, including small secondary islands, and will remain in effect for an initial period of five years.
WHAT THE LAW SAYS
Significant differences between the 2005 Regulation and 2011 Regulation are as follows:
– The 2011 Regulation is applicable to the whole of Phuket, including small secondary islands within the territory of Phuket province, whereas the 2005 Regulation covered only Phuket island;
– The 2011 Regulation increases the number of land utilization zones from 13 to 16 zones, as noted in the chart below. The three additional zones, which govern the sea areas around Phuket province and its small secondary islands, are the blue zone (empty land for environmental preservation, tourism and fishery), the blue with white stripe zone (empty land for recreation and preservation of coastal environment), and the blue with light brown stripe zone (empty land for preservation of natural resources and coastal environment);
– The 2011 Regulation provides that the use of land in each zone for purposes other than those prescribed in the regulation must not exceed a certain percentage in each area of each zone as prescribed in the regulation. Previously, under the 2005 Regulation, the percentage limit for such use applied to each individual land plot; and
– There are changes regarding the scope of land utilization in each zone, including changing certain commercial and high-population residential zones (red zones) to low-population or medium-population residential zones (yellow or orange zone). The key changes are summarized in the table below.
LOW-POPULATION RESIDENTIAL ZONE (YELLOW ZONE)
2005 Regulation:
– The use of land for other purposes must not exceed 30 percent of the area of each individual land plot.
– The land must not be used for the storage of fuel intended for sale.
2011 Regulation
– The use of land for other purposes must not exceed 5 percent in each area of the yellow zone.
– The land must not be used for the storage of fuel intended for sale, except for liquefied petroleum and natural gas.
MEDIUM-POPULATION RESIDENTIAL ZONE (ORANGE ZONE)
2005 Regulation
– The use of land for other purposes must not exceed 50 percent of the area of each individual land plot.
– The land must not be used for the storage of fuel intended for sale.
2011 Regulation
– The use of land for other purposes must not exceed 15 percent in each area of the orange zone.
– The land must not be used for the storage of fuel intended for sale, except for liquefied petroleum and natural gas.
COMMERCIAL AND HIGH-POPULATION RESIDENTIAL ZONE (RED ZONE)
2005 Regulation
– The use of land for other purposes must not exceed 70 percent of the area of each individual land plot.
– The land must not be used for the storage of fuel intended for sale, except for gas stations.
– The land must not be used as a graveyard or crematorium.
– The red zone in certain Muang Districts must not be used for factories other than factories that operate without causing any nuisance or pollution.
2011 Regulation
– The use of land for other purposes must not exceed 15 percent in each area of the red zone.
– The land must not be used for the storage of fuel intended for sale, except for liquefied petroleum and natural gas.
– No restriction on the use of land for graveyard or crematory purposes.
– The red zone in certain Muang Districts must not be used for any type of factory.
INDUSTRIAL AND WAREHOUSE ZONE (PURPLE ZONE)
2005 Regulation
– The use of land for other purposes must not exceed 50 percent of the area of each individual land plot.
2011 Regulation
– The use of land for other purposes must not exceed 10 percent in each area of the purple zone.
Specific industrial zone (Light purple zone)
2005 Regulation
– The use of land for other purposes must not exceed 50 percent of the area of each individual land plot.
2011 Regulation
– The use of land for other purposes must not exceed 10 percent in each area of the light purple zone.
RURAL AND AGRICULTURAL AREA (GREEN ZONE)
2005 Regulation
– The use of land for other purposes must not exceed 30 percent of the area of each individual land plot.
– The land must not be used for the storage of fuel intended for sale.
– No restriction on the use of land for residential or commercial purposes in the form of commercial buildings.
– The land must not be used for residential purposes in the form of common residential buildings such as condominiums or apartments.
2011 Regulation
– The use of land for other purposes must not exceed 5 percent in each area of the green zone.
– The land must not be used for the storage of fuel intended for sale, except for liquefied petroleum and natural gas.
– The land must not be used for residential or commercial purposes in the form of commercial buildings, except if such use is part of a land subdivision for residences and does not exceed 10 percent of the total area of the project.
– The land must not be used for residential purposes in the form of common residential buildings such as condominiums or apartments unless the land is 1,000 meters away from the shoreline.
EMPTY LAND FOR RECREATION AND ENVIRONMENTAL PRESERVATION (LIGHT GREEN ZONE)
2005 Regulation
– Land which is privately owned shall be mostly used for residential purposes, tourism, governmental institutions, public utilities and public activities.
– The use of land for other purposes must not exceed 50 percent of the area of each individual land plot.
– The land must not be used for the storage of fuel intended for sale, except for gas stations.
– The land must not be used for factories classed as type 2 or 3.
– No restriction on the use of land for the sale, purchase or storage of scraps.
2011 Regulation
– Land which is privately owned must be mostly used for recreation, recreation-related activities, environmental preservation, residences, tourism, governmental institutions, public utilities and public activities.
– The use of land for other purposes must not exceed 5 percent in each area of the light green zone.
– The land must not be used for the storage of fuel intended for sale, except for liquefied petroleum and natural gas.
– The land must not be used for any type of factory.
– The land must not be used for the sale, purchase or storage of scraps.
– Forestry reservation area (Green with white stripe zone)
FORESTRY RESERVATION AREA(GREEN WITH WHITE STRIPE ZONE)
2005 Regulation
– The use of land for other purposes must not exceed 50 percent of the area of each individual land plot.
– The land must not be used for the storage of fuel intended for sale.
– The land must not be used for factories classed as type 2 or 3.
– The land must not be subdivided for residential purposes, except for single housing.
– The land must not be used for residential or commercial purposes in the form of commercial buildings or row houses.
– No restriction on the use of land for the sale, purchase or storage of scraps.
2011 Regulation
– The use of land for other purposes must not exceed 5 percent in each area of the green with white stripe zone.
– The land must not be used for the storage of fuel intended for sale, except for liquefied petroleum and natural gas.
– The land must not be used for any type of factory.
– The land must not be subdivided for any residential purpose whatsoever.
– The land must not be used for residential purposes or for the construction of high rise buildings or large scale buildings.
– The land must not be used for the sale, purchase or storage of scraps.
CONCLUSION
The 2011 Regulation is currently the key law governing all types of development and land utilization in Phuket. Prior to acquiring any land for real estate development in Phuket, developers need to carefully consider the new regulation and keep abreast of any other upcoming regulations regarding land utilization restrictions and requirements to ensure that their proposed projects can be realized under Thai law.
Developers who acquired, but did not start developing, their land before the 2011 Regulation took effect, including those who already have building construction permits, should confirm whether the 2011 or 2005 Regulation will apply before proceeding with their proposed developments.
Source: <link>http://www.bakermckenzie.com/Thailand/*Baker & McKenzie in Thailand</link>
Sri Lanka's resort real estate sector is set to be Asia's next success story.
Leading the surge is a new wave of foreign investment into resort property along the southern coastline of the country. Multi-million dollar hotel managed pool villas are a developing storyline which has seen other regional leisure destinations including Bali, Phuket and Koh Samui attract high net worth buyers from around the globe.
Tourism is a leading catalyst for resort grade property as it links to sustainable demand.
One benchmark project our radar is the Six Senses Ahungalla Resort which will launch fourteen oceanfront luxury villas for sale by the fourth quarter of this year. Pricing points are expected to set a new standard for resort grade real estate in the country."
An increasing number of hotel chains are lending their brands to developers who view mixed-use projects as attractive ways to minimize long term debt and equity positions and enhance project returns.
A prime example of the chain loyalty connection is at Six Senses managed Soneva Fushi in the Maldives where last month a French -based buyer purchased a USD7 million beachfront villa after staying at the property a number of times.
While private holiday homes and villas have dotted the resort areas for a number of decades, with Galle being the epicenter, development is set to march further south.
Ultimately access and infrastructure improvements are creating new catchment areas. The new toll road between Colombo and Matara will expedite travel time to ninety minutes.
Looking beyond Galle there is a noticeable uplift in projects from Talpe's Golden Mile, down to Weligama and Mirissa Bay. The later highlights activity with the soon to complete six villa luxury estate Nisala, built by a Hong Kong group who currently has one property remaining pried at USD2.45 million.
Trends indicate the Tangalle area looks set to see major resort and property development in the short to medium term. The new Hambantota International Airport will see airlift capacity take off when it opens in 2012. Another developing story has been service for upscale tourists by Maldivian Air Taxi and national carrier Sri Lankan who are ramping up flights on the coastal route.
A mega project by Hong Kong's Shangri-La group includes a 300 rooms and villas, golf course and will be selling residential and investment property. With the new deep sea port and international convention centre, the area has a critical undersupply of hotel rooms.
The close proximity of Tangalle with its white sand beaches and natural resort attributes make it an attractive target for international hotel chains. It's inevitable the luxury Amanwella which opened a few years ago will sell branded villas once the market cycle moves up a notch.
The southern Sri Lankan coast has strong fundamentals to sustain cyclical growth and graduate from a developing market into maturation. Airlift is increasing which for us is everything, as you can't stay in a hotel or buy property in a destination, if you can't get there.
In our opinion the prospects for resort property will see a quantum leap both in product and pricing as a result of the entry of a critical mass of international brands and hospitality led residential projects
New town planning regulations for the island of Phuket have been issued on July 6, 2011.
The most significant changes have been to land areas located on hillsides and forest conservation areas.
For developers of condominium and land development projects, there has been limited revisions. Those most impacted will be upscale villa or luxury hillside projects.
Leading tax and legal experts on Laos PDR , DFDL Mekong will be holding a seminar on cross border investment including hotel development and management on August 5th.
Topics will include:
Investment Opportunities for Thai Investors:
-General overview of the Lao economy
-Opportunities for Thai investors: what sectors are attractive to Thai investors?
-Are there any restrictions for Thai Investors?
-What sectors have Thai companies invested in?
New Investment Law- some salient features:
-What does the new investment law offer for Thai investors?
-Areas open to Thai investment
-What legal structures are available: 100% foreign owned companies, joint venture
agreements (JV), representative offices, branches
-What investment terms are available?
-What land concessions / lease terms are available for Thai companies?
-How to structure an investment in Lao PDR: minimum investment requirements,
financing, types of shares
Tax in the Lao PDR
-What tax incentives are available for Thai investors?
-Entry Strategies: What holding company options are available to structure an
investment into the Lao PDR? What is a tax efficient structure for Thai investors?
-What does the Double Tax Agreement (DTA) between Thailand and Lao PDR offer
Thai companies?
-Free Trade Agreement (FTA) / Bi lateral trade agreements with Thai and Lao PDR
-Exit Strategies: What are the tax implications for Thai companies selling or
transferring an investment in Lao PDR? Sale of shares or asset sale?
Banking / foreign exchange Transactions:
-Repatriation of income: what foreign exchange restrictions exist for Thai investors?
-What currencies are available for foreign companies (THB, USD, LAK)
-Thai and international banks operating in the Lao PDR
Venue will be the Dusit Thani Bangkok and timing from 2:00 pm to 5:00 pm. Cost is THB2,000.
For details email – [email protected]
Call it Bangtao, Cherngtalay or more commonly known as Laguna, but the upper scale property area is now seeing creep by the low or entry priced segment.
The early adopters in the area of Baan Don or Layan were Two Villas and then the Erawana Group who have built detached homes and now condos.
Next up is now the 59 unit Baan Tak r Kard which recently launched and according to the developed have sold close to 50% already in off-plan sales.
Semi-detached units range from 108 square meters up to 125 square meters of living area. Entry pricing point starts at THB2.69 million.
Call it a niche market, but the Malaysian My Second Home Program has captured the hearts and minds of a growth market – Iran.
Iranian's now top the list in terms of foreign nationalities investing into the incentive led initiative intended to spur the real estate sector according to an article in Property Report South East Asia.
The piece goes on to say over 60,000 Iranians live in Malaysia and 160,000 inbound travelers visited in 2010.
Phuket has seen a rush of visitors from the country with the establishment of direct flights from Tehran on Mahan Air, but the ripple effects have yet to strike the local property market.
While most assume the peaceful election has been the trigger, in talking to a number of sources the property hunters are primarily motivated to move to greener pastures from the CBD given intense competition and escalating land prices.
Most acquistion pricing is ranging from THB3 – 5 million baht per rai with the focus on larger inland located parcels.
At the same time there is a resurgance of interest by overseas investors in development land mainly from Singapore and Hong Kong based groups. These tend to be driven to more prime locations.
We've seen planning for some smaller villa projects recently with 3-6 homes even on the upscale Natai beach region which are being driven by overseas investment.
During the global financial crises in 2007/2008 this was the hardest hit sector in Phuket property.
On the domestic front, a potential looming threat is a government mandated miniumum wage of THB300 baht. According to an article in today's Nation newspaper the Thai Contractors Association is quoted that building costs could escalate as much as 9-11% lead by labor costs and a resulting surge in building materials.
The luxury MahaNakhon skyscraper in Bangkok has finally starting piling after a delay in the project timeline.
Set to house the Ritz-Carlton luxury residences, Ian Schrager Marriott collaboration for the trendy Edition hotel and commercial/retail space.
Pace Development has been under the gun to start work on site and conjecture in the property sector has been pointed as to whether the ambitious tower will go forward.
For those whose idea of living large the idea of swimming, biking and running before bonking out – Laguna Phuket is drawing widespread acclaim for its end of year back to back triathlon events.
This year's Laguna Phuket Triathlon sold out in a mere 40 days despite 700 slots, and the Ironman 70.3 the following week is already over 500 entries out of 1,100 available spaces.
Tri-fest 2011 is slate with the LPT on November 27th and Ironman 70.3 Asia Pacific Championship on December 4th.
The event's continue to be a be international draw card and a number of athletes are signing up for both, which means an extended Phuket stay.
