1h 2010 | residential
thailand
Samui Residential Report
Condominium & Villa Executive Summary Condominiums are fast becoming part of the landscape in Samui after the first units were supplied in 2007. There are now nearly 340 units as of H1 2010. Most existing and future condominium developments mostly cater for the high end market, although others are more modest in scale and affordability. The majority of residential units are used in one way or another to cater to the hospitality industry as the nature of the island makes this an attractive option for buyers seeking to generate income.
market indicators 2H 2009 Supply LAUNCHES PRICES TAKE-UP
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1H 2010
Many villa projects remain on hold for financial reasons after the global downturn and Thailand’s domestic political woes over the past eighteen months. Villa developments are expected to continue to be supplied in the next few years, especially in the Bo Phut and Cheong Mon area.
SAMUI RESIDENTIAL REPORT | 1H 2010 | CONDOMINIUM & VILLA
Zoning Bang Po: Bang Po beach is located on the northwest of Samui and contains very limited accommodation, however this is set to change over the next few years. There are few tourists and shopping facilities in this area although a number of restaurants operate. Mae Nam: Mae Nam beach is located in the north of Samui and there are many 4 - 5 star hotels and restaurants along the road and beach. Bo Phut: This area contains the widest variety of facilities and real estate on the island. Visitors can find the fisherman’s village, mid-range to upmarket restaurants, cafes and bars, luxury hotels to budget guesthouses and residential projects. Cheong Mon: Cheong Mon is located in the northeast of Samui. This is the most popular area for residential projects on Samui. This area is not far from airport, and many foreigners choose to live here as it is a relatively tranquil location Chaweng: Chaweng is the most well known and longest beach on Samui, and accommodation ranges from 4 – 5 star hotels to budget
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bungalows. Nightlife in Chaweng is very popular due to the wide assortment of restaurants and bars. There are a limited number of residential projects in the area, as it is mostly occupied by hotels, restaurants, bars and shops. Lamai: This area is comprised of Lamai beach and Hua Thanon beach. Lamai is the second longest beach on Samui, and although Lamai is smaller than Chaweng it also has a number of luxury hotels and high quality eating and drinking establishments as well as guesthouses for backpackers. South Coast: The South Coast beaches are amongst the least developed part of Samui with only a few resorts along the beach, so these places are peaceful and suitable for relaxation and where you can find local seafood restaurants. West Coast: This area is comprised of Nathon beach, Lipa Noi beach, Taling Ngam beach to Thong Tanote beach. The Ferry pier and local government offices on Samui are located in Nathon beach, so this area is very busy in the day time; meanwhile in Taling Ngam the area is very quiet.
SAMUI RESIDENTIAL REPORT | 1H 2010 | CONDOMINIUM & VILLA Samui Condominium Market Current Supply, H1 2010
Source: Department of land, Colliers International Thailand Research
Many residential projects on Samui are small in nature and some of them are not officially registered at the Department of Land, due to a number of them planning to change from residential use to that of hotel. Therefore the number of condominium units listed here may be slightly less than the real figure.
project in Samui was registered in 2007, and since then the figure has grown every year, especially in 2009 with around 150 units completed and registered. For the first half of 2010 around 60 units were supplied and approximately 330 units are scheduled to be completed for the whole of 2010.
The average unit per project on Samui is just 30, due to some projects on the island only having 7 – 8 units. The first condominium By location
Source: Colliers International Thailand Research
Around 64% of condominium project units on Samui are located in the Bo Phut area; Bo Phut is not far from the airport and has its own nightlife area as well as being close to Chaweng. There are also many retail outlets in this area.
In the next few years condominium projects will pan out from Bo Phut to the surrounding beaches, such as Mae Nam, Cheong Mon and Bang Po
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SAMUI RESIDENTIAL REPORT | 1H 2010 | CONDOMINIUM & VILLA Future supply Cumulative future supply scheduled to be completed during the years 2010 – 2012 by location. (As of H1 2010)
Source: Colliers International Thailand Research
Cheong Mon is the new area for condominium projects in the years 2011 – 2012 with approximately 230 units scheduled to be completed by 2012. Bang Po also has 140 new units that are scheduled to be completed in 2012. There is a lack of supply of land suitable
for new condominium projects in the Bo Phut area therefore no new supply is due in the next couple of years. Lamai and the West coast will see the first condominiums rising this year.
Take up rate Take up rate of all projects in the market, as of H1 2010
Source: Colliers International Thailand Research
The take up rates in Bo Phut and Chaweng are higher than in other locations, this is due to these areas being not far from the airport and equipped with various facilities, such as restaurants, hypermarkets, convenience stores, hospitals and entertainment. However in Bo
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Phut area there are nearly 220 condominium units, while Chaweng has around 60 units. Although Cheong Mon is not far from the airport; due to limited facilities and high prices for units here, the take up rate is considerably lower.
SAMUI RESIDENTIAL REPORT | 1H 2010 | CONDOMINIUM & VILLA Price Selling price of total projects on Samui Zone
Selling Price (THB / Sq M.) Min.
Max.
Avg.
Bang Po
33,500
146,000
113,375
Mae Nam
39,500
80,000
59,750
Bo Phut
40,000
67,000
53,500
Cheong Mon
52,000
130,000
80,717
Chaweng
55,200
99,000
77,100
Lamai
34,500
35,800
35,150
South Coast
120,000
125,500
122,750
West Coast
154,500
156,500
155,500
Average Price
69,886
110,400
92,049
Source: Colliers International Thailand Research
AVERAGE SELLING PRICE OF TOTAL PROJECTS ON SAMUI
Source: Colliers International Thailand Research
Prices differ based on location in terms of beach access, road access and attractiveness of the area. The West Coast is based on limited supply so may not be a good indicator. The more expensive locations contain condominium
units by the beach while lower rates can be found in other zones due to the units being located some way from the beach.
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SAMUI RESIDENTIAL REPORT | 1H 2010 | CONDOMINIUM & VILLA Samui Villa Market Note: This report consists of research in regards to multiple villa developments. Individual villas are excluded. Current supply by year, H1 2010
Source: Department of Lands and Colliers International Thailand Research
Samui is a newly emerging residential location in Thailand. The first residential projects in Samui, especially in the housing or villa market started in 2004. Before that time development consisted of only individual villas. The average number of units per project is less than 20 and some consist of only 2 – 4 units. The villa market is still in its infancy and appears quite volatile to the fluctuations of the market. Some developers build only one villa at a time and future building has been put on hold, others consist of one villa only but the size is usually so substantial that the developer will give it a name in order the market the product. In these
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cases the data is not included in the report. Some developers sell off plan and then base their financing on payments from buyers. Some have little experience in real estate and there have been examples of projects being suspended due to poor project financing and planning. This has plagued the residential market in the past but there are signs of growing maturity. Additional supply in H1 2010 amounts to nearly 100 units, so the total number of villa units in Samui is approximately 350 units in the first half of 2010.
SAMUI RESIDENTIAL REPORT | 1H 2010 | CONDOMINIUM & VILLA
Current supply by year, H1 2010
Source: Department of Lands and Colliers International Thailand Research
Bo Phut is the most popular location for the residential market although more in terms of condominiums than villas. This is due to relatively convenient transport and access to a wide range of restaurants and family entertainment facilities. Villa development has
taken hold in relatively sparse locations such as Mae Nam, Cheong Mon and the West Coast compared to the relatively small condominium growth. These areas have significant land available for landed property compared to the busier Chaweng zone for example.
Future supply Cumulative future supply scheduled to be completed during the years 2010 – 2012 by location. (As of H1 2010)
Source: Colliers International Thailand Research
More than 440 units are scheduled to be completed in 2012 and 165 units or around 37% will be completed in 2011.
100 units or approximately 25% of total are scheduled to be completed in 2012.
The developers are interested to develop villa projects in the Cheong Mon area, more than
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SAMUI RESIDENTIAL REPORT | 1H 2010 | CONDOMINIUM & VILLA Take up rate The take up rate of all projects in the market, as of H1 2010
Source: Colliers International Thailand Research
The take up rate in the West Coast area is around 60% higher than in other locations, followed by Cheong Mon and Bang Po areas with approximately 48% and 32% respectively. Villa projects in the West Coast area shown the highest rate, but most of the units are located in
the north part of West Coast area as these areas are not far from the airport and close to various facilities, such as restaurants, hypermarkets, convenience stores, hospitals and entertainment venues.
Residential demand drivers Flights Most people enter Samui from the air. It is possible to take a ferry but this is time consuming for all but budget travelers and they are more likely to use Samui as a springboard for Koh Phangan. Samui suffers from a limited number of direct international arrivals and domestic flights from Bangkok are prohibitively expensive when compared to those of other resorts.
transferred. This makes the island more susceptible to the political dramas in Bangkok as evidenced by the airport blockade and April /May riots in 2010. It also deters travelers from visiting from Bangkok and using Samui as a second home due to the high ticket prices. This means that developments are more focused on the high end market.
The upshot is that many international visitors will have first arrived in Bangkok and then Internal transport Great strides have been made in the road system on Samui over the past few years but the island still suffers from a lack of adequate infrastructure especially during the rainy season when flooding can seriously effect traffic. Also the island suffers from poor signage
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making navigating the roads difficult. The recent improvements to the road have also had an adverse effect in that car drivers and motorbike riders are going much faster and accidents, often fatal, are commonplace and negatively affect the image of the island.
SAMUI RESIDENTIAL REPORT | 1H 2010 | CONDOMINIUM & VILLA Growth of retail The emergence of a strong retail sector on the island has meant that Samui has become a more attractive residential and holiday
destination due to the handiness that hypermarkets down to the convenience stores provide.
Entertainment The Samui experience is one of chilling out and relaxing during the day and enjoying the restaurants and partying at night. This is appealing to western travelers but less so to the Asian market where daytime entertainment facilities are a more significant attraction in a holiday. This puts Samui at a disadvantage compared to Phuket but especially Pattaya, with
its growing focus on family style theme parks. However from a western perspective this is to its advantage as many are repelled by a more Disneyland approach and will seek out a laid back resort area. This means that the Samui’s growth is taking another direction to the other resorts.
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SAMUI RESIDENTIAL REPORT | 1H 2010 | CONDOMINIUM & VILLA Tourism The take up rate of all projects in the market, as of H1 2010
Colliers International Thailand Research Source: Office of Tourism Development
In Samui, tourism is the key driver of residential real estate in terms of buyers often being returning tourists wishing to invest in property and the end users of these products utilizing the hotel function. Condominium and villa usage is different from that of Bangkok in that the majority of units function as hotels or even serviced apartments and as such developers have sometimes altered the design to reflect this with facilities expected in a hotel or serviced residence. Owners often can offer their units into a pooling system with apportioning of revenue based on unit size. As many owners use their units infrequently this system offers flexibility and a good potential rate of return. However the residential market is therefore dependent on the vagaries of the tourism market and the recent protests and rioting in Bangkok have affected the market. The airport blockade brought tourism to an almost standstill at the end of 2008 as most visitors use a plane to come to the island and so this event dramatically affected arrival numbers. Recovery was strong after the blockade but fell
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again at the end of 2009. Although the last quarter was relatively tranquil for Thailand as a whole, Samui was affected as many travelers book their holidays months in advance and so the effects of traumatic events are felt a long time after. This can be seen by the sharp reduction of tourists from mainstay markets in Europe during this time. There are few countries that dominate the market as visitors come from a wide range of countries and the Thai market is relatively small compared to other resorts, although this group has bucked the trend in Q2 2010 by actually increasing from the previous quarter. This was due to Bangkokians escaping the disturbing events in their city and time will tell if this growth can be sustained. Samui is also limited by the number of flights allowed in at the airport and its reliance on domestic flights. The short runway means that large wide body jets cannot be accommodated thus restricting direct flights from Europe which use such longer range aircraft. Domestic flights
are prohibitively expensive compared with flights to Phuket and deters less well heeled visitors. This means more development in the luxury end of the market and the lack of mass tourism bestows Samui with a more exclusive appeal, reinforced by the limit on high rise construction. It is partly for these reasons that the island hosts a number of specialized wellness resorts such as Kamalaya Koh Samui while other resorts offer a strong wellness component. This is a growing and lucrative niche which could also be developed to take into account the burgeoning number of retirees from Europe, Japan and the USA.
SAMUI RESIDENTIAL REPORT | 1H 2010 | CONDOMINIUM & VILLA Outlook Due to it being an island and an expensive one to reach, the opportunities for the development of Samui are limited compared to other resorts in Thailand. This may be no bad thing as many living in Samui are there for that very reason and do not wish the island to be awash with new projects. There are also concerns about the water supply being adequate for future supply. These limitations mean that Samui can grow not necessarily in terms of quantity but rather quality with the emergence of higher end projects with eclectic designs that fit into the natural structure of the island rather than deflect from it. The residential market in Samui is greatly dependent on the tourism market as most projects have a hotel/serviced apartment component. Potential buyers will be keenly aware of the ups and downs in the Samui tourism market as visitors provide the mainstay of income on most properties. Therefore the market is likely to remain volatile while Thailand is mired in political uncertainty and the global economy teeters towards another recession.
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SAMUI RESIDENTIAL REPORT | 1H 2010 | CONDOMINIUM & VILLA COLLIERS INTERNATIONAL THAILAND MANAGEMENT TEAM PROJECT SALES & MARKETING Wasan Rattanakijjanukul | Manager Nukarn Suwatikul | Manager ADVISORY SERVICES Napatr Tienchutima | Manager
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researcher:
researcher:
Thailand Antony Picon Senior Manager | Research
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