A PLACE IN PARADISE

GRAEME MALLEY REVEALS THE PERKS AND PITFALLS OF INVESTING IN A TROPICAL PROPERTY

KOH SAMUI in the Gulf of Thailand has come a long way since the early ’70s when the majority of accommodation was simple beach huts catering mainly to backpackers and the more adventurous traveller. The airport’s opening in 1989 has since made the island more accessible to all.

Slowly but surely, the make-up of visitors began to change, leading to a demand for more high-end resorts, restaurants and shops. These same visitors are now driving the property market, as more and more people are choosing to purchase holiday homes or even settle permanently on the palm-tree fringed island.

WHY KOH SAMUI
Koh Samui is, today, a truly international destination with visitors and buyers hailing from around the globe. The British definitely represent the biggest number of home-buyers but Hong Kong expats, Nordic nationals and an increasing number of Hungarians and Russians are investing too. The island offers the amenities of a developed destination, yet still manages to retain the feel of a romantic tropical island, unlike Phuket, which is linked to the mainland by bridge.

“It is one of the few developing destinations that provides luxury living in a romantic tropical island setting,” argues Meash Meakin at Samui Beach Village. And also one of the few destinations left in Southeast Asia where you can find prime beachfront land which has yet to be developed.

In addition, Samui boasts one particularly unusual property law that prohibits buildings higher than the tops of the coconut trees that ring the island. If this law is upheld, it will prevent the construction of the high-rises which blight so many resort towns around the world.

From an investment point of view, Samui remains relatively cheap when compared to the likes of Spain and Portugal – the most popular places for European buyers in the past. This is even more so for buyers from Hong Kong and Singapore, where land prices are particularly high.

The main drive behind the local market is the value of property here, compared to other leading international holiday destinations, combined with the amount of money that can be made renting property out if the investor does not plan to use it year round.

One of the easiest ways to assess value is to compare rental yields. It is estimated that on Samui, buyers are looking at an annual yield of 8-10%, while many other leading resort destinations are closer to 4-6%, mainly due to rapid price increases.

On this basis alone, Samui represents very good value with plenty more growth to come. “Further development of services and infrastructure and the launching of more direct flights can only boost the market further,” says John Birt of Samui Villas & Homes.

The fact that Samui is an international destination also means that property values are not unduly affected by slumps in any single market. For example, unlike Bangkok, Samui would be largely unimpacted by a downturn in Thai house prices unless it affected international buyers. In addition, the cheaper cost of living and lower wages make owning and managing property in Samui comparatively inexpensive.

In all these ways, Samui has a considerable amount going in its favour on just the financial fundamentals, while the maturing market means that buying here no longer involves the risks it once did, even a few short years ago.

THE NEXT STEP
Tempted to consider purchasing a property, but not sure how to proceed? It can seem a bit overwhelming at first glance.

To start with, there are several real estate companies and developers offering everything from simple one-bedroom bungalows up to 80-million baht luxury beachfront villas with their own private yacht berths. Obviously, budget will be the major factor in your choice but, even then, how do you decide who to deal with?

It is important to approach any potential purchase with the same caution you would in your home country, and there are a few questions you need to ask before parting with your money.

“One of the most important investment decisions is to choose your developer carefully,” advises Zuelal Ut of Coconut Land & House. “Make sure the organisation you are entrusting your money to has an established track record and are able to support their claims with factual examples.”

This will immediately separate the more reputable companies from the rest. Wherever possible, find opportunities to talk to residents or other investors to gain firsthand feedback.

If you are not going to be living full-time on Samui, check that you have the option of property management. They will not only assist in the renting of your place, but also ensure that its value is upheld through proper maintenance.

There are also a number of lengthy legal considerations to bear in mind before you invest. Again, by using a respected company, buyers can have peace of mind that these will be handled professionally.

ENVIRONMENTAL AWARENESS
The value of any investment in Samui will be increasingly dependent on the maintenance of the natural environment.

It would be misleading to suggest that the massive surge in construction has had no environmental impact –island-wide floods of late 2005 are testament to that, and were, in large part, blamed on the unrestricted felling of trees and the blocking of natural drainage channels.

Hopefully, however, lessons have been learnt and development must go hand in hand with conservation, otherwise the very things that attracted people to the island will be gone forever. Reputable companies have always adopted a policy of trying to blend with the environment with as little impact as possible. Find out what initiatives your developer is undertaking to maintain the environment, and in so doing, help protect your future.

BUY NOW, RELAX LATER
In the words of Tropical Luxury Living’s Rune Theilsby, Koh Samui appears to offer a unique opportunity to own “a piece of paradise”, and at prices which are more affordable than you might think.

Here, you can enjoy a tropical lifestyle with all the comforts of home and the reassurance of a good return. One source estimates that the growth in property prices during the last five years is over 100%, with land prices rising by nearly 200% in the same period – and all the signs are showing that this upward swing is set to continue for some time to come.

“Buying property in Samui is about lifestyle and investment opportunities.” says Andrew Moore of Samui Property Solutions. “On both counts, I doubt many buyers will be disappointed.”

THE PROPERTY PROFESSIONALS

Coco International Properties Co. Ltd.
Unit B4 Time Square, Chaweng and 90/13 Moo 2, Tambon Bophut, Koh Samui, tel/fax +66 (0) 7742-2248, email info@cocosamui.com, www.cocosamui.com

Coconut Land & House
8/5 Moo 5, Ban Tai, Koh Samui, tel/fax +66 (0) 7742-0444, email layback@coconut-land-house.com, www.coconut-land-house.com

Dhevatara Properties Co. Ltd.
Suite 1105, 11/F, CRC Tower, All Seasons Place, 87/2 Wireless Road, Phatumwan, Bangkok, tel +66 (0) 2654-3484, email mark.vinton@dhevatara.com, www.dhevatara.com

Destination Properties (Shambala) Co. Ltd.
Discovery Centre 21/8 Moo 5,Tambon Angthong, Koh Samui, tel +66 (0) 7723-6632, email shambala@destination-properties.com, www.shambala.co.th

Karma Samui
80/32 Moo 5, Bophut, Koh Samui, tel +66 (0) 7741-3901, email info@karma-realty.com, www.karma-realty.com

Samui Beach Village
442/1 Moo 1, T. Maret, Koh Samui, tel +66 (0) 7741-8985, email sales@samuibeachvillage.com, www.samuibeachvillage.com

Samui Prestige Homes
157/12 Moo 1, Bophut, Koh Samui, tel +66 (0) 7743-0411, email mark@samuiprestigehomes.com, www.samuiprestigehomes.com

Samui Property Solutions Co. Ltd.
106/19 Moo 1, Tambon Bophut,Koh Samui, tel +66 (0) 7724 5830, email andy@samuipropertysolutions.com, www.samuipropertysolutions.com

Samui Villas and Homes Co. Ltd.
11/7 Moo 1, Bophut, Koh Samui, tel +66 (0) 7743-0326, email info@samuivillasandhomes.com, www.samuivillasandhomes.com

Tropical Luxury Living
91 Moo 6, Chaweng Ring Road, Koh Samui, tel +66 (0) 7723-0681, email info@tropical-luxury-living.com, www.tropical-luxury-living.com