In 2011

Market Focus: Developing a Natural Attraction

Koh Chang newsJun 25, 2011   – Property Report Thailand

Would hae been nice to have had a mention Sofie as I put you in touch with most of the people interivewed ;-)

The property market in the northern Gulf of Thailand has long been dominated by the sea-side resorts of Hua Hin and Pattaya, but the islands of Koh Chang, Koh Mak and Koh Kood in the northeastern corner of the Thai Gulf are fast emerging as the new hot spot in the region.

Standing on the lawn in front of the X2 (pronounced ‘cross two’) Resort and Residences, one of several new and planned residential developments overlooking the waters that surround Koh Kood, it is easy to see the attraction of this remote island in the Gulf of Siam. The prevailing atmosphere is one of total calm and natural beauty, and the secluded location off the main road on the west coast offers the kind of island getaway feel that has become a rarity, even in Thailand.

The calm and tropical authenticity here stands in stark contrast to more mature drivers of the second home market such as Pattaya, Samui and Phuket, which some say have already overextended their capital gains potential. So far, only a handful of developers operate in the northeastern gulf and all stress the tranquillity and natural beauty of the islands as their main selling point. “I have seen an increase in interest this year without doubt,” said David Smith, head of sales at X2. “One of our main challenges is that it’s just so hard to get here.”

A new airport is reportedly scheduled to open on Koh Kood in 2014 and Bangkok Airways recently received a permit to open Trat airport to international connections, thereby significantly improving access to the islands. As it is now, visitors have to fly to Trat from Suvarnabhumi International Airport in Bangkok and then take the boat to the island, or take a bus from Bangkok to Trat. “Currently we must fly guests via Utapao airport to do the trip,” says Charlie Filleul, director of Six Senses Residences, “and the immigration service set up at our private airstrip has been slowed down due to the border dispute.”

Despite such limitations, infrastructural improvements are planned including highway expansions between Bangkok, Rayong and Trat and a bullet train down the east coast to improve access to the eastern seaboard where a huge portion of Thailand’s GDP is produced. Most developers are hoping to benefit from the improved access in the area: “We expect a boom in prices once the airport is done,” added Smith. “Imagine the impact that will have in terms of tourist numbers as the island becomes so much more accessible.”

But in the face of increased demand and unexploited market potential, developers and the local island authorities also face the question of how much development is enough. Some feel improved access will attract too much growth, risking damage to the very natural attractions that the islands are known for. “If we are able to develop good infrastructure and quality control systems before the investors come, we can keep things under control,” says local government official on Koh Mak, Jakrapad Taveteekul. “We still have no large 4 and 5 star hotel developments, and most of the projects on the island are owned by local citizens.”

Yodying Sudhidhanakul, the owner of the largest residential development on Koh Mak, Goodtime Resort, tries to incorporate sustainability and environmental awareness into his project by not over-developing the land. “My concept is clear,” he said, “just very few houses on a big piece of land. I think this is one of the best things you can do for the environment because what is dangerous on an island is not the size of the houses but the number of people who stay on a small piece of land.”

On Koh Chang there are already strict building regulations in place. Approximately 80 per cent of the island lies within the Mu Koh Chang National Park and thus has no title deeds, prohibiting any development. The remaining titled land is strongly regulated and limited in volume and scale enforcing among other rules a substantial ocean set back line for any new projects. “Local authorities often mention Thailand’s other two large islands as a reason and a reminder to strictly enforce the stringent local construction code,” said Roland Steiner, CEO of Siam Royal View, the largest residential development on the island, located on the north eastern tip.

On Koh Kood, X2 is working with similarly strict building codes in order to preserve the natural environment and avoid over-development. “The local government official has made it almost impossible for us to build X2,” says Smith. “We have had to adhere to severe codes in regards to qualities, styling, colours, sizes, roads, and especially the ecology.”

With such government regulations in place and new infrastructural improvements in the pipeline, the future remains bright for what is clearly a fast emerging tourist and residential retreat. However, some developers still have concerns based on outside factors. “My main concern is the price of fuel,” said Bruce Sweet, developer of Baan Talay Thai, a smaller beachside residential development on the east coast of Koh Chang. “I think for overseas investors, the price of air fares is important.” Even if the general economic recovery makes economic considerations less important, others say the political instability in the country is another major obstacle to continued growth.

“The Thailand property market will only improve if potential investors believe the country will not become embroiled in a lengthy and costly civil war,” said Simon Martin, director of sales at Tranquillity Bay Residences on Koh Chang. “Investors are not concerned about the political issues behind rallies and demonstrations, they are only concerned about the stability of the country and the safety of their investments.”

Back on the beachfront amid swaying palm trees, concerns about either money or politics seem very distant. Perhaps the secret behind the continued success of the market in this region is that it offers buyers the opportunity to own a property in one of the last unspoilt island retreats in the country. “There has been an obvious increase in enquiries this year,” said Filleul. “This is the first time we have seen the market pick up since the end of 2008 when it became stagnant.”

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