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The Next Big Thing in Ocean Front Real Estate

Category: , Posted:18 Sep 2009 | 14:24 pm

The Nation.
Upturn, downturn, or sideways perhaps the single greatest unique selling point for a resort property is the tantalizing offer of ocean front real estate. Who hasn't harbored those Robinson Crusoe or Castaway daydreams and visualized an idyllic tropical getaway; though as daylight creeps in air conditioning, infinity swimming pools and a bit of luxury are deemed necessities.
Looking at Greater Phuket where prime parcels on the island, over the bridge in Phang Nga, even in Krabi, Koh Lanta or Koh Samui now take you higher into the spending zone then one of Richard Branson's planned galactic spacecrafts. Having written on property and real estate now for a few years one of the most asked questions is always where is the next big area set for growth?
Having viewed the island bursting at the seams story in Phuket where Phang Nga or more notably Natai beach became one of the highest priced land markets in recent times, this was premised on the ability to purchase land directly on the beach. Flip over to the gulf of Thailand and over the past few year's transactions in southern Surat Thani, mainly in the Don Sak area has seen actitivity by both foreign and Thai investors.
Logically the trail of the beachcombers has now continued further south just over the province's border into Nakhon Si Thammarat which is now buzzing with speculation on prime property. One of the early entrants to test the market with upper tier pricing is Thai Royal Residence selling in the THB 15-25 million baht level. This sets an entirely new pricing paradigm for the area and it will be an interesting base case to see how sales pace is taken up by the market.
Fundamentally highway access to a major north south artery is not far away, Koh Samui is near by boat and two airports are located in the catchment area. Developers of hotel assets and residential grade property are taking a favorable view with these long term strong fundamentals.
Looking closer though clearly it's a stretched horizon, while Phang Nga's success has been its relative short driving distance to Phuket coupled with an international airport and a high brand concentration of hotels, critical mass of infrastructure and demand generators such as marinas, golf courses, schools and hospitals. Much of this is true for Samui as well, though to a lesser extent.
Airlift for tourism remains a key component and unlike perhaps resort development in more remote locations such as Koh Kood, having twin airport access remains a huge plus. Hua Hin with its push down into Pranburi might draw some insight as well looking at how its lower density model while prospering has yet to see larger scale development come its way.
Adding into the witch's brew of speculation remains that Phuket and Samui are anomalies amongst Thailand's property markets. They are highly or perhaps you could argue over leveraged with foreign buyers to the tune of 70-80% of resort grade property.
Hua Hin and the eastern seaboard cater to larger domestic markets who rely on a vast major of purchases which are financed, but for Thai families looking for a second holiday home its just a matter of jumping in the car with the kids and away you go.
Looking at Surat and destinations further south, tourism is going to be a lead indicator on higher end real estate if it will be a reality. Branded resorts and the attached perks are what will eventually draw in overseas investors. So for those of you looking to buy in this area, history has shown true value in dynamic drivers as in ocean front land but an existing menu of hotels, attractions and tourist services need to first get up and running. While this may be the real deal or just a flash in the pan, one thing is for sure there are no short cuts in the quest for capital appreciation.
Greater Phuket appears on the third Friday of each month.

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