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Surreal Estate

Category: , Posted:06 Jun 2009 | 13:42 pm

It was interesting reading comments from a local resident recently published in the Gazette on the issue of property consultants pushing speculative investments in the newspaper (Letters, Phuket Gazette, May 30). The writer painted the real estate industry as one that takes, rather then contributes to the island on a fairly wide scale. The letter, which contained some facts and a lot of opinion, portrayed those working here in the industry as only after a fast buck and claimed that absent investors don't contribute to the community.
The property industry has grown in the past decade, mainly fueled by the island's tourism industry. While the full-time expatriate population has skyrocketed, the number of part-time owners and investors in villas, condos and homes has fast outpaced all other transactions. We've moved from a business model that was a very rudimentary framework to a more developed model, which is the logical growth pattern seen the world over, with investors viewing property as a secure long-term investment.
As for what is written about real estate in the Gazette, I took the opportunity to actually reread the most recent columns the writer admonished as not being neutral property assessments. Looking at stories such as the Lersuang vs. Joe Cole dispute, Bali outpacing Phuket for investment, and transaction figures from developments such as Andara, The Heights, Kata Rocks and Tawan Views, it seems to me that what's being published is a mix of the good, the bad and the ugly, and certainly no evidence of rose-colored shades on the state of play in property.
As for the claim that absent property owners who don't live full time in their units do not support the economy, well, that's hardly an informed statement. The majority of these types of buyers purchase property at the higher end of the spectrum and employ estate management firms who provide jobs to maids, gardeners, drivers, pool cleaners, maintenance staff and a host of other services. They purchase furniture and interior decoration from local shops. For those employees who are locals, the salaries pay for schooling and essential goods. All of that money flows back into the local economy. All of these local companies pay VAT and municipal and government taxes, which again comes back into the national and local revenue stream.
The industry's contribution on a socio-economic basis is well documented. Laguna Phuket, which has a large core property business, was one of the first businesses to offer staff aircon bus transportation, as opposed to being herded like livestock in open trucks as hotels had done for a number of years. Their daycare center for staff, commitment to education and support of local charities amount to one of the largest spends of any company here. The Phuket International Women's Club and their annual event provide scholarships to needy students among other things. This has been embraced by marquee property firms on an ongoing basis. Look also at the recent "Summer in Phuket" clean up campaign, which brought thousands of people out looking to improve the island's fragile environment. This was instigated by Indigo, who are also "property consultants".
Furthermore, the writer's claim that most overseas buyers purchase units offshore, with the money never reaching Thailand, simply does not add up. Construction costs here are some of the highest in the region. Any developer has to pay a local contractor, who again employs many workers on site in the various required trades. The largest part of a project cost is the actual construction. That money has to come to Thailand in order to get the villas and condos built. These local workers buy food and clothes and support their children's education. All the money flows back into the local economy. On top of that, add the marketing and legal costs for firms who support a development and employ a significant number of Thai staff.
A local community is something we all want and strive for. Phuket has attracted investment and full-time residents with its international schools, hospitality, marinas, golf courses, shopping and business opportunities. Certainly a great deal of these see demand generation from real estate development and growth in the property sector. There is an increasing segment of people who first purchased homes in Phuket as holiday homes or investment and in time move to live here full time.
There will always be people who view the past more favorably than the present, forever asking "why can't things be how they used to be?" Imagine seeing Thai people live in abject poverty with few career or educational opportunities or the ability to set up their own businesses. While it might be charming for some to see people live in bamboo huts, ploughing fields with water buffalo and entrusting their food intake to the mercy of the weather, it's questionable in terms of simple human dignity.
All in all I'd have to say I'm proud to be a good member of the community here and certainly have no plans to go anywhere soon. There is no question that as in any business model there has to be balance and the right fundamentals for investors. As we have always advised here, investors must make long-term and informed decisions. I believe that's what the Gazette and other publications are aiming to facilitate by providing informative commentary and relevant news. Furthermore, printing comments such as the one we've discussed today shows an enlightened approach. Feedback from readers helps to make us aware of issues we weren't aware of, and lively debate is always interesting.

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