Sweden leads massive Nordic boom in Rayong

By Bjarne Wildau, The Nation

Hundreds of Swedish home-buyers are spearheading an incredibly strong Nordic property boom in Thailand. And Scandinavian investors are expected to invest up to Bt16.2 billion in residential developments in Thailand this year and the next. This money will flow into tourist destinations such as Rayong, Hua Hin, Koh Samui and Phuket, according to research by Colliers International (Thailand).

The company's managing director, Patima Jeerapaet, said Swedish investors figure most prominently in the list, followed by Finns, write the Thai daily The Nation.

The main residential projects developed by Scandinavian investors include villas, resorts and condominiums at tourist hotspots.

According to the research, Rayong is seeing huge investment from Scandinavian investors, especially Swedes, in projects valued at Bt4.79 billion this year, followed by Hua Hin with Bt4.1 billion and Koh Samui with Bt2.07 billion.

Patima said the market was dominated by buyers from Scandinavia who are interested in owning a second home or a property for vacations, in Thailand. Presently, 3.08 per cent of all Scandinavians visit Thailand.

According the Tourism Authority of Thailand, the number of tourist arrivals in the Kingdom for last year stood at 14.5 million persons. Of that And 5 % Thailand’s visitors, were from Scandinavian countries, a growth of 17.4 per cent from 2006.

"Given the strong interest Scandinavian tourists have in Thailand, most of them are also interested in buying residential properties as a second home for vacations or retirement. Due to this, a number of property developers from Scandinavia have expanded their investment in Thailand", said Risinee Sarikaputra, manager at Colliers' research department.

Most Scandinavian developers have set up joint ventures with local partners to develop residential projects in Thailand. Some of them have bought condominiums developed by Thai developers and resold these to Scandinavian buyers.

"People from Scandinavia are known to be traditionally interested in resort properties in Spain and France. However, over the past three to four years, apart from Thailand, they have snapped up real estate in Turkey and Bulgaria though investment to the former country has now dropped", Risinee said.

"The Kingdom is more popular though it has a long way to go before it has the high number of Scandinavian-owned homes as Spain does", she said.

As of now, Scandinavian developers, such as Glen Asia, which develops residential projects in Rayong and Pattaya, and Logans Thailand, which develops residential projects in Rayong, Pattaya, and Hua Hin, have entered the Thailand market.

"In recent years, Scandinavians have become investors in Thailand. Hundreds of Swedish home-buyers are spearheading an incredibly strong Nordic property boom in Thailand," Risinee said.

Ocean 1 Tower in Pattaya Officially Launchs

Celebrities and VIP's gathered in Bangkok at the end of the Songkran festivities for the lavish opening of the Ocean 1 Tower Bangkok sales office and the premier view of the Ocean 1 Tower promotional movie.

The new office is in the prestigious President Tower Arcade in Ploenchit Road, adjacent to Gaysorn Plaza and the Intercontinental Hotel.

The office will handle sales inquiries from locals and tourists for the spectacular 91 storey condo tower being built at Jomtien Beach. Ocean 1 Tower will be the tallest building in Thailand and one of the tallest residential buildings in the world.

In conjunction with the office opening, project developer Siam Best Enterprises Co Ltd launched a spectacular 10 minute promotional movie on the project, featuring well known Thai model and actor Sonia Couling.

Sonia takes viewers on a virtual tour of Ocean 1 Tower, featuring key aspects of the project, such as condo configurations and interior design, and the ultra chic shops and restaurants that are an integral part of the complex.

More than 200 party goers celebrated the opening of the sales office, starting at the office in the lobby level of President Tower with champagne and then moving to the trendy Vigo Vovo restaurant for cocktails, wine and dinner.

Bruno Pingel, CEO and Managing Director of Siam Best Enterprises Co. Ltd said the Bangkok sales office had been opened in response to inquiries from Thais living in Bangkok and from expatriates and tourists.

"The sales office provides not only a wealth of information on the project, but also gives potential buyers the chance to speak face to face with marketing and sales personnel who are familiar with all aspects of Ocean 1 Tower," he said.

Mr Pingel said the promotional movie highlighted an aspect of Ocean 1 Tower that was attracting growing interest from potential buyers – the lifestyle features of the complex.
"Many Thai and expat buyers are interested in Ocean 1 Tower, not only because it is a unique, quality condo development, but also because it offers a total lifestyle option through a range of facilities from swimming pools, running track, gym, to luxury shops, bistros and restaurants," he said.

Ocean 1 Tower will feature 611 condominiums, ranging from studios through to three bedroom apartments, with one penthouse and two duplex penthouses.

Ocean 1 Tower Officially LaunchsThe complex will have a 3000 square meter shopping plaza, with 40 high end shops over two levels. The shopping centre will contain restaurants and coffee shops and the tower itself will boast three quality restaurants.

Facilities at Ocean 1 Tower include three swimming pools overlooking the ocean, a health spa, gym, jogging track and tropical gardens and salas.

A high speed tourist elevator will take visitors to the 91st floor which will have an observation gallery and restaurant. The apartment tower will have 14 high speed elevators servicing three residential zones.

Using the ocean as a design inspiration, the exterior of Ocean 1 Tower will incorporate different finishes which will catch and reflect light throughout the day, giving a shimmering effect similar to that of water.

There is also a consistent use of water in features within the building, such as the internal three storey waterfall in the lobby, water droplet entrance canopy and landscaping wave forms.
The Bangkok sales office is at Unit L40, Lobby Floor, President Tower Arcade, 973 Ploenchit Road. Direct phone lines are 02 656 0234 and 02 656 1521-2.

DVD copies of the Ocean 1 Tower movie are available from the Bangkok office and also from Pattaya Properties Co. Ltd the marketing agents in Pattaya for the project. If it is not convenient for you call into our offices please forward your mailing address and we will send you the O1 DVD immediately.

Thailand's villa rental market

For the world's discerning travellers, nothing carries quite the same prestige as spending a holiday in a luxurious private villa somewhere exotic.

And who can blame them? With such added perks as personal chefs, butlers and drivers at your beck and call as you relax by a private infinity pool in your five-bedroom retreat, that 5-star resort down the beach suddenly pales in comparison.

Villa owners in Europe, the Caribbean and the US have been capitalizing on this mindset for decades, but it is a trend that has only really started to catch on in Thailand in recent years, partially because the country's high-end villa sales market itself is still in its infancy compared to other global resort markets.

Thailand's villa rental market is for the most part limited to two areas: Koh Samui and Phuket. Hundreds of travel agencies and rental firms specializing in villas around the world are beginning to take an interest in these two destinations, which has translated into an increase in the number of local firms turning to villa management as a way to offset the recent sales slump that has enveloped the country.

"It's a trendy market. It's the next best thing to having a private house," says Marc Ribail, chief operating officer of villa management firm Samui Villas & Homes (SVH), noting that in the last six months, property sales on the island have been down, so quite a few firms are going into property management. Hence, there are now three or four decent companies that have begun offering villa management among their services, he says.

But unlike most firms, which expanded their services to include rental management under their umbrellas as a means of diversifying, Samui Villas & Homes (SVH) initially set out in 2001 solely as a villa management company, only later entering the sales market to cater to the growing number of clients that wished to purchase a holiday home there. The firm recently announced it's expanding with a branch in Phuket that will focus on villa management there as well.

Ribail says when the company was created in 2001, it managed only three properties, but things quickly grew from there.

"At the beginning of 2006 we had 25 and now we have nearly 50 so it's definitely an emerging market," he says. "In some respects we're still kind of creating history and track records in Samui. If you look at Phuket, they've been doing this for a much longer time, so they have a bench mark they can rely on. We've just started making a bench mark now."

Ribail says when the tsunami hit in 2004, SVH received a dramatic increase in business as holiday-makers shied away from Andaman destinations, however competition and Phuket's resurgence has caused the market to take a breather.

"There's a bit of a slow-down this year, because of the recovery of Phuket. The first quarter has been difficult but the rest of the year looks much better," he says. "The offerings are increasing but demand is the same. So basically the competition is increasing," says Ribail.

A similar trend is emerging in Phuket, where there are now dozens of firms offering villa management services. Allan Mossop, managing director of Phuket Island Property Services (PIPS), says they've definitely seen an upswing in the property rental market in the last year, but it's been a long time coming.

"The last five years has been a challenge for most folks because Thailand is not a traditional holiday home destination like say the Mediterranean or the Caribbean. But we've been making serious inroads. If you go online and look at the international rental sites, the number of properties featured for Thailand has increased dramatically as has the number of inquiries."

Mossop feels that more people are travelling to Thailand as repeat visitors and are starting to feel more comfortable and don't' feel that they have to go stay in a more protected environment of a hotel.

"Holiday rentals are very popular with families, knowing that they're going to be in a property that's got a private pool and a kitchen, which means they're able to take care of their kid's requirements better. If you're travelling with your family, it's a little inconvenient to have the young ones on the fold-out couch."

PIPS deals with the mid-to upper segment of the rental market. Mossop says that in the low season villa rates range from US$250-500 a night for a three-bedroom villa, but in the high season rates can go for between $600 to $2500 a night, depending on the size of the villa. With rates like these, it's not surprising villa owners are jumping to put their properties on the rental market when they're not in use.

But half the battle is attracting interest. According to Mossop, the most important thing for villa owners to consider before putting their property on the rental market is whether their agent able to make their property available to a wide selection of other agents.

"For a long time PIPS was the only company in Phuket actively marketing the full-service rental projects we represent with 50 other agents locally nationally and internationally," he says. "A lot of the property management companies or rental management companies are only able to take their straight 10% and they are not able to market a home to other rental companies which is a major factor."

Indeed villa owners have a lot to consider before renting out their property, and this includes whether or not they're even in a position to do so. SVH's Ribail says before they'll even take a villa into their portfolio they consider several factors.

"The first is location. It has to be situated either on the beach or inland with absolutely stunning views. If you look at Phuket, Bali, The Phillippines or Malaysia, there are not as many properties directly on the beach as there are here. So the guests want to pay a bit more to be on the beach rather than sitting in the hills. So because of that location is very important for us," he says. "We try to keep the level of standards equal among all houses in our portfolio. So even though they're all individual, if one house doesn't have a range of amenities or facilities that matches our portfolio we recommend the owners upgrade."

SVH offers clients two brands to choose from – the Signature Collection or the Boutique Collection. The higher end villas in their portfolio on average go from US$700-900 per night for a 4-5 bedroom villa, which includes 5-star facilities and amenities, however rates can go as high as US$2,000 a night.

Most agents agree that while these prices may sound a bit lofty for your average traveler, when you consider the rates being charged in 5-star hotels for a single room with no privacy and added costs tacked onto nearly everything, it's no surprise people are looking for new alternatives.

From Spain To Thailand To Where Next?

Back in the 1950s, Western European and United Kingdom retirees and holiday makers discovered that sunny Spain was a wonderful holiday location to get some respite from the dreary northern European winters. They soon discovered that not only was the cost of living much cheaper, but also the cost of housing was relatively cheap, and that both property and residency were easily obtainable for foreigners.

As soon as they were in a position to retire, these retirees flocked to Spain to enjoy their new found life-style, but they were not all financially struggling pensioners. With them came the ultra-wealthy, who had “made good,” and decided to retire early in life - these people brought financial wealth to Spain, as their active life-style saw them buy large villas, restaurants, bars, hotels, farms, luxury yachts, thereby injecting a huge amount of capital into the country.

The end result of this capital injection was that Spain, which was once considered a poor country, became quite affluent. However, after many decades of good fortune, clouds began to gather on the horizon, in the form of the European Union. Subsequently, the EU currency was introduced, resulting in the prices of many items rising dramatically - some small items almost doubling in price due to opportunistic sellers.

However, the salaries of Spanish workers remained pegged at more or less the old levels, so that Spain retained its competitive edge in the manufacturing field. This, of course, made it more difficult for the average Spanish worker, even though his job was assured.

Unfortunately, Spains relaxed immigration policy also allowed many undesirable and illegal immigrants into Spain. Many of these “undesirables” had been involved criminal activities in their home countries and continued on with these criminal activities in Spain.

However, Spain was still a good choice for retiree’s, particularly British nationals, as being part of Europe it was close to the UK, allowing retirees to easily return home to visit their relatives at a very nominal cost. But, the question arose - was there now somewhere better than Spain?

The Discovery Of Thailand
It wasn’t long before some of the more adventurous holidaymakers discovered the attractions of the Kingdom of Thailand - from the hills of Chiang Mai, to the beaches of Phuket, the extremely friendly people, the low living costs, the tropical warmth and sunshine, and the relaxed “laid-back” (mai pen rai) attitude and lifestyle.

Many of these holiday makers never forgot how much they enkoyed Thailand and its friendly people, and when the time came for their own retirement, many of them opted to retire to Thailand rather than Spain or elsewhere. As many had retired early and had both time and money to spare (partly due to the low cost of living), they decided to obtain work permits and open or start their own businesses in Thailand. Many of these men had retired early because they were at the top of their chosen profession, and by starting a similar (albeit smaller) business, they imparted many of these skills to their Thai staff. This capital inflow, both financial and intellectual has been of great benefit to the Kingdom of Thailand and has been an integral part of the incredible advances made by the country. The retirees in turn have then benefitted greatly from the rapid improvements in business, technology and services.

Thai Government Changes Their Interpretation?
Although Thai law strictly prohibits foreign nationals (or aliens) from owning land in Thailand, it has, in the past, been possible to own land through a Limited Liability Company - this form of purchasing property has been the most popular with foreign investors as the Articles of Association can be varied to allow greater protection for foreign minority shareholders where majority Thai ownership is required under the Alien Business Law. Thai law requires that 51% of the shares be held by Thai juristic persons, however, any company with more than 40% foreign interest that purchases land will be investigated by the Central Land Office in Bangkok (under Section 74 of the Land Code) to ensure that the company has not been organized in an attempt to circumvent the prohibition against foreign ownership of land.

This results in the foreign ownership of the company being limited at 39%, but with changes to the Articles of Association, the use of two tiered stocks (ie. Ordinary Shares and Preferred Shares with different voting rights), plus the foreigner being the only director of the company who can commit or bind the company in any contractual dealings - it is possible to effectively give the minority shareholder control over the company.

However, an Interior Ministry announcement issued on 15 may 2006 has requested that all Regional land offices investigate any land transactions involving companies with foreign shareholders. This is not a new law, it is simply a different interpretation or application of the existing laws. The main problem is that no-one is sure exactly what this announcement/directive means - many believe that it is aimed primarily at Thai companies buying land for business or development purposes.

Due to the prevailing uncertainty over this announcement, the Interior Ministry has scheduled various meetings in an attempt to clarify the matter for all concerned.

Sea Change On The Way?
It will be of great interest to a good many retirees to see which way the Thai Government proceeds on this controversial issue. A negative interpretation could have a substantial financial impact, both current and future as many retirees seek to protect their wealth by divesting themselves of any land that they may be holding through Thai companies.

Worse than that, is the prospect of a significant departure of expats from Thailand, to more foreign friendly countries, such as Cambodia, Vietnam or Malaysia. Cambodia could become a wise choice, as the port city of Sihanoukville appears to resemble Pattaya in its early years, before the business and tourism boom. It will become a question of whether Foreign Nationals are free to own a residential property, for their own quiet enjoyment, or whether they will be forced to become tenants, with the same status as “short stay tourists.”

Not only is Cambodia a lower cost destination, but it is a fairly “free-market” ideology, where bars can stay open all night (if they choose), and even though you can still only own 49% of any property purchased, the authorities are most unlikely to interfere in your normal affairs. As the Secretary General of one Province stated to one overseas developer; “If you meet our criteria and complete all relevant documentation, we will ensure that things go smoothly, as we want foreign capital and foreign expertise to come into our country.”

If Thailand isn’t careful backward Cambodia could capitalize on the present situation.