Builders to resume work on projects as government dispels uncertainty about FBA The Koh Samui property market is poised to stage a recovery this year, following the government’s decision to relax the Foreign Business Act (FBA), says property expert Pisarn Tangkasombat.
He said demand for residential projects on Koh Samui doubled in 2006 from the year before but that most developers suspended projects after the previous government tightened the FBA and announced stricter norms on land holding and construction licences for developing residential projects.
Pisarn, also president of the Arayaburi Group, which owns five hotels and resorts on Koh Samui, said most developers – foreign investors and local developers who were partnering foreign investors – had suspended the launch of new projects and work on existing ones. This was because of uncertainty surrounding the Act, as they were not sure whether their projects would be considered illegal.
However, Pisarn said after the new government outlined a clear policy regarding the FBA, developers who had planned projects on Koh Samui would restart work soon.
Some foreign investors will now begin work on their projects in collaboration with local partners, while others have decided to sell their projects to local developers, he said.
“We believe the property market, especially the residential segment, will stage a recovery this year, as the government has announced a clear policy regarding the Foreign Business Act,” Pisarn said.
Research by CB Richard Ellis has shown that Koh Samui, Asia’s emerging “boutique” resort island, is seeing significant growth.
Last year, the island had 1.5 million visitors, up from 600,000 in 2000.
The research also indicates that the number of tourists heading to the island may rise once Thai Airways increases the number of flights on the Bangkok-Samui-Bangkok route to two a day.
The number of airport arrivals this year is expected to surpass 2 million after this.
“ The improved connectivity will be a key factor in supporting growth in the area’s property market. CB Richard Ellis expects increased demand for homes,” said CB Richard Ellis Samui manager Prakaipeth Meechoosarn.
CB Richard Ellis remains confident of the long-term prospects of the Thai resort market.
Last year, the company opened two offices – on Koh Samui and in Pattaya – as part of its plan to expand its network in Thailand. The research said land prices in Koh Samui continued to rise last year even though the number of individual transactions dropped, due mainly to the uncertainty surrounding the FBA.
Last year, the value of property transactions in Samui was estimated at an average of Bt413 million a month, down from an average of Bt450 million in 2006.
Since last December’s general election, reports of viewings and bookings have risen. The type of residential projects most popular on Koh Samui is luxury villas.
Seventy per cent of the villas are priced at below US$1 million (Bt31.65 million).
CB Richard Ellis is now witnessing more developments within a price range of $2 million to $3 million. And as the luxury- villa sector on Koh Samui grows, chances are prices may move to a level that is on a par with Phuket, at least for the top end of the market.
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