Being Attached
Living in an apartment is a lifestyle chosen by many. And on Samui there are plenty to choose from to suit your budget.
Thursday, May 1, 2008
For several years Samui’s real-estate industry concentrated on building and selling detached houses. Buyers wanted this style of home and therefore the focus of development was to meet this demand.
However, about two years ago when land and house prices were soaring, the market started to change and a number of townhouse developments started to appear. These developments generally look good, have shared facilities, offer good value for money and provide a very attractive home for holiday letting. In fact, many people have opted to buy such properties that are more expensive than comparably sized detached houses because of the ease of maintenance and the fact that they resemble European holiday resorts that many holidaymakers are used to and feel comfortable staying in.
And it’s a natural progression that as the destination becomes more desirable, the population grows, demand for homes therefore increases and prices rise. To combat this scenario developers have begun to opt for condominium units. And it appears that most new developments on Samui now include a condominium or apartment block.
In the past even the word condominium has been a taboo on the island and this kind of accommodation has been shunned and feared by residents who don’t want to see Samui turned into a high-rise urban island. But let’s not be overly-concerned. Samui has strict building regulations and zoning laws that should prevent that nightmare from ever occurring. And if apartments or condominiums are constructed within the laws then they shouldn’t damage the look of the island any more than a development of large detached houses.
And consider the view of the developers. Yes, they want to make money and selling a number of units compared to a single house is good business for them. But buyers of condominiums and apartments are looking for certain things. Competition in this sector is already strong and that will increase in the future. People investing in property on Samui have many motivations but aesthetics is always high on the lists of requirements, especially if the home is to earn a rental income, and even more so if the target is holiday rentals. So developers are more likely to try and produce appropriate and attractive apartments to compete.
As a potential investor one thing to find out from the developer, or agent, is whether the property is actually a condominium or an apartment. There are differences. In the simplest possible terms a condominium is a unit within a block of units (like an apartment) and each unit is individually owned with each owner being a shareholder in the building and surrounding common property, and a monthly management fee is paid to maintain the building and public areas. In some circumstances foreigners may own a condominium freehold, with full rights of ownership.
An apartment is a building that’s owned by one owner who lets out units within the building on a short or long-term basis. On Samui most condominium and apartment blocks are actually apartments and do not fulfil the criteria to comply with the somewhat restrictive condominium law. So, in these circumstances, normally a legally-owned Thai Company or Thai Juristic person will own the whole building and each apartment will be sold on a leasehold agreement up to a maximum of 30 years, but with certain guarantees of extensions. In relation to the maintenance and responsibility for common areas, it will be decided in each individual case but a management contract will usually be imposed. This process is exactly the same way in which you are most likely to buy a single house on the island at present. Buyers are now starting to accept that the leasehold option is currently the best way to buy houses, so why not use the same straightforward option to buy an apartment.
Tim Dean-Smith of Royal Nirvana Resorts states, “At the Koh Samui
Country Club we considered building condominiums, but decided that providing apartments on long-term leases had many advantages. This allowed us more flexibility in
planning the development; reduced administrative costs; and means that we are not subject to an arbitrary limit of 49% on foreign direct ownership. All our buyers get straightforward registered lease ownership, and don’t have to worry about whether or not a condominium license will be successfully applied for at the end of the project.”
For developers, the Condominium Act specifies certain requirements which must be met and that can make the process more complicated. And only 49% of the condominium project can be sold to foreigners. So, as the majority of properties here are aimed at the foreign market, this creates an issue for the developer regarding the remaining 51%. Proposals to amend the law surrounding condominiums have been discussed and the situation may well change in the future.
But things have gone full circle and it’s now in vogue to describe or advertise properties as condominiums, when in reality most on Samui are actually apartments. Lifestyle magazines and TV programs promote apartment living and the idea of owning an apartment is extremely attractive to wide range of investors.
For single people, apartment living can provide a social network and it’s often seen as a trendy, low-maintenance lifestyle; retired people who no longer want the hassles of maintaining a garden, or the remoteness of living in a single house, choose the comfort, peace of mind and shared facilities of an apartment block; young professional couples, who work long hours and don’t have the time to maintain a property, like the ease of apartment living, plus with facilities such as pools and gyms often included it offers high levels of convenience; and, on Samui, no block is likely to top four storeys, so an attractive serviced apartment block, with good facilities in a nice location, provides the ideal holiday accommodation and a viable alternative to a hotel room.
To maintain Samui’s status as a real-estate hot-spot it’s important that properties are provided to suit all tastes and budgets. And gone are the days when a detached home signified a persons wealth. Apartments and condominiums are big business and cover all sectors of the market from affordable studios through to luxury high-end penthouses, and in society today it seems that people like being attached.
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