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Monday, September 1, 2008
Welcome to www.samuipropertyonline.com,
the online version of Samui Property, an independent monthly property &
real estate newspaper published by Siam Map Co. Ltd., Koh Samui,
Thailand.
Samui Property offers impartial, objective
news articles, stories, legal advice & information, zone maps, photos,
classified adverts and features about real estate, property, villas,
developments, homes, house and land for sale and other real estate
related items on Koh Samui.
Please come back every month for fresh
news and information on the Koh Samui Property & Real Estate Market.
In The Middle
Whatever the situation, it always seems to be the middle price bracket that gets hit the hardest.
The real-estate market on Samui is surprisingly stable at the moment considering the global economy problems. Interest in property remains high and sales are still going through. However, the island continues to show certain traits that tend to remain the same whatever external factors affect the overall market.
Throughout the last few years, homes at the lower end of the market have sold successfully. There are a number of reasons for this. The market has concentrated on building middle to higher end properties leaving less choice available in the lower budget area. This shortage of competition ensures that a reasonable lower budget property has improved sales potential.
It’s also fair to say that for many interested property buyers homes under Bt10 million are very attractive and often affordable without the need for separate financing. Samui’s property market has always relied on cash purchases but with prices rising so steadily, more and more properties are now above the financial means of interested buyers and require mortgages. So, any property that can be bought for cash becomes more attractive, especially in times when borrowing money is becoming increasingly difficult around the world.
In previous times, buyers of lower end properties were those who wanted to live here full time: retirees, or people looking for a private holiday home that they may get some rental return on. More recent times have seen buyers concentrating more on the rental returns and capital growth without having the personal attachment to a property.
Now, even buyers who have a bigger budget may look at the lower end as a way of entering the profitable Samui market but with less risk. World economic problems and local government issues may knock the confidence of some potential investors. Not enough to stop them from buying altogether, but maybe enough to make them minimise the risk by spending less in the first place.
At the other end of the market, the very high end properties also continue to sell. For example, those who can afford properties at Bt100 million and above aren’t affected by higher travelling costs, and so on.
This results in a difficult situation for the incredible amount of properties which fall between these two extremes. Too expensive to buy outright, not quite good enough to attract the very big spenders and up against more competition than homes in the very low or very high price brackets.
Builders, developers and sellers are aware of this situation and steps are being taken on many new projects. Some will revise their building plans and build cheaper homes that may attract a wider market. Others will look to go the other way and push their properties into the higher price ranges. A number of top-end residential projects have amended initial plans to include hotel facilities and hotel rooms. These will look for a recognisable brand to manage the properties and help attract buyers. Branded properties offer less risk for the buyers and continue to generate interest and sell well whatever their price.
Some high-profile developers and projects have altered their buying options to include fractional ownership or time-share concepts. Whatever people’s financial situation they still desire holidays and resort property investments. Fractional ownership agreements can often provide a suitable answer for far less of a financial commitment.
This is something that is likely to increase on the island with some developers combining the fractional ownership idea with the branded resort residence concept to really maximise the sales potential.
Finally, developers may switch to smaller condominium and apartment units which, too, have proven popular amongst buyers and remain attractive during difficult times.
Sellers in the middle bracket have to be patient and realistic about their expected sales price. There’s a lot of choice in all price ranges and therefore finding a buyer is never easy.
Whilst people all around the world are looking at ways of reducing expenditure they may be a little more selective in their property investments. But sellers shouldn’t get too downhearted. Trends are exactly that, they are an indication and not a fact. There are still buyers out there that are looking at the middle price range homes on Samui and therefore your home can still be sold. No-one is saying that a home will not sell. It’s just that you have to accept that, in general, buyers will want more guarantees and less risk at the moment, there may be less of them around and they will definitely have lots of properties to choose from.
In the long term, some experts are already suggesting that the global economy problems haven’t been as bad as previously expected. There is light at the end of the tunnel and, as usual, the ‘end of the world’type scenarios and sensational headlines were, hopefully, a little premature.
Tourism and real-estate will undoubtedly see the effect of declining global economies. Airline increases due to fuel costs will impact greatly on this with fewer flights and destinations already announced by many. This is all beyond Samui’s control. But tourists will still come, property buyers will still buy, and life will still go on. Both industries will notice the effects but new hotels continue to go ahead with plans to open on the island. There’s been no obvious knee-jerk reaction from major hotel chains looking to close or shelve their plans to build on Samui. The whole world is feeling financially pressured and everyone everywhere will see some negative results.
One thing that remains is that Samui is an outstanding holiday destination and one that is regarded around the world as a sound place to invest in property. Constant improvements to infrastructure, accommodation, shopping facilities and tourist attractions help to safeguard the future and make the island a better place to visit, live and invest in.
Even in a thriving property market middle price range properties are the hardest to sell because there’s always a greater choice available; and financing the purchase will always be an issue. However, Samui attracts many retirees and it’s expected that this specific market will expand in the future. Retirees are more likely to have the ready cash available to buy and they may be the answer for sellers in this price bracket. This is worth considering if you’re building a home. Think about single storeys, fewer steps, ease of access and convenience of location. If the home has the right features you could specifically target retired buyers.
Whatever problems the market faces there will always be potential buyers who want to live, have holiday homes or just take advantage of the capital growth and rental returns available. Real-estate on the island is an established industry which continues to evolve and find ways to turn potential interest into property sales. |
