PHANGAN-SAMUI REAL ESTATE INTRO
KOH PHANGAN BUSINESS OVERVIEW
More than 100 years ago Phangan was the favourite place of King Rama V, then its becoming a central spot for party-goers, yoga-students and nature-lovers. Now there a combination of all this categories, “usual” tourists and long-stayers, coming to spend cold (in their countries) winters here under the palms with the sea breeze. What is next?
Geography and how to get here
Koh Phangan with its 167 sq km is situated in the Southern Gulf of Thailand. Its in 100 km, or 2.5 hrs boat ride from Suratthani (less with speed catamarans), the district centre, and 30 min. or 15 km from Koh Samui.
There are a few ways to get to Koh Phangan, depending on tourist’s port of entry and travelling budget.
AIRPLANE: The nearby Island of Koh Samui has an international airport that receives flights from all over Thailand and Asia, owned by Bangkok Airways. Local airport on Phangan under construction. Also there are airports in Suratthani & Nakhorn Sittamarat. Island is a 15km boat journey from Koh Samui with few ferry companies going all day to the 2 piers - Thongsala (main) and Haad Rin (Haad Rin Queen).
TRAIN: The State Railway of Thailand operate rail service down from Bangkok to Surratthani and up from Had Yai in the deep south of Thailand. Overnight sleeper trains are the best way to go, with clean and secure carriages, waiter service and clean bedding.
BUS: All bus journeys in Thailand are taken on air-conditioned tour coaches. They are the cheapest way to get the island. Nearly all long haul bus journeys are made overnight when the traffic is at a minimum.
Most of buses and trains stop in Suratthani town centre (some in Chumporn), where you will be provided with a connecting bus to the appropriate ferry pier enabling you to continue your over-sea journey to Koh Phangan.
Climate
Despite of commonly spreaded info about rainy season on Phangan, which should be September - November, last 2 years climate changed and its more balanced all-year round (longest rains recently were in March). Most of info-sources also informing about dry season from February until April, what is not a fact currently too. Almost every day is sunny, and most of rains are heavy, but short. Usually tourists, especially who coming to the South-West, interested in tide schedule.
Local attractions
As a sunny island, Koh Phangan has full range of tropical island’s amenities, such as sandy and rocky beaches, small bays, waterfalls (also small), viewpoints, wildlife, elephant, snake & crocodile shows, boat trips...
As a Thai island, here are more than 20 temples around the island and all welcome well behaved visitors, local holidays with live music, thai boxing, buffalo & cock fights and much more...
But adding to all it Phangan has something special. First - the parties. Starts from late 80-th, Full-Moon Party rapidly growing up and now its a biggest monthly open-air in Asia with nearly 10-20 thouthands people every month and 50-60 during the New Year (more than 60000 on 31.11). Half-Moon (twice a month) and Black-Moon (monthly) events have less visitors - from 1000 to 3000, but also helping to the local hoteliers in Haad Rin & Baan Tai keep on the business. Only because of the Full-Moon all resorts here have guaranteed occupancy for 3-6 nights every month with surcharged rates.
Second - yoga, healing and meditation centers. Phangan with its unspoiled nature and plenty hidden places with sea and sunrise/sunset views is ideal spot to remote from the crowds and concentrate on self-improvement. There are more than 20 centers, and more openings every year.
Population and transportation
Koh Phangan have about 16,000 people living today. There are no any official statistics about tourist arrivals, but its approximately 500,000 people, about 30-35% from its coming to visit Full-Moon & NY party. Its no any buses and government transport communication on the island - all road communication provided by tuk-tuk’s and boat taxis. Many people renting motorbikes or cars for affordable rates.
Law regulations
Thai Law, prohibits non-Thai citizens from buying land or purchasing property in Thailand - they can own just buildings on it (own the house with all bricks and materials, but not a land under it). So, as in some countries in Europe and all around the globe, there are few options for foreigners who want to buy land or purchase property to acquire rights to land and property in Thailand legally. One of the most popular, because easiest and secure is to buy condo in condominium (with 51% of all condos belongs to Thais and 49% to foreigners). Phangan don’t have a accepted areas to build the condos, so here spreaded two other ways to register land (and property on it):
Land Leases: Although Thailand real estate law restricts land ownership rights to non-Thai citizens, foreigners may hold 100% interest in a Thailand land lease. Thailand lease law allows a 30-year maximum lease period, with the possibility of renewing the lease for additional 30 year periods.
2. Company Ownership: Thailand registered companies with majority Thai ownership are able to buy land in Thailand. In the past it has been common for foreign nationals to acquire an interest in Thailand real estate as minority shareholders in a Thai majority company. The land will be owned by this company, not the individual. The structuring of this company with the majority of the voting shares belonging to the foreigner enables controlling interest. This is the most popular form of land ownership for foreigners in Thailand.
The price of property in both ways is same - buyer choose preferable option; but the cost of purchase process different, expenses with company opening and running will be higher. The company needs to register and pay tax – this can be arranged through a local accountant.
As an additional protection method buyer can combine those options - buy land on company name and then rent it out to the individual.
Land title deeds
There are 3 land titles, recommended for foreigners. However it can be more, if investor have experience and understand the risks of buying land with lower title - if it giving him the opportunity to buy the land for price, much less than market, and then using tools to upgrade the title, according to the low. More detailed explanation attached.
Nor.Sor.3
Is the lowest land title which allows for legally building a property and an instrument certifying the use of land issued by the government to the proprietor of land not a possessory title, i.e. it is confirmed by law that a person holding Nor. Sor 3 has the legal right to possess the land. This land title can be used as a legal document or to use the benefit of the land as an owner. Nor Sor 3 is a floating map with no parcel points. It is issued for a specific plot of land and is not connected to other land plots. This causes problems in verifying the land area. Any legal acts must be publicized for thirty days.
Nor.Sor.3 Gor
Is a legal land title with the same legal basis as Nor. Sor. 3. The difference being that Nor. Sor. 3 Gor has parcel points on the map, and is set by using an aerial survey to set the points and the land area. It is possible to verify a nearby land area. It always uses the same scale of 1:5000. There is no need to publicize any legal acts, and it is possible to partition (divide) the land into smaller plots.
Chanote
A Chanote is a certificate for ownership of land. A person having their name shown on the deed has the legal right to the land, and can use it as evidence to confirm the right to government authorities. The title deed has been issued by using GPS to set the area and boundaries of the land, which is a very accurate method. Any legal acts may be done immediately, as per the right of ownership. Land partition of more than nine plots must be carried out according to the land allotment law, section 286. This is the most secure type of land title and is highly recommended.
Measurement
The units of land measurement in Thailand are the Wah, Ngan, and Rai. Conversion factors between Thai measurements and metric measurements are:
1 Wah = 2 meters
1 square Wah = 4 square meters
100 square Wah = 400 square meters = 1 Ngan
4 Ngan = 1 Rai = 1,600 square meters
Conversion factors between Thai measurements, meters and acres are:
1 hectare = 6.25 Rai
1 acre = 2.529285 Rai (approximately)
Taxes & company expenses
In addition to the local law and accountant companies, there are many offices with good proven reputation on Samui island, who can cover all issues.
LAND OFFICE transfer tax of immovable property (land, house, condominium);
Transfer Fee 2% over the appraised value of the property;
Business Tax 3.3% over the registered (sale) value or appraised value (whichever is higher);
Stamp Duty 0.5% over the registered value
Withholding tax;
if the seller is a company withholding tax is fixed at 1% over the registered sale value or appraised value (whichever is higher)
if the seller is a private person withholding tax is calculated at a progressive rate based on the appraised value of the property.
Company expenses: registration of company cost from 30,000 THB.
MARKET OVERVIEW
LAND SALE
Real estate market on Koh Phangan has constant rise in 2003-2008, when the prices of land increases to the current present level on approx 10%. However growth was stopped by world crisis in 2008, what was aggravated by local political events (temporary blocking of Bangkok center and main airports), prices were just freezed and didn’t dropped down - as distinct from Samui, where 80% of all projects were build on loans.
Next stage of the prices (on some parts of the island) starts only in the 2012, after re-election of Pee Poom as a senator of province. His company building the roads on the east-north side of the island and he is one of inspirators and responsible persons of construction of the new airport, what should be done in the next 2 years. Here we must to add, that Koh Phangan, depends to the location has a serious difference in prices and level of demand - especially on beachfront land, what cost from 2 mln (big plots on east of island) to 30 mln (Thong Nai Pan) per Rai.
Thongsala - Baan Tai/Kai - Haad Rin Nai (sunset)
The most popular and developed part of island. Thongsala is the only town and here are the state offices, main port, market and the only “Tesco Lotus”. Beach here is not the best for swimming, but due to the road interchange its easy to reach most of other places on island comparably for the same time.
Prices: beachfront land cost around 10 mln per RAI, however its much less on some large 8+ Rai plots (from 6 mln). Sea-view land with road cost around 2,5 - 3 mln. Its also can be lower if far from the concrete road and electricity/water.
Useful facts:
- Here (Baan Tai/Kai) are the most stable touristic traffic.
- In some areas can be noisy during the nighttime due to the regular parties going around.
- Many houses for rent, but just few villas (only 2 beach villas with 3-bedrooms).
Prices chronology
This part is central and its was a first developed area of Koh Phangan. Prices in Thongsala Baan Tai has a 100% raise during 2003-2008, when its goes to current level. However even before 2003 it wasn’t few baht, as someone can tell now - in 2002 it was a bit less than a million per Rai (in 2004-2005 1 Rai costs 1-1.1 mln) for sea-view land and 3-4 mln/Rai for beachfront.
We believe that cost of beachfront land will be stable for next few years - it wasn’t almost any deals but still lots of offers, more coming every year. Most of new foreign investors looking for resorts in long-term rent here.
Sea-view land - here our forecast that all plots for price below average will be sold out in 1-2 years (it happens now) and then prices start to grow up after the completing of the roads and airport and in -3-4 years will reach 3,5-4 mln THB per Rai. However its look like it will be top level for Baan Tai - there are no any factors for further escalation.
Haad Rin Nok - Leela
Haad Rin hosts Full-Moon party, what is world greatest monthly open-air. Every full-moon from 10000 up to 50000 young people partying here. All resorts has 5-7 nights minimum stay (10 during the NY eve). Unfortunately, despite of the nice beach and comfortable resorts, this week of the Full-Moon its a only busy period for Haad Rin).
Leela, or Sarikantang beach is the only place with own floating pontoon and consist of only 3 large resorts (beach area, also few on the hill), one of which was just sold-out.
Prices: there are no any offer on the beach land (except of “Monkey beach” - small beach opposite Haad Rin). Hillside land cost from 5 mln per Rai.
Useful facts:
- no any villas, in spite of demand, no houses for rent.
- Own port (“Haad Rin Queen”), belongs to local family, communication with Samui.
- Most of tourist are young backpackers.
Prices chronology
Old residents still remember few deals from the sweet past times, when Rai of beach land on Sarikantang costs little more than 50,000 THB. It was 25 years ago, and that land just was sold for the price 100 higher (38 Rai of “Leela Beach Bungalow”).
Haad Rin resort’s business experienced its “golden age” in 2006-2008 - Full-Moon party becomes more and more popular, and many tourists still coming between that events. However its wasn’t entail boom in real estate market: most of locals didn’t want to sale the land, and the clientele too specific for most of businessmen. All recent activity going among local families, who buying, selling and renting land to each other.
Also its no any demand for long-stay accommodation here and not much facilities for living, such as markets, kindergartens, schools. Local business organisation (Haad Rin Business Association) is more “mafia style group”, than effective party. In a view of that facts we don’t think that Haad Rin today is perspective investment.
Haad Yuan - Haad Tian - Haad Yao (east) - Haad Namtok
East side of the island well-known for its beautiful sandy beaches and sunrises. Its still dirty roads connecting this area from the central, so many people using boat taxi. Mostly diesel electricity, many resorts oriented on yoga and healing practices.
Prices: mostly only big plots available from 10+ Rai, beachfront land starts from 2,5-3 mln per Rai for rocky beach.
Useful facts:
- airport coming in that area; there are new road connections mostly done from Haad Rin to Than Sadeth
- Own port (“Haad Rin Queen”), belongs to local family, communication with Samui.
Prices chronology
There are no any real estate agents, which keen to work with the “wild” east today - interested clients contacting strait with the owners, which usually could be barely found. Few owners of large plots (30-50 Rai) are Bangkok families, who bought the land 7-8 years ago, others are locals, living in other sides of Phangan. Most of landlords are the first owners (or their inheritors). 90% of land don’t have proper status (Nor Sor Sam or Chanote), only large plots available (1 exception in Haad Nam Tok).
Prices didn’t changes a lot here for last 10-12 years, but now its can be different - some owners starts to voice much higher numbers, than just year ago. We suppose that land here becoming now one of the most promising investment. The cost of land will raise with every stage of road construction and airport completion, and the value of properly chosen beach plots will be doubled in next 3 years.
Thong Nai Pan
Consist of Yai & Noi (big & small) areas. Both are very popular for its sandy beaches with water all year round. Noi is home of the most luxury resorts on the island (one of them, the most expensive Rasananda just joined to the “Anantara” chain). Only recently the road the TNP was seriously improved, so now its easy to get there with motorbike.
Prices: hillside land with view cost from 3,5 mln per Rai, although beachfront land not available (last deal was for 12 mln 2 years ago). Just now they sell one plot with beachfront land for 30 mln 1 Rai and having another plot ( 9 Rai).
Useful facts:
TNP has a separate status from all other island - both residents and tourists don’t go outside from here, area has own shops, restaurants/bars and even real estate company.
Prices chronology
As most of other tourist areas, cost of land in Thong Nai Pan starts serious growth in 2005-2006, when government approves road construction and 2-nd luxury resort, Santhiya, preparing to open. TNP Real estate appears a bit later, in 2007, with large villa project. Some plots with a view from 1 - 1.5 mln per Rai cost around 3,5-4 mln. - the price what we have now. Land on the beach represented just in 1 offer - 30 mln. per Rai.
Our prognose: land above TNP Noi and luxury resorts has a good investment potential - worldwide practice shows that its ideal place for villas and apartments (the best when its sharing facilities with those resorts).
Naiwok - Woktum - Hing-Kong
This places still has mostly basic accommodation. Road separate beach area from the hillside. On the hills there are few famous bars offering relax during the Sunsets. Here located few villas (none on the beach) and projects in long construction process. In Naiwok also lies one of the largest resorts on the island, “Grand Sea Resort” (for sale also).
Prices: its just few offers with different price level. Beach plots costs 6-10 mln per Rai, hillside land with view also not cheap - 4-5 mln per Rai.
Sritthanu- Chao Phao
- island’s district, what has few sandy beaches. Also here are lots of houses for rent, largest yoga-healing schools, own market and 7/11.
Prices: only 1-2 beach land offers, 1 of them divided to small plots. There are a lot of land for sale in the jungle from 1 mln per Rai.
Useful facts:
- part of Srittanu its a one of the best beaches on Phangan with large undeveloped land on it - landlords can accept the offers.
- there are not too many info about that area in internet - probably because of small amount of well-promoted resorts.
Haad Yao - Haad Salad
Both has long sandy beaches with resorts mostly 3-4 star level. Here are more classical holiday picture - families with children and couples, restaurants with the candles serving fresh seafood on the beach. Across the road there are hillside houses for rent and resorts with lower prices.
Prices: no any offers on the main beaches, but few around (small bays). Hillside land costs 3,5-4 mln per Rai.
Useful facts:
- Haad Salad is a local villa’s area - its a lots of them on the hillside.
- Yao & Salad are very seasonal retreats - from Dec to Apr and Jul-Aug; its almost empty all other periods.
Prices on land here on the same level of 2008 and starts now from 3 mln in case of “urgent offers”. Haad Salad 2006-2008 was one of the most rapidly developed area time of opening -expensive resorts and hillside villa projects. Many of them, as Baan Suay villas, going to full completion only now - in Sep 2012 was finished the concrete road, Wi-Fi, water... However in High Season this area overbooked, there are no too many people wish to stay all-year round.
Mae Haad - Hin Ngam - Thong-Lang
Favourite place not just for foreigners, but also for many Thai tourists. Has only few resorts, including the newest 4-star Mae Haad Bay resort with largest swimming pool here. Probably best place for snorkeling on the island.
Prices: only 2 big plots available for sale near the beach (12 -20 Rai). Hillside area with the ocean-view has very attractive offers - from 1,2 mln THB per Rai.
Chaloklum - Haad Khom
Chaloklum going to be soon the “Russian village”. Its happens now during the high season, and more and more people staying here all-year round. Many of them families or only mothers with children, reasonably preferring sunny island with good ecology to megapolis. Long sandy beach, good for swimming all-year round is one of the reasons why. So, as the same time as resort’s business staying at same level, house and villa rentals demand increasing every year.
Haad Khom is the beach with coral reef and simple resort’s bungalows. There are still no central electricity here, and all of the using diesel power.
Prices: there are few plots on the beach (but not the best part of that) with differs in level of cost - 6-10 mln per Rai. Hillside land with sea-view cost 3 - 5 mln., however some offers much less (2 mln per Rai), and some much higher (6-7 mln) - all for comparably equal plots.
Useful facts:
- There are lots of unsatisfied requests for upper class houses for rent during the high season - there are no any offers for that still.
- The newest 4-bed villa just built in Haad Khom, built by French man, one of the best on the island and have good occupancy during the High Season.
Prices chronology
For last 6-7 years prices in Chaloklum and around were stable - still possible to find large plots from 1,5 mln THB per Rai, and from 2 mln for small plots. All factors indicates that changes only coming - for last 2 years all houses and villas in Chaloklum are fully-booked from November to April, and its despite of many new houses which were recently built. Moreover - more people every year coming to stay for all-year round here.
During the High Season Chaloklum looks like a Russian village and for first look its the only change , but its not exactly true: diving business in Chaloklum growing up on 20-30 % every year (international clientele), few new villas just built-in (one of them, French villa in Haad Khom probably the best on the island), lots of people coming to Chaloklum during the daytime to swim and go further to Bottle Beach.
For 2-nd year more and more Russian guests interested about real estate here, but no any serious deals was made. We predict that it will starts soon (next year). On a same time few local buyers from Thailand took large plots of land and resorts (Buritara for 70 mln THB).
Construction services overview
1. There few local contractor on the island - managed by Thai and foreigners. Other option is to involve companies from Bangkok, Samui or Suratthani (there only on Thai language). The advantage of that option here in Thailand in same price, in addition of delivery of materials and staff accommodation cost.
2. All materials for construction available on the island, however some of its can be bought cheaper on the mainland. Phangan has boat delivery from Suratthani and Samui., post and boat companies (such as Lomprayah) providing delivery through all the country for reasonable rates.
Approximate eventual cost of building is 9,000 - 11,000 THB/sq. m. for economy class, 12,000-15,000 THB/sq.m. for standard, and 16,000 - 18,000 THB/sq.m. for high (euro) standard.
Pool - there are 2 local pool companies on the island, also there are few in Samui, where are much more international offices (such as Desjoyaux).
Cost of swimming pool: depends on size, form and system.
Also Suratthani & Samui companies providing solar power, CCTV and latest technologies in eco-construction - most of them all has experience on work on Koh Phangan.
OUR COMMENTS
House and villa rentals, as well as resort’s marketing are the important sectors of our business. Analyzing the past and present business trends, we suppose that the most efficient and profitable are:
- investments in undeveloped land for the price below the average. Here we advice Chaloklum hillside area, Thong Nai Pan hillside, and land on the Haad Tian, Yuan and Than Prapard areas.
- construction upper class 2-,3-bedroom houses and villas with further rental & sale.
Villas & houses rental
About 40 villas on whole island can’t satisfy the demand during the high season. Most of villas don’t offer long-stay rates and not well promoted. Some of them calls “Villa”, however its in house class.
The highest concentration of villas in Haad Salad hillside - there are few complexes 4-8 villas in each, all with sea-view. There are just few beachfront villas on the island (6-7).
Phangan Houses rental - there are lots of “local standard” 1-bedroom houses, and more coming every month, with prices from 6,000 THB/month for simple fan (if old some even less) and 12,000 THB/month for aircon house. However its a luck of comfortable 2-3-bedroom houses priced 25,000-40,000 THB/month. Also there are just few houses with communal swimming pool (no any with gym), what are so popular on Samui, Phuket and Pattaya.
There are no any townhouse style complexes on the island, what are so popular on neighbour Samui. Euro-style apartments represented by the only project - Sunset Hill, offering both short and long term rental. Despite of relatively high prices its very popular.
Example of house building with renting and selling it after:
0,5 Rai with view in Chaloklum/Baan Tai - 1 mln THB.
2-bedroom house, 100 sq.m. with jacuzzi - 2 mln. THB.
realistic expected renting income - approx. 250,000-300,000 THB/.year. Selling price - 4,5 - 5 mln. THB.
SAMUI REAL ESTATE OVERVIEW
Starting point of tourism business in Samui was 1986: the airport was completed, more and more resorts begins to open. More flights coming, inc. international direct flights from Hong Kong, Singapore, Bombay and etc. - real estate on Samui rapidly growing. Despite of Pattaya and Phuket, Samui is the villa destination and almost don’t have condos - first condominium coming only in 2011. Today is approx. 60 real estate offices, speaking on all main languages; in 2004-2008 400-800 villas building on Samui every year, and the all-year occupancy of 4-5 star resorts are 75-80% (now its less than 50%). World crisis in 2008 made serious negative changes and the prices dropped down to the current level.
Samui RE, LAND PRICES, mln THB/RAI
LOCATION: BEACH VIEW JUNGLE
2001-02 3-4 +- 1 0.4-0.6
2007-08 25-35 7-8 2-3
2012 15-20 3-4 1.5-2.5
REMARKS:
- Prices above are average market offers, in some other areas beach land’s value can be much higher (Chaweng, Lamai);
- All given info for land with Nor Sor Sam/Chanote title.
- Land market on Samui recently doesn’t have so large choice as villas/houses/condos.
