Features

Villa phuket

31 Aug 2006 by intern11

After three decades, the Pearl of the Andaman Sea now boasts brand status on the vacation circuit. Ed Peters studies its booming property market and shows the wise way to buy into Nirvana

For a snapshot of what’s going on in the world of Phuket property, wend your way south from the airport to Kamala, a beachside community that was hit especially hard by the 2004 tsunami. The village is back on its feet again – as indeed is the rest of the island – but continues to hug the coast southward and the road leads to a secluded headland dubbed Jomchang. This is the latest, and some would say the snazziest, arrival on what has recently come to be known as Millionaires’ Row – though Billionaires’ or Squillionaires’ might be more apposite – which runs roughly between Surin and Patong beaches and where few upscale properties sell for less than US$1 million.

Jomchang is an extraordinary project, comprising 11 villas spread over a central plateau and dramatic cliffs. Each multi-level villa is designed with numerous bedrooms, living and relaxation areas, water features, a swimming pool, servants’ quarters, master-of-all-I-survey views, and – crucially – enough space around to make it seem like it’s the only one for miles about. The buzzwords for buying a pied-à-Phuket are privacy and seclusion. Anyone can front up to the island with a few thousand bucks and pick up their own slice of quote paradise unquote. The smartest money is snapping up the last remaining exclusive sites in this sun-drenched, real-life game of monopoly.

“High-end properties are leading the island’s market, and the developments are becoming increasingly more sophisticated,” says Masae Ono, manager, agency project sales for Knight Frank Phuket. “Prices in the millions of dollars are now routine, and the demand is growing stronger with overseas clients viewing Phuket as an excellent investment as well as a second or holiday home.”

There are other spaces on Millionaire’s Row, notably the ultra luxurious Trisara project and Hongkong tycoon Alan Zeman’s Andara, while other parts of the island are making determined strides upmarket, in particular Royal Phuket Marina, which combines retail and leisure facilities with berths and luxury housing on the hitherto little-developed eastern coast.

Naturally, regal rows and millionaires’ marinas are not within everyone’s reach. Property purchase in Phuket falls into roughly three camps, with varying degrees of affordability: the afore-mentioned top-end, designer label projects; searching a piece of land, an architect, contractor et al under your own steam; and thirdly, going for the timeshare option.

North of the airport, Mai Khao beach is dominated by the JW Marriott Resort & Spa, a stunningly designed property, fringed by 138 two-bedroom, two-bath suites encompassing 119sq m which make up Marriott’s Phuket Beach Club. The deal is simple: purchasers pay US$15,000 or US$25,000 for a week’s usage (depending on the season), which is good up until 2081, and are then free to enjoy their vacation home and all the resort’s facilities.

“Timeshare is an evocative phrase,” says the Beach Club’s director of sales, John Edgar. “You can buy a Ford or a Mercedes, they’re both cars, but what we have to offer is the very best option. If you have the money to pay for your vacations upfront, over the years you save a tonne. The only extra you pay is an annual maintenance fee of US$550. We’re taking people out of hotel rooms and putting them in their very own suite – it’s like a free upgrade to Business Class. Plus you can choose whether you want to come to Phuket, or exchange for another resort in Marriott’s Vacation Club, or trade your week in for reward points. It’s an eminently flexible and valuable way to vacation.”

South of Mai Khao, another hotel and villa complex is enacting its own mini property boom just behind Bang Tao Beach. Laguna, a triumphant eco-success story, which transformed disused tin mines into an award-winning resort, is currently in the throes of constructing a swathe of new villas and residences.

Reinforcing the theme that upmarket is on the up and up, the most significant new properties are the double pool villas, which fall under the Banyan Tree umbrella. With a price tag of US$2.5 million, the villas – designed along Thai architectural lines with an infinity pool and direct access from the bedroom to a wading pool – can be rented out at a fixed return of six percent for six years, with the owners retaining use for 60 days per year.

“The villas are attracting very strong interest, as they bring luxury and exclusivity to new heights,” says sales manager Rung-aroon Wichitwatee. “People are looking at them as an investment, as a lifestyle option, or simply to add to their property portfolio.”

Proof positive of the investment opportunities on Phuket is showcased at Villa Santi, a project masterminded by veteran hotelier Bart Duykers just outside Patong. A mixed development of spa villas, suites, residences and studios anchored by a signature restaurant, Villa Santi should be completed by early 2007, but some villas are already being resold. “We sold one of the spa villas off plan for US$350,000, and it has just been sold on for double that,” says Duykers. “We are not so much a straightforward villa complex, but more a village with resort facilities and a very firm management structure. We aim to have this finished by early next year, and are already embarking on a second, more exclusive project just up the road – Djinnah Santi.”?

Away from the sureties of professional property project, the DIY option – buying a plot, commissioning an architect, and seeing your very own home gradually take shape – is akin to the old proverb about the devil and the deep blue sea. The legal side of things – foreigners may not own land, but may lease it, though may own the house it stands on – is not entirely straightforward; reliable contractors are still the exception rather than the rule; building standards may get lost in translation and budgets and timelines tend to be flexible.

Contrast all this against the ultimate satisfaction of owning somewhere (theoretically) built exactly how you want. While estimating costs is an inexact science, a 1,000 square-metre plot with a sea view would probably cost around 10 million baht (US$268,384), and building a four-bedroom house with pool would add a further 10 million.

As an anonymous Singapore-based owner commented: “My biggest mistake was thinking that I could get my villa built in about the same time that such a project would take back home. I found the land myself and took a hands-on approach to the design and construction, but even though I flew up several times to check on progress, when I flew away again it seemed to be the signal for tools down.

“I had to keep a constant eye on building standards ... so all in all it took eight months longer than I expected. However, the end result is superb, and I had a very good offer for the place from a friend’s friend a couple of weeks after I stayed there for the first time. No way I’m selling though; well, not yet anyway.”

For the moment, the outlook on Phuket property is good, with all sectors of the industry anticipating rosy years ahead. “The market is generally bullish, and we are starting to see a very strong resale market,” says Bob Andrews, managing director of Phuket LandSearch, the island’s most comprehensive agency and consultancy. “You might say there is some oversupply in the apartment market, but this is still a cash market, so it is insulated from the outside world’s financial ups and downs.

“Property is strong now, but – as the saying goes – ‘you ain’t seen nothing yet’. It should be six or seven years before there is any sort of correction, as until financing arrives and interest rates start to play a part in the supply and demand side of the property market, there is no reason why there should be a correction.

“The Phuket property market has endured the Tsunami, SARS, bird flu, the title issues and foreign ownership restrictions, all with no detrimental effects to the market. Hopefully within the next 10 years, the Thai government may look at changing their policy regarding foreign ownership and make it easier for people to invest in the property market.”

Quite the most phenomenal part of the Phuket property story is its success as a brand. While the island’s development over the past three decades has not been entirely smooth, it can now boast international schools, hospitals, an airport, a bevy of well-regarded restaurants and hotels, myriad shopping options and raucous nightlife for those so inclined, and all set against the sort of backdrops that might be mistaken for tropical computer-generated images. That Phuket has managed to achieve all this more by luck than judgement – and acquired the same sort of status on the vacation circuit as perhaps Louis Vuitton or a Business Class seat – is little short of incredible. It’s also a firm indicator that if Phuket’s not quite yet the Monaco of Asia, as some predict, it has still to achieve its full potential. Anyone with the requisite cash to spare should think hard about filtering some into bricks and mortar (with a sea view) off the Pearl of the Andaman Sea.

GOING, GOING...

Phuket is filling up fast with new construction projects mushrooming on both east and west coasts, and although there is still plenty of opportunity on the island, some purchasers are casting their gaze further afield, with an eye to getting in while the prices are still reasonable.

“The main reason for buying ahead of the curve is the chance of greater capital appreciation,” says Bob Andrews of Phuket LandSearch. “In parts of Phuket, land that was selling for 2.5 million baht (US$67,096) per rai has gone up 300% in three years. However, once you get off the island, the infrastructure is markedly less.

“If you’re buying here as a second home or a retirement option, you don’t necessarily want to drive a couple of hours to get to the international hospitals, shopping outlets and entertainment that make Phuket attractive in the first place.”

The most obvious places to look off Phuket are its immediate neighbours across the Sarasin Bridge, Khao Lak and Phang Nga, both popular tourist destinations with a number of hotels but still relatively little touched by property development. Offshore islands are similarly unspoilt, however sparse access, utilities and communications may prove too much for all but the most ardent pioneers.

It’s well worth remembering, however, that as recently as 1970, Phuket’s roads were largely unsurfaced and the concept of multiplexes, marinas and rows of millionaires were as remote as Mars.

GO BY THE BOOK

To get an overall impression of what’s on the market in Phuket, pick up a copy of the Phuket Blue Book, the island’s home buyers’ bible, which also contains sage advice on legal issues and a mini directory of services, as well as some rental options. (Land is measured in rai, and 6.25 rai equal one hectare.)

This summer’s issue spotlighted a 35 million-baht (US$939,345) four-bedroom villa in Ao Makham, part of a development of seven with absolute water frontage; a two-bedroom apartment in Bang Tao going for 10 million baht (US$268,384); a six-bedroom house in Kathu with a separate guest bungalow priced at 27 million baht (US$724,638); and a 7.7-rai sea-view plot on the nearby island of Koh Phra Tong for 15 million baht (US$402,576).

There are a number of ownership options: foreigners can own a condominium outright, while a lease or a limited company is the most usual option when buying a house or a piece of land. Various legal consultants based on the island specialise in property purchase, and finding one you can work with to mutual satisfaction is the most important step. Make sure you fully understand your legal obligations before putting pen to paper or handing over any substantial amounts of cash. It is all too easy to be blinded by the prospect of sunset cocktails by your pool. Sort out the red tape first and do your research thoroughly.