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Phuket Property PDF Print E-mail

{mosgoogle}The devastating tsunami of Boxing Day 2004 which destroyed parts of Thailand, Indonesia, Sri Lanka and the Maldives, may have put places like Phuket on the international stage, but many in south-east Asia were already aware of the charm and delight of this idyllic island located on the west coast of Thailand, in the Andaman Sea.  While Phuket is generally considered to be simply a holiday destination, a large number of Hong Kong residents have taken it a step further and have invested in property on the island.

PhuketWhile property development continues relentlessly across the island, real estate advisers warn against accepting over-inflated expected returns.  Says Hong Kong-based Andrew Pang, executive director for international investment at real estate giant Knight Frank, ?Treat with suspicion any developer that promises a high annual return, as these, realistically, cannot be guaranteed.?

Mr Pang goes on, ?Rather than treating a property purchase as purely for investment purposes, it is far preferable to consider the property as either a holiday or retirement home. And, when a buyer is not in residence, obtaining some income by leasing out the property as a holiday home is an added bonus, although this is clearly limited to certain months of the year.?

Knight Frank Thailand has marketed the luxury Sri Panwa villas, south of Phuket City, which, says Mr Pang is ?a high end development?.

Philip Nourse, a consultant with Chesterton Petty, Hong Kong says, ?Despite the tsunami a year ago, buying activity in Phuket has seen unprecedented levels in 2005.  Whereas the majority of buyers have historically come from Hong Kong and Singapore, there are increasing numbers of purchasers from Scandinavia and Europe: Norway, Sweden, France, the Netherlands, Switzerland and, in particular, the UK, which appears awash with cash for the purchase of second homes.?

In Phuket, Knight Frank?s managing director Stephen O?Brien says that although there was a slow-down in the market in the fourth quarter last year, generally business is good: ?It?s about quality, not quantity,? says Mr O?Brien.  More people are making decisions and our conversion rates are generally high.?

Early last year Bangkok Bank announced that it would make mortgages available to foreigners.  Mr O?Brien said at the time that ?mortgage finance is available and that freehold ownership is assured?.  Now he says, ?The lending structure of Bangkok Bank in Singapore is still in its early days and is being fine-tuned, but as of now there really is not any straight-forward loan financing and it is principally a cash market ? which is actually good for the market.?

Phuket Land?s Bob Andrews basically agrees:  ?Some banks are offering finance out of Hong Kong or Singapore, but normally they will only finance finished product, which is a little awkward as almost all new property is sold on an off-plan basis.?

Expatriates tend to look closely at the Laguna development, close to Phuket International Airport.  ?Laguna is a great product,? enthuses Steve O?Brien.  ?It is well-managed and good value for money.  People trust Laguna; they would not so much as change a comma in any contract without agreement.?

Hong Kong businessman Allan Zeman is developing 26 villas overlooking the sea in Phuket and, says Steve O?Brien, ?has listened to the market and it is one of the leading sea-view developments on the island?.  The properties are definitely high-end, ranging in price between US$1.5m and $4m.  But, says Mr O?Brien, ?People in Asia know and trust Allan.?

To the south of the island areas such as Chalong and Rawai are experiencing considerable development.  Although it is some distance from the airport, many families prefer the tranquillity of these parts of Phuket.  Says Mr O?Brien, ?We have lost sales because places like Chalong, Rawai and Nai Harn are too far away from golf courses, nightlife and the airport, but developments like Bel Air Panwa and Sri Panwa have sold well. 

Phuket?Generally if someone has done well in their business, he will want to be close to the centre of action.  Typically, the south attracts families who like a quiet life.?

In Karon, on the west coast, international brand Crowne Plaza is developing some reasonably priced apartments.  Beginning at 12,000,000 Thai baht (about US$300,000) which can be purchased by instalment, with the first payment due on signing of the contract; payment four would then be due on handover of the apartment.

Further south, Kata Heights is a new boutique development comprising 16 condominiums.  Construction will begin in early 2006 and it is anticipated that handover should take place before the end of the year, weather permitting.

Close to the popular tourist resort of Patong, still on the west side of the island, L?Orchid?e Residences is an exclusive luxury pool villa residential development, within easy access of a number of golf courses, including the mature Phuket Country Club and nearby Loch Palm, as well as some of the finest beaches and, of course, the infamous nightlife on Soi Bangla.

?Construction began in November 2003, and is expected to be completed by the end of the year,? says promotion and sales manager for L?Orchid?e, Stephan Fondanesche.

Mr Fondanesche points out that sales have increased considerably ?since we cancelled the exclusive contract with an agent?.  He adds that a show villa is now available for viewing.

Further north and overlooking the picturesque beaches of Layan and Bang Tao is the newly built Layan Gardens, a cluster of five buildings, each containing eight luxury apartments.  Close to Laguna Golf Course, Layan Gardens is another development of choice for many expats.

Chesterton Petty?s Philip Nourse believes the east coast is also growing in popularity: ?There are several new developments coming onto the market at competitive prices.  However, the longer-established west coast market remains the primary focus for would-be buyers because of access to beaches, restaurants and other facilities.

?Some pundits claim that prices in Phuket are overheated.  I disagree.  I believe there is significant potential for both capital values and rentals in coming years.?

Luxury houses that may of interest to those with school-age children is The Woodlands, which, says developer John Robinson is ?literally two minutes from the International School?.  The school is the former, world-famous, Dulwich College that changed its name in the middle of last year.

There are a total of 15 houses being built, with prices ranging between 16m and 21m Thai baht and about half have already been snapped up. 

?We have sold a number to Hong Kong people, including a resident of Discovery Bay,? says Mr Robinson.  ?The 4-bedroomed houses are around 350 square metres and the 5-bedroom ones a shade under 400 square metres.  And that?s a genuine figure, not developer-speak,? he adds.

Thai law stipulates that a foreigner may not own land in his name, but that he has the right to own buildings.  There are currently two options if a non-Thai wishes to purchase land: 

The land may be purchased on a 30-year lease, with an option to extend for two further 30-year periods.  Possession of the land is assured by virtue of the property that occupies the land.  Alternatively, if a foreign national operates a business in Thailand (although this is subject to certain restrictions) he may purchase the freehold of the land through the limited company.

Purchasing a condominium is the simplest transaction.  The law allows foreigners to hold 49 per cent of the units in a condominium freehold.  One important consideration in order to qualify for freehold ownership, is that the foreign currency used for the purchase must be remitted from abroad and duly recorded by an authorised Thai bank.

Property tax is not assessed on residential dwellings, but there are transfer fees and stamp duty to consider, although these are not particularly arduous.  Phuket-based Siam Real Estate says on its website: ?The precise methods of calculation are complex, but as a rough guide for residential sales, expect total fees and taxes to work out to be approximately two to three per cent of the value of the property.? Generally, these costs are split between the buyer and seller.

While there are a number of international law firms operating in Phuket, a local lawyer would be less expensive and as often all documents are in Thai, it is far quicker than waiting for a translation. However, only use a reputable business adviser and lawyer and carry out ?due diligence? as you would anywhere else in the world.

Philip Nourse again: ?The profile of the typical buyer is changing.  While the US$1m luxury villa buyers are still clearly in evidence, there is a growing demand for lower-budget investment property that can produce rental returns for buyers.  I still think Phuket offers a superb investment opportunity.?

Philip Nourse: Consultant, Chesterton Petty Hong Kong  This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Andrew Pang: Knight Frank Hong Kong  This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Stephen O?Brien: Knight Frank Thailand  This e-mail address is being protected from spam bots, you need JavaScript enabled to view it   www.knightfrankthailand.com

Stephan Fondanesche:  L?Orchid?e  This e-mail address is being protected from spam bots, you need JavaScript enabled to view it   +66 156 999 98

www.lorchidee-residences.com

Bob Andrews:  Phuket Land  This e-mail address is being protected from spam bots, you need JavaScript enabled to view it    www.phuketland.com

Siam Real Estatewww.siamrealestate.com

John Robinson: The Woodlands This e-mail address is being protected from spam bots, you need JavaScript enabled to view it   +66 76 380 400 or +66 5069 4303

The Phuket Gazette: Information and property advertisements: www.phuketgazette.net

Jeff Heselwood: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

 Airlines

Thai International Airwayswww.thaiairways.com

Dragonair: www.dragonair.com

Consulate

Royal Thai Consulate General ? Hong Kong:  www.thai-consulate.org.hk


Phuket Fact Sheet 

Phuket, Thailand's largets island, lies on the west coast of Thailand in the Andaman Sea.  Generally hot - between 25 and 35 degrees Celcius - it os rarely as humid as Hong Kong.

Direct flights from Hong Kong are available with the Thai International and Dragon Air, while many carriers fly to Bangkok from where connecting - often low-price-flights can be made to Phuket.

The infrastructure of the island has, regrettably, not kept pace with the amount of development and until a desalination plant, cuurrently under construction, comes on stream, water shortages are a real possibility.   Tap water is not safe to drink and it is essential to stock up on bottled water.

 Thailand drives on the left, as in Hong Kong, and reasonably-priced cars can be hired at the airport, using a Hong Kong (or other recognised jurisdiction) driving licence.   The wearing of seat belts is madatory and the Thai police frequently operate road blocks to check this requirement.

Duty on imported items such as cars (particularly luxury vehicles), wine and electrical equipment is high. However,  if it is for personal use, it is often possible to import small items exempt of duty. 

Jeff Heselwood can be contacted at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it  
 

 

 


 
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