Representing the Best Real Estate in Phuket

Tourists in Phuket Are Not Scared Away by Protests

When the news was out that clashes had erupted between troops and the red-shirt demonstrators in Bangkok, many tourists worldwide ignored their government’s warning to reconsider vacationing in Thailand.
Most travelers may be avoiding Bangkok, if not Thailand in general. But still many visitors appear to be insulating the tropical resort island of Phuket from the effects of the recent violence. Indeed, the island’s comparative prosperity shows how shifts that transform the global economy, can also supply visitors to an attractive destination so steadily that it becomes relatively immune to temporary disturbances. Their nationalities simply change.
Consider the Australians: in recent years, increasing exports of iron ore, copper and coal from Australia to booming China sent the Australian dollar soaring, pushing down the cost of imported fuel and, with it, airfares. That in turn helped to put Phuket within reach of more and more Australians, with airlines responding with more direct links.
As a result, Phuket now attracts more Australian tourists every year than it does from any other country. That means that with just over 22 million people, Australia sends more people to the island than countries like Japan and South Korea that are not only more populous but much closer.
Scandinavians, whose currencies have rocketed upward recently as the euro has dived, have also been coming in increasing numbers, along with tourists from oil-rich Russia and the Gulf.
All of which is good news for an island whose economy is dominated by the export of sun-kissed beachgoers. Tourism accounts for an estimated 70 percent of all jobs on Phuket, representing a $3.15 billion industry that has helped turn it into one of Thailand’s wealthiest provinces.
So business owners and officials here have been understandably anxious about whether Phuket might suffer as tourists heard advice from their embassies to avoid Thailand altogether. Last week, Phuket’s governor, Wichai Prisangob, published an open letter reminding travel agents and airlines that no anti-government “red shirt” demonstrators had been spotted on the island.
Tourism officials in Thailand estimate that the recent protests in Bangkok could cut the country’s tourism revenues, which are already under pressure of the global economic crisis, by almost one-fifth this year. Hotels in Phuket, however, have reported only a slight increase in cancellations. ‘We have had some impact, but not as much as in Bangkok’, said Somboon Jirayus, president of the Phuket Tourist Association and a 20-year veteran of the island’s travel industry. Mr. Somboon’s family owns two hotels on Phuket. But room cancellations are one thing and airport arrivals are another. The number of international arrivals into Phuket last month (April) increased by 41.4% over April 2009.
The negative effect of the global economic crisis on tourism in Phuket actually pales in comparison with what happened late December 2004, when the tsunami hit the resort island and surrounding provinces, killing about 5,400 people, of which only 250 on the island. In the year after the disaster, tourist arrivals to Phuket were cut in half.
Perhaps the most lasting effect has been on Phuket’s popularity in Taiwan. Before the tsunami, Taiwan was to Phuket what Australia is now, supplying more visitors than almost any country. Only two Taiwan visitors were killed in the disaster, yet visitor numbers from Taiwan dropped off afterward and have never recovered, according to statistics from the Thai Ministry of Tourism and Sports.
But Phuket seemed to become only more attractive to Swedes, even though Sweden lost more citizens to the tsunami than any other country. More than 500 Swedes died because of the Tsunami. In 2006, as the dollar sank against Scandinavian currencies, Swedes began pouring back into Phuket, becoming one of the biggest groups of visitors to the island.
Nowadays, Scandinavians are offsetting a shrinking number of visitors from the countries that share the rapidly declining euro.
Russians are another fast-growing source of new arrivals, as evidenced by an increasing number of restaurants and shops here sporting signs in Cyrillic lettering. Rising oil prices and a climbing ruble have brought down the cost of heading to the tropics during the depths of the Russian winter.
Thailand’s tourist industry is quick to exploit new markets like these. After Russians first started coming to the country in sizable numbers in 2006, the Tourism Authority of Thailand opened an office in Moscow to promote the “Land of Smiles.” Now, Russians represent the fifth-largest group of visitors to Phuket, with more arriving each year than from the United States and Canada combined.
Mr. Somboon says the Phuket Tourist Association is currently aiming to promote the island to tourists in that other emerging economic powerhouse: India. Phuket is vying to host the annual Tourism Association of India meeting later this year to give it greater exposure to the subcontinent’s travel industry.
But Phuket’s popularity seems to have more to do with its relative cost to a country’s travelers than with their economic strength.
One country that is still underrepresented in Phuket, for instance, is China. While the number of mainland Chinese visiting Phuket grew rapidly during the global economic boom, they have since fallen relative to other groups and, in the last year or two, have actually declined.
Australia has been a particularly strong source of reinforcements. Not only was it one of the few non-Asian nations to avoid a recession during the financial crisis, but it has the added advantage of being in the Southern Hemisphere. That means that when Australians decide to escape their winter for sunny Thai beaches, it is summer in the Northern Hemisphere, which is typically Phuket’s low/green season.
Some Australians say Phuket’s popularity is a reaction to a terrorist bombing in Bali in 2002 that killed 88 Australians. Others say it is a simple question of cost.
Australian arrivals in Phuket did not start to surge until the Australian dollar did in 2004, along with commodity prices. Then, in late 2006, Jetstar Airways, the budget subsidiary of Qantas, began offering direct flights to Phuket.
A round-trip ticket from Sydney to Phuket can run as low as 930 Australian dollars, or $739. The surge in Phuket’s popularity coincided with a wider boom in low-cost airfares from Australia abroad. “In 2009, for the first time since about 1983, outgoing passengers outnumbered inbound,” said Peter Harbison, managing director of the Center for Asia Pacific Aviation in Sydney.
Australians who switched to Phuket from Bali seem to prefer its greater level of development and its more freewheeling style.
“Here’s more of a big town,” one visitor from Adelaide said as he downed a lunchtime tequila at the Kangaroo Bar. “I’ll never go to Bali ever again.”

Some Words of Advice for Newbies

Due diligence is the name given to the process of investigating the details of a potential investment, including the verification of material facts. Wishful thinking, on the other hand, is an interpretation of the facts as one would like them to be rather than as they are.

If you regularly visit online expatriate forums, you will read plenty of stories about people who bought property in Phuket, or anywhere else in Thailand, and afterwards found themselves with big problems on their hands. Which approach do you think most of those investors took when they decided to buy their property?

In fact, many people buying real estate in Phuket appear to exercise less due diligence than they would when purchasing a property in their home country. There are a number of reasons for this. One reason is that decisions are sometimes made in haste due to the time constraints of overseas trips. Alternatively, difficulties and misunderstandings can easily arise when trying to evaluate and negotiate purchases from a distance. Another reason is the language factor, which makes doing your homework just that much more difficult. The intoxicating allure of a foreign country and the fact that Phuket property for sale is relatively inexpensive can also result in caution being thrown in the wind.

Thailand is unique in many ways and it does have its share of problems. But it is not an inherently bad place in which to invest in real estate. It is, however, surely a bad place in which to be a lazy, poorly-informed or inept investor.

There are a number of factors you need to be aware of before committing to any real estate purchase (or long term lease) in Thailand. These include:

- The nature of land titles in Thailand (if you propose to buy or lease land)
- The legal framework that determines how foreigners may (or may not) own or control land, buildings or apartments/condominiums in Thailand.
- Current market conditions such as sales price (both asked and achieved) for both new and older property, rental prices, time taken to sell or rent and
- The fact that in Thailand there can be a huge difference between what is written in the rule book, what you will be told by various people involved in the process, and what actually happens in real-life.

Information concerning the first point can easily be obtained by some research over the internet. You can simply use a search engine to identify relevant pages within, for example, the websites of Thai law firms. This material will give you a good basic knowledge about the subject. Some websites also provide English language translations of relevant Thai laws. If you are interested in condos rather than houses or villas, you might want to locate and study the relevant sources such as the ‘Condominium Act’ which was amended in 2008 to give the buyers more protection.

Reliable information on the second point is more difficult to find, as the topic is complex, the information sources more dispersed, and there is a great deal of misinformation in circulation. Again, a good starting point is the websites of the more reputable Thai law firms AND reputable real estate agencies in Thailand.

Generally speaking, the only real estate in Thailand that can be owned by foreigners is certain condos or buildings built upon land owned by a Thai. These controls on foreign ownership are a major constraint on real estate investment in Thailand and are not about to be liberalized any time soon. Many foreigners seek loopholes or alternative means of acquiring or controlling real estate, but most of these methods feature an element of risk or uncertainty and some are even illegal.

Some of the procedures more commonly discussed in the media or online include:

- Buying through a Thai company
- Buying land in the name of a child
- 30 year leasehold
- Buying land in the name of a Thai spouse with various protections in place such as usufructs, leases, or mortgages

Obtaining accurate real estate market information is equally problematic and takes a great deal of determined searching. There is information out there, but it is neither integrated nor particularly user friendly. Much of it also tends to address only limited segments of the real estate market.

With regards to the last point, many people who are new to the process and idea of buying property in Thailand and just started their research, bemoan the fact that they are having difficulties in obtaining a clear and precise answer to their questions. These people have to understand and realize that this is not Europe or Australia but Thailand and that there often is no precise answer. This is not to say that research is pointless, but it does not mean that you must develop a certain level of general knowledge and then exercise your own judgment.

As well as information that is specific to real estate investment, it is also recommended to spend some of your time to inform yourself about other related issues. What is the best way to transfer your money to Thailand, how to select a bank and open an account and the nature of Thai tax regulations. Factors such as these can have a significant impact on the cost of your investment.

To conclude all the above, I am sure you can agree that you better not go the distance on your own, but that you should get assistance from reputable, experienced professionals.

We here at ‘Tropical Properties’ – Real estate, can assist you with all the above matters.

Source: www.property-report.com

Some Basic Knowledge To Property Investment

Over the many years I have been in this business here in Phuket, I have met with hundreds of property investors. All of them have their specific requirements and taste. And all have their own specific reason for investing in property in Phuket. Still, although everyone is different, has different taste and different requirements, there are still some basics that all need to keep in mind when selecting the property you find the most suitable to invest in.

These are some insights I gathered over the years dealing with these investors that I want to share with you:

Good Location

I know it will sound like a cliché, and I have to admit, it is. But when it comes to making your choice when buying a property, especially when you are buying for investment purpose, be it here in Phuket or anywhere else around the world, it is all about location, location, location. When you are buying a property to live in it yourself, location may be a less significant factor as one may have different preferences in where to live. Some like to live in a quieter location, away from the resort areas and tourists. These people are probably more interested to buy a Villa in Rawai, or an apartment/condominium in Nai Harn. Others will choose to be close to the action with easy access to shopping, nightlife… These people are very likely to be more interested in a property on the west coast of Phuket, be it a house in Patong or a luxury ocean view apartment in Kamala or any other resort area close to the island’s beaches. Proximity and accessibility to schools, airports and hospitals are some other important factors to consider for some. Even when buying to live in the property yourself, it is important to also consider how other people will view the location and even to try to think ahead about how the area might develop and will look like in the years to come. After all, you may one day decide to sell the property. So it is advised to try to be as objective as possible when it comes to deciding on the location.

Is the property located in a good development? Is the area around it already built-up or what could be built there in the future? How about the drain or power cables? Is it close to the main road? How far is it situated from the beach? When choosing the location of the property, these are some of the points to consider when thinking about what will appeal to your potential buyers in the future.

Good Property layout

If you are buying an existing property (i.e. a property that is already 100% completed or a resale), it is important to consider if you are satisfied with the layout of the property. Many of our many clients over the years like to have an open plan living area as this makes the room look and feel more spacious. As we are living in Asia and many of these buyers have spent a significant part of their live in the region, many of them are also taking the ‘Fengshui’ into consideration. If there are many angles and corners in the house, that property will not suite them. But in any case, a good layout will save you time, effort and money in having to redesign the property layout to suite your needs and taste the most. If you are buying a property ‘off plan’ or while it is still under construction, most of the times the developer will be flexible enough to make the necessary changes to the layout to fit with your taste and requirements, as long as that is structurally possible.

Good History

If you are buying a resale property, it might be good to know the history/background of it. Why are the current owners looking to sell? Is the current owner living in the property or is it rented out? These things are important in the making of personal and economic decisions.

Profitable Investment

If the property is for investment, with the intention to generate a good rental return, the potential buyer should also get the information about the expected rental returns or, if it has a history of lettings, the proof of the returns. Does this match with what other properties in the area are generating in rental returns? Then you need to consider if this is acceptable for you.

Another point that needs to be considered when the purpose of the purchase is mainly investment is the expected capital appreciation. What is the average price for similar properties in the same area and how are these prices compared to what they were about 5-10 years ago?
Sometimes it will not be easy to get a straight answer to this as in many areas of the island, 5-10 years ago, there was almost no development of the scale and quality we now have.