Big Money Pouring Into Samui

[sbk]

Big money pouring into Koh Samui

The Nation: 27 February 2008

By: Somluck Srimalee

Local infra-structure fails to keep pace with headlong tourist-industry growth

Property developers are investing nearly Bt10 billion in new hotels and resorts on Koh Samui this year.

The number of hotel and resort rooms on the tourist haven in the Gulf of Thailand will grow from 14,405 at the end of 2007 to 15,500 by the end of this year, according to a survey by the Tourist Association of Koh Samui.

However, the island's infrastructure, including waste treatment and water supply systems and roads, are falling further and further behind the aggressive growth of tourist facilities.

The association's president Sanee Puwasetthaworn says expansion by international hotel chains on Koh Samui since 2005 has been largely responsible for increasing the number of hotel and resort rooms from 10,000 to 14,405. Their investment has totalled nearly Bt30 billion, and they include Accor, Hyatt, Avasorn and Four Seasons.

The investment has followed the spiralling number of tourists visiting Koh Samui. From 937,763 visitors in 2004 to 1,030,623 in 2006, the number is expected to reach 1.5 million this year, following Thai Airways' launch of two flights per day between Bangkok and Koh Samui to add to Bangkok Airways' existing schedule.

Up to 80 per cent of tourists who visit Koh Samui are foreigners, mainly from the United States, Europe, Oceania, Asia, the Middle East and Africa. It is perhaps not surprising that land prices have leapt by an average of 100 per cent over the past two years, in response to strong demand for land to develop resorts and hotels. Prices at the hugely popular Chaweng Beach have risen from Bt5 million per rai in 2005 to Bt10 million. Plots inland - so-called "mountain view" properties - have increased in price from Bt2 million per rai to Bt5 million over the same period.

Sanee says demand for land to develop five-star hotels and resorts on Koh Samui has continued to grow but there is no more land at beach locations, so investors have moved inland, to be satisfied with mountain views.

As well as hotels and resorts, investors have also been keen to develop residential projects for sale on the island. There was a rush of growth in 2005 and 2006, to reach nearly Bt10 billion a year. But most of the developers suspended their projects abruptly when the recent interim government announced plans to amend the Foreign Business Act, particularly as it related to nominee issues.

Pisarn Tangkasombat, president of Arayaburi Group, which has developed five hotels and resorts on Koh Samui, says both foreign investors and local developers who could be regarded as nominees of foreign investors suspended new and existing projects. They were concerned that their projects might be declared illegal.

As it happened, the interim government ran out of time before amending the Foreign Business Act. Pisarn says that if the new government announces a policy of expanding investment in the country and clarifies its attitude to amending the Foreign Business Act, the developers will return to their suspended projects.

Some foreign developers have already started to rebuild their projects by finding local partners to do the work. Others have sold their projects to local investors, Pisarn says.

"We believe the property market, especially that for residential projects, will recover this year, when land developers with nominee issues change their businesses to comply with the law and the government makes clear its policy on the Foreign Business Act," he says.

One of the biggest problems facing Koh Samui is the ability of the island's infrastructure to cope with the flood of development.

Tourist Association of Koh Samui director Satirapong Surinvarangkul says Koh Samui's status is only that of a district within Surat Thani province. As a result, its infrastructure is nowhere near as good as that at Phuket, which has provincial status. So when the population of Koh Samui district doubles, from only 50,000 people to 200,000, and nearly 1 million tourists visit each year, the infrastructure proves to be sorely inadequate.

Glaring problems exist with Koh Samui's waste treatment, water supply and transportation systems.

Satirapong says the island's waste-treatment system has the capacity to clear only 70 tonnes of waste a day, but the local and visiting populations create more than double that amount. The question is how to solve the infrastructure problems and develop Koh Samui as a permanent tourist destination.

The island's tourist association has proposed to the Surat Thani Provincial Administration Organisation that it set aside a budget to develop the district's infrastructure. However, several Koh Samui communities have decided not to wait for that and have begun local projects to support the district's growth.

"We cannot say our endeavours will succeed, but we believe that if we try to achieve stable growth, perhaps we will succeed," Satirapong says.

Source: Nation Multimedia.com/Thailand Real estate Property News

[chiang mai]

It's no better in Phuket, worse possibly in high season. Developers have run out of flat land to build on and have started to eat away at the hillsides everywhere, often building in some near impossible locations and the hillsides are looking ravaged and pockmarked by excavation works. No new road works in the offering, thankfully but possibly a tunnel through the mountain to Patong in years to come. At least Phuket has a distinct low season so it's not all bad, all of the time - roll on the rains, please.

[ClaudeFeller]

Samui had 10 % less visitors in 2007 compared to 2006, it is not growing. This article is just a promotion for the nearly dead Real Estate business here - promising future rise in land and building prices. I dont believe it....

[longtom]

Some interesting aspects in this article:

The investment has followed the spiralling number of tourists visiting Koh Samui. From 937,763 visitors in 2004 to 1,030,623 in 2006, the number is expected to reach 1.5 million this year, ...

Almost half a million more than 2006? Good joke! Would be interesting to see how Samui's roads cope with that.

Up to 80 per cent of tourists who visit Koh Samui are foreigners, mainly from the United States, Europe, Oceania, Asia, the Middle East and Africa, ...

That doesn't leave out many places - except Canada where definitely a sizable part of Samui's tourists/residents come from.

So when the population of Koh Samui district doubles, from only 50,000 people to 200,000 ...

Very interesting mathematics indeed.

Satirapong says the island's waste-treatment system has the capacity to clear only 70 tonnes of waste a day, but the local and visiting populations create more than double that amount.

Is that really true? If so, I would really like to know where the other half goes (do I have to digg under my house to find part of it?), seriously!

Alltogether quite a confusing article, half of it seems to promote real estate business as Claude states, but the rest would shy away potential investors (bad infrastucture). Or is it a plea for more money from the Surat Thani Provincial Administration, just to let it dissapear in the potholes and various pockets again?

Edited February 28, 2008 by longtom

[sayitaintso]

Some interesting aspects in this article:

The investment has followed the spiralling number of tourists visiting Koh Samui. From 937,763 visitors in 2004 to 1,030,623 in 2006, the number is expected to reach 1.5 million this year, ...

Almost half a million more than 2006? Good joke! Would be interesting to see how Samui's roads cope with that.

Up to 80 per cent of tourists who visit Koh Samui are foreigners, mainly from the United States, Europe, Oceania, Asia, the Middle East and Africa, ...

That doesn't leave out many places - except Canada where definitely a sizable part of Samui's tourists/residents come from.

So when the population of Koh Samui district doubles, from only 50,000 people to 200,000 ...

Very interesting mathematics indeed.

Satirapong says the island's waste-treatment system has the capacity to clear only 70 tonnes of waste a day, but the local and visiting populations create more than double that amount.

Is that really true? If so, I would really like to know where the other half goes (do I have to digg under my house to find part of it?), seriously!

Alltogether quite a confusing article, half of it seems to promote real estate business as Claude states, but the rest would shy away potential investors (bad infrastucture). Or is it a plea for more money from the Surat Thani Provincial Administration, just to let it dissapear in the potholes and various pockets again?

take your motorbike down the laem din market road ten minutes into any good rain and you will have direct contact with a portion of the other half.

[Nirvana]

Samui had 10 % less visitors in 2007 compared to 2006, it is not growing. This article is just a promotion for the nearly dead Real Estate business here - promising future rise in land and building prices. I dont believe it....

agree with that Claudefeller

[Rooo]

Hilton Hotels is underlining its confidence in Thailand's economy and tourism industry with a plan to open at least 20 new hotels under the Doubletree brand within the next five years, according to Koos Klein, area president for Hilton Hotels Asia Pacific.

He said the US-based company was looking at major destinations including Bangkok, Hua Hin, Phuket, Chiang Mai, Phangnga and Krabi as Thailand remains the most attractive destination in Asia.

The company plans to open the Doubletree by Hilton Golf Resort & Spa Si Racha Hills by December, followed by the Conrad Koh Samui Resort and Spa in 2009. Currently, it operates Hilton properties in Bangkok, Hua Hin and Phuket and The Conrad Bangkok.

http://www.bangkokpost.com/Business/03Mar2008_biz43.php

Makes interesting reading.

[Eric1949]

Well, it seems someone has confidence in PM Toxin.