Samui Property

[Kananga]

I've been thinking about getting a small (3 bed) Samui property for investment and our own family holidays when we feel the need to escape Bangkok.

I have been doing some initial investigations and there seems to be A LOT on the market at the moment. And many decent sized 3 bedroom villas for just 7-10 million which many say have been reduced from 12-15m for a quick sale. This surprised me and raised several questions.

Firstly, why are there so many villas/houses for sale?

If many are advertising price reductions is the sale market really slow?

Finally is it easy to rent out an investment property during the year or is supply far outweighing demand?

(There seems to be more tourists year on year so this surprises me, but with the number of properties that seem to be on the market advertising a quick sale makes me think there are not enough to rent all these properties)

If any Samui locals or real estate professionals could help me understand the market a bit better it would be much appreciated.

[itishothere]

You seem to be answering your own questions.

Sale prices are being reduced because there are not enough buyers at the levels there used to be. And I suspect there are plenty more that are not on the market.

Just look at the websites for Samui and the number of properties for rent, and then take into account the hundreds more that are not marketed through the web.

There is an oversupply here today, and more is expected on the market.

And I am not too sure where you are comparing to when you say 7-10m is cheap. For that price in many areas of Thailand, you could get an awful lot more square meters.

[Kananga]

Thanks, perhaps I am asking more for confirmation on my thoughts than direct questions then. Yes, I am sure I could have a 4 rai palace 30 miles outside of Korat for the same money, but I am also looking at using the property for short term rentals so would need it to be somewhere that is populated by (relatively) high net worth tourists.

It would seem like a waste of money to have the place sit empty for 48 weeks a year when I could rent it out, I just need to find out a bit more on the supply and demand of short term house rentals.

Thanks

[Rooo]

Many folks on here are into renting & managing properties.

The reason prices are dropping IMHO is most were overpriced to start with. Many factors:

1/Builders dealing through real estate agents, were just selling off the plan properties at inflated pricing.

2/ Real estate agents pricing properties wrong, most of them wouldn't have a clue.

3/ Greedy developers.

4/ Greedy owners thinking they will make a killing.

The list goes on.

Prices are probably coming back to where they should be in the first place. I also think the rental market is very active.

[Kananga]

Many folks on here are into renting & managing properties.

The reason prices are dropping IMHO is most were overpriced to start with. Many factors:

1/Builders dealing through real estate agents, were just selling off the plan properties at inflated pricing.

2/ Real estate agents pricing properties wrong, most of them wouldn't have a clue.

3/ Greedy developers.

4/ Greedy owners thinking they will make a killing.

The list goes on.

Prices are probably coming back to where they should be in the first place. I also think the rental market is very active.

Ok thanks. This is very positive news. I think I'll check some properties with online booking facilities to see their availability throughout the year. This should give a good indication of demand.

[SamuiRes]

Prices hit a peak about 3-4 years ago as a consequence of demand.

There are a number of factors that have changed since then, the most dramatic being the fall in value of currencies against the Thai Baht.

GBP down from 72 to 48, USD from 52 to 30, etc (approximations for the pedantic).

This means that a seller can reduce his Baht price by the same % and still come out with what he invested in his home currency.

Demand has fallen mainly due to the world economic crisis and people do not have the spare cash they had before for a second home in Thailand.

The land issues and Coup did not help, but it is the availability of spare cash to buy that is the big factor.

Prices have come down to pre-boom levels and we have seen a drop in asking prices by an average of 25% with completed sales at up to 50% down on pre-boom prices. Property is selling again where the seller has accepted these corrections in the market and there are some very well priced i.e. good value resale properties around.

[motocrosser]

Prices hit a peak about 3-4 years ago as a consequence of demand.

There are a number of factors that have changed since then, the most dramatic being the fall in value of currencies against the Thai Baht.

GBP down from 72 to 48, USD from 52 to 30, etc (approximations for the pedantic).

This means that a seller can reduce his Baht price by the same % and still come out with what he invested in his home currency.

Demand has fallen mainly due to the world economic crisis and people do not have the spare cash they had before for a second home in Thailand.

The land issues and Coup did not help, but it is the availability of spare cash to buy that is the big factor.

Prices have come down to pre-boom levels and we have seen a drop in asking prices by an average of 25% with completed sales at up to 50% down on pre-boom prices. Property is selling again where the seller has accepted these corrections in the market and there are some very well priced i.e. good value resale properties around.

I think you have that spot on.it was booming about 5 years ago and that is why so many people built and the exchange rate was great,but if you want to sell here and build another home you are still going to want to make a bit of a profit,its ok if you just want your money back and return to your home country,maybe things will change,remember its not just here its all around the world.

[Kananga]

I just want a property I can use for my holidays and rent out the rest of the year. Seems like now is the time to buy. Thanks everyone.

[Tropicalevo]

I believe that Rooo and SamuiRes are pretty accurate in their analysis.

Many real estate/builders suggest unrealistic returns on rentals.

A lot will depend on location and your target viz a vie returns.

If you want to run the property as an income and make a killing - possible but difficult. If you want a personal holiday home and then rent out to cover your costs - very possible.

There are more properties than customers on Samui at the moment, but the right location will always rent out. Sometimes - not at an ideal price, but definitley enough to cover costs.

Personally, I am seeing that the rental market is very active in certain areas - demand is outstripping availablity.

Most common request that I see at the moment is - 3 beds, pool, sea view and wifi. Security is also an issue. I am getting equiries every week for these.

I built two rental villas 10 years ago and they have never been empty. Sometimes I get the price I want - sometimes 50 - 60% of that. I am still a happy bunny though. I also manage a number of other properties, and the owners usually cover their costs most years. The biggest factor that affects this is when there is a building project next door to the rental property. This will impact returns for a year or two.

Anyway, this is a how I see the market at the moment.

I am sure that you will not rush into anything, but rent a few places in different areas and talk to your neighbours before you decide on the location. Location is everything.

[Kananga]

Thanks tropicalevo, that's also very helpful.

Just out of interest what sort of annual or monthly rental can you expect for a 3 bed sea view villa with a pool and wifi thrown in, in a reasonable location? Just an approximate figure...

[Boater]

Thanks tropicalevo, that's also very helpful.

Just out of interest what sort of annual or monthly rental can you expect for a 3 bed sea view villa with a pool and wifi thrown in, in a reasonable location? Just an approximate figure...

Long Term , around 40 - 50K a month if you want a good secure rental , ( without sea view 25-35K )

[PattayaPhom]

Having a respectable property management company is all important if you intend on letting...Its worth paying a little extra but if their marketing is good, you should have a healthy rental stream. Also they will take care of utilities etc in your absence..Location should be your major priority, many on holiday, wont use a bike and may not want to drive too much, so close to ammenities and transport links....its all well and good having a fantasic view over Chaweng Bay but if its a few miles up winding steep roads it may well put people off...Not sure what the situation is now but burglaries on empty properties was a very big problem. One of my lettings was burgarled 3 times in a month, so security needs to be factored in also.

[Tropicalevo]

Thanks tropicalevo, that's also very helpful.

Just out of interest what sort of annual or monthly rental can you expect for a 3 bed sea view villa with a pool and wifi thrown in, in a reasonable location? Just an approximate figure...

Long Term , around 40 - 50K a month if you want a good secure rental , ( without sea view 25-35K )

Not far off the mark in my experience.

We have been able to get a bit more on the 3 bed sea views but better to aim low and overachieve when planning your income stream.

Do not forget to factor in agent's commmissions and management fees. These can be substantial for the bigger management companies. (So I am told.)

[BigC]

I think the callapse in the currency has helped.

when 70 to the pound 7 million banht was 100 000 pounds now 4.8 million baht is 100,000 pound so for the same in baht the owner can still make a profit by selling in baht after givng a discount unless they made there money to buy the property in baht then they are in a bit of a mess.

allot of people have loans to pay off and need the money quick. Then again whos to say that they need to pay it off.

There are some good deals out there. i think currency has allot to play and some properties might be shown as a cheap price to get the person in the door then the extras they let the customer know later once they are drawn in

[BigC]

Having a respectable property management company is all important if you intend on letting...Its worth paying a little extra but if their marketing is good, you should have a healthy rental stream. Also they will take care of utilities etc in your absence..Location should be your major priority, many on holiday, wont use a bike and may not want to drive too much, so close to ammenities and transport links....its all well and good having a fantasic view over Chaweng Bay but if its a few miles up winding steep roads it may well put people off...Not sure what the situation is now but burglaries on empty properties was a very big problem. One of my lettings was burgarled 3 times in a month, so security needs to be factored in also.

It is important that the owners in an housing estate pay the right price for maintance or it de valuves everybody elses property. if you buy on an estate then you must make sure you can afford it if you can't then do not buy.

maintance fees are very important to the re-sale of your property and the everyone elses.

[Kananga]

What would be an approximate figure for maintenance fees for a 3 bed pool villa?

[Tropicalevo]

What would be an approximate figure for maintenance fees for a 3 bed pool villa?

The cost of an annual maintenance fee would probably pay for a month in a really nice villa, or two months in a decent one. PM sent.

[PattayaPhom]

What would be an approximate figure for maintenance fees for a 3 bed pool villa?

You only have maitenance charges in gated compounds.....independant properties do not have this excessive cost.

[samuijimmy]

What would be an approximate figure for maintenance fees for a 3 bed pool villa?

You only have maitenance charges in gated compounds.....independant properties do not have this excessive cost.

So what are you saying, a garden and swimming pool takes care of it's self? If it's private property.... I think not!

People I know with a swimming pool, pay a good monthly fee for cleaning, usually done at least once a week ... and gardens need to be looked after with some regularity too... finding a reliable & good garden maintenance person not always easy or cheap to find either..... .....

[BigC]

What would be an approximate figure for maintenance fees for a 3 bed pool villa?

You only have maitenance charges in gated compounds.....independant properties do not have this excessive cost.

So what are you saying, a garden and swimming pool takes care of it's self? If it's private property.... I think not! People I know with a swimming pool, pay a good monthly fee for cleaning, usually done at least once a week ... and gardens need to be looked after with some regularity too... finding a reliable & good garden maintenance person not always easy or cheap to find either..... .....

I think what he /she means is that in gated communities people are forced to pay buyt for private houses if you do not pay for you mainentence fees then it is up to the owner if they want their house to be left to rot.

buying into a gated community is a little different amlsot like buying into a condo. It is already agreed that people have to pay fees every month but people get angry when the old contract expired and the new contracter wantsa more money or something big needs fixing but not everyone wants to pay.

Gated communities have to work together to keep the communites maintaince a private commmunity is up to the owner only.

[SamuiRes]

One managed estate that I know charge Baht 5,000 per month. This includes 24 hour security, street cleaning, refuse collection, common lighting, communal pool maintenance, management charges (someone has to organise this and pay the bills). However, this is at the low end of charges I have seen and up to Baht 10,000 a month is not unusual.

[BigC]

Normally these places have meetings. I think that they vote for a boss. Then people think they are being ripped off by the maintance company then they can speak up. Allot of estates when u buy the maintance is fixed for the first year or so then it is up to the community to find their own contractors. There is a line between paying the fees but not getting what u pay for

[Tropicalevo]

One managed estate that I know charge Baht 5,000 per month. This includes 24 hour security, street cleaning, refuse collection, common lighting, communal pool maintenance, management charges (someone has to organise this and pay the bills). However, this is at the low end of charges I have seen and up to Baht 10,000 a month is not unusual.

You are correct, but that is not the end of the costs. If the OP is looking to rent out, then he/she would have to add pool cleaning (own pool), gardening and house cleaning for his/her renters.

[samuijimmy]

One managed estate that I know charge Baht 5,000 per month. This includes 24 hour security, street cleaning, refuse collection, common lighting, communal pool maintenance, management charges (someone has to organise this and pay the bills). However, this is at the low end of charges I have seen and up to Baht 10,000 a month is not unusual.

You are correct, but that is not the end of the costs. If the OP is looking to rent out, then he/she would have to add pool cleaning (own pool), gardening and house cleaning for his/her renters.

That's what I was trying to point out.... also someone to "trouble shoot & have fixed" things that go wrong... "on call" to deal with things...that go wrong and they do!!! ...and the bills too, as Tropicalevo pointed out... I know someone who had their electric cut off because electric bill not paid, what a nightmare to get it re-connected... (owner out of country)

The biggest difference between a gated community, obviously going to be the common area maintenance costs..... A private home, to be rented out needs to kept up to snuff too.... something for the OP to keep in mind.... low maintenance....& keep it simple!

I have higher end Villas next to me, but often few renters.... sometimes just a few weeks a year.... these are in the 60,000 to 90,000 baht per month, range. So over priced for many people !

[PattayaPhom]

What would be an approximate figure for maintenance fees for a 3 bed pool villa?

You only have maitenance charges in gated compounds.....independant properties do not have this excessive cost.

So what are you saying, a garden and swimming pool takes care of it's self? If it's private property.... I think not!

People I know with a swimming pool, pay a good monthly fee for cleaning, usually done at least once a week ... and gardens need to be looked after with some regularity too... finding a reliable & good garden maintenance person not always easy or cheap to find either..... .....

Your own swimming pool and garden will of course need to be taken care of. I was trying to point out that in gated compounds there is an extra maitenance charge on top of this that has to be paid for refuse collection, communal areas etc....some of these can be in the region of 5,000 baht a month whereas an independant property would only pay 40 baht for refuse collection.

[Birdman]

and 500 for the lawnmower man, that's it...

[Tropicalevo]

OK - here is a summary of things that need paying for if the OP plans to rent a house out for short to mid term renters.

Entrance way clean and tidy (sweep road and manicure the foliage around the entrance - may not belong to the house

Clean House, pool and keep gardens tidy on a regular basis (includes regular trimming/treatment of coconut trees if any)

Remove garbage from the property (most rental villas are not near a government bin collection point)

Re-supply consumables

Repair broken stuff or arrange contractor to do it

Keep the paint/finish etc up to scratch

Pay bills (including garbage, UBC, telephone etc)

Check UBC,WIFI, a/c, telephone etc all working prior to renters arriving

Replace broken light bulbs, dud batteries in remotes etc etc

Security

Pick-up and return laundry

Welcome basket (not a must)

Organise airport pick-up/taxi's/car hire then go and find them when they cannot find the villa!!!

Deliver papers (not a must)

Pest control

Liaise with rental agents/owner re renters and show property as required

I am sure that some of you will find other stuff to add here, but this is what I can think of off the top of my head. You do not have to do all of the above, but if you do, and the property is in a good location you should get decent returns on renting it out.

In a gated community, the resident's association or whatever will do some of these - but someone has to pay for it.

Some of the bigger, more expensive houses offer full time maids, driver and car, chef etc etc

As I said in an earler post - the cost of doing all of this would pay for a month or two in a nice villa, however, it is the old trade off. Rent and loose the money, or buy and keep it forever. (Hopefully making a profit when you sell.)

When you look at the cost of the above, maybe that's another reason why there are a lot of places for sale! Property is an investment, not a hobby.

Good luck OP on whatever you decide to do.

[khunPer]

To OP:

It may be a good time now to buy/invest in the kind of house Westerners looks at. Price depends a lot on location - distance to beach, shopping and view - and you may even be able to find bargains for 3-bed (a lot) lower the 7 mio.

At the south of Samui you can find nice land, with beautiful views - and house - for a descent price, but it quite long away from shopping any everything else.

The bigger, more luxurios houses at good spots, have not been reduced in price, as that are the kind of houses Asians buys. Also property at prime spots, like beachfront, has gone up in price, over the last five years or so.

Regarding renting out, there are - as mentioned by other posters - a lot to take into consideration. You may need a management to take care of it, or if buying property in a devollpment project, they may offer you that kind of service, for a fee. Again, the place is important for what you may be able to get back in rent and how many customers you may have.

[oldsailor35]

Why do you say that 7-10 mil Bht is cheap. I was looking at a 2 b/r villa with pool near Cheong Mon for 3.5 mil bht only last week.

[robertfey82]

Hi, I am visiting koh samui in this winter. We all family going for a vacation in samui beaches, do you know which vacation villas are easy to get and in what cost. What about the weather does the place got colder in winter season. Any information.

Edited July 21, 2012 by Rooo
Link removed