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Airlift Upgrades in Thai Resort Markets

By on Mar 26, 2008 in Hotel-Tourism

The areas of Greater Phuket are now well connected by Destination Air’s sea plane service which provides an alternative means of transport within the Andaman Sea region.  It offers services to many outlaying islands in the Andaman Sea such as Koh Yao Noi, Phi Phi Islands, Koh Lanta, Koh Racha Yai, Koh Mook, Similan Islands, as well as to Khao Lak and Ranong. Private jet travel and helicopter is also increasingly popular amongst high-end travelers.

Looking to the other coast in the Gulf of Thailand, Samui is catching up with Phuket in terms of airlift upgrades as well as its property market. Last year, Bangkok Airways invested in a major upgrade for the Samui Airport. The new airport still maintains its tropical charm with added facilities for passengers as well as the ‘walking street’ shopping arcade which features anchor tenants such as Jim Thomson, Bookazine and Whittards of Chelsea.  The official grand opening for the new airport is set for July 2008.

As part of Bangkok Airway’s plan to position Samui as Thailand’s second international air hub, the airline is currently planning a number of mid-haul international routes from Samui to Dubai, Shanghai, KL and Bali. Hong Kong and Singapore, the two main markets for Samui properties is well serviced by Bangkok Airways’s daily flights. In addition, SilkAir is currently planning scheduled flights between Singapore and Samui.  (See below for airlift summary into Samui Airport).

Bangkok Bangkok Airways (21 flights/day)
TG (2 flights/day)
Phuket Bangkok Airways (3 flights/day)
Krabi Bangkok Airways (3 flights/week)
Pattaya Bangkok Airways (2 flights/day)
Chiang Mai Bangkok Airways (2 flights/week)
Hong Kong Bangkok Airways (5 flights/week)
Singapore Bangkok Airways (1 flight/day)
Penang Firefly (4 flights/week)
KL Berjaya (2 flights/week)

Another step forward for Samui is the allowance of higher capacity aircrafts to land in its airport resulting in a 62% increase in permitted aircraft capacity. Thai Airways also began two daily Samui-Bangkok flights from mid-February. This is expected to bring in an additional 14,000 overseas visitors to Samui per month, increasing the monthly average passenger numbers by 24%.

The improved airlift will be a key factor in supporting the growth of Samui’s property market. The island is already attracting an influx of international hotel chains which together will add a total of 900 four to five star hotel rooms within the next five years. The quality of property developments are matching up to Phuket levels with the increase in luxury and branded residences.

The Estates (adjacent to Four Seasons Samui) and Conrad Residences Koh Samui have launched in 2007. CB Richard Ellis’s sole agent project W Retreat & Residences Koh Samui will be launched later this year. The project is already generating substantial market interest during the pre-launch phase.  Other projects under planning include Park Hyatt.

Pattaya is a different market compared to Phuket and Samui. One-third of Pattaya’s visitors are local, with the remainder being a mix of Asian visitors from Hong Kong, China, Taiwan and India, European visitors from UK, Germany and Russia and Middle Eastern tourists. This mix broadly reflects the trend in Pattaya’s property market where demand is split between foreign and local.

Pattaya’s tourism market benefited significantly from the opening of Suvarnabhumi Airport in September 2006.  The airport is located less than an hours’ drive away from Pattaya. According to TAT, tourist arrivals to Pattaya increased by 14.55% from 2005 to 2006.

Pattaya’s property market showed signs of recovery towards the end of 2007 with a 17% increase in the value of property transactions. White Sand Beach, CB Richard Ellis’s sole agent project in Jomtein Beach has performed well since the launch in Q3, 2007. Over 52% of the high-rise condominium units are now sold.

CB Richard Ellis has also expanded into the Hua-Hin residential market. 80% of visitors to Hua-Hin are local Thai residents. Similarly, its property market is focused on the Thai market, unlike other resort destinations in Thailand. In the past two years, Hua-Hin has attracted a number international hotel chains such as Hyatt Regency, Hilton and Sheraton. With the arrivals of well known brands, hotels have seen a jump in achieved room rates. The value of property transactions in Hua-Hin also rose by 10% q-o-q.

More quality property developments aimed at the affluent Thai market and expatriates are launching in Hua-Hin. Marrakesh Hua-Hin is one of the most recent themed residences developed by Major Development. CB Richard Ellis is the appointed sole agent for Marrakesh, a Moroccan themed mid-rise and low-rise condominium project in the heart of Hua-Hin with 90 meters of beach frontage. Marrakesh will be officially launched for sale in April 2008. The project is expected to break new price points in Hua-Hin with an average pre-launch price of over Baht 120,000 per sqm.

All in all, the future of the Thai resort property markets remains bright. The market has passed a series of tests in 2007 beginning with a military coup, proposals to amend the Foreign Business Act and imposition of capital and currency controls, all of which raised doubts on Thailand’s foreign investment policies. Despite a series of deterrents, the market in 2007 picked up towards Q4 and matched the overall performance level in 2006. The economic stimulus package and tax cuts aimed at the property sector approved by the new government are expected to lift market sentiments on both the demand and supply side. Alongside, the continuous improvement in infrastructure and airlift will remain an essential factor to support further growths in Thailand’s key resort destinations.

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