2007 was a year of robust growth for the tourism industry in Thailand’s resort markets, according to a report by international property consultant CB Richard Ellis. Arrivals to Phuket alone totaled 5.47 million, a third of total tourist arrivals to Thailand. Samui, Asia’s emerging “boutique” resort island, is also seeing significant growths. In 2000, there were only 600,000 visitors to the island compared to 1.5 million in 2007.

Phuket has outperformed itself in terms of hotel occupancy and arrivals even in last year’s low season. From a highly seasonal tourist destination, worldwide appeal has transformed Phuket into a year-round destination, with a 70% average annual hotel occupancy. This high season is undoubtedly one of the busiest Phuket has seen. Phuket International Airport currently handles up to 287 international flights per week, while many hotels and airlines remain fully booked until March this year.

2007 land prices continue to rise although there were reduced numbers of individual transactions mainly due to the Foreign Business Act (FBA) uncertainty in Q1 2007. In Phuket, there were no significant changes in the number of completed land transactions, however transaction values from Q1 to Q3 2007 totaled an estimated of THB 6,900 million, a 6.7% reduction compared to Q1 to Q3 2006.

Land price in Thailand’s coastal areas continues to grow unabated and indicates the strength of the market and long term prospects. The Treasury Department’s recent appraisal of land value shows that land prices in Phuket have increased on average a 160% in the past four years, with Samui prices following closely. Beachfront plots on Phuket’s west coast are transacting at THB 21 up to 50 million per rai, with the exception at Patong which has recently achieved THB 200 million per rai. Samui beachfront land prices are also trailing closely at THB 15 million per rai.

“There is sustained interest in the Thai resort properties market reflected through the ever increasing number of enquiries through our three resort offices. We are seeing more activity in Phuket this high season and our sales team is busy with closing sales,” said Ms. Charlotte Filleul, CB Richard Ellis General Manager - Resort Property.

Phuket’s property market is no longer confined to the regional market. The increasing focus on luxury developments has extended the island’s appeal to the global market. The growth of Phuket’s yachting and marina industry is a key part in drawing in the well-heeled investors and positioning the island as the yachting capital of Asia.

Out of the 124 villa projects actively marketing in Phuket, the high-end market (over USD 1 million) still accounts for less than 15% of the total supply. The supply of luxury villas is actually limited, but there is a growing number of projects on the drawing board which as they come to the market will offer more choices to buyers who are searching for their right property. CB Richard Ellis says it has at least 500 serious enquiries for property in the USD 2 to 5 million price range, where potential buyers have not yet found their ideal property.

Phang Nga, part of Greater Phuket is also becoming an important centre of development, continues the CBRE report, adding that it is an attractive alternative to some of Phuket’s busy beaches. An increasing number of developments are being planned along this part of Andaman’s serene coastline, from Natai beach just across the Sarasin Bridge from Phuket and expanding up to Thai Muang. The beauty of the area and its proximity to Phuket International Airport are strong pulling factors for International and Thai investors who are banking on Phang Nga’s boom.

In the coming years, CB Richard Ellis expects an increasing supply of branded residences. In Phuket, branded residences under development include Shangri-La Villas in Bangtao. Other developments in the pipeline include TAJ Exotica in Koh Lone, Park Hyatt and Capella in Emerald Bay, Four Seasons in Rawai and Dusit and Raffles Residences in Phang Nga. Samui is following a similar trend with the launch of The Estates at Four Seasons and Conrad Residences. One of Samui’s most exclusive developments to launch in 2008 through CB Richard Ellis is W Retreat and Residences with prices ranging from THB 65 to 205 million. Another branded residence under planning is Park Hyatt located in Thong Krut Bay.

Whilst there appears to be an influx of branded residences launching, in fact the volume each year is quite limited. The exclusive nature of branded residences often impose restrictions in the volume of unit and such projects demand a thorough design development phase, hence CB Richard Ellis does not expect all projects to hit the market at the same time period. With a steady flow of projects launching and a sustainable level of demand, the market is expected to perform well and absorb the new supply in the long term. The association of luxury brands to residences will also help strengthen Phuket and Samui’s position in the international resort property market.

Looking ahead in 2008, CB Richard Ellis expects a long term growth in the Thai resort property markets. The general election held on December 23rd 2007 marks the return to democracy and puts the country back on the path to economic and political progress. “The property market has been subdued in 2007. Although the general election is not a miracle cure to Thailand’s problems, we do expect a clear and positive policy towards foreign investment from the democratically elected government. This should play a significant role in bringing confidence back to the market,” concluded Mr. David Simister, Chairman of CB Richard Ellis Thailand.