Ko Samui Properties

2015-08-04T10:52:00.001+07:00

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Tsunami on Koh Samui?

2012-11-15T20:39:00.001+07:00

In June I discussed the possibility of earthquakes in Koh Samui. This month I will look at the possibility of a tsunami affecting the island.
Since the catastrophic tsunami of 2004 which caused so much destruction around the Indian Ocean there have been many studies published on tsunamis, their generation and consequences. There has been nothing specific to Koh Samui that I could find but there are numerous studies relating the possibility of a tsunami in the Gulf of Thailand.

There are three principal causes cited for the promulgation of a tsunami, sub-sea earthquakes, landslides and volcanic eruptions – the former being the most common. Earthquakes are the consequence of the movement of the tectonic plates moving against each other and similar movements in the fault lines which cross them. Major earthquakes commonly occur along the plate boundaries and in SE Asia the ones we are concerned with are the Sunda Trench to the west of Thailand and the Manila/Luzon Trench immediately to the west of the Philippines. Any tsunami generated by an earthquake in the Sunda Trench will not affect Koh Samui due to the land mass in between. All studies I have found re the Gulf of Thailand concern themselves with the effects of earthquakes in the Manila/Luzon Trench.

“PROBABILISTIC TSUNAMI HAZARD ANALYSIS AND RISK TO COASTAL POPULATIONS IN THAILAND”
Follow the link for the full report but to summarize a seismic induced tsunami in the southern part of the Manila Trench in excess of 8.5Mw would likely lead to a tsunami entering the Gulf of Thailand once
in 650 years to a height of 2-3 metres. The worst affected areas would be the southern provinces.

This is demonstrated in the “2010Tsunami Simulations for Regional Sources in the South China and Adjoining Seas” study which proposed a catastrophic earthquake at the Luzon Trench, off the western shore of Luzon producing a tsunami affecting the Narathiwat and Pattani provinces in Thailand. It also addresses the effects of a sub-sea landslide off Borneo but generally the shallow nature (average 100m) would mitigate the magnitude of any tsunami entering the Gulf of Thailand and hence the affect on Koh Samui.
The study “Effect of Tsunamis generated in the Manila Trench on the Gulf of Thailand 2008” states “The Gulf of Thailand is affected by the diffraction of tsunamis around the southern part of Vietnam and Cambodia. The tsunami amplitude at the southernmost coastline is about 0.65 m for the Mw 9.0 earthquake. The current velocity in the Gulf of Thailand due to the Mw 9.0 earthquake is generally less than 0.2 m/s. “
“Tsunami Risk Reduction Measures Phase 2 –November 2009” stated “The simulations reveal further that tsunami threat due to seismic origin to the Gulf of Thailand is almost nonexistent.”

The conclusion is that , yes, Koh Samui could be affected by a tsunami, but that it would be small and not very powerful, probably less than one metre.

Ko Samui Properties - Earthquakes in Koh Samui

2012-06-05T09:12:00.002+07:00

The recent earthquakes on the west coast around Phuket caused a great deal of concern, not just because of the potential to create a tsunami but because of the damage an earthquake can instigate. Earthquakes themselves do not always create damage apart from where cracks appear in the ground. The main damage is to buildings and other structures such as bridges and elevated highways as well as causing landslides and rock falls. Phuket is susceptible due to its location on the west coast, not only because of its proximity to the Andaman fault line but also because it lies adjacent to the Khlong Marui fault line which runs immediately to the east of the island in a north-easterly direction and it was along this fault line that the most recent earthquake occurred. This fault line continues across the peninsular and runs between Koh Samui and Chumpon but is not considered by the Thai Department of Mineral Resources to be active in this region and the USGS records a slip rate of 0.01mm per year and earthquake probability of once in 127,000 years.

People live in earthquake areas all round the world and experience earthquakes on an almost daily basis. Japan and the West Coast of the USA are prime examples. Thailand is not regarded as being at major risk from earthquakes although there are many fault zones throughout the country, mostly in the north and north-west. There are no building codes in force to my knowledge which are relevant. However, I am attending a seminar in Bangkok in June which may tell me more. Nor is there advice on what to do in the event of an earthquake.

In San Francisco the telephone books have pages of information and advice on the actions to take and not to take in the event of an earthquake. One piece of advice was not to run out into the street as you may well be hit by falling debris. For more information of what to do in an earthquake follow this link. Buildings in California are built to very strict codes. I had a 35 storey office building in my management portfolio and during the Loma Prieta 6.9 earthquake in 1989 which destroyed the Marina District and a number of highways with 63 deaths, we only suffered USD 10,000 of damage with one window blown out and some minor cracking to walls requiring re-painting. This was due to correct design and construction which mitigated damage but it costs money and a balance must be sought between prudence and economic reality.

Koh Samui does not have a high earthquake risk. With one exception all the earthquakes in the region over the last ten years have been to the west of the peninsular. The one exception was on 7th October 2006, 42 km off Prachuap Khiri Khan, at a depth of 10km and magnitude 5.0 on the Richter scale. This would lie on the northern end of the Ranong fault line which runs in a south-westerly direction across the peninsular and to the west of Phuket.

As unpredictable as nature can be, it seems highly unlikely that Koh Samui will be affected by earthquakes except possibly at a great distance. However, the question remains – can Koh Samui be affected by a tsunami? That is the subject of next month’s Newsletter.

If you want to receive a copy of the full Newsletter each month, email me at hbonning@kosamuiproperties.com

Ko Samui Properties January 2012 Blog -- A New Year and New Office

2012-02-04T17:37:00.000+07:00

Well as we enter 2012 may I wish you all a very Happy and Prosperous New Year. Another milestone for Ko Samui Properties – at the end of January, the ten year lease on our office comes to an end. Hard to believe we have been here that long and it would be easy to dwell on all the ups and downs we have experienced over that time, but better to move on and not relive the past. The present market conditions do not justify us staying where we are as we no longer need this amount of space. At the moment I am finalising the negotiations on a lease of a property in Bangrak from 1st February and will send out further details of the new location when these are complete. Whilst we have enjoyed our main road position it has become clear that such a prominent location is not necessary as the vast majority of people we do business with are in contact with us before they come to Samui. We rarely do business with people who walk through the door having found us by chance.

What do I see for 2012? Much of the same I suppose, but if you are considering buying this would be the time to move forward. Whilst this may not be the happiest time for sellers it certainly is for buyers and there are some excellent deals around and remember most prices are still negotiable. Last month saw average price reductions of 22% which indicates more and more sellers are adjusting to the realities of the market and presenting great opportunities for new buyers. Real Estate remains a solid asset and should rarely be looked on as a short term investment. We are of course subject to the world economy and certainly this has played a part in the availability of spare funds for second homes. However, there are people who have profited in one way or another during the present crisis and these people are here and looking for deals. Correctly priced properties will sell and we have seen more evidence of that over recent months in all price ranges.

A word of warning – and I really should have known better myself – do not give interviews to local Newspapers. I was asked to do that a few weeks ago and the first point I made was that I would wish to see the draft copy before publication to check for factual errors. This was agreed. The draft was subsequently sent to me and contained numerous errors requiring correction, which I made and returned the amended document. They then printed the original without amendment. I plagiarise their articles all the time, but you have to wonder just how accurate their reports really are. Whilst they are back on line, be aware that many of the reports they are publishing are 3-4 years out of date!

Ko Samui Properties December 2011 Blog - Face and its consequences

2012-02-04T17:32:00.000+07:00

(Better late than never)

There is a distinct lack of news this month to be trawled from the local and national papers. Neither The Nation or Bangkok Post had any relevant stories about Koh Samui during November and the Samui Express web site is still in the throes of re-inventing itself and re-hashing old, old stories with nothing new. Samui Gazette is up and running but, bless their hearts, they do make it difficult for me to plagiarise so here is the direct link to their web site.

http://issuu.com/discoversamui/docs/edition-35-nov-16-29-2011/11

Something I have been thinking about recently is the Eastern concept of “face”. I had always assumed that to lose “Face” was a consequence of doing something wrong in the eyes of other people, or being humiliated in front of other people. It is a concept that comes up time and again when discussing eastern culture. Wikipedia has a long discussion on “Face as a sociological concept” and it is clearly not easy to define in all its facets. Respect; reputation; prestige, honour all figure in definitions but these obviously vary between the eastern concept and that as we see it in the west. Then we have “losing face” and “saving face”.

The reason I have been thinking about this is the very real issue of “why did no-one lose face over the re-surfacing of the road by Bandon Hospital?” They spent good money improving the drains, putting in new kerbs and then re-surfacing – albeit straight onto the concrete – but within weeks the road is giving way and holes are appearing and major patch work has been put in place. Now surely someone must feel responsible for this shoddy workmanship and I would have thought “lost face”. Is it the Contractor who did the work, the Civil Engineer who wrote the specification, the Project Manager who over saw the work? Or have I got this whole concept wrong? Were all the parties involved able to “gain face” with their contempories by getting away with and getting paid for shoddy work? The same has to go for the construction of the promenade around Chaweng Lake. Looked good to start with but started falling to bits within months. The street lights through part of Bangrak – promoted as a “Walking Street” they then proceeded to place the light posts in the middle of the footpath so you had to step into the road. Then they were rarely switched on, if they were half did not work and most of the fittings are missing . Has no-one “lost face” over that fiasco?

As I see it “face” is a concept used and abused according to circumstances and an individual’s inability to provide a good answer to something that they are responsible for but have screwed up. To some extent this runs parallel with the Thai concept of Kreng jai which is being aware of other people’s feelings and showing politeness, respect and consideration towards them. It is also tied in with the Thai concept of not wanting to lose face; displaying kreng jai is one way in which one person can help another save face. Do nothing that will embarrass the other person. Let them get away with shoddy workmanship because to tell them it is shoddy would make them feel bad. Basically, criticism is bad manners. I have learned to live with it and deal with it over the years and if you are going to live here in Thailand and be happy then you must too. As frustrating as it can be sometimes, I still love living here and it could be worse. I could be living in England.

The market continues to be erratic, but at least that is better than dead. Enquiries ebb and flow and there is no consistency in the range of demand. Certainly more long term rental enquiries recently but also requests for details on properties for sale has increased, although not as much as the demand from new sellers to market their properties. We have seen and heard of a number of sales being completed but without exception at heavily discounted prices and the trend remains an average 30% fall over the last 2-3 years.

If you would like to receive a copy of the full Newsletter, please email me at hbonning@kosamuiproperties.com

Ko Samui Properties November 2011 Blog

2011-12-06T19:47:00.000+07:00

Well the rainy season has started and all the usual places flooded very quickly – Beach Road south of Samui International Hospital and Dow Market as I write this. Some debate as to whether this is the NE Monsoon setting in or just heavy tropical storms. Well the weather charts indicate the wind is from the east so it is certainly moving in the right direction. What is more interesting is if the new drainage that has been installed will cope with the floods or not. The are just in the process of completing the new drainage outside our office and they have used large pre-cast concrete sections buried underground with large drain covers which we hope will be big enough to cope. Certainly better than the weed filled ditch we had before. The other advantage for us is that the rather insubstantial bridge across the ditch to our office has now gone and been replaced with a concrete driveway.

The Local Authority has over recent weeks been promoting their "Disaster Planning" following the severe damage suffered by the island over the last twelve months. This extends from dealing with floods, to landslides, long power failures and even a tsunami. Additional emergency vehicles were seen arriving on the island including fire engines and ambulances together with large pumps. We have seen an improvement over recent years as new drainage has been installed in that the floods have dispersed rapidly once the rain has stopped. I doubt we will ever see the large monsoon drains that you can see in Singapore or even Los Angeles, but work has been done to clear the Chaweng Klong. Obviously Samui has not suffered in the same way as the north of Thailand and Bangkok.

If you are considering opening a Personal Savings Account, have the following in mind. If you open joint account, you will probably not get internet banking – this has been the experience of two of our clients recently with Bangkok Bank (who actually have a very good internet banking system) and Siam Commercial Bank (who do not). If you want internet banking it seems it must be in a single name. Please do not ask me to explain the logic to this. If I have a joint account with my wife we can both have ATM cards and can take money from the bank but no internet banking. If I have a sole account she cannot access my internet account but I can give her the access details so she can use it.

The real estate market seems to be going through an inconsistent phase, although one could probably say that about much of the last couple of years, but enquiries seem to ebb and flow from many to none from week to week. What is consistent however is the number of properties being newly listed which is of course adding to the stock available. If you check our Newsletters for the past few months you will see we are adding properties all the time. I wish we were selling them at the same rate. All these properties are being offered by a number of agents on the island so they all have plenty of exposure to buyers. The consequence of course is that buyers have more and more choice and are very price conscious. Sales are happening, but your property has to be correctly priced or it will get passed over.

For a full copy of this Newsletter, email me at hbonning@kosamuiproperties.com

Ko Samui Properties Blog for October 2011

2011-10-28T14:26:00.000+07:00

Included in this Newsletter is an article by Dr Theerathon Tharachai which discusses the relationship between design and construction standards when developers are faced with increasing building costs. Whilst the article refers in particular to high-rise buildings in Bangkok with emphasis on safety it highlights an issue we need to be aware of here in Koh Samui as well. Whilst we have few high rise buildings, the implication in the article is that developers and contractors will cut corners to maintain profit margins and that is something to be seriously considered. Before I am accused of making false accusations, may I say that I have no experience of this happening on Koh Samui and I am simply raising a warning flag that this could happen and is a possibility we all should be aware of.
The easiest way to reduce costs is by using inferior or sub-standard materials and if you are buying a new property either rom a developer or having one built, you need to be sure that what is built and the materials used actually accord with the specification you agreed to.
A perfectly acceptable process for reducing costs is Value Engineering. There are four basic steps in approaching this:

1) What are the requirements for the project. How should it function? What functions or performance characteristics are important? What does the object do? What must it do? What should it do? What could it do? What must it not do? This could relate to aspects of the structural design or materials to be used.
2) We then ask - What are the various alternative ways of meeting the requirements? What else will perform the desired function?
3) We then look at all the alternatives and assess them by evaluating how well they meet the required functions and how great will the cost savings be.
4) In the final stage, the best alternative will be chosen and presented to the client for final decision.

All developers should utilize Value Engineering as a matter of course. From my experience here on Samui, that is not always the case and I have seen some horrendous cases of over engineering due to poor design due to lack of knowledge or consideration of alternatives. When I first came to Koh Samui ten years ago, everything was built using reinforced concrete frames. The use of a steel frame was unheard of. As time has passed I see more and more steel frame buildings being built and steel components incorporated into some of the larger villas. The use of steel has allowed greater spans than previously possible except by creating impossibly large concrete beams – and I have seen some of them!
So alternative design solutions and alternative materials are quite acceptable if they meet the required standards and save money. You just need to be sure that it is not the last factor only that influences the choice.

The real estate market is slowly gaining pace but as reported previously mainly in the lower ranges. We have been receiving more serious enquiries recently than for a long time and interest has moved up into the 10-15 million range whereas previously it was almost exclusively under 10 million. However, before everyone starts putting their prices up, the only properties selling in that range are those that have already been discounted. What is also noticeable is that with so many agents having disappeared over the last year or so, there are signs of one or two coming back, unfortunately with little real estate experience. So just be careful who you are dealing with.

For a full copy of this Newsletter please email me at hbonning@kosamuiproperties.com

Real Estate Valuations in Thailand for Overseas Courts

2011-09-03T11:21:00.001+07:00

Whilst recognised in most countries throughout the world The Royal Institution of Chartered Surveyors has not yet been accredited in Thailand. Equally Thai Valuers are not accredited in many countries overseas. This creates an issue for anyone requiring a formal valuation from a qualified valuer of property in Thailand to be used for official purposes, usually in the Courts, overseas.

As a Chartered Surveyor with 40 years of international real estate experience, the majority of overseas Courts will accept a Valuation Report prepared and signed by me. Different countries have different requirements and much depends on the purpose of the valuation. Sadly many valuations I have carried out are for divorce matters. In the UK there are specific rules with regard to such valuations and they must comply with Part 35 of the Civil Procedures Rules. In Australia the report must be accompanied by an Affidavit witnessed by a Notary.

All formal valuation work is carried out in accordance with the International Valuation Standards Committee of the Royal Institution of Chartered Surveyors. A formal valuation report will usually consist of a Valuation Certificate, a full Valuation Report accompanied by location plans, photographs, copies of land titles and copies of my Professional Diplomas. Before accepting valuation instructions I will determine the purpose of the valuation and where it is to be used. I will then issue a Letter of Instruction to be signed and returned to me. I will then make arrangements to inspect the property and obtain all relevant documentation. Provided I
have been given all necessary paperwork to complete the valuation, the final report will be available seven days after the inspection.
Please contact me for further information at hbonning@kosamuiproperties.com

The real estate market is slowly gaining pace but as reported previously mainly in the lower ranges. We have been receiving more serious enquiries recently than for a long time and interest has moved up into the 10-15 million range whereas previously it was almost exclusively under 10 million. However, before everyone starts putting their prices up, the only properties selling in that range are those that have already been discounted. What is also noticeable is that with so many agents having disappeared over the last year or so, there are signs of one or two coming back, unfortunately with little real estate experience. So just be careful who you are dealing with

For the full version of this Newsletter which also includes all new property listings, price reductions and local news, please email me at hbonning@kosamuipropertie.com

2011-08-06T11:21:00.000+07:00

As we all know value is a factor of supply and demand although the definition of value can vary – but that is a discussion for another day. Demand for real estate here in Samui has been depressed for many months now and the reasons are well know – world economy, lack of credit, politics etc. But what about the supply side?

Despite the low level of demand there are still developers creating new stock and new properties are coming onto the market all the time. I am aware of at least three developers who have built the first house on their development and quite rightly stopped because it has not sold. There are still individuals building properties with a view to selling and at the lower price levels having some success. The consequence though is that the stock of available properties is increasing faster than they are selling. This has a further knock on effect in that the new modern stock of properties is more attractive than the older properties which inevitably means the old properties will decrease in value faster.

This then begs the question – with the thousands of Rai of developable land in Samui, why have land prices not fallen at the same rate as residential house prices? The main reason of course is that the majority of this land is still held in Thai names and there is generally no pressure on them to reduce the price from what was achieved during the boom days.

What then are factors that would help to maintain values? Apart for increased demand, which cannot be controlled, the obvious answer is to limit supply. It will take some considerable time for the existing supply of properties available to be taken up, so perhaps now is the time for the local authority to look more closely at how the excesses of the past can be controlled in the future. In a small way they have already done this with height restrictions so we do not have masses of multi-storey buildings dotted around the island as can be seen in Pattaya and Phuket. Yes I know we have some, but not many. The zoning restrictions brought in are still very flexible in respect of residential properties so what more can be done?

Take for example San Francisco. In 1986 they passed Proposition M, a quite complex piece of legislation, part of which restricted the total of planning approvals for office space to 950,000 sq ft a year. For a major city this is quite significant and the consequence was that new development was restricted and rental rates stabilized as did consequent capital values. It was more than just a restriction on planning permissions, but was also very detailed as to how development of any kind would be controlled. Washington DC has for years had height limits on buildings and this helped to maintain values. At the other end of the scale Dallas in the same time frame had no zoning laws or restrictions as a consequence of which the real estate market almost died a death with rampant uncontrolled development.

How do we translate this into what would work in Samui. The reason that Proposition M was passed was due to local pressure from the urban population. Do we think that the indigenous population of Samui would support far reaching restrictions on development? Would those restrictions be in the form of number of approvals or a tightening of the zoning laws? Will it be imposed economically due to lack of infrastructure and communications? I wish I had an answer to that.

We will have to wait and see.

There is one aspect though that should have been done and still could be. Many countries have linkage policies. The price for granting planning permission is a contribution to the cost of providing the infrastructure to that development or indeed providing that infrastructure. Many of the islands problems with electricity, water supply and drainage could have been dealt with adequately had this been in place previously. Wise after the fact some will say. Not really, it is any issue I have never understood in the ten years I have been here.

The real estate market is slowly gaining pace but as reported previously mainly in the lower ranges. We have been receiving more serious enquiries recently than for a long time and interest has moved up into the 10-15 million range whereas previously it was almost exclusively under 10 million. However, before everyone starts putting their prices up, the only properties selling in that range are those that have already been discounted. What is also noticeable is that with so many agents having disappeared over the last year or so, there are signs of one or two coming back, unfortunately with little real estate experience. So just be careful who you are dealing with.

For a full copy of the Monthly Newsletter - please email hbonning@kosamuiproperties.com

New Listings and Price Reductions at Ko Samui Properties

2011-07-25T16:25:00.000+07:00

Check out all our New Listings here
http://www.kosamuiproperties.com/

and our latest Price Reductions here
http://www.kosamuiproperties.com/stoppress/stoppress.html

and you can see both on our Ko Samui Properties Facebiik page here
https://www.facebook.com/#!/pages/Ko-Samui-Properties/135017444890

Next Newsletter due out 1st August.

Ko Samui Properties Blog for July 2011

2011-07-11T14:50:00.000+07:00

Once again I must come back to the issue of having all your paperwork up to date and correct and knowing where it is. It is very frustrating, particularly in this market, to go through the process of negotiating a sale only to find that the seller does not actually have the original paperwork to hand causing delays and frustration on all sides.

Thailand is gaining a reputation for medical tourism due to the extensive facilities available and reasonable charges. I have always found dentists here to be very good and cheap compared to the UK. A filling is Baht 1,000 which is equivalent of GBP 20 as opposed to the NHS quoted price of GBP 47 and private treatment at GBP 77 – 100+. There are some very good hospitals, mostly in Bangkok, providing a wide range of treatments and by the time you get this Newsletter I will have undergone cataract surgery. Over the years I have had the “pleasure” of visiting many hospitals (unfortunately as a patient) in many countries so entering the doors of a hospital for any reason is not one that fills me with trepidation. Nevertheless, there is inevitably a certain amount of anxiety when faced with surgery on your eyes – in my case cataract surgery on both eyes.

If anyone is considering this let me allay your fears. It is a wonderfully simple and quick procedure. Arriving an hour and a half before the appointed operating time you relax in comfortable arm chairs as a nurse administers a series of eye drops. Then in the pre-op room you are swathed in the usual operating gowns and have the first of two injections. This for me was the most anxious time – having someone stick a needle into the flesh at the side of the eye. Why I was concerned I do not know. Hardly felt a thing and that just froze the area for the main injection which was totally painless. All you could feel was tightness around the eye as the anesthetic took hold. Then the operation began. All I could see were a pair of bright lights moving around and then it was all over. Ten to fifteen minutes after going into surgery I was back in the recovery room where a nurse explained the cleaning process and schedule for drops over the next two weeks, followed by the cashier of course and that was it. Having arrived at 06.30 we were out before 10.00. The eye was covered with a loose dressing and next day I went back for this to be removed and a post op check up. As soon as they took the dressing off I could see the difference. Absolutely amazing. My long distance sight is virtually perfect but I need reading glasses. Some irritation as the eye heals for a few days. The operation on the other eye followed a week later with the same procedure.

I went to the Rutnin Eye Hospital on Asoke in Bangkok. A specialist eye hospital also used by the Royal family and the treatment there lived up to their first class reputation. You can contact them through their web site www.rutnin.com/eng/ . Their charges are reasonable. I recall my first visit when cataracts were diagnosed cost me Baht 1,200. The surgery cost will depend on a number of factors and if anyone is really interested send me an email and I will let you have a breakdown of the costs.

The big event at the moment is the General Election on 3rd July. No polls are allowed to be published in the immediate run up to the election but I would expect to see a north south divide once again.

The real estate market is slowly gaining pace but as reported previously only on the lower ranges. We have been receiving more serious enquiries recently than for a long time and interest has moved up into the 10-15 million range whereas previously it was almost exclusively under 10 million. However, before everyone starts putting their prices up, the only properties selling in that range are those that have already been discounted. What is also noticeable is that with so many agents having disappeared over the last year or so, there are signs of one or two coming back, unfortunately with little real estate experience. So just be careful who you are dealing with.

For the full version of this Newsletter please email hbonning@kosamuiproperties.com

Ko Samui Properties Blog for June 2011

2011-07-11T14:45:00.000+07:00

This is late again as I was in Bangkok having eye surgery - full report on that in the July Blog!

Last month I commented again on the relationship between Bangkok Airways and tourism on the island and the negative effect their airfares were having. They have been widely criticised in the Press and on-line and to their credit they made an effort and offered a restricted number of seats on the Bangkok-Samui-Bangkok route at Baht 4,300 return up until the end of July. Or so it was reported. Nothing on their Web site and nothing in their promotions except ones to increase the frustration when you see you can fly from Bangkok to Chang Mai or Phuket for around Baht 2,000. I would be interested to hear from anyone who managed to get one of these fares. Even the Residents Card is of little use with regard to fares. Discounts are only available on their highest fares and it is often cheaper to ask about their Promotional Fares – but you have to ask because the booking staff will not volunteer that information.

I have always been very supportive of Bangkok Airways and the risk they took in building the airport. However, enough is enough. Personally I consider Samui Airport to be one of the worst designed airports in the world. It looks stunning but is totally impracticable. In every airport you can expect to walk a good distance from check-in to the gate – but not in the boiling sunshine or torrential rain. Buggies? If you are lucky and forget it on a late flight. I have complained on more than one occasion when I have been to Bangkok for the day and returned on the last flight and requested a buggy to take me from arrivals to the departure car park. Even in the pouring rain they were reluctant to help. The response of Bangkok Airways is to start charging for the departures car park. Baht 200/day. Not a huge amount and I know that all airports charge for parking but for someone working on the island, having a Residents Card and making a one or two day trip to Bangkok, you would think they might just provide free parking – but then they would have to provide transport from arrivals!

The real estate market seems to be picking up somewhat. We have been receiving more serious enquiries recently than for a long time and interest has moved up into the 10-15 million range whereas previously it was almost exclusively under 10 million. However, before everyone starts putting their prices up, the only properties selling in that range are those that have already been discounted. What is also noticeable is that with so many agents having disappeared over the last year or so, there are signs of one or two coming back, unfortunately with little real estate experience. So just be careful who you are dealing with.

For the full version of this Newsletter please email hbonning@kosamuiproperties.com

Koh Samui Properties Blog May 2011

2011-05-06T11:55:00.000+07:00

The sun is shining again and we are getting no more than the usual isolated brief tropical shower. Samui is getting back on its feet but it will take time to recover fully, particularly the tourist industry which has been hard hit. The storms and their effects were widely reported and pictures of crumbling seaside bungalows were all over the internet. Many hotels suffered damage and the island infrastructure has taken a pounding with damaged and washed away roads, collapsed electric poles, fallen rocks (see last months newsletter) etc. Samui is simply not set up to cope with these disasters and it is all very well for Dr Prasert to be wise after the event (see report below) but maybe he could see his way clear to making the island more accessible with realistic air fares and service that justifies the title “boutique”.

As a general rule we do not get involved with the sale of businesses but I do keep an eye out on what is going on in that market. One of the reasons is that I have yet to find a business owner on Samui who has a realistic idea of the value of his business and consequently the whole exercise is a waste of time. I have been presented with figures which do not even justify the price they paid for the business when they bought it and now they want to sell at a higher figure still. The usual comment is “Well if the buyer did this or that, they would make a lot of money” and they seem to think that justifies their
price tag. I have to bite my tongue and not ask why they do not do “this and that” to make the profits they believe are there. There is a learning curve to any business and it takes time for a business to become established – the general rule is three years. A good well run business, with a steady track record and not dependent on the personality of the seller can make sense at the right price and provided there is sufficient time left on the lease to regain the invested capital. However, so often small businesses are dependent on an individual, their personality and expertise and that does not carry over when the business is sold. Buying an existing business is no guarantee of success and you really have to work out why the present owner is selling – because if the business is as successful as he makes out – then why is he selling?

There is no international standard for the star rating system for hotels and star ratings are frequently approved in accordance with the local practice and at the discretion of whichever national body is responsible for tourism and the hospitality industry in that country. So a 5-Star hotel in one country may well not reach that category in another. There is then the quandary of “Boutique” hotels. Quite an interesting article can be found here at Wikipedia. One definition I found states “Small but exclusive property that caters to the affluent clientele with an exceptional level of service at premium prices”. Bangkok Airways claims to be a “Boutique Airline” then one would transpose the words “property’ and “airline”. The only issue I have with that is “exceptional level of service”. I do not travel on Bangkok Airways very often but I have to say that the last few times I have the service has been less than exceptional in the extreme and on a par with the low cost carriers operating in Thailand. This is a shame as when I started travelling between Samui and Bangkok several years ago, the flight was something to enjoy and you could appreciate the service provided. That has all sadly gone. Fares have gone through the roof and service through the floor. Whilst they were rightly complemented on the help they gave to the island during the recent floods, the complaints from tourists about the way they were treated was a reflection of what a monopolistic enterprise can get away with. Tourism is the life blood of the island and, as I have stated in previous newsletters, this came about as a consequence of Bangkok Airways investment in the airport. There are many reasons for the decline in tourism here but I just hope that Bangkok Airways understand that they have played more than their fair part in this and return to the original standards of service we were once used to.

If you wish to receive the full monthly Newsletter please send an email to hbonning@kosamuiproperties.com

Ko Samui Properties Blog April 2011

2011-04-05T11:57:00.000+07:00

The main topic of conversation recently has been the unseasonable spell of extremely wet weather to hit Samui and Southern Thailand. It has been more like the Autumnal rainy season with roads flooded and impassable in places. Bangkok has also suffered and there have been complaints of extremely cold (for Thailand) weather there as well.

The Samui Gazette (hard copy) had an interesting article written by a source at NASA Meteorological Dept explaining why this has happened. Apparently it is due to a High forming over central China at the same time as a Low formed over India. This created a steep pressure ridge over northern Thailand. Then another Low formed over Bangladesh followed by a further Low off the coast of Malaysia. Put together this combination of weather systems created strong easterly winds and lots of rain.

There are some extremely good sources for weather information available on the web. The main one is the Thai Met Office and they can be found here . There are links to weather maps, weather radar and forecasts here. Another useful link is to WindGuru which gives a while range of predictions for a few days ahead in 3 hourly segments.

Infrastructure has taken a severe pounding and the ring road has been damaged in many places – not the least of which was the rock fall on the section between Chaweng and Lamai just short of the Cliff Restaurant as these photographs show.

The airport has been closed for two days and the ferries have not been running so there are many stranded tourists here and in Koh Tai and Koh Phangan. The British Embassy sent down a small team to assist UK nationals where they could and the Thai Navy sent their Aircraft Carrier into the area to evacuate people by helicopter although I hear there were times when that operation had to be suspended due to high wind speeds.

Hard wired internet connections have been down since Tuesday with only the Air Cards having a connection if you live in an area with a good signal. Mobile phone networks have been badly affected but are gradually getting back to normal.

As I write this Newsletter reports are coming in of collapsed Villas in North Chaweng.

As of Thursday morning the rain had almost stopped and the flood waters are receding very quickly. Central Government have promised Baht 50 million to help with immediate repairs As of today, Friday things are gradually getting back to normal – albeit slowly
Of course Songkran starts on the 13th April – maybe this year we will not need water pistols!

For a copy of the full Newsletter please send an email to hbonning@kosamuiproperties.com

Koh Samui Properties March Blog

2011-03-10T17:24:00.000+07:00

Last month I discussed how air travel had made the world that much smaller and the impact it has had on Koh Samui. There is little doubt in my mind that the creation of Samui Airport by Bangkok Airways was the catalyst for the development that has taken place here over the last ten years in particular. Without the airport it is inconceivable to me that the plethora of new villas and hotels would have been built.

Now many people dislike the changes that have occurred and would like to see Koh Samui stay as it was 20 years ago. Whilst there is an attraction in that, is that really fair to the indigenous people of the island? Development has brought its problems, that cannot be denied, but it has also brought many benefits and indeed wealth to the islanders. For many reasons the infrastructure has failed to keep up with the pace of development but that is gradually being addressed. People quickly forget what it was like that long ago and I can only speak for the last ten years here.

- We complain about the electric supply but ten years ago we only had for the most part single phase supply and blackouts were far more common than they are now. The second under sea cable and new transformer station in Maenam are all part of addressing the present issues.

- Broadband internet was unheard of. Slow dial-up connections were all you could get if you could get a telephone line at all!

- Water was from a well. The desalination plant and city water did not exist.

- Many roads were sand and gravel including, not too long previously, Chaweng Beach Road. Access to the hills was difficult and only possible by 4-wheel drive. Now most of those hillside tracks are concreted roads.

- Supermarkets were poorly stocked and many products out of date and more than once I found bread full of mould when I got it home. Now we have a choice of supermarkets and convenience stores by the dozen with fresh produce available 24 hours a day.

Some people will continue to argue that all these developments are a bad thing and perhaps they have a point in the way they have expanded in a seemingly uncontrolled way, but there is also an element of selfishness in that view. Why should the people of Samui be denied these facilities to retain an idealized vision of what Samui once was – or perhaps never was. It is the “old hands” that complain. People coming to Samui today for the first time see it as it is. It remains a beautiful island despite the problems common to any developing vacation destination.

Over the last year hotels have seen reduced occupancy and lower room rates. This is for a multitude of reasons not the least of which has been the political instability and demonstrations in the country. The worldwide economic slump and devaluation of most currencies against the Thai Baht have made it more expensive to come to Thailand. As you will see from reports below, Bangkok Airways are also being cited as part of the problem with the high air fares and lack of capacity. So Bangkok Airways who were the catalyst for the development of Samui are now being held partly responsible for declining tourism on the island. Once again there is a clamor for a second airport but that is unrealistic. Who is going to build it? Not the government to be sure (it is hard enough to get funding for essential infrastructure) and why would a private operator take the risk?

The economics of supply and demand will no doubt sort much of this out. One major international hotel chain has just announced it is pulling out of Samui after only a short period here. No reason has been given and whether the decision is based on economics or other factors is not known, but I doubt they will be last. Others though are still coming!

If you wish to receive a full copy of this Newsletter, which includes details of latest listings and price reductions as well as local news, please email hbonning@kosamuiproperties.com

Koh Samui and the impact of air travel - February 2011

2011-02-16T15:13:00.002+07:00

Air travel has its benefits but also its downside. In fact the advent of long haul flights had a huge impact on everything we do. Forty years ago if you wanted to travel from Europe to “Far Away Places with Strange Sounding Names”, you had little choice but to get on an Ocean Liner in Southampton or Tilbury and spend five weeks at sea if you were lucky enough to travel before the Suez Canal was closed or six weeks if not, to get to Australia and longer to the Far East. The big white liners of the P&O – Orient Line (as it then was) together with Shaw Savill, Union Castle and many others plied their trade between these foreign destinations. Passengers were varied, from Diplomats taking up or returning from foreign postings, to assisted passage immigrants to Australia. Cruising was in its infancy and these ships spent more than three quarters of their time carrying people from one port to another. You could of course fly, but it still took a few days and several legs with stop overs in the Middle East, India and Asia.

What changed all of that was the introduction of the Boeing 747 in the mid 1960’s with its ability to carry large numbers of passengers great distances quickly and relatively cheaply. Almost over night this killed the Liners. Most had been built just after the Second World War with reparations from the British government for ships they had lost. Without a doubt they were in any case approaching the end of their useful life and only a few new ships such as the Oriana and Canberra had been built since.

Air travel changed the world and made it smaller. No longer were foreign vacations confined to Teneriffe or Majorca and these “Far Away Places” suddenly became accessible to far more people. Television also had its place in opening peoples eyes to what was over the horizon, and the Brits in particular, always ready to conquer new lands, set off to explore this expanding world. The Far East, Thailand, Malaysia, Singapore, Hong Kong, could all be reached in a day. The tourist markets in these countries opened up and as wealth increased with age, the possibility of owning your own piece of Paradise became a reality for many people.

The world became more accessible to back-packers on limited budgets and eventually they found Koh Samui. Undeveloped, with few roads and very basic infrastructure. Travel here was by road or rail and ferry. Nothing much changed until in 1989 Bangkok Airways opened Koh Samui Airport. Once again air travel was the catalyst of huge change. It took a few years, but gradually word spread of this idyllic island and of course Alex Garland’s book “The Beach” was another influence. With the airport came people with money although it was not until about ten years ago that the influx of wealth started to have an effect on land prices and developers came to the island. Would they have come without an Airport? Almost certainly not. So air travel and in this case Bangkok Airways have a lot to answer for. Whether this is good or bad depends on your point of view. A subject for future discussion perhaps.

Koh Samui January Blog and Review of 2010

2011-02-16T15:11:00.000+07:00

Still catching up on my posts but getting there. This is from January 2011

Let me start by wishing everyone a Very Happy and (hopefully) Prosperous New Year. Looking back over the last 12 months here on Samui I would say that the real estate market has been pretty static. As reported during the year there have been sales but almost exclusively in the price range below Baht 10 million. The Red Shirt protest in Bangkok earlier in the year clearly had a negative affect on tourism and combined with the strong Baht this has continued throughout the year so that even over the Christmas period hotels were reporting poor occupancy. The problem for the Thai Government is that the strength of the Baht is due to outside factors beyond their control so do not expect any changes there. The number of hotel rooms in Samui continues to increase in particular in the 5-star category with the opening of W in Maenam, Banyan Tree and Langham Place in Lamai, Hansar Samui in Bophut and soon Conrad followed by Vana Belle due next December. Infinity will also start operating as a hotel in the spring and I am aware of other hotels in the planning stage.

Earlier in the year I reported on the ring road having a layer of tarmac applied between Bophut and as far as the Law Courts in Hua Thanon. Whilst a great improvement it was always in doubt as to how long this would last as it was laid directly on to the concrete. Come the heavy rain of the monsoon and two areas not far from our office were quickly washed away but I was pleasantly surprised that this was the only real damage that occurred and for the most part the road held up pretty well. Back in May we were talking about the possibility of water rationing – certainly not needed now!

In July we had the mass protest against the proposed drilling for oil of the coast. Hundreds of people joined hands around the ring road in a mass peaceful demonstration. The proposal has since been put on ice for at least a year while further environmental studies take place.

September hosted the Samui International Jazz Music Festival which was a great success attracting hundreds of people to the lakeside venue in Chaweng. A mix of Dutch and Thai jazz musicians provided great entertainment for a full week and plans are already in hand for a follow up this year.
We have also seen at last the approval of the new electricity line from Taling Ngam to the new sub-station in Maenam which when complete will solve many of the power issues in the north of the island. The Municipality have approved the 22 metre steel poles which have caused controversy as being unsightly, but all other solutions were too expensive.

The exceptionally wet monsoon season has continued through December.

To see some of the damage go to these You Tube pages
http://www.youtube.com/watch?v=bT-RuPGWF44&feature=player_embedded for the fallen tree in Hua Thanon
http://www.youtube.com/watch?v=9nteH4xBa1s&feature=related for flooding in Lamai
http://www.youtube.com/watch?v=nrCPdMjNMvk&feature=related many views and more links.

Koh Samui Weather, documents and DHL!

2011-02-16T15:02:00.000+07:00

Once again I find myself behind with my posts for which I apologise! This is from December 2010.
The main issue over the past month has of course been the exceptionally wet monsoon season this year. As previously reported the Municipality has been working on improving the drainage at various points around the island but the weight of rain falling is still too much for them to cope with and the result is massive flooding in all the usual places – the link road between the Ring Road and Fisherman’s Village; the Ring Road by Bandara Hotel, Samui Town Centre and between the police box and Caltex Filling station; Laem Din and Dao Markets and the Beach road. However, the good news is that once the rain stops the drains do take the water away pretty quickly. Then you can see the damage that has occurred. It is not at all surprising that the tarmac road has been affected as laying tarmac directly onto the old concrete road was never going to be a long term solution.

As usual with severe weather there has been a lot of other damage including a large tree behind the 7-11 at the sharp turn in Hua Thanon which fell onto the adjoining building. You can see the damage in this photo taken a couple of days later when the weather had briefly improved. As far as I am aware no one was hurt. We had our own share of problems with a couple of broken roof tiles and a collapsed ceiling and of course finding someone to repair this when everyone was shouting for roofers and builders was not easy.

A word of advice. If you own your property through a Thai company. Do you know where all your original documentation is? The original incorporation documents and share certificates being the most important but also your Tax ID Card, Tabien Ban (House Book), audited accounts and tax receipts? You will need all of these if and when you decide to sell either by a share transfer or sale out of the company. If you do not have them, then it will delay the whole process by some considerable time.

If you are intending to use a Courier Service to send anything to Koh Samui, another word of advice. Avoid DHL. They do not know where Koh Samui is. A client sent us three packages from Hong Kong correctly addressed to our offices with my contact details. This was on Friday 12th November. The same day I was given the tracking number which showed the destination as Phuket. DHL Hong Kong was immediately informed of the error. This is the route the packages took. Hong Kong – Cincinnati – Hong Kong – Bangkok – Phuket – Bangkok – Hong Kong – Bangkok – Phuket – Bangkok. At this point they gave up and sent it from Bangkok by Thai Post EMS. The first two packages arrived on Monday 22nd and I had to collect them from the Post Office – hardly the door to door service they advertise. The third package was missing. I contacted DHL in Bangkok on Tuesday morning and they confirmed they had sent it separately by post and gave me the tracking number. I went to the Post Office and they found the package but informed me they were about the return it to the sender (DHL) as it was incorrectly addressed. I was able to assure them it was for me, so eventually I had all three packages. DHL have an office on Koh Samui, but DHL Bangkok “think” they must just be an agent. Contact with DHL Headquarters in Germany just elicited the usual “We will look into your comments” and nothing further since.

If you wish to received a copy of the full Newsletter please email me at hbonning@kosamuiproperties.com

Ko Samui Properties Newsletter - November 2010

2010-11-08T16:23:00.001+07:00

Well at last caught up to date and I will try and maintain this as before on a monthly basis!

If you are a regular reader of this Newsletter you will have noted that each month I report on the change in asking prices as sellers respond to the correction in the market that has taken place over the last couple of years. We have over 600 properties on our web site in all categories and of these some 75 have reduced their asking prices and as a consequence some have sold. Since I started reporting on these changes we have seen prices fall by between 14% and 50% with an average of 25%. The immediate reaction by some people is that someone must be losing money – but that is not necessarily the case although inevitably there are some that do.

As finance is not available to foreign purchasers in Thailand, all purchases are in cash and with funds transferred from overseas. At the top of the market in 2005/2006, taking the Pound Sterling as an example, the exchange rate was around 70Baht to the GBP. Today it is 47Baht to the GBP which is a 33% change. So if you bought a Baht 10 million house in 2005 it would have cost you £143,000. You could sell that house at Baht 6,720,000 and get your money back. So whilst Baht prices have fallen, people have not necessarily lost money. There will always be exceptions and these tend to be where too much was paid in the first place and reductions greater that 33% are needed to get to present values.

Reduced asking prices are of course only part of the story as there is also considerably reduced demand and any prospective buyers in the market are well aware of their bargaining position. Basic economics tells us that value is determined by supply and demand. Supply here is created by an increasing number of people who wish to or need to sell. Demand is created by people who wish to and have the ability to buy. There are lots of the former and few of the latter.

The rainy season has well and truly arrived and we will now see just how well all the new drainage that has been put in place over the last year copes. Anyone following the Thai news will have seen that Bangkok and some of the northern provinces have been badly affected by flooding. So far Samui seems to have escaped, but a lot more rain is forecast so we must wait and see.

Ko Samui Properties Newsletter - October 2010

2010-11-08T16:15:00.000+07:00

What is happening in the Koh Samui property market? Well it has been so quiet for such a long time that any movement almost seems like an earthquake. Sales are happening albeit at low levels and only in respect of properties the owners of which have accepted the market correction that has occurred over the last two years. There are clearly people out there who are trying to talk the market up which in the end only makes them look foolish and the last thing I want to do is give the impression that all is fine. There are still a tremendous number of properties, both new and re-sales, available and it is going to take some considerable time for then to sell. Nevertheless it is encouraging to see sales taking place.

The infrastructure of Koh Samui has lagged behind development and there are constant complaints about water shortages and erratic electricity supply. The difficulty the Municipality faces in both regards is a combination of lack of funds and time. Major infrastructure items are costly and expensive. They need time to plan and obtain funding. Driving round the island you can see the new lengths of black water pipes being laid which according to officials will alleviate the current unpredictable water supply. Also in an article below there is news of the long planned extension to the electrical distribution system which will bring a supply to a new sub-station in Meanam. We have already seen some road improvements and the road by Bandon Hospital is in the process of being widened and re-laid. Slowly, slowly the island is getting what is required – not fast enough for many, but at least it is happening.

Driving back from Tong Krut on a regular basis I pass “The Garden of the Fool” Puppet and Art Shop. The owner, Barrabas, has a large number of puppets available and it is worth a visit just to see the craftsmanship. “The Garden of the Fool” can be found by turning left after Hua Thanon (coming from Chaweng) onto the lower ring road (4170) and it is about one kilometer on the right hand side.

Last month I promoted the Samui International Jazz Music Festival. This has just finished as was a great success. Look out for more of the same next year!

For the full version of the Newsletter please send an email to hbonning@kosamuiproperties.com

Ko Samui Properties Newsletter - September 2010

2010-11-08T16:12:00.000+07:00

When sending funds to Thailand I have always found it better to convert to Thai Baht here. For large sums of money it can make a big difference but even on relatively small sums every penny saved is worth it. Just recently I received a transfer for a rental payment. The Baht amount required was 72,000. The client had his bank in the UK convert to Baht and gave him a rate of 49.7916 which cost GBP 1,446.02. If he had transferred GBP the cost would have been GBP 1,419.98 as the rate here was 50.705 a saving of GBP 26.04. Now you say, how do I know how much to send? Every bank here has a web site and on that site it shows currency exchange rates. We use Bangkok Bank and you can find their currency rates at http://www.bangkokbank.com/bangkok%20bank/web%20services/rates/pages/fx_rates.aspx
Look at the Buying Rates TT Column and you will see the rate in real time for whichever currency you are sending. Obviously you need to allow for charges – inward transfers to Bangkok Bank are usually Baht 200 but can be higher for larger amounts – but you will get those anyway. Rates change from day to day and my experience is that transfers from the UK sent standard rate take 2-3 days although they will always quote 3-5 days. In the nine years I have been here and receiving client’s funds, I have never known anyone get a better rate offshore.

Everyone has different ideas about street food. Some love it some hate it. Many people regard it as unhygienic but I have to say in the ten years I have been in Thailand, so far (touch wood) I have never had a problem and have sampled the delights in Bangkok and many places in between and of course here in Samui. One place I call at regularly is in Hua Thanon, usually mid afternoon on my way back to the office following a site visit.

Every week day afternoon between 3pm and 6pm, Em sets up her stall and makes these delicious sweets. Made from a combination of rice flour and sugar, topped with coconut milk they are cooked fresh in a baking tray. Five for ten Baht served in a banana leaf basket, you must let them cool down a little before eating as they are really hot! You can find Em as you enter Hua Thanon from the direction of Nathon, on the left hand side. Look for the cardboard cut out boy with the red shirt!

Koh Samui Newsletter - August 2010

2010-11-08T16:05:00.000+07:00

When writing about Koh Samui it would be easy to extract just the negative and many people do only seem to see the down side. I have always tried to keep a balance in reporting both the good and the bad. There is no point in hiding the blemishes but there is also every reason to promote the highlights. I read many articles published on the internet about Samui, many are bland repetitions of much that has gone before but a couple recently caught my eye as being totally absurd. I will not reprint them here but you can follow this link to one which is dated July 2010 but must have been written by someone who has never been here. http://www.ihrthailand.net/samui-thailand/property-trends-in-koh-samui . Let me look at some of the statements.
“demand is already greater than supply when it comes to the residential market, and shortfalls are already being felt in some sectors” .
Just look at our web site and you will see there is no shortage of supply in any sector.
“There is currently no real secondary property market on Samui as most of the properties are brand new.”
Where on earth does that statement come from?
“without any stock to fall back on, agents are literally having to tell people to wait for more houses to arrive”
What!
“Despite rapid residential growth, some raw land is still available on Samui,”
Unbelievable! How much do you want?

One of the glossy real estate magazines, which is also published on line, recently carried an article by a local real estate agent which discussed buying land in this area. The information given was simply wrong. Unfortunately many people will read this nonsense and believe it. I have no problem with being positive, but anything that is published must reflect reality.

House addresses in Thailand do not seem to have any logic. Take our office address – 52/5 Moo 3, Bophut. The best you can elicit from that is that we are in Chaweng - Moo 3. 52/5 has no relevance to location. Even the Post Office needs a location map for a new address! However, even having the correct address does not always help as I found out in my very early days in the UK doing Building Society valuations. Victorian terraced houses, of which there are hundreds if not thousands in Leicester, look very much alike. One road looks very much like another. So with the confidence of youth I knocked on the door and was greeted by a very charming Indian gentleman to whom I introduced myself as The Surveyor, and he had obviously been expecting me. So tape and damp meter in hand I proceeded to prod and poke, jump up and down on floor boards (an old and tested method of identifying wet and dry rot in floor joists) and generally give the place a good going over. When I got to the Kitchen at the rear of the house he had laid out a set of plans which he proudly showed me of the new bathroom extension he was going to build. It was at this point that the first seeds of doubt were sown. Why would he build a bathroom if he was selling the house? Did I think he would get the grant, he asked me? Time to take a closer look at the plans – and more specifically the address on the plans! Right house number – wrong road! I assured him that I thought everything would be OK and beat a hasty retreat to find the right house. I do hope he got the grant!

Building Society valuations were really just that. They were never intended as structural surveys and the main purpose was to ascertain that there was sufficient value in the property for the intended loan. Obviously condition comes into this and the main things we looked for were wet and dry rot, rising damp, wood worm, ancient electrics and plumbing and of course glaring structural defects, generally evidenced by cracks in the walls. The skill was in deciding if the crack was a result of natural settlement, shrinkage or something more serious which required further investigation. Here in Koh Samui the vast majority of residential buildings are based on reinforced concrete columns and beams which form the main structure and everything else is just infill. Cracks in the infill are not structural and usually the consequence of shrinkage as the mortar in the wall and the plaster rendering dry out. This is a particular problem in hot weather when evaporation occurs too quickly but is in no way serious and is soon taken care of with decoration. That is of course something of a sweeping statement as there can be occasions when the vertical alignment of the infill can be out of line but this is unusual. Nevertheless we have had instances here where so called “experts” have advised against purchasing a property due to serious structural defects which when I looked at them, turned out to be no more than a single hairline crack in some concrete block infill which did not even reach the concrete frame.

Old buildings, and I mean very old buildings, always presented a problem. Technically many of them should not have been standing but when you are talking about a timber frame cottage that has been there for the last 300 or more years how do you justify stating the building is unsound! It has evidence of wood worm and Death Watch Beetle although it is clear the infestation is old and no longer active, but what hidden damage was caused when it was? Yet this old house is a solid as a rock. Modern buildings are not built to last hundreds of years and due to advances in technology and changing social requirements many are out of date within 20 – 30 years – more so perhaps with commercial and industrial buildings than residential, but I doubt we will see many of the houses we have around us today in a couple of hundred years time. Yet I bet that old timber frame, wattle and daub cottage will still be there and there will be another Surveyor standing there scratching his head and wondering how?

Ko Samui Properties Newsletter - July 2010

2010-11-08T15:49:00.000+07:00

Better late than never!

The question I am continually asked is “How is the market and what is going on?” and sometimes that can be a difficult one to answer. There is no real consistency. The market is not dead but then it is not bubbling with life either. We continue to receive enquiries from interested buyers but their expectations have changed. I have been beating the drum over recent months in this Newsletter about how prices have fallen to the extent that most people are bored with it, but it is a fact that must be accepted if anyone wants to sell in this market. Buyers in particular are very aware of this fact and only looking at what can now be considered as “good value”. And that is an interesting point. In order to sell within a short period of time over the last few months, it has really been about “what is the lowest figure you can afford to accept” rather than “what is the value of my property”. There does now seem to be at least a plateau at which “values” have stabilized which suggests we may be at the bottom with regard to the change in prices. However, please note “maybe”. How long that will last and which way it will go is of course the million dollar question. The two factors relevant to that are of course the political situation in Thailand and the world economic situation.

Whilst on the surface all seems quiet here I do not think we have heard the last of the red shirt protestors but what form their next action will take is unclear. How the Prime Minister handles the situation over the next few months and if Thailand can get to the next General Election without further damaging demonstrations and violence remains open to question. This uncertainty alone I believe will delay any recovery in the real estate market even if by some miracle the international economy sorts itself out.

The last weekend in June brought another speedboat accident carrying people to the Full Moon Party on Koh Phangan. At the time of writing there were no fatalities reported although about 40 people were injured, some quite seriously. It was a very stormy night, but as is often the case here, rain and storms can be very localized and it would seem this particular squall came through quite quickly. As usual there are conflicting reports as to what happened but even in good weather the seas between the islands, once you get clear of the headland, can get very rough. I have a fairly good back ground in sailing over the last forty or so years, and I have sailed down the east coast of Koh Phangan at dusk and into Big Buddha Bay as it became dark and there is clearly a need for better navigation lights in that area, particularly with buoys – of course of which there are none. Local knowledge is one thing, but in the dark, with rain and heavy seas, anyone can become disorientated. It would also appear that whilst the Marine Police had things under control at the Samui end, there was no one overseeing the Koh Phangan end and who could perhaps have prevented the boat leaving until the squall had passed. Health and Safety in Thailand is sadly lacking in every aspect of life. I see it every day on the roads and there is not a construction site in Thailand that would not be closed down by a UK Factory Inspector before he had even walked on site. I know from personal experience that trying to police these issues here is virtually impossible. We have managed to get construction staff to wear safety helmets but safety footwear – forget it. Equally we do not want the extremes of ‘elfinsafety prevalent in the UK in particular where jobsworth H&E Inspectors tell people they cannot climb a ladder to change a light bulb without a risk assessment analysis. There are many more ludicrous examples but some where there needs to be a reasonable compromise. I suspect that may be found in Thailand way before the UK. Or perhaps not.

For a full copy of this Newsletter please send an email to hbonning@kosamuiproperties.com

Ko Samui Properties Blog for June 2010

2010-06-01T15:23:00.000+07:00

Of course the big issue recently has been the unrest in Bangkok. I have been asked by several people if there was any problem on Koh Samui and the simple answer is NO. People in Samui just want to get on with their lives and businesses and to some extent we have the north/south divide in that the red shirts are mostly from the NE Issan region. Whilst there are many Issan people working here in the tourist and construction industries, they are simply happy to get on with their jobs and send money back to the family at home. I see tourists on the street every day enjoying themselves and we pass at least half a dozen “jungle safari” jeeps each morning as we drive to work. Tourism is undoubtedly down even for low season, but there are still many people here enjoying the sun and the beaches.

Over the years I have carried out many valuations for a range of different purposes in different countries. During my time in Germany before the Wall came down I was asked to value an hotel in the hills above the Rhine Valley just outside Bonn. I was met by a very charming elderly German gentleman who proceeded to show me round the property and also the outlying buildings which were offices, the walls of which were plastered with illustrations of every sort of gun and armament you could think of. It turned out he was a second hand arms dealer and had been an officer in the Waffen SS during the Second World War and fought on the Russian front where he built, so he told me, railway platforms out of solid ice for the disembarkation of men and supplies. Sitting in his office at the end of the tour he handed me a large bag of pistachio nuts. The day before the Iranian Defence Minister had been sitting in the same chair and these were fresh from Iran but I was welcome to them as he could not eat nuts. And very tasty they were too.

On another occasion, also in Bonn, I was carrying out a portfolio valuation for a large British owned German Insurance company. I pulled off the road to check my map and then drove on. A week later I had a call from the Bundessicherheitsdients – the Federal Security Agency – asking if I had been in Bonn the previous week and specifically if I had been there on the Wednesday. I was actually there on the Thursday which I admitted – trying to catch me out no doubt! It turned out that when I stopped to consult my map, I had done so outside a property which for some reason was of a sensitive nature and under surveillance. I had to explain why I was there, what I was doing, why did I stop. Eventually they were satisfied and I heard nothing more.

Whilst the RICS is not recognised in Thailand I do get called upon from time to time to carry out official valuation work which is accepted by the UK Courts, sadly usually in divorce cases, but also for private issues between business partners. In the present market this becomes something of a challenge as the most reliable basis of valuation for residential properties is by comparison of like sales. When there are few sales to make that comparison it becomes a matter of judgement and analysis of market trends. The usual criterion is that the valuation should be fair between the parties and in arriving at a figure, valuation practice requires us to value at a specific date. This is an essential point as you can imagine the difficulty a valuer would have been in if he valued the World Trade Centre Buildings on 1st September but did not stipulate a date! It is also necessary to assume a reasonable marketing period which in the present market could be many months. There is no specific definition of a “forced sale” valuation but it is generally agreed that this would be accepted as an Open Market Valuation restricted by the marketing period available. I take as an example a case where a property were to be offered at auction in say four weeks time with no reserve price. I am sure you will appreciate that a property offered in this way will attract a sale price well below that which would be achieved following more extensive marketing and subject to the usual condition of “willing buyer and willing seller”. However, it is still an Open Market Value but subject to severe restrictions.

Ko Samui Properties Blog for May 2010

2010-06-01T15:21:00.000+07:00

(Somewhat late but better that than not at all!)
Of course the big issue currently is the continuing unrest in Bangkok. I have been asked by several people if there is any problem on Koh Samui and the simple answer is NO. People in Samui just want to get on with their lives and businesses and to some extent we have the north/south divide in that the red shirts are mostly from the NE Issan region. Whilst there are many Issan people working here in the tourist and construction industries, they are simply happy to get on with their jobs and send money back to the family at home. I see tourists on the street every day enjoying themselves and we pass at least half a dozen “jungle safari” jeeps each morning as we drive to work. Tourism is undoubtedly down even for low season, but there are still many people here enjoying the sun and the beaches.

Distressed Real Estate is a term you often hear these days and essentially refers to property that cannot produce sufficient income to meet its running costs. No different to a business really. I have seen a number on Koh Samui and the usual reason is that the rent, which was reasonable when the lease was first signed, has increased automatically by a fixed percentage over a number of years and is no longer realistic in current market conditions. This is particularly true of long leases where the rent increase every five years traditionally by 5%. You might say that a 1% annual increase is not excessive but the increase is compound so works out more than that. However the real problem is that the automatic increases have no regard for actual market conditions and over a period of time there can be a significant discrepancy. This situation is most often seen in long term registered leases – any lease in excess of three years has to be registered to be enforceable and long leases cannot exceed 30 years. The European concept of “review to market rent” after say five years is unheard of here in Samui and indeed with the lack of transparency in transactions it would be difficult to find realistic comparable evidence. Add to that the nonsense of key-money and analysis becomes difficult if not impossible. A long lease in theory gives a tenant sufficient time to build the business and recoup the investment, make a good living and possibly even sell the business at a profit. The short term leases, under three years, make this much more difficult due to the restricted term. Many have options to renew for a further period of three years maybe more than once and provided the same parties (lessee and lessor) are still the same, it is usually not a problem. However, this obviously gives both sides the opportunity to review the rent to one that is in line with the market and acceptable to both sides. There is no easy answer to this but anyone entering in to a lease, be it long term or short, needs to think carefully how future rental increases will be implemented and how that will affect their business.

Living on a tropical island has many advantages. Take something simple like having a haircut in the open air. Near to where I live there is a very small mini-mart run by a local family. The son takes care of the shop but the father, who is essentially retired has installed a chair at the side under the projecting roof, fixed a mirror to the wall and runs a side line cutting hair. You sit back surrounded by banana trees and watch life go by in the mirror as a couple of kids play in a pile of builders sand on the opposite side of the road. Cars and bikes are buzzing by a few feet away and people say hello as they wander past. No air conditioning of course as you are out in the open, just a gentle breeze to blow away the silver hairs as they are cut free! But you know one of the best things about this is that there is no rear wall where many hairdressers fix an angled mirror so you can see the back of your head. I do not need reminding that the hair there is getting thinner all the time!

I was sad to report last month the loss of Big Joe and his funeral and wake took place on 3rd April at the Wat in Bophut. It was not surprising with Joe’s popularity that there was a huge turn out both at the Wat and at the Wake at the Bungee Jump later in the afternoon. Triple figures would not be an exaggeration. Joe of course had the last laugh. He was not called Big Joe for nothing. Thai crematoria are simply not designed for people of Joe’s girth.