Almost every country throughout the world lauds the financial benefits of owning real estate. Real estate in some countries can, for many people, be price prohibitive, depending on an individual’s financial muscle. However, global influences have now made increasingly easier for people to invest in property abroad. Emerging nations, with ever more buoyant economies, are now welcoming foreign investors as part of their foreign investment policies.
South East Asia has always been seen as an attractive destination for property investment for a number of reasons. Owning property in a country with a tropical climate is an obvious draw. Combine the wonderful climate with entry investment levels being lower than in most Western countries, and the potential financial gains to be reaped through capital gains and rental incomes, it is easy to see why so many foreigners now look to South East Asia for potential property investments.
Within South East Asia, Thailand has, for many years, been seen as the most attractive location within the region for property investment. This is partly due to the reasons already mentioned, but Thailand also has a legislative structure which has been deliberately engineered to be attractive to foreigners looking to invest in property within the kingdom.
The Early Boom in Foreign Investment
By far, the most popular form of property investment in the kingdom is through condominium ownership. This has come about due to the 1979 Condominium Act which allows foreigners to own a condo unit outright in their own name.
This act opened up the country to foreign workers and retirees, indigenous companies have been able to exploit vital skills that foreign workers were able to offer. International companies saw Thailand as the ideal business hub for new operations in South East Asia, as a result, the country has benefited economically from the influx of foreign property investment. Add to this the thousands of individuals who have seized the opportunity to live a dream, and we can see how the face of The Land of Smiles has been changed forever.
Owning land outright for a foreigner in their own, sole name is still not an option. Thailand has a die-hard policy whereby the land ownership shall remain the sovereign right of the indigenous people, and it is difficult to argue against the virtue of this policy. Hence, condominium ownership is the popular choice for foreign investors.
Post 1979, it must be said that many of the condominium buildings that were constructed were of a questionable quality. In the race to satisfy demand, many building projects lacked any innovative thought of design, and standards of build were, in many cases, woeful. Little thought was given the impact on neighborhoods, towns and cities that such an expanse of high-rise concrete would have.
Many condominium developments were nothing more than concrete carbuncles. Little effective thought was given to the supporting infrastructure, local services and transport facilities struggled to cope with the rapid increase in the density and numbers of new residents., many of them from overseas.
The clamor by developers to cash in quickly by throwing up multitudes of cheap, shoddily built concrete hutches soon, thankfully, would be consigned to history as investors demanded higher standards in design, build and environmental awareness. Responsible developers prevailed, and now across the nation there can be seen modern, high quality projects which are inventive and more in sympathy with the environment.
Many of the newly built condominiums were purchased as rental properties and with profit in mind, with a large number of them aimed at the tourist trade along with a growing number of foreign workers and retirees adding to the mix. With so many new options available for short, and long-term rental it became apparent that hotels were losing out on a lot of business which had traditionally been, almost exclusively, their domain.
Hoteliers Respond to the Popularity of Condominium Rentals
Hotels had for many years dominated the market in rental accommodation for foreign visitors. Hotel groups, large and small, now found themselves having to rethink their business models in order to directly challenge the new threats to their dominant market share. Existing establishments were remodeled and new projects were designed with a new business angle under which to operate.
The top end hotel chains were never going to abandon their traditional, tried and tested grails of hotel accommodation, but they built into the business a new concept to run in parallel to the embedded ideal of hotel hospitality. This new concept has become known as “Hotel branded residences”.
In simple terms, this is when a new build, or refurbished hotel, sells a quota of the rooms within the hotel off to private investors, in much the same way as an investor would buy a unit in a condominium complex. The unit which has been invested in would then be let out in the same way as any other room in the hotel, in most cases guests are unlikely to have any notion that the room in which they are staying is privately owned.
The first of these newly styled businesses appeared in Bangkok in 2011, The Residences at The St. Regis allotted 53 of its units as hotel branded residences. This was quickly followed by Sukhothai Residences with another 196 units. All the major players in the hotel trade avidly watched these 2 pioneers closely to assess the success, or not, of this new marketing slant.
Bangkok had to wait until 2017 for one of the international big brands to recognize that there were potential profits to be made from this new trend. The purpose-built Ritz-Carlton Hotel Residences opened its doors with 200 branded units. Bangkok now had a grand total of 449 hotel branded residential units available for potential investors.
It has become apparent that this business model can reap rewards for the hoteliers and investors, so much so that other major names are currently styling new projects along the same model. For this current year the number of available units will increase threefold, giving the city in excess of 1300 hotel branded residences. In addition, early next year Sindhorn Kempinski Hotel Residence on Soi Langsuan will open with another 231 units.
The big marketing advantage with this concept is the name, investment opportunities can be advertised with the backing of a globally known and recognized product. This is appealing to investors as it builds in, almost automatic, confidence in knowing that they are dealing with a well-established brand, which effectively underwrites the quality that investors are looking for.
Many buyers enjoy the idea of making their property investment within a hotel style operation, a centralized management system along with a concierge service is very appealing to foreign investors. However, the brand, and all it stands for, is no guarantee of success. Today’s potential property investors are far more diligent and have greater environmental awareness than ever before. The brand must be accompanied with location, innovative design, high standards and specifications, along with modern ethically principled building standards.
The majority of the hotel branded residences coexist with its recognized hotel counterpart. Logistically this makes sense for the hotelier as its existing management and service structures can overlap between the traditional and new business models. This, hopefully, leads to a seamless meld between the dual residential concepts that are operating under one umbrella. Done properly and professionally, guests are unaware that there are 2 operations running in tandem, simultaneously under the same brand.
As of today, the undertaking of hotel branded residences has only been adopted by some of the high-end hotel brands that are aimed at higher net worth individuals. This does mean that investors are paying a premium for the brand, there are those that will question whether paying this premium really represents value for money. But whatever an individual’s view point, the hotel branded residences are making inroads into the market.
Competitiveness Leads to New Hybrid Managed Investments
This slight shift in trading trends has not been lost on the established condominium development companies. Some have been left scratching their heads wondering how to counter the new stance that the hotels seem to be taking. Others see a new challenge, and with every new challenge a new solution is waiting to be unearthed. Challenges and solutions are good news for the end user, they raise standards and increase competitiveness in the market.
Professional condominium developers have no wish to become hoteliers, but what they can do is push the evolution of management and administrative systems to embrace the demands of the modern property investor. By retaining the best of their condominium management approach, and combining it with the best of hotel style services, a new vision has emerged.
A hybrid model has evolved which offers the best of both worlds. The very best commercial expertise of professional buy to let condo management teams has been twinned, and bonded to the principles of high-end hotel services. This resulting mechanism is the new hybrid vehicle that is driving services, standards and profitability to previously unattained levels.
A number of award-winning condominium developers have one advantage over traditional hotel brands. Where the big-name hotel brands have introduced branded residences in their traditional locations of operation, namely cities such as Bangkok, condo developers have already sensed the oversupply of accommodation in the major cities. Identifying this phenomenon, they have already looked for, and located, new horizons for projects that excite and inspire potential investors.
Investors and Renters View New Horizons
Thailand’s buy to let market outside of the principle cities is now gathering pace as buyers and renters see the benefits of non-city living. This is not only true for the tourist sector, but with today’s digital freedom more and more workers are able to rent properties away from the hectic pace of city life. Coastal living is now, by far, the favored mode of living for short- and long-term renters.
Foreign investors purchase a condominium with the view of making a profit, in the longer term through capital gain, in the immediate term, and ongoing, they look for a rental income. Many investors are likely to live outside the country which creates a potential problem in letting the property. How many investors are experts in marketing and advertising a rental property in a foreign country? How can they manage and maintain their property whilst living in their home country? These are very real concerns for all potential investors.
These concerns are now being met with total, peace of mind investment packages, investor plans that don’t simply end when the keys to a new property are handed over. There are now developers that see their relationship with investors as a journey with a new partner. A journey which goes from planning, through the building process and the interior design. One which guides each partner through the legal process and assists with appropriate visas.
On completion of the purchase the journey continues with expert in house management strategies. There are now condominium residence projects which offer flexible letting plans that are profitable, secure and worry free for every owner. Many complexes will guarantee 6% per annum return on investment, manage and service each unit, administer the upkeep and servicing of communal areas, all of which maximizes the letting potential and the capital growth on an individual’s investment.
So, imagine a complex of privately-owned condominiums, situated in an idyllic coastal location which has a solid supporting infrastructure, and also has excellent transport links to the surrounding local and the capital. A complex which also sports modern innovative design of ecological awareness and which lives in sympathy with its environment. Residences with a 24-hour management and letting service which gives each purchaser a care free profitable investment.
The cynical may think this sounds somewhat idealistic, but not realistic. But in fact, this is a very real deal. Not only are condominium investments of this ilk available now, there is an investment with all this plus a little bit extra. Imagine a modern quality condominium overlooking the sea with a 280-meter beachfront, which also operates on a totally care free investment plan with a guaranteed 6% yearly return, but also has its very own private marina with exclusive canal access to the Gulf of Thailand.
The New Thai Riviera Leads the Way
Situated at Pranburi in Prachuap Khiri Khan Province lies the most ideal of all ideal property investments. Here, a new low-rise condominium project is underway. This project is setting new standards in design and build quality. Right from the off, the planning of this new complex was done with the surrounding environment in mind. The site nestles between blue waters fringed with a sandy beach and the natural greenery of the un-spoilt beauty of Pranburi.
Pranburi is along Thailand’s Southwest coast and looks across the Gulf of Thailand. Currently, it is a little under 3 hours’ drive from the capital, but with new road links now being constructed the drive from Bangkok is set become easier and quicker. An improved road structure and a new rail link are part of the governments incentive to produce the kingdoms new ‘Thai Riviera’.
With the support of the government, combined with the areas own Tourist Development Plan, carefully selected sites have been earmarked for new developments. Developments which are under strict controls regarding the impact they have on the existing provincial environment. The number and size of the projects are restricted, and designs remain within controlled parameters specifically drawn up to maintain the esthetical beauty of the area and preserve the existing local way of life.
Under the strict controls of the Tourist Development Plan the area will not see acres of land swallowed up by swathes of characterless concrete, or high-rise monstrosities that blight the skyline. Quite the contrary is true. Pranburi has secured a limited number of carefully selected locations for new developments, developments that are exquisite in their progressive design, designs that embrace, and blend with, the beauty of the existing environment.
The very best of these new projects in Pranburi embraces all the new ideals of condominium residences, with its own private marina and exclusive canal access to the Gulf of Thailand. It offers everything a foreign investor could wish for, with no hassle or worries. This unique project is Grand Marina Club and Residences.
Grand Marina have joined forces with premium hotel brands to manage and administer the complex and letting plans. Generous, renewable, 5-year rental packages guarantee a 6% net return on investment. This project offers freehold and leasehold purchase plans with investments starting as low as 3.9 million Baht.
Comprehensive legal advice and assistance is at hand, their experts will guide an investor through the system ensuring compliance in areas such as opening a Thai bank account and the transfer of funds. Thailand’s immigration rules can be complicated and confusing to a non-national, their highly trained professionals will assist in selecting the ideal visa for each individual and effortlessly walk investors through the process.
Few, if any, condominium projects can offer the quality and uniqueness of Grand Marina Pranburi. This, coupled with its progressive approach to management and administration, has resulted in simply the best property investment available at this time. The new Thai Riviera is sure to become a much-desired location for visitors to the Kingdom and Pranburi is set to be at the very heart of its inception. Wise investors want to be part of the mix from the beginning and realize that Grand Marina Pranburi will maximize profitability and capital gain.