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Natai Beach, Phang Nga, October 8th 2007 - Luxurious hotels in this province and neighbouring Phuket are facing some competition from the owners of posh villas who want to earn a bit of money to cover operating costs with a little left over as profit. People don’t really buy expensive villas to make money but some do rent them out to cover maintenance, says Andrew Craig, general manager of Phuket Villas & Homes, an affiliate of the successful Samui Villas & Homes, which has been operating since May of this year. “We try to keep the house occupied at least 20% of the year and that results in some sort of return for the owner and the operating and running cost of the house are then covered.”

Clearly illustrating this are the four Jivana villas on this pristine beach in Phang Nga province, which is very close to Phuket Airport. Each sits on a four-rai land plot with a large beachfront and all are owned by Hong Kong families. Rental rates in the current low season for each of these six-bedroom houses - with two maids and a full-time chef - are US$1,200 a night. That works out to $200 a bedroom and is indeed something four- to five-star hotels have to reckon with. In the high season the rate climbs to $1,800 a night and during Christmas and New Year it’s $3,500.

“So people are starting to get groups together or if you have very large families going on holiday, or even a few couples going away together, they find this a lot more private but still with all the services you find in a fine hotel,” says Mr Craig.

The villa rental market is quite new in Phuket and Phang Nga though many of the new hotels that are coming up also have a villa component. “It’s quite evident that the market is really tending to go more toward the private rental situation and that is where my company comes in,” says Mr Craig. “So if the guests book a villa then we provide all the service that you would find in a five-star hotel.”

Helping this market is the fact that few villa owners actually live in Phuket. A large majority are from Europe, Australia and the US or are expatriates living and working in other countries in Asia. Mr Craig has found that about half of the owners of villas in Phuket and Phangnga are willing to rent out their holiday homes, compared with 80% on Samui.

“We see a lot of people just locking up for the low season and not renting out too much. However, my belief is that keeping villas running full-time and having people staying there keeps them in better condition as you are constantly maintaining them and doing preventive maintenance.”

Mr Craig draws on the experience of Samui Villas & Homes in building up business in Phuket and Phangnga. “Our Samui office just started out managing four homes and providing rentals and then it branched out into property sales and then construction management.” The Samui office now manages about 60 villas with a staff of 180 and Mr Craig aims for a similar number on the Andaman side in two to three years.

Aside from Jivana and other top-end property, Mr Craig has cheaper properties - some at the Laguna estate are $550 a night - but with golf course views and not sea views. “But essentially the price range is the higher you get on the hill or the closer you get to the beach the more expensive it gets.”

At the moment the demand is for the high-end villas because holidaymakers find $1,200 for six bedrooms pretty cheap compared to hotels. While rental returns on villas are not that high, capital values are going through the roof, he says. “I mean, the land has probably quadrupled in price from the time they bought it five years ago.”

The condominium rental market is also growing, but Mr Craig says villas are favoured for their full services. However, some people who enjoy doing some housework and a few Jivana guests like to cook and use the kitchen and also go to the market with the maids. While last year’s coup and lingering political uncertainty compounded by the planned changes to the Foreign Business Act are affecting the overall resort property market, Mr Craig pointed out that as a holiday destination the Phangnga area is getting better every year.

The brave hearts who still dare to buy expensive property are advised by Mr Craig to seek good legal advice so that they know exactly what they are getting into. “Always be aware that there is tax to pay, Thailand is not a tax haven by any stretch of the imagination.”

Written by: Nina Suebsukcharoen
Pubished on: Bangkok Post