A company run by two Finnish-Swedish spent a short period of time established on the island. Within three months after they had moved there Jonas and Staffan – who previously worked together in Finland during five years with marketing – had set about building 20 houses and 49 apartments. Initially they had planned to start with two houses.
Now they have a five-year plan to build 430 units consisting in both apartments and houses for both foreigners and Thais.
It was Staffan, a regular Thailand-visitor, who lured Jonas into visiting the holiday paradise, who then also turned enthusiastic.
Jonas soon wanted to live in Thailand and when he met a guy from Finland building in Rawai, who had sold a house to Norway, he thought it could a good idea in order to make a living.
“I have myself been working on renovating apartments and selling them. I am also a boat builder,” says Jonas.
In 2004 they came back just before the tsunami, looking for land to buy, for example in Khao Lak.
“We found some nice plots with paradise feeling in Mai Khao, the beach north of the airport. The idea was to build a few houses and develop the business slowly but we bought 13 Rai which was too big for the initial idea, so the plan changed to twenty houses instead.”
“We had started working on drawings and planning, and when I found a piece of land 500 metres from Karon beach, we hastily planned a condo area and bought this land. The main focus then was directed to Baan Paradise.”
“We had learned the laws regarding ownership in Thailand, and realized a condominium is the safest way for a foreigner to buying something. We thought that would be perfect as our first thing,” explains Jonas.
Within January 2005 they started building and managed to sell six apartments by February, which shows that the allure of the island was not damaged by the tsunami. On the contrary land prices actually began to increase at a higher rate than before.
By August 2006, 35 of the 49 units at Baan Paradise were sold to Swedes, Britons, expatriates in Singapore and Hong Kong etc., but mostly to Scandinavians thanks to word of mouth.
The price range on the Karon project is Bht 5 – 10 million, on the Mai Khao house project Bht 7 – 14 million and on another forthcoming hillside project with sea view on Kata, 25 – 27 million.
The developers know there is a target group for that as well with people looking specifically for Kata beach.
Finding such attractive land plots, with increasing prices and the given risks associated with acquisition of property in Thailand has required a lot of work and contacts.
“We’ve been looking at lots of land, and one must be careful because if you are a white man, the price will be triple the normal price. Perhaps we have been a bit lucky, having found all the plots through Thai friends.”
“When we first came here we had no idea at all what the price ought to be.” Jonas had researched on Internet and heard through some Thai people who had bought some land a few years back.
“I had expected a low price, and got a shock when they wanted Bht 6 million and up per rai. There is land costing up to 50 million. The land in Mai Khao has increased with 200 per cent.”
The land where Baan Paradise stands has increased around 100 per cent in one and a half years.
More recently they have applied a method in their hunt for prime property: travelling around and looking for suitable plots and then having a Thai broker asking if the owner would be interested in selling.
“Unfortunately, as I have seen, there are many foreigners working as brokers and selling. Then the price is double. But, it depends; the price on land varies a lot.”
The first buyers at Baan Paradise can reap the benefits of both having been given discount as providers of essential money in order to get going with the project, and expected yields of up to 20 per cent yearly.
“They have made a 100 per cent profit already and according to my calculations, the increased value plus rentals should reach 20 per cent yearly for a long time to come.”
All buyers also get higher quality and additional items, extra air con, more wooden floors etc. which they are not paying for – all bonuses from a developer who is anxious to get satisfied buyers.A quick look at the construction site shows that there will be lighting in the floors and central air condition with hidden units and an overall high quality level.
Capital appreciation is expected by the developer to increase by up to 30 per cent once the resort is completed and apartment owners renting out could have a rental revenue of up to 10 per cent per year.
”A Scandinavia buyer will not live here all year round so they will want to have some returns. So we made it a bit like a hotel, with a reception a club house and a gym to function as a resort for those who wants.”
The high number of new residential developments on the island will definitely have an impact on the types and quantities to choose from and Jonas sees it as a coming trend.
“I think it is interesting for families. In comparison with living in hotel, where you normally get one room, here all apartments have minimum 2 bedrooms, kitchen and living room.”
Europe is the main market for Priority Village, not Scandinavia specifically.
“But I think many Scandinavians living in Spain now will move over to Thailand, because of the cost of living in Spain. 10 000 Norwegians, for instance, bought houses abroad last year.”
The developer also plans to build for the local market, having a project under planning in Trang and with the long-term aim of going from 30 per cent of the sales to Thais to become 70 per cent.
“In the beginning, investment-wise, a project for foreigners gives more yield, as it is on another level of standard. But it is more costly.”
“But of course, we would like to move towards the Eastern Seaboard, providing both for Thais and foreigners. Then you can avoid the problem when building condominiums where you cannot sell all units to foreigners. If it suits both markets you can avoid that kind of problem.”
Finally they are planning for projects appealing to the older demographic; retirees drawn to Thailand’s low cost of living and year-round warm weather.
Full property management services will then be required, along with healthcare.
“Healthcare is the most important aspect for such a project. It requires a different planning with on-location health services and good infrastructure plus designing for handicapped people. We are looking at that too, as I believe it will grow.”
