Property developers from the UK and Scandinavia have announced the sale of nearly Bt6 billion worth of their projects on Koh Samui, following a new city plan and a lack of clarity in the amended Foreign Business Act.

Research by the Agency for Real Estate Affairs indicates the new city plan on Koh Samui will mandate that property projects cannot be constructed higher than 150 metres above sea level. As a result, British and Scandinavian property developers planning projects higher than that must suspend them.

"Foreign investors have expanded investments on Koh Samui since 2004 to develop resort-property projects. Most of them bought land from local owners, and some plots did not have land titles, but rather only an authorisation certificate allowing people to make use of the land, not the right to sale and develop a property project. As a result, up to 10 property projects developed by foreign investors must be suspended and have been announced for sale to other investors," said Wason Khongchantr, the agency's managing director.

The project land on Koh Samui may be discounted 10-20 per cent from the average price of Bt5 million a rai for a sea-view location.

Meanwhile, demand for resorts and villas has shown only slight growth since last December, because foreign investors have adopted a wait-and-see attitude about whether the amended Foreign Business Act would affect their ownership in property projects. As a result, most foreign buyers have delayed decisions about buying new residential projects on Koh Samui and at other resort destinations.

Wason added that new resort-property projects at three tourist destinations - Pattaya, Phuket and Koh Samui - numbered 175 and were worth Bt151.04 billion. Of these, 73 projects launched in Phuket are worth Bt70.73 billion total, 59 projects on Koh Samui are worth Bt38.01 billion and 43 projects in Pattaya are worth Bt42.29 billion.

Sales of resort projects at the three tourist destinations began slowing last December after the Bank of Thailand announced a 30-per-cent currency guaranty and the government an-nounced its policy to review the Foreign Business Act, especially regarding nominee firms, Wason said.

With the market trend, land prices on Koh Samui and in Pattaya and Phuket have been stable this year compared with last year.

Last year, sea-view land prices on Koh Samui recorded double growth, from Bt2 million a rai to Bt4 million. Land prices in Pattaya increased 30 per cent, from Bt10 million a rai to Bt14 million. And Phuket's land prices rose 12 per cent, from Bt7.8 million a rai to Bt8.9 million.

"Both foreign and local investors must wait and see what the government's policy will be in the Foreign Business Act, because this will have an effect on demand for residential projects in resort destinations, 50 per cent of which is from foreign investors," Wason said.

Somluck Srimalee

The Nation