Tax sops spur new projects

Local and foreign property developers are confident of increasing their investment in Thailand's property market, having applied for tax incentives worth Bt10 billion from the Board of Investment (BOI) in the first half of the year.

Most of the companies are increasing investments in Phuket, Hua Hin and one project in Yala province.

"This is the only project that the BOI board has approved for tax incentives in the first half of this year. A number of hotel and resorts now waiting for board approval worth up to several billion may be cleared in the second half of this year," a BOI source said.

Property consultant Colliers International Thailand's head of research Risinee Sarikaputra said demand for developments in the hospitality business at beach locations is seeing strong growth, as many overseas property developers are increasing their investments in seaside destinations such as Phuket, Pattaya and Hua Hin.

Some of them were applying for tax privileges from the BOI, which would aid their business expansion in Thailand she said.

The projects must meet the specified conditions to be eligible for tax incentives from BOI.

The projects have to be located in Zone 1 and Zone 2. Hat Yai district or Muang district of Chiang Mai will receive only non-tax privileges.

Zone 1 includes Bangkok, Samut Prakan, Samut Sakhon, Nakhon Pathom, Nonthaburi and Pathum Thani.

Zone 2 includes Ang Thong, Ayutthaya, Chachoengsao, Chonburi, Kanchanaburi, Nakhon Nayok, Phuket, Ratchaburi, Rayong, Samut Songkhram, Saraburi, and Suphanburi.

The projects located in Zone 3 will receive only an exemption of import duty on machinery and other non-tax privileges. Zone 3 comprises the remaining 58 provinces. 

The projects located in Amnat Charoen, Buriram, Kalasin, Maha Sarakham, Nakhon Phanom, Nan, Narathiwat, Nong Bualamphu, Pattani, Phayao, Prae, Roi Et, Srisaket, Surin, Sakon Nakorn, Satoon, Yasothon or Yala, will receive privileges decided by the BOI. Each hotel must have at least 100 rooms.

Risinee said 17 new residential projects worth up to Bt20 billion would be launched in Phuket in the second half of the year. Most of the investors are from Europe, Asia and the Middle East.

India-based Taj Exotic group plans to develop residential and hospitality projects worth about Bt50 billion in Phuket next year and in 2010.

UK investor Gulu Lalvani, founder and chairman of Binatone, the world's second-largest manufacturer of digital cordless phones, has also invested about Bt10 billion in residential projects and special luxury retail in Phuket.

Hua Hin is also attracting several new residential projects worth up to Bt20 billion, which are driving up land prices 30 per cent a year, according to a survey by The Nation last week.

The Agency For Real Estate Affairs said demand for residential projects, especially condominiums, villas and resorts, is seeing strong growth in the four tourist destinations of Phuket, Pattaya, Koh Samui and Hua Hin-ChaAm.

Residential projects in Phuket have recorded high offer prices, averaging Bt22.4 million per unit, followed by Koh Samui with an average price of Bt19.2 per unit.

Pattaya recorded an average price of Bt8.38 million per unit and Hua Hin projects fetched an average price of Bt5.64 million per unit.

Colliers International Thailand said condominiums are popular investments for foreign investors because they can own up to 49 per cent in a project.

Research shows condominium prices at Koh Samui range between Bt125,000 and Bt130,000 per square metre, followed by Phuket between Bt77,000 and Bt106,000 per square metre and Hua Hin ranging between Bt66,000 and Bt80,000 per square metre.