As we all know value is a factor of supply and demand although the definition of value can vary – but that is a discussion for another day. Demand for real estate here in Samui has been depressed for many months now and the reasons are well know – world economy, lack of credit, politics etc. But what about the supply side?

Despite the low level of demand there are still developers creating new stock and new properties are coming onto the market all the time. I am aware of at least three developers who have built the first house on their development and quite rightly stopped because it has not sold. There are still individuals building properties with a view to selling and at the lower price levels having some success. The consequence though is that the stock of available properties is increasing faster than they are selling. This has a further knock on effect in that the new modern stock of properties is more attractive than the older properties which inevitably means the old properties will decrease in value faster.

This then begs the question – with the thousands of Rai of developable land in Samui, why have land prices not fallen at the same rate as residential house prices? The main reason of course is that the majority of this land is still held in Thai names and there is generally no pressure on them to reduce the price from what was achieved during the boom days.

What then are factors that would help to maintain values? Apart for increased demand, which cannot be controlled, the obvious answer is to limit supply. It will take some considerable time for the existing supply of properties available to be taken up, so perhaps now is the time for the local authority to look more closely at how the excesses of the past can be controlled in the future. In a small way they have already done this with height restrictions so we do not have masses of multi-storey buildings dotted around the island as can be seen in Pattaya and Phuket. Yes I know we have some, but not many. The zoning restrictions brought in are still very flexible in respect of residential properties so what more can be done?

Take for example San Francisco. In 1986 they passed Proposition M, a quite complex piece of legislation, part of which restricted the total of planning approvals for office space to 950,000 sq ft a year. For a major city this is quite significant and the consequence was that new development was restricted and rental rates stabilized as did consequent capital values. It was more than just a restriction on planning permissions, but was also very detailed as to how development of any kind would be controlled. Washington DC has for years had height limits on buildings and this helped to maintain values. At the other end of the scale Dallas in the same time frame had no zoning laws or restrictions as a consequence of which the real estate market almost died a death with rampant uncontrolled development.

How do we translate this into what would work in Samui. The reason that Proposition M was passed was due to local pressure from the urban population. Do we think that the indigenous population of Samui would support far reaching restrictions on development? Would those restrictions be in the form of number of approvals or a tightening of the zoning laws? Will it be imposed economically due to lack of infrastructure and communications? I wish I had an answer to that.

We will have to wait and see.

There is one aspect though that should have been done and still could be. Many countries have linkage policies. The price for granting planning permission is a contribution to the cost of providing the infrastructure to that development or indeed providing that infrastructure. Many of the islands problems with electricity, water supply and drainage could have been dealt with adequately had this been in place previously. Wise after the fact some will say. Not really, it is any issue I have never understood in the ten years I have been here.

The real estate market is slowly gaining pace but as reported previously mainly in the lower ranges. We have been receiving more serious enquiries recently than for a long time and interest has moved up into the 10-15 million range whereas previously it was almost exclusively under 10 million. However, before everyone starts putting their prices up, the only properties selling in that range are those that have already been discounted. What is also noticeable is that with so many agents having disappeared over the last year or so, there are signs of one or two coming back, unfortunately with little real estate experience. So just be careful who you are dealing with.

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Ko Samui Properties Blog for July 2011

Once again I must come back to the issue of having all your paperwork up to date and correct and knowing where it is. It is very frustrating, particularly in this market, to go through the process of negotiating a sale only to find that the seller does not actually have the original paperwork to hand causing delays and frustration on all sides.


Thailand is gaining a reputation for medical tourism due to the extensive facilities available and reasonable charges. I have always found dentists here to be very good and cheap compared to the UK. A filling is Baht 1,000 which is equivalent of GBP 20 as opposed to the NHS quoted price of GBP 47 and private treatment at GBP 77 – 100+. There are some very good hospitals, mostly in Bangkok, providing a wide range of treatments and by the time you get this Newsletter I will have undergone cataract surgery. Over the years I have had the “pleasure” of visiting many hospitals (unfortunately as a patient) in many countries so entering the doors of a hospital for any reason is not one that fills me with trepidation. Nevertheless, there is inevitably a certain amount of anxiety when faced with surgery on your eyes – in my case cataract surgery on both eyes.

If anyone is considering this let me allay your fears. It is a wonderfully simple and quick procedure. Arriving an hour and a half before the appointed operating time you relax in comfortable arm chairs as a nurse administers a series of eye drops. Then in the pre-op room you are swathed in the usual operating gowns and have the first of two injections. This for me was the most anxious time – having someone stick a needle into the flesh at the side of the eye. Why I was concerned I do not know. Hardly felt a thing and that just froze the area for the main injection which was totally painless. All you could feel was tightness around the eye as the anesthetic took hold. Then the operation began. All I could see were a pair of bright lights moving around and then it was all over. Ten to fifteen minutes after going into surgery I was back in the recovery room where a nurse explained the cleaning process and schedule for drops over the next two weeks, followed by the cashier of course and that was it. Having arrived at 06.30 we were out before 10.00. The eye was covered with a loose dressing and next day I went back for this to be removed and a post op check up. As soon as they took the dressing off I could see the difference. Absolutely amazing. My long distance sight is virtually perfect but I need reading glasses. Some irritation as the eye heals for a few days. The operation on the other eye followed a week later with the same procedure.

I went to the Rutnin Eye Hospital on Asoke in Bangkok. A specialist eye hospital also used by the Royal family and the treatment there lived up to their first class reputation. You can contact them through their web site www.rutnin.com/eng/ . Their charges are reasonable. I recall my first visit when cataracts were diagnosed cost me Baht 1,200. The surgery cost will depend on a number of factors and if anyone is really interested send me an email and I will let you have a breakdown of the costs.

The big event at the moment is the General Election on 3rd July. No polls are allowed to be published in the immediate run up to the election but I would expect to see a north south divide once again.

The real estate market is slowly gaining pace but as reported previously only on the lower ranges. We have been receiving more serious enquiries recently than for a long time and interest has moved up into the 10-15 million range whereas previously it was almost exclusively under 10 million. However, before everyone starts putting their prices up, the only properties selling in that range are those that have already been discounted. What is also noticeable is that with so many agents having disappeared over the last year or so, there are signs of one or two coming back, unfortunately with little real estate experience. So just be careful who you are dealing with.

For the full version of this Newsletter please email hbonning@kosamuiproperties.com

Ko Samui Properties Blog for June 2011

This is late again as I was in Bangkok having eye surgery - full report on that in the July Blog!

Last month I commented again on the relationship between Bangkok Airways and tourism on the island and the negative effect their airfares were having. They have been widely criticised in the Press and on-line and to their credit they made an effort and offered a restricted number of seats on the Bangkok-Samui-Bangkok route at Baht 4,300 return up until the end of July. Or so it was reported. Nothing on their Web site and nothing in their promotions except ones to increase the frustration when you see you can fly from Bangkok to Chang Mai or Phuket for around Baht 2,000. I would be interested to hear from anyone who managed to get one of these fares. Even the Residents Card is of little use with regard to fares. Discounts are only available on their highest fares and it is often cheaper to ask about their Promotional Fares – but you have to ask because the booking staff will not volunteer that information.


I have always been very supportive of Bangkok Airways and the risk they took in building the airport. However, enough is enough. Personally I consider Samui Airport to be one of the worst designed airports in the world. It looks stunning but is totally impracticable. In every airport you can expect to walk a good distance from check-in to the gate – but not in the boiling sunshine or torrential rain. Buggies? If you are lucky and forget it on a late flight. I have complained on more than one occasion when I have been to Bangkok for the day and returned on the last flight and requested a buggy to take me from arrivals to the departure car park. Even in the pouring rain they were reluctant to help. The response of Bangkok Airways is to start charging for the departures car park. Baht 200/day. Not a huge amount and I know that all airports charge for parking but for someone working on the island, having a Residents Card and making a one or two day trip to Bangkok, you would think they might just provide free parking – but then they would have to provide transport from arrivals!

The real estate market seems to be picking up somewhat. We have been receiving more serious enquiries recently than for a long time and interest has moved up into the 10-15 million range whereas previously it was almost exclusively under 10 million. However, before everyone starts putting their prices up, the only properties selling in that range are those that have already been discounted. What is also noticeable is that with so many agents having disappeared over the last year or so, there are signs of one or two coming back, unfortunately with little real estate experience. So just be careful who you are dealing with.

For the full version of this Newsletter please email hbonning@kosamuiproperties.com

Koh Samui Properties Blog May 2011

The sun is shining again and we are getting no more than the usual isolated brief tropical shower. Samui is getting back on its feet but it will take time to recover fully, particularly the tourist industry which has been hard hit. The storms and their effects were widely reported and pictures of crumbling seaside bungalows were all over the internet. Many hotels suffered damage and the island infrastructure has taken a pounding with damaged and washed away roads, collapsed electric poles, fallen rocks (see last months newsletter) etc. Samui is simply not set up to cope with these disasters and it is all very well for Dr Prasert to be wise after the event (see report below) but maybe he could see his way clear to making the island more accessible with realistic air fares and service that justifies the title “boutique”.


As a general rule we do not get involved with the sale of businesses but I do keep an eye out on what is going on in that market. One of the reasons is that I have yet to find a business owner on Samui who has a realistic idea of the value of his business and consequently the whole exercise is a waste of time. I have been presented with figures which do not even justify the price they paid for the business when they bought it and now they want to sell at a higher figure still. The usual comment is “Well if the buyer did this or that, they would make a lot of money” and they seem to think that justifies their
price tag. I have to bite my tongue and not ask why they do not do “this and that” to make the profits they believe are there. There is a learning curve to any business and it takes time for a business to become established – the general rule is three years. A good well run business, with a steady track record and not dependent on the personality of the seller can make sense at the right price and provided there is sufficient time left on the lease to regain the invested capital. However, so often small businesses are dependent on an individual, their personality and expertise and that does not carry over when the business is sold. Buying an existing business is no guarantee of success and you really have to work out why the present owner is selling – because if the business is as successful as he makes out – then why is he selling?


There is no international standard for the star rating system for hotels and star ratings are frequently approved in accordance with the local practice and at the discretion of whichever national body is responsible for tourism and the hospitality industry in that country. So a 5-Star hotel in one country may well not reach that category in another. There is then the quandary of “Boutique” hotels. Quite an interesting article can be found here at Wikipedia. One definition I found states “Small but exclusive property that caters to the affluent clientele with an exceptional level of service at premium prices”. Bangkok Airways claims to be a “Boutique Airline” then one would transpose the words “property’ and “airline”. The only issue I have with that is “exceptional level of service”. I do not travel on Bangkok Airways very often but I have to say that the last few times I have the service has been less than exceptional in the extreme and on a par with the low cost carriers operating in Thailand. This is a shame as when I started travelling between Samui and Bangkok several years ago, the flight was something to enjoy and you could appreciate the service provided. That has all sadly gone. Fares have gone through the roof and service through the floor. Whilst they were rightly complemented on the help they gave to the island during the recent floods, the complaints from tourists about the way they were treated was a reflection of what a monopolistic enterprise can get away with. Tourism is the life blood of the island and, as I have stated in previous  newsletters, this came about as a consequence of Bangkok Airways investment in the airport. There are many reasons for the decline in tourism here but I just hope that Bangkok Airways understand that they have played more than their fair part in this and return to the original standards of service we were once used to.

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Ko Samui Properties Blog April 2011

The main topic of conversation recently has been the unseasonable spell of extremely wet weather to hit Samui and Southern Thailand. It has been more like the Autumnal rainy season with roads flooded and impassable in places. Bangkok has also suffered and there have been complaints of extremely cold (for Thailand) weather there as well.

The Samui Gazette (hard copy) had an interesting article written by a source at NASA Meteorological Dept explaining why this has happened. Apparently it is due to a High forming over central China at the same time as a Low formed over India. This created a steep pressure ridge over northern Thailand. Then another Low formed over Bangladesh followed by a further Low off the coast of Malaysia. Put together this combination of weather systems created strong easterly winds and lots of rain.

There are some extremely good sources for weather information available on the web. The main one is the Thai Met Office and they can be found here . There are links to weather maps, weather radar and forecasts here. Another useful link is to WindGuru which gives a while range of predictions for a few days ahead in 3 hourly segments.

Infrastructure has taken a severe pounding and the ring road has been damaged in many places – not the least of which was the rock fall on the section between Chaweng and Lamai just short of the Cliff Restaurant as these photographs show.

The airport has been closed for two days and the ferries have not been running so there are many stranded tourists here and in Koh Tai and Koh Phangan. The British Embassy sent down a small team to assist UK nationals where they could and the Thai Navy sent their Aircraft Carrier into the area to evacuate people by helicopter although I hear there were times when that operation had to be suspended due to high wind speeds.

Hard wired internet connections have been down since Tuesday with only the Air Cards having a connection if you live in an area with a good signal. Mobile phone networks have been badly affected but are gradually getting back to normal.

As I write this Newsletter reports are coming in of collapsed Villas in North Chaweng.

As of Thursday morning the rain had almost stopped and the flood waters are receding very quickly. Central Government have promised Baht 50 million to help with immediate repairs As of today, Friday things are gradually getting back to normal – albeit slowly
Of course Songkran starts on the 13th April – maybe this year we will not need water pistols!


For a copy of the full Newsletter please send an email to hbonning@kosamuiproperties.com

Koh Samui Properties March Blog

Last month I discussed how air travel had made the world that much smaller and the impact it has had on Koh Samui. There is little doubt in my mind that the creation of Samui Airport by Bangkok Airways was the catalyst for the development that has taken place here over the last ten years in particular. Without the airport it is inconceivable to me that the plethora of new villas and hotels would have been built.

Now many people dislike the changes that have occurred and would like to see Koh Samui stay as it was 20 years ago. Whilst there is an attraction in that, is that really fair to the indigenous people of the island? Development has brought its problems, that cannot be denied, but it has also brought many benefits and indeed wealth to the islanders. For many reasons the infrastructure has failed to keep up with the pace of development but that is gradually being addressed. People quickly forget what it was like that long ago and I can only speak for the last ten years here.

- We complain about the electric supply but ten years ago we only had for the most part single phase supply and blackouts were far more common than they are now. The second under sea cable and new transformer station in Maenam are all part of addressing the present issues.

- Broadband internet was unheard of. Slow dial-up connections were all you could get if you could get a telephone line at all!

- Water was from a well. The desalination plant and city water did not exist.

- Many roads were sand and gravel including, not too long previously, Chaweng Beach Road. Access to the hills was difficult and only possible by 4-wheel drive. Now most of those hillside tracks are concreted roads.

- Supermarkets were poorly stocked and many products out of date and more than once I found bread full of mould when I got it home. Now we have a choice of supermarkets and convenience stores by the dozen with fresh produce available 24 hours a day.

Some people will continue to argue that all these developments are a bad thing and perhaps they have a point in the way they have expanded in a seemingly uncontrolled way, but there is also an element of selfishness in that view. Why should the people of Samui be denied these facilities to retain an idealized vision of what Samui once was – or perhaps never was. It is the “old hands” that complain. People coming to Samui today for the first time see it as it is. It remains a beautiful island despite the problems common to any developing vacation destination.

Over the last year hotels have seen reduced occupancy and lower room rates. This is for a multitude of reasons not the least of which has been the political instability and demonstrations in the country. The worldwide economic slump and devaluation of most currencies against the Thai Baht have made it more expensive to come to Thailand. As you will see from reports below, Bangkok Airways are also being cited as part of the problem with the high air fares and lack of capacity. So Bangkok Airways who were the catalyst for the development of Samui are now being held partly responsible for declining tourism on the island. Once again there is a clamor for a second airport but that is unrealistic. Who is going to build it? Not the government to be sure (it is hard enough to get funding for essential infrastructure) and why would a private operator take the risk?

The economics of supply and demand will no doubt sort much of this out. One major international hotel chain has just announced it is pulling out of Samui after only a short period here. No reason has been given and whether the decision is based on economics or other factors is not known, but I doubt they will be last. Others though are still coming!

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