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Property Koh Samui – demand supported by stronger currencies

Recently we are seeing the effects of a weakening Thai Baht on property in Koh Samui. Noticing that the GBP (Pound Sterling) versus Thai Baht has been getting stronger recently. Other foreign currencies are following suit. This has the effect of making it a good time to buy property. The effects are to reduce the purchase cost of all properties in Koh Samui and the rest of Thailand as foreign buyers send in their foreign currency to fund purchases. So now 1 GBP will buy you at least 52 Thai Baht and even more. This is much better than earlier in the year when 1 GBP would only buy you 42 Thai Baht. The improvement in purchasing power means that if you are buying a property now, it makes Thailand property much cheaper. Meaning property prices converted to foreign currency cost the buyer more than 20 percent less. That’s a great incentive to come over to Thailand and find a great property deal.

Property in Koh Samui - Chart GBP v THB

The warning is that this could be a double-edged sword, with developers soon catching on that foreign buyers have a higher purchasing power. This is sure to mean a realignment of prices soon, as local property developers realise that foreign buyers can afford to pay higher prices. Our expectations are that new releases of popular developments will be at higher price levels.

The Koh Samui property market seems to be showing effect of the Bangkok demonstrations. Foreign homebuyers continue their interest in island destinations such as Koh Samui, the property market here continues stronger. Many Samui real estate agents are seeing sales closures. Property demand is still strongest along the North East coast in such places as Cheong Mon, Plai Laem, Chaweng and Bophut where there are significant off-plan sales of mid-range properties.

Generally there is a tendency for buyers to look for properties with high single to double digit rental yields and the prospect of good capital growth. Samui Estates in Tongson Bay is setting the market. Indicative market prices on these three options are in the range of 10 million to 15 million Thai Baht at the lower end. Then comes a selection of higher priced properties generally in the 16 million to 25 million Price range.

The market seems set for a spell of price growth as supply levels of quality properties remain scarce. Property buyers are snapping up the existing properties on offer. The demand of property in Koh Samui is now seeing further acceleration due to the recent weakening of the Thai Baht against a basket of foreign currencies. We expect this trend to continue and shortages of off-plan properties in Koh Samui due to lack of fresh supplies in the early part of 2014. These factors are also being supported by the general interest in Koh Samui property after heightened media interest earlier in the year.