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Property Prices Set to React to Four Seasons Site Transaction

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Posted: 14 Apr 2009 | 3:09 pm

With minimal leveraging and a limited supply of prime development plots Phuket has been able to stem the global and regional rising tide of depreciating prices, at least for the moment. Industry watchers are now viewing closely the outcome of the bidding on the 150 rai Laem Ka Properties site which was to have been managed by international chain Four Seasons. With Jones Lang LaSalle Hotels brokering a sale with Lehman's liquidators there is keen interest to see at what price the premium site will transact at.

In past years appraisals of institutional properties on the island and its environs have had difficulty benchmarking comparable transactions though noteworthy ones included Hongkong and Shanghai Hotels site in Bangtao where the present Shangri La Resort is being developed, Thai Muang by Richard Li's Pacific Century Group and most recently Pacific Star's Ko Pilai acquisition.

Prior to the economic downturn large prime oceanfront sites for hotels and mixed use were widely regarded to have a value of 18-20 million baht per rai and there were only a few transactions at that level. A new yardstick may now be applied depending at what price Leam Ka would sell at, should indeed it be vended. For existing projects there has been limited relief in terms of lower construction costs and with land components already priced in, it's doubtful that the same volatility in pricing may occur as with raw land.

Very interesting. What of Lehman's other assets in Phuket such as the Marriott site in Kamala?

Bill Barnett responds:
Lehman's liquidator's are curently only working on Laem Ka and Baan Taling Ngam in Samui. While construction has ceased at Marriott Kamala Cove, Destination Properties who is the developer already has significant ongoing assets here in Phuket wiht 3 Courtyard properties, a Ramada, and other hospitality assets in Hua Hin. Given Lehman's only reportedly only provided debt and minority interest in this asset, believe the developer will be able to work out a solution as the renovation is too close to completion and this is a quality project.
Michael Cleary, 15 Apr 2009 | 9:12 am

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