There is a fair bit of buzz around this upcoming hotel/luxury residential development in Thailand. For investors thinking about getting in at this development stage, I think you will find these podcasts quite informative. You can also reach out to me at dpriti@nipponmarketing.ca.
The property under development called the Nebu Resorts and Hotels, luxury residential suites in Jomtien, Thailand. This property is under a franchise agreement with Wyndham Hotels and Resorts. What is remarkable about this project is that it is hotel luxury but residential living, giving buyers the opportunity to purchase fully furnished individual suites. These suites can be used for personal use, or rented out when not in use, and the rentals are managed by Ramada.
Thailand has always ranked high among top tourist destinations, known for its leisure activities, adventure, scenery, beaches, food, history, arts and crafts, and cultural richness. One of the reasons the Nebu project garners interest is its prime location — 7 minutes away from the new Sony Theme Park, 8 minutes to the beaches, 10 minutes to restaurants and markets, 10 minutes to a golf course, and one and a half hours from Bangkok.
In addition, here are the top 5 reasons that attract investors to this property:
1. High Occupancy Rates
Generally, when looking at a hotel project, the first question an investor will ask is the potential for high occupancy rates, because higher occupancy levels push up rental rates. So, let’s look at the numbers — July 2022 has seen hotel occupancy rates in Thailand recover to 47%, remarkably up from the pandemic’s 2% in April 2020. The cost of an individual suite is approximately $80K. Currently at 55% occupancy with no ongoing monthly fees, income at approximately $47/night would generate gross yield of 8.98%. At 65% occupancy, yield would be at 10.62%, and at 75% occupancy 12.26%.
Additionally, the developer will pay investors of individual suites 8% per annum for up to two years. Or, upon development investors can rent the units for no less than USD $1,000, increasing as occupancy rates increase.
2. Sony Theme Park
The recent opening of the Sony Theme Park coincides with a revival in global tourism. And, only 7 minutes away, that is great news for the Nebu hotel. Attractions include characters from Columbia Pictures to inclue Ghostbusters, Jumanji, and Hotel Transylvania. Thailand expects to attract as many as 10 million tourists this year and about 30 million visitors next year. Why is this important? Again it comes down to occupancy rates.
And… Occupancy rates will continue to grow as the Columbia Pictures’ Aquaverse is the next step in Sony Pictures’ larger global strategy to grow and expand location-based entertainment, this time by utilizing its globally known film and TV brands, according to Jeffrey Godsick, an executive vice president at Sony Pictures.
3. Long Term Visa for Wealthy Expats
So, China is Thailand’s largest visitor source. China will continue to extend its zero covid policy into 2023. That poses a challenge to Thailand’s tourism numbers. Therefore, as of September 1, 2022, the government initiated the Long Term Residency Visa (LTR) to attract highly skilled, wealthy individuals and retirees to stay for up to ten years with a work permit, as a second home option for foreigners. The LTR is intended to attract professionals to start a business, thereby create jobs, domestic spending and support economic growth. Expats are attracted to the Nebu hotel for luxury residence, with the comforts of home on a luxury resort knowing they have the flexibility of travelling back and forth while still generating an income.
Yes, other countries also have similar programs but Thailand’s advantage to other countries competing for the same patrons is in its lower living costs. The terms of the LTR is designed to attract wealthy expats with cash and assets of at least USD $1 million, pensioners with an annual income of $USD $80,000, remote workers who work for a company with revenues of at least $150 million over the past three years, and professionals.
4. Opportunities for Digital Nomads
Who are these digital nomads? During the pandemic, we saw a shift towards remote work and tech-savvy young travellers. They have been dubbed as digital nomads. Thailand is among the handful of nations (Greece, Spain, Portugal and Bali, Australia, Indonesia and others) that are willing to accommodate this emerging segment of remote employees. A Thai visa will allow them to live and work in the country for ten years. Employers, under this visa, are able to offer more flexible working arrangements without additional tax and regulatory liabilities and may be able to capture talented individuals from anywhere in the world. An impressive list of companies open to remote employees include Shopee, GMM Grammy, UNIQLO, and the Stock Exchange of Thailand, PTT, Siam Cement Group, Electricity Generating Authority of Thailand, the BMW Group, LINE Corporation, Workpoint Entertainment, Pfizer, Bangkok Hospital Google and other tech giants. Digital nomads also find the upcoming Nebu hotel appealing for similar reasons as expats, the flexibility of travelling while generating rental income, and living with the convenience of hotel services.
5. Contingency Plan
So you are thinking this is great, affordable, and let’s get in during this development phase and invest in a suite. Let me share the risks. As with any construction project, the risk to the investors could be in construction delays. Currently in phase one, construction is expected to be completed in two years. Nick Meredith, Partner and Sales Director of Azure Rich Group recognizes that times are uncertain particularly with weather and covid-19 and that contingencies need to be in place. For this reason, to offset the monetary risk to the investor, the company has allowed for two additional years of 8% per annum to the investor if the development is not completed.
For you the investor, the question is will occupancy rates rise, because that will impact your profits. How is the visitor program working so far?
As of October 2022, around 400 people have sought the Long Term Residency Visa within the first 12 days of it being rolled out, with pensioners making up 40% of the applications, according to the deputy secretary-general of Thailand’s Board of Investment. Applicants for the work-from-Thailand pass accounted for 30%, while the remaining was split between highly-skilled professionals and wealthy global citizens. US nationals accounted for 20% of the visa applications, followed by China at 15% and UK 10%. For expats and digital nomads alike, the cost of living in Thailand is low by comparison to other progressive countries and provides ideal living against other currencies which means that increased growth is likely to follow.
If you want more information, reach out to me at dpriti@nipponmarketing.ca. We will get you what you need.
Until next time, keeping you informed, this is Priti Donnelly.