Due to the slowdown in housing sales caused by proposed amendments to the Foreign Business Act (FBA), the Canadian developer Sierra Projects Co plans to delay the second phase of its resort in Hua Hin and focus on Vietnam's resort market instead.
Managing director Rose O'Hearn said the phase two launch of Sea Ridge in Hua Hin would wait until next year after Thailand gets a new government.
''After we started in Thailand in late 2005, we entered Vietnam with less investment through a joint venture with a local investor. At first we did not intend to develop more projects as property laws were not stable,'' she said.
But now, Mrs O'Hearn added, the laws in Vietnam are clearer and supportive of foreign investment. Its government also extended the leasehold period for foreign buyers in property from 50 to 70 years, compared with 30 years in Thailand.
The company plans to invest more in the Vietnamese property market next year as the situation in Thailand has not been good for two years with no sign of improvement since last year's slowdown.
Mrs O'Hearn was born in Ho Chi Minh City and her relatives own property developments there and in Danang. She is interested in resort developments in Danang, as it is a famous beach destinations and an emerging regional draw.
She said that phase one of Sea Ridge comprised 56 condominium units worth 300 million baht and 22 villas worth 250 million baht. Both products would be located on a 35-rai site in Hua Hin, which the company spent 50 million baht to acquire in 2005.
Condominiums would be priced between 5.4 million and 14 million baht, or 45,000 baht per sq m, and villas priced at 7.3 million to 18 million baht. About 60% are sold and most villas were acquired by foreigners through 30-year leasehold deals.
''The property market in Hua Hin was impacted by the FBA, dropping by half. Some buyers are delaying decisions until after the election while some shifted to buying a unit in our joint-venture project in Vietnam,'' she said.
Yesterday the company signed a construction contract with Teka Construction to build condominiums for Sea Ridge. Construction started in October and is scheduled to be completed in late 2008.
In 2008, it plans to develop three new residential projects in seaside destinations. The first would be the Anansara Tropical Golf Villas resort worth 200 million baht located on a 15-rai site near Palm Hill Golf Course in Hua Hin.
The project would comprise 46 villas priced between 3.4 million and 7 million baht. Investment returns are projected at about 7-12% a year, Mrs O'Hearn said. Rents per night would be approximately 2,000 baht.
Another two projects would be a condominium and resort development in Thailand worth one billion baht, said Mrs O'Hearn, who previously developed a nursing home in Canada. .
The company, with registered capital of four million baht, is a 40:60 joint venture between the Canadian developer Sierra and a Thai contractor with construction experience in the northeastern provinces. Sierra has 25 years of experience developing infrastructure and utilities in Canada.