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Land of Smiles: The mallification of Phuket

Legacy Phuket Gazette

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Land of Smiles: The mallification of Phuket | The Thaiger

PHUKET: Get ready, Phuket people. It’s coming. It has already saturated Bangkok, and is moving rapidly southward, like an alien slime. I’m talking about mallification: the process by which a nation becomes overrun with enormous shopping malls.

Now the mallification of Bangkok has progressed to the point where they are considering appointing a Minister of Malls to oversee the process. The putative Minister of Malls, a dynamic lady named Ngernwadee Seukhong (nickname: “Shop”), kindly granted me an interview:

Q. Khun Shop, there’s a rumor that the government plans to turn Bangkok into one giant shopping mall.
A. Yes. It will extend from Nonthaburi to Samut Prakan, and will all be under one roof. Existing shopping malls will be integrated as nodes within the unimall, as we call it. The Skytrain, renamed the Malltrain, will speed customers from one node to another.

Q. That’s marvelous. Now shoppers will never have to step outdoors. They’ll all be living in one big shopping mall.
A. That’s right. Instead of bringing the people to the mall, we’re bringing the mall to the people.

Q. What do you say to those mean-spirited critics who complain that this will make people even more greedy and materialistic than they are now?
A. That is a narrow attitude that ignores a fundamental truth. Our economy is based on buying and selling. If people don’t buy, the economy collapses. If the economy collapses, everybody will be poor.

Q. In that case, shouldn’t the government reward shoppers, to motivate them to shop more?
A. Yes, we’re thinking of instituting a series of awards for excellence in shopping. “Major Shopper”, “Prime Shopper” and “Super Shopper” are a few of the titles we’re considering. Every year we’ll honor the person who has spent the most money shopping. He – or, more likely, she – will receive a trophy and a cash prize at a ceremony that will be televised worldwide. She will be crowned “Supreme Shopper” and will wear her crown till the following year. She’ll appear at charitable functions, on talk shows, and will even put in a guest appearance on “Academy Fantasia”.

Q. Sort of like Miss Thailand or Miss Thailand World?
A. Yes. We also plan to augment the carrot with the stick. Recalcitrant shoppers will be required to spend a minimum amount of money on shopping every year.

Q. Are you working with the TAT to attract international shoppers?
A. Oh, yes. We hope the TAT will devise a new tourism promotion campaign with the slogan “Shop Thailand.” Entire plane-loads of foreign shoppers will be flown in on shopping sprees. They won’t get to see any temples, beaches, elephants, or classical Thai dancing, but they will get to shop. TV commercials will feature happy foreign shoppers pushing shopping carts piled high with pricey purchases.

Q. And all of this will be coming to Phuket?
A. Yes, we have big plans for Phuket. Our pilot mall is already in operation. This will be followed by malls of increasing size and flash. We favor super-huge structures the size of a small city, with names like Mammoth, Humongo, Gigantica, and Colossus. The Japanese mall franchise Godzilla will have a major outlet here, as will the Hong Kong syndicate King Kong and the French consortium Le Big.

Eventually all these malls will be merged into one vast building that will cover half the island. We plan to call it the Great Mammon Mega-Mall. With a bow to religion, we will have a shrine to Mammon, the pagan god of riches, at every entrance.

Q. I guess all of this will bring us one step closer to the perfect society.

Ye Olde Carmudgeon can be flamed at s.tsow@ymail.com, but not while he’s waiting for the perfect society. Any similarity with another writer who shares this same email address is purely coincidental. Kinda.

— Ye Olde Curmudgeon

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Property

Guaranteed rental returns – Are they real?

The Thaiger

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Guaranteed rental returns – Are they real? | The Thaiger

If you’re looking to invest in overseas property, search the market and it’s not unusual to find condos for sale with guaranteed rental returns of 40%, and some even higher. Yes, it DOES seems too good to be true, but the offers are out there and the packages often come with free legal fees and other such benefits. Clearly, before diving in, you need to seek some expert and professional advice.

So, what is the debate about? And what questions should you ask prior to investing?

Guaranteed rental returns are obviously enticing for investors and purchasers alike, with standard net returns usually being advertised below the 10% mark.

In the opinion of many, this is not a cheap marketing trick. Yes, it does have ‘marketing power’ and it might just be the additional financial package that helps developers and agents clinch the deal. But for the investors, they genuinely are guaranteed a minimum return on their investment. Surely that’s positive. It eases the concerns of investors and keeps the market buoyant. And why wouldn’t buyers prefer to go with the property that guarantees this return, over the property that does not?

Other experts are not so sure. While acknowledging that a rental guarantee clearly offers agents and developers an advantage in marketing and selling, there are voices within the industry that urge caution. There’s a suspicion that developments that come with a guarantee may be overpriced and that the developers may have factored the cost of the guarantee into the actual price of the property that is being offered.

Those that hold this negative opinion about guarantees suggest that a better strategy for any investor might be to really understand the market in which the property is being offered, aim to get the lowest price possible, do the deal and then organise the letting independently.

Other cautious voices wonder if investors aren’t being tantalised with a vision of unrealistic long-term returns. The question that is asked is what happens when the guaranteed period ends? It’s not unknown for the guaranteed period to expire, and for the investor to suddenly realise that the true rental value of the property is much lower than they believed. Rental incomes suddenly drop, and they suddenly realise that they have overpaid into the wrong investment.

But still, many deny that developers overprice properties when offering guarantees. And no matter what, it’s clear that a rental guarantee is important for certain investors who need the security that it offers. And genuinely, it appears that there are some good guarantees out there on the market. So what to do?

The trick is to apply common sense and due diligence to the situation and examine the legal, commercial and financial strength of the guarantee and the market in which it is being offered. Here are some questions worth considering:

Legally, how is the guarantee structured?

Is it underwritten with a contract in which legal recourse is an option, should you not receive the income that is guaranteed? This is clearly important.

Commercially, is the guaranteed rental figure in-line with the rental market in which the property is situated? Basically, are the developers offering you more rental income than is actually achievable in the current market? If they are offering you more, then once the guaranteed period expires, you’ll probably see your returns on investment drop.

Financially, how does the guarantee work?

Is the guaranteed return dependent upon the commercial success of the project?

Some guarantees are based on projected annual revenues and are subject to these revenues being achieved. In other words, if the expected revenues aren’t achieved, the full guaranteed amounts might not be paid to the purchaser.

In addition to this, some guarantees may also come with the proviso that the amount being ‘guaranteed’ is ‘subject to the competency of’ the management of the complex. This may seem vague, but it’s possible that if the expected revenues aren’t achieved, then the blame for this failure is going to be put solely on the management company.

The vagueness of such a ‘competency’ proviso might also be used to cover all manner of issues. For example, is it possible that forecasted rental revenues might fail to materialise, not because of the bad management of a complex, but because the original forecasts were set too high? It might be easy to blame all manner of poor results on the incompetence of how an apartment complex is managed and to do this with no liability.

With this in mind, once again, it’s very important to look at the rental market in which the property is located, and then ask: are the projected annual revenues realistic in the current market? And of course, you will have to do some research on the developers.

Do the developers have a track record of successfully managing properties, renting them out and ensuring that incomes are generated?

If the answer to this is ‘no’, how then will they be able to generate the income that they are guaranteeing? This may be a sign that the property price has been ‘artificially’ increased to cover any foreseen shortfall in future income.

All-in-all, there’s a lot to consider. Guaranteed rental returns do offer investors a level of security, and it is natural for people to feel compelled to buy into them, and yes, there are some good offers on the market. But it’s worth remembering that in the right location, you’ll always be able to rent out a property.

As we always recommend at The Thaiger, do your homework!

To find thousands of available rental properties in Thailand, click HERE.

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News

30 dolphins greet visitors to Similan Islands

Greeley Pulitzer

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30 dolphins greet visitors to Similan Islands | The Thaiger

Tourists were treated to the sight of a school of dolphins in the Similan Islands off the Phang Nga coast on Sunday.

Tour organisers said that around 30 dolphins swam close to the boat six or seven miles offshore, creating excitement for passengers. It was the first time dolphins had been seen in the vicinity since October 15.

The Similan Islands National Park director said they were bottlenose dolphins and were among several species now returning to the area following a five-year closure of the park for environmental rehabilitation. Food is again plentiful there for them, he said.

Tourists are forbidden to feed wildlife lest the free handouts alter the animals’ natural behaviour, and the park’s waters are also very sensitive to contamination from human disease and marine debris, according to the director.

SOURCE: nationthailand.com

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Business

500 people own 36% of equity in Thai companies

Greeley Pulitzer

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500 people own 36% of equity in Thai companies | The Thaiger

Roughly 36% of Thailand’s corporate equity is held by just 500 people, highlighting wealth inequality in the Kingdom, according to a study released by the Bank of Thailand’s research institute.

Each of these 500 amass some 3.1 billion baht (102 million USD) per year in company profits, according to the report from the Puey Ungphakorn Institute for Economic Research. In contrast, average yearly household income in Thailand is around 10,000 USD.

A report out this week from the Economic and Business Research Centre for Reform at Thailand’s Rangsit University also pointed to divisive and polarised politics being another root cause of the economic divide.

Thailand’s private sector is dominated by tycoons running sprawling conglomerates. According to the World Bank, the gap between the mega-wealthy and the rest of the Thai population of 69 million is among the many economic challenges for Thailand. According to Bloomberg, the perception of a divide, exacerbated by an economic slowdown, is a major political fault line.

“Magnates arise in Thailand from institutional factors that privilege certain businesses,” said the executive director of PIER, author of the study.

The institute said Thailand needs to promote competitiveness to reduce profits from monopoly power and bolster entrepreneurship to create a more equitable distribution of corporate wealth.

The research is based on analysis of 2017 Commerce Ministry data on the 2.1 million shareholders in Thai firms, and was funded by the University of California San Diego.

SOURCE: Bangkok Post

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