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What makes a good rental villa?

Ian Macaulay

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by Ian Macaulay

www.AquilaPhuket.com

Not everyone who has gone through the process of owning or building a villa will want to rent it out.  Even if you don’t, rentability can have a significant impact on the asset and resale value so it’s well worth being aware of a given property’s potential appeal to the rental market.

Here are a few things to consider:

Location

No, we won’t say this 3x, but it always should be remembered as a major factor.

Every location has its advantages, which can range from the mundane – number of parking spaces (for when you want to have a gathering of friends), or accessibility to restaurants as some examples. How close is the villa to the major spots of appeal for visitors?

Views and surroundings are also valued and appreciated by guests, and consequentially impact desirability.

Some places will win because they are close to the action, others are be able to play the card of being away from it all – the first may have better occupancy, the latter may enjoy a better price per night.

The more sought-after the location, the more the rental appeal which will normally convert to good rental rates and solid occupancy levels.

Equal size bedrooms

We don’t think of this so much in the houses we live in, but when rental clients start looking for a rental villa for a group of friends or family, suddenly not only the room sizes get important but the relative size of each of them.

If people are splitting the bill evenly, in a case where there are two bedrooms each twice the size of the remaining two, or even more challenging, something like three gradients of rooms – it has the unfortunate effect of reducing desirability.

The rental market seeks rough parity in room sizes.  There is rarely a problem if the master bedroom is larger than the other rooms as long as the other rooms are roughly equal in facilities and have en-suite bathrooms.

Owing to the fact there is often someone in any given group more equal than others; whether it be the couple who organised the villa booking or the parents being granted respect, having one bedroom being disproportionate with the others is not going to be a major issue, as long as the other bedrooms offer decent size and facilities and are themselves roughly equal.

En-suite bathrooms

The expectation of most clients in the villa world is to have each bedroom with a private access to a bathroom, or en-suite bathrooms.  If any of the bedrooms in a rental villa have separate bathrooms (access through a hall, whether that walk be long or short) it will impact on the overall pricing of the villa.

If there is a shared bathroom in a villa that will substantially impact both price and appeal – because now by its very nature the villa is needing 2 rooms of guests who are willing to share a bathroom with one another, as opposed to choosing another villa which doesn’t suffer from this issue.

If it is a big villa that sees lots of entertaining, additional service bathrooms are welcomed and desired for maximum guest comfort (notably few people will weigh up this aspect when selecting a villa for a gathering).

Number of bedrooms

I am commonly asked questions like “What rents better? 4 bedrooms, or 6?”  The answer is the market is really divided into one-bedroom villas (normally found only in resorts or villa complexes) and then multiple-bedrooms villa options.

Admittedly there are more people looking for 2-bedroom villas than 8-bedroom villas, but the moment you have more than one person/couple making a decision on accommodation it falls into the same booking parameters as every multi-room accommodation (there are roughly the same number of 3-bedroom requests as 4-bedroom ones).

Rental guests tend to shape their stays around what is on offer.  Someone finds a 5-bedroom villa being presented as a holiday option, and they fall in love with it – they will find another 4 bedrooms of friends and family to come and share and help them enjoy it

The other way rounds is 5 bedrooms of friends or family decide on a trip together and then cast around for options.  In parallel, 4 bedrooms of friends are looking for 4 bedroom villa options.

So there is no ideal configuration for market appeal.  It should be noted that the more bedrooms a villa possesses the better the economies of scale from both operational as well as a marketing and distribution perspective which will impact on yield.

Facilities

The more facilities that the villa can offer (this can be a barbeque, to a private movie theatre, to spa facilities), the better.  It helps distinguish it from other villas, it offers differing levels of appeal to its guests, and in the internet age we live in, the more additional features which can put on a listing will help to underpin the pricing ask.

Quality of those facilities and features is very important.  If a villa claims to do or offer something, it needs to do that well – or you wind up with dissatisfied guests and a loss in market appeal in a review-based modern world, which is especially relevant to travel options, one must be careful about execution of such.

As the villa industry grows from a cottage industry to an increasingly developed one, a growing list of heavily desired aspects, bordering on ‘musts’ for villas at the luxury end, include:

  • A swimming pool
  • Wi-Fi connection
  • Reliable and reasonably high speed internet connection
  • Backup power facilities
  • TVs in every bedroom*
  • Privacy

(*Personally I think that people renting a house in the tropics should have access to an absolute minimum of 2 screens in any house – one for the adults and one for the children.  Having said that there is a large portion of the market who expect a personal AV solution for each bedroom as that is what they have come to expect from the hotel market/personal preferences – so this impacts on desirability.)

Events

One of the dimensions of villas that sets them apart from hotels is the ability to entertain.  Villas will normally be expected to able to host its sleeping capacity without question.  If it’s a large villa, one thing that should be reviewed carefully is its suitability for events – events normally translate into weddings in the commercial market.  Sunset facing and proximity to ocean are the biggest selling factors externally for this.

Then it becomes about what the villa offers internally.  Is there a large flat space, either on the deck, or the lawn that is suitable for hosting a group of people? With the unpredictable weather these days, having the space to do a wet weather solution – either a marquee on the lawn or a large room inside the villa which can host in inclement weather will add value to the villa’s commercial appeal.

Maintenance

Good maintenance is something that is not easy to accomplish, but looking after the materials and equipment of the villa has a direct impact on its desirability in the rental market (and also its appeal to the property market).

Regular guests from rental bookings can assist with this – houses in the tropics do much better when they are lived in and being used.  Taps get turned, switches get flipped.  Anything fails, it will be reported by either the owner or guests to the onsite staff and it gets repaired.  Staff stay on their toes and service levels are consistent.

Quality of Cooking

Food is one of the major reasons visitors come to Thailand.  If you haven’t got the food right there is a problem and it will complicate everything else you do.

Clients can get sold on the architecture and stay once, but they will not return if they do not have a good culinary experience when they are at the villa, nor are they going to recommend it to others, ruining potential word of mouth business which is critical in the villa industry.

Quality of staff

Service is the secret sauce which makes everything else work to its potential.  Reasonable levels of English are important to let foreign guests interface with the staff and enjoy their holidays.

Consistent delivery in terms of client requests is needed.  Staffing can be done at various levels from housekeeper to butler but what clients care about the most is its smooth functionality and reasonable delivery of standards promised/expected.

It should be remembered that good service will hide a number of sins and potential drawbacks in a property if done well.

Having a professional management company which can structure the onsite team and provide backup resources is normally the most efficient way to succeed in this area.

Marketing materials

Building, designing and decorating a fantastic villa is one challenge, being able to convey to remote parties as in over the internet the villa’s wow factors, facilities and appeal, and achieve top rental rates is a separate one.

Top end professional photograph is a must.  A visual identity for the villa must be established and woven carefully through all the villa’s marketing materials to present to potential holiday renters.

Pricing

Pricing needs to reflect all the other variables referenced above.  Comparable villas should be carefully reviewed to ensure that pricing is realistic vis-à-vis the market.

When pricing, dimensions such early bird pricing offers, reduced occupancy prices, last minute booking price should be considered.  These are not all necessarily required however let’s remember villa time is like an airline seat so extracting some value before the plane flies empty often makes sense.

Summary

The sum of all these above factors which will determine its appeal to the market.  You have a fantastic villa but if it’s not priced correctly, it will have very low chances of success.  A great looking villa with poor operational management will underperform. Great service and operations, but poor marketing will also bring sub optimal results.

Think through every dimension of the guest experience, work to your villa’s strengths and do what you can to compensate for its shortcomings, and things will come out well.

 

PHOTOS: Christopher Leggett

- Ian Macaulay

Previously living in Bali for over a decade, Ian Macaulay, has now been living in Phuket for 2 years. Ian founded and ran one of the largest villa companies in Asia and now heads a company specialising in marketing & distribution of rental villas, the Luxury Villas of Asia, which recently brought the 7 bedroom Aquila to market.

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Pavilions Hotels & Resorts announce two important acquisitions

The Thaiger

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The Pavilions Hotels & Resorts has made two important appointments as it continues to expand its portfolio and strengthen its management team.

Scot Toon takes on a new role as the company’s Managing Director, Asia while Tim Sargeant becomes the Director of Marketing for The Pavilions Phuket. Both are highly skilled and experienced hospitality professionals who join The Pavilions Hotels & Resorts.

“I am delighted to welcome Scot and Tim to The Pavilions Hotels & Resorts as we continue to build an outstanding team of talented individuals. We are committed to recruiting the industry’s brightest professionals and I’m certain that both gentlemen will be great assets to our team,” said Gordon Oldham, Founder and CEO of The Pavilions Hotels & Resorts.

“Scot is a seasoned hospitality leader and international GM with a proven track record, while Tim is a rising star who is ready to take the next step in his impressive career. I look forward to working closely with both of them,” Mr Oldham added.

Scot Toon (left) Tim Sargeant (right)

Scot Toon, originally from New Zealand, had started at The Pavilions in January 2018 under a project capacity as Director Operations, responsible for a new PMS, Finance and POS system roll out across the entire group (Asia and Europe) before being appointed MD Asia. He had worked for Qantas before entering the hotel industry in 2000 at the prestigious Hayman Island resort in Queensland. He went on to work with a series of leading hospitality brands, including Stamford Hotels & Resorts and Per Aquum, managing luxury resorts in Sri Lanka, the Maldives and Malaysia.

Scot moved to Thailand in 2009 to become GM of the five-star Paresa Resort in Phuket, before he switched to Kata Rocks Resort in 2014, serving as GM of the resort and Operations Director for its management company, Infinite Luxury. He now embarks on a new phase in his distinguished career as MD Asia for Pavilions Hotels & Resorts.

“It’s an exciting opportunity for me to manage and work with the talented team at The Pavilions Hotels & Resorts as we develop and grow the brand in Asia to complement the company’s parallel expansion in Europe,” said Scot.

Tim Sargeant is an exciting young hospitality professional with 15 years of experience. Having commenced his career in the restaurant trade in his native New Zealand, Tim became Food & Beverage Manager at The Spire, a boutique hotel in Queenstown in 2011 before moving to Thailand in 2013 to oversee the pre-opening of Novotel Phuket Kamala Beach as Marketing & Events Manager.

He joined Kata Rocks in 2016, becoming Marketing & Events Manager for the resort and organizing exclusive events. As Director of Marketing for The Pavilions Phuket he plans to introduce his fresh, dynamic approach to the resort.

“I’m thrilled to join the team as Director of Marketing and take on this new chapter of leadership. Now is an exciting time for The Pavilions Phuket and The Pavilions Group as we continue to expand globally and I look forward to delivering on our mission with the team, along with creating memorable experiences for our guests,” said Tim.

In addition to its aggressive expansion into Europe with new openings in Madrid, Lisbon and Rome, The Pavilions Hotels & Resorts continues to grow and diversify in Asia. The company recently announced a new pop-up adventure travel concept in Mongolia and will combine luxury branded residences with a stylish new hotel in the popular Japanese ski resort of Niseko, Japan, scheduled to open in 2020.

To discover more about The Pavilions Hotels & Resorts, please click HERE.

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Stunning new Lux Neo project at Chaweng, Koh Samui

The Thaiger

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Lux Neo is now available, combining stunning sea views and outstanding modern design. Lux Neo is the newest award winning project by the “Neo” team with critiqued unique villa design and award winning styling. Click HERE to read more about the Neo design team and some of their otters award-winning projects.

This magnificent site offers a unique combination for in Thailand – inspired design, value, astonishing views and quality. Designer two or three bedroom villas are now available with sea views to Chaweng Noi and just minutes to the main attractions, beaches, shops, airport and the main Chaweng shopping and beach areas.

The “Lux” location is 18 Rai of premium Chaweng Noi sea view land with “Neo” being a private 12 plot residential development featuring the uniquely inspired villa style. The highly desirable location of Chaweng Noi is just 1 kilometre away from some of Koh Samui’s best beaches and restaurants.

These luxuriously designed spaces include vaulted double height ceilings, mezzanine floors, large open airy spaces, modern terrazzo bathrooms and mezzanine bedrooms – all with breathtaking views of Koh Samui offering unparalleled design with nothing else like it in South East Asia.

Prices start from 8.8 million baht for the 2 bedroom villas ranging up to 12.5 million baht for the 3 bedroom villas.

Read more about the details of this stunning Samui development or make enquiries HERE. You will be able to find out a lot more information as well as compare the new Lux Neo to other projects in the area.

Go to property.thethaiger.com when you want to search for Thailand’s largest selection of properties.

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Habitat Group launches three projects valued at 3 billion baht

The Thaiger

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Habitat Group is poised to launch three new projects with a total value of 3 billion baht in the second half of 2018.

Recognising the growing trend of buying properties for investment, the company reveals this sector is growing 10-20% per year and foreigners looking to invest in property assets are making up a increasing part of that growth each year.

The Group has had a record first quarter this year with sales of 1.9 billion baht, a 63% increase on 2017, and is well on target for 12-month sales of 3 billion baht in 2018.

Mr. Chanin Vanijwongse, Chief Executive Officer of Habitat Group, the country’s leading property-for-investment developer, commented, “We will be launching three new luxury development projects worth a combined 3 billion baht during the second half of 2018. These residential and for-investment condominium developments will be located in the heart of Bangkok and Pattaya.”

Two of these new condominium developments will be launched in Q3 2018 under the Group’s ‘Walden’ brand, and are luxury low-rise condominiums for residence and investment. Located in Sukhumvit 39 will be the 950 million baht eight-storey 116-unit condominium ‘Walden Sukhumvit 39’ with sales starting from 5.6 million baht per unit.

Another 800 million baht project called ‘Walden Sukhumvit 31’ will be a luxury eight-storey 104-unit condominium located on Sukhumvit 31, also with sales starting from 5.6 million baht.

“Sukhumvit area is an important business hub and an area we believe will continue to grow. In addition to residential offerings, Sukhumvit is considered a “complete location” with offices, five-star hotels, shopping malls, tourism, hospitals, and educational institutions.

Walden Sukhumvit 39 and Walden Sukhumvit 31 offer convenient commuting for residents who can use the mass transit system to get around Bangkok easily, as well as being conveniently located nearby to shopping malls such as EmQuartier and Emporium, as well as many well-known schools.

The Walden Sukhumvit 39 and Walden Sukhumvit 31 developments have a different business model to the Group’s branded-resort developments in Pattaya, as they will be available both for residence and investment. Habitat Group’s hospitality arm, Habitat Hospitality, will be managing the properties and facilitating rent for owners. The company will work to support rental ROI for investors, and also ensure that developments see a capital appreciation of 3-5% annually.

The third development to be launched in 2018 is located in North Pattaya with a project value of 1.25 billion baht, and is planned for a Q4 launch. The project will use an investment model with guaranteed returns, and it will be managed by a well-known US hotel chain.

Habitat Group’s sales in H1 2018 totaled 1.9 billion baht, up 63% year-on-year and already surpassing total sales in 2017, which were 1.298 billion baht. The Group forecasts total sales for 2018 to reach 3 billion baht, a 131% year-on-year increase.

This record performance is on the back of successful sales at X2 Pattaya Oceanphere, which is 70% sold; the resort-style condominium on Na Jomtien Beach, Best Western Premier Bayphere Pattaya, which is sold out; BluPhere Pattaya managed by BW Premier Collection, which is also sold out; Wyndham Atlas Wongamat Pattaya which is 90% sold; the ultra luxury residence LEROY Ruamrudee, which is 100% sold; and Walden Asoke which was only launched in March 2018 and is already 80% sold.

“The Thai economy offers a positive trend for property investment. With interest rates lower than 1%, and since stock investment comes with risk and a chance for loss, investors want to diversify their portfolios with less risky assets that offer steady returns, and the property market is an attractive option. Statistics have shown an annual growth of 10-20% in number of real estate investors, while long-term investors in this market continue to invest,” added Mr. Chanin.

Thai investors remain Habitat Group’s largest market at 60%. The remainder come primarily from Singapore, Hong Kong and China, with the latter being the largest nationality of international investors reaching almost 40% of the total. Other international markets on the up include Europe, the Middle East and Myanmar which together are showing an annual growth rate of 20-30% for Habitat Group.

In the case of Habitat Group, guaranteed rental yields of 6% for five years are offered. All Habitat Group developments are in prime locations with award-winning architecture and design, as well as quality built-ins and electric appliances, ensuring yields are high and with land prices continuing to trend upwards investors will profit from this with 3-5% capital gain yearly.

“Incoming foreign investors to Thailand are one of the main disruptors to the real estate market, however, Thai investors remain a big part of the market.

Interest in Bangkok’s Central Business District will continue to grow due to limited supply, therefore I see the trend for buying a second residence in the heart of the city or owning an asset for rent will continue to attract expats working in Bangkok, such as European and Japanese residents, as well as Thai people.

Habitat Group’s development projects for investment purpose thus answers this need very well. We will help investors take care of all management aspects including yields and returns, rental contracts, and maintenance. As for our projects in Pattaya, investors can use their room for upto 14 nights per year and booking will be managed by the respective five-star world-class hotel chains we work with to ensure the best return for our investors,” concluded Mr. Chanin.

For more information please visit HERE or call 02 168 8266 or 081 451 0002.

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