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What makes a good rental villa?

Ian Macaulay

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What makes a good rental villa? | The Thaiger
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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.

What makes a good rental villa? | News by The Thaiger

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.

What makes a good rental villa? | News by The Thaiger

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

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Interested in more property news or buying property in Thailand - check out FazWaz today!

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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Bangkok

Silom Road tops as the most expensive area to buy land in Bangkok

Caitlin Ashworth

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Silom Road tops as the most expensive area to buy land in Bangkok | The Thaiger
PHOTO: Unsplash: Paul Szewczyk

Silom Road, Bangkok’s nightlife district, is the most expensive area to buy land in Bangkok, followed by Phloen Chit Road, according to data the Treasury Department gathered from 2016-2019. The pandemic may have fluctuated the prices, but no data on land value for 2020 has been reported by the department. They also say only asking prices were recorded, so it’s unclear how much the price decreased by during negotiations.

On Silom Road, land prices per square wa are up to 1 million baht while land on Phloen Chit Road have been reported to cost up to 900,000 per square wa. A square wa is about 4 square metres. Land on Rajadamri Road ranges from 750,000 baht to 900,000 baht per square wa. The cheapest areas to buy land in Bangkok are farmlands in the Bangkhuntian district. Land prices range from 500 baht to 10,000 baht per square wa.

Properties on Silom Road are also the most expensive in Bangkok. The price for a 170 square wa 4 storey office on the road costs around 155 million baht, according to the data. The highest asking price was 7 billion baht for a 37 storey office building on Sathorn Road.

Here are the top 10 most expensive areas to buy land in Bangkok:

1. Silom Road at 700,000 baht to 1 million per square wa

2. Phloen Chit Road at 900,000 baht per square wa

3. Rajadamri Road at 750,000 baht to 900,000 baht per square wa

4. Rama I Road at 400,000 baht to 900,000 baht per square wa

5. Wireless Road at 500,000 baht to 750,000 baht per square wa

6. Sathorn Road at 450,000 baht to 750,000 baht per square wa

7. Yaowarat Road at 700,000 baht per square wa

8. Thaniya Road, Pattanapong Road, Pattanapong II Road at 600,000 per square wa

9. Narathiwas Rajanakarin Road at 280,000 baht to 600,000 baht per square wa

10. Ratchawong Road, Sampeng Road at 550,000 baht per square wa

SOURCE: Nation Thailand

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Property

Thailand’s property market and Covid-19

The Thaiger

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Thailand’s property market and Covid-19 | The Thaiger

The Coronavirus outbreak poses challenges for Thailand’s property market as potential Chinese condominium buyers remain stranded in China. Meanwhile, some believe that the outbreak may bring opportunities for non-Chinese buyers and in the long-run, the Chinese may be looking for an overseas refuge in the event of these types of emergencies popping up again

Of course, it’s not just the Chinese not being able to come and inspect potential buys, the rest of the world is also currently shut out of Thailand.

Market remains weak

The pandemic is hurting the condominium market as Chinese nationals were accounting for half of the international buyers in Thailand, or 57.6% of the total foreign condo owners in 2018.

Vichai Viratkapan, acting director-general of the Real Estate Information Centre says that 50% of Chinese condo transfers are expected to disappear in the first 2 quarters of this year and the total transfer value by the Chinese will miss the mark of the usual 29 billion baht by about 25% (around 7 billion).

However, since Chinese property buyers only make up 6% of the total international and domestic housing transfers in Thailand, the proportion of total housing transfers in the country is likely to be similar to last year.

Developers looking to sell current stock whilst shelving new projects

CBRE reports that most Thai developers are postponing the launch of new condo projects to focus on clearing existing stock.

“Discounting completed projects to generate quick revenue as a financial lifeboat is the best solution for many of the country’s larger developers whilst the market is in limbo.”

Rathawat Kuvijitrsuwan, head of CBRE Research and Consulting in Thailand believes that, now business is gradually recovering, a few developers have started to launch new condominium projects.

“In the first half of 2020, the Bangkok condominium landscape was gloomy with fewer than 10,000 condominium units launched, which was much lower than the total number of new launches in the past three years of more than 60,000 condominium units per year.”

The Chinese are reluctant to complete transfers

The virus has continued to affect hospitality operators, including hotels and condominiums that service tourists, nationwide. Since China has suspended tours, put restrictions on movement, and locked down cities, home to over millions of people, it also poses a threat to real estate developers as their clients are unable or unwilling to fly.

“Currently multiple off-plan condominium developments are approaching completion, and Chinese clients are unable or unwilling to transfer. Chinese clients who made a reservation in Q4 2019 are requesting a refund and withholding their investment,” said Marciano Bijmohun, Business Development Director at FazWaz Property Group.

He believes every condominium that is in transfer status will see the percentage of non-transfer units rise in the coming months.

“These non-transfer units will cause a big financial hit to developers.”

If a client refuses to transfer, does not comply with the terms and conditions stipulated in the sales and purchase agreement, and decides to release the property, their deposits will be forfeited.

“However, there is some good news, these non-transferred units can be offered with a discount to new clients.”

Also, as China has been susceptible to a few disease outbreaks – from bird flu to the current coronavirus – it may prompt Chinese buyers to look for second homes outside of China.

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Thailand

Thai condo developers clearing inventory rather than starting new projects

The Thaiger

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Thai condo developers clearing inventory rather than starting new projects | The Thaiger

“With waves of uncertainty and financial stress crashing into the market from the COVID-19 pandemic, most residential property developers have decided to postpone their plans.”

CBRE, the international property consultants, reports that most Thai developers are postponing the launch of new condo projects to focus on clearing existing stock. Discounting completed projects to generate quick revenue as a financial lifeboat is the best solution for many of the country’s larger developers whilst the market is in limbo.

Rathawat Kuvijitrsuwan, head of CBRE Research and Consulting in Thailand believes that, now business is gradually recovering, a few developers have started to launch new condominium projects.

“In the first half of 2020, the Bangkok condominium landscape was gloomy with fewer than 10,000 condominium units launched, which was much lower than the total number of new launches in the past three years of more than 60,000 condominium units per year.”

Since June, CBRE Research says new condominium projects, along new extensions and future routes of mass transit lines, with starting prices under 2 million baht, and those along existing mass transit lines are usually priced lower than 3 million baht.

“On the other hand, there has been no newly launched condominium in the high-end and above segments this year due to the high level of unsold supply and high land cost in prime locations. Investors have become more cautious in spending a large amount of cash during these uncertain times.”

“Some of the newly launched condominiums have had a good sales rate during their first launch. Most of these projects have been launched with a product and pricing that are mainly targeting large demand from buyers with lower-purchasing power and are located in an attractive location with limited available condominium supply in the area.”

But despite the slowdown of general activity and the current sales and promotions to dispose of excess stock, over 60,000 condos are expected to be completed this year and around 80,000 units each year over the next 2 years.

“With over 140,000 condo waiting to be transferred over the next 2 years, there is a possibility that a large number of booked units could return to such a volatile market as some cash-strapped buyers could decide not to transfer their units.”

“The future of the condominium market depends on the direction that residential developers will take collectively. With the 10 year record low number of newly launched condominium projects, this is the moment for the market to correct its long-standing oversupply and overpricing issues.”

CBRE Research believes that there are still opportunities for developers, including the 4 under-construction mass transit lines that are expected to be completed in 2022, the new Bangkok City Planning that will unlock many new locations for condo development and foreign demand that will come back… eventually.

To find the best range of condos, houses and villas, around Thailand, click HERE.

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