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The announcement of two major investments in Phuket the very week the military coup took place and the huge success of the Barama Bay project clearly show the recent political upheaval has not affected the popular resort island, says Bill Barnett, the managing director of C9 Hotelworks.

Kingdom Hotel Investments, controlled by the billionaire Saudi Prince Alwaleed bin Talal, has bought land across the bridge in Phangnga to develop a new hotel and villas. The proposed Raffles Phang Nga Resort and Residences will have 150 rooms and 25 luxury villas and is expected to start operations in 2009. The investment is estimated at US$115 million. Kingdom Hotel earlier this year made its first investment in Phuket, acquiring the Karon Beach Hotel Phuket and rebranding it as a Movenpick. Destination Properties Company also acquired Felix Resort, a 125-room beachfront resort on Karon beach, which will also be rebranded with an international name yet to be announced.

Mr Barnett said Barama Bay was probably the hottest project to be introduced in Phuket this year. Developed by TGR Group Asia, it is actually a private island off Phuket's east coast and will have a five-star resort to be managed by the Dubai-based Jumeirah Group. There will be 79 pool villas with prices starting from US$3 million, plus a host of facilities including a 73-berth marina and yacht club. "I think Barama Bay is unique because everyone is saying. 'How can you top Amanpuri? How can you top Banyan Tree?"' Mr Barnett said, referring to two of the region's most exclusive resort brands.

"But by having a private island you're only a few hundred metres from the mainland. How much more exotic can you get than having your own island?" Barama Bay also underscores the trend toward purchasing properties linked to a hotel operated by an international chain. Also strengthening the Phuket property market outlook is the recent announcement by Dragonair that it is relaunching flights to Phuket, expected to be twice daily, from Dec 15 onward. "So that is reinforcement of confidence in the marketplace."

Mr Barnett acknowledged that some concerns may have developed among individual investors about the nominee structure that a few had used to acquire real estate in Phuket, especially in light of the controversy over foreign holdings in major businesses, notably Shin Corp. "I think that certainly, perhaps from the individual investor standpoint, there is the discomfort of not knowing. People don't know what the government policy will be but I think there hasn't been a change in the law, the law has always been the law."

Kingdom Hotel's move into Phangnga and the Barama Bay project add impetus to development shifting away from Phuket's west coast to the neighbouring province and the island's east coast where land is comparatively cheaper. Mr Barnett has seen asking prices for oceanfront land on the west coast at 25 million baht a rai, but says prices would be anywhere between half to one-quarter of that figure in Phangnga.

However, those thinking of buying land cheaply in Phangnga and waiting for values to rise may have already missed the boat. Meanwhile, two other hotel ventures are being considered for the area in Phangnga where the new Raffles is to be located. "A major hotel market will be created in five years," Mr Barnett says of the province north of Phuket. Many have said there is no hotel market on Phuket's east coast but things are changing.

Among the new arrivals are the Sri Panwa and Conrad hotels at Panwa Bay, and the upcoming hotel at Cape Yamu, to be called The Yamu and managed by GHM Hotels. As well, Royal Phuket Marina looking to develop a 50-room hotel at its spacious site where all of the condominiums have been sold and more residences are in the pipeline, and of course Barama Bay.

Another interesting trend on the island is that resales are becoming more of a factor this year. Mr Barnett says this is not necessarily a bad development but a sign of a maturing market. "We have initial investors already exiting the market but yet new investors are coming in." The resale market is quite healthy with people having doubled their money selling properties in Phuket over the past three years. "We warn our buyers this isn't to be expected but certainly there are transactions out there that happened and I think it's a good thing."

Asked to identify any unsuccessful developments in Phuket, Mr Barnett said it was hard to think of any lately, though some properties developed inland in the early years of the tourism boom turned out to be less promising than thought. "Phuket over a period of time has come from a very immature development to a more mature market," he said. "During that period there has been a learning curve. We've seen developers entering the market with projects that were not necessarily feasible, and you can see those projects have not succeeded."

This article was first published in Bangkok Post November 6th 2006