Law change may slow development in Phang Nga

A government change in zoning laws in Phang Nga province just above Phuket will most likely slow down the development of beachfront villas and hotels in the area.

The new ministerial regulations, which took effect July 3 and will run until July 2, 2015, cover the Kok Gloy and Tai Muang southern coastal areas of Phang Nga province and divide them into ten zones. Most beachfront land in the area has been designated as in forest conservation zones or agricultural zones, limiting new projects to single housing units or government use. The regulations also require more green area as a percentage of a plot, limiting the amount of development on a piece of land.

Phang Nga has increasingly come into the sights of resort developers in Thailand because it offers beachfront property, which is extremely limited across the Sarasin Bridge in Phuket. The area is already home to what is rumoured to be the most expensive villa in Thailand, Villa Beyond on Natai Beach, and the luxury Aleenta Resort & Spa, which offers suites and villas for sale and rental.

“The Natai strip in particular will suffer, however if you look at the extant beachfront development in Natai it has by and large been tastefully accomplished,” says John Howard, managing director of real estate law firm Tilleke & Gibbins Phuket International. “Upscale developments in the affected area have added considerable value to the local economy while preserving the beachside ambiance. It will certainly cause proposed hotel and villa estate developers to pause and reflect, with a possible flow on affect for land values and future development.”

Hong Kong-based law firm Mayer Brown JSM summarized the zoning change in a legal update, concluding, “clearly, the Ministerial Regulation 2010 will impact on the planning and construction of developments by developers who have completed land acquisitions or are going to acquire target lands. Further, details of land utilisation in each zone are different. Developers who intend to construct as new developments should therefore seek professional advice on the construction restrictions as determined by the Town and City Planning Law and the other relevant laws and regulations before commencing.”

Bill Barnet from C9 Hotelworks says that it’s too early to know exactly how much the law will change things for developers. “For now its early days and its not prudent to speculate until more information is key. the most critical is finding out what the act is specially trying to address, the intent, and how enforcement will be done.”

Barnett says that the law could be trying to stem the growth of big box stores rather than resorts. “The new act is apparently targeting the countrywide issue of the spread of international chains such as Makkro, Tesco Lotus, and Carrefour. It’s unlikely this is an ad hoc attempt to stem hotel or residential development, but goes broader to the issue of mom and pop retails businesses and how the hypermarts are seen to be encroaching. We are still seeking opinion on the application of the act so for now this is ongoing news.”