Andrew Bond
The swimming pool at The Dhara Dhevi Mandarin Oriental
Hotel
While residents of Chiang Mai, Thailand are breathing a
collective sigh of relief that the Ratchaphruek Royal Flora festival is now
over, developers have keenly noted the windfall some made from the city’s
biggest influx of tourists ever. With three million visitors in three months
it demonstrated the very real future of this northern tourist centre, as
well as the effect it’s likely to have on the property market.
In issue 26 of Property Report Thailand, we reported on
the construction of a 22 storey Le Meridien hotel that was changing the face
of Chiang Mai’s Night Market area. When it’s complete in 2008 this enormous
high-rise will join big names such as Shangri-La, Mandarin Oriental,
Sofitel, GHM (Chedi) and Pan Pacific, along with the Dusit Group’s new D2
concept and the long-established Four Seasons.
Both the Hyatt and Banyan Tree are rumored to also have
future plans in this city, once regarded as a quaint guesthouse venue in the
north of Thailand. Yet just three years ago only one of these existed. The
question on the minds of many in the hospitality industry is whether this
sudden flood of luxury rooms will be sustainable? The question on the minds
of realtors is: how much is it going to inflate property values?
A look inside one of the suites at the Four Seasons Hotel and Resort
But these are big names with big money and they certainly
would have done their homework before moving in. The fact that several have
simultaneously gone ahead sends out a very strong signal that Chiang Mai’s
tourism is not only set to increase but go markedly up-market as well. As we
have seen in other tourist centers, it tends to set off a buying and
development spree in the adjacent areas and this has already become evident.
According to several opinion leaders we spoke to, the
single biggest catalyst has been the announcement by the ousted Thaksin
government to develop a large convention centre as part of the deposed prime
minister’s grand tourism design for his hometown. Although those plans may
now be on hold, the current tourism minister assured a local hotel manager
recently that it would still go ahead. But even without it, the improvements
to infrastructure and tourist profile are having an effect. The completion
of an international air terminal and the publicity from the Flora Expo has
raised the city’s profile. The hospitality industry seems bullish, and this
has been demonstrated none more clearly than the creation of the Dhara Dhevi
in San Khampeng. This 60 rai Lanna and Burmese-themed masterpiece under the
Mandarin Oriental banner is an extraordinary work of art featuring
purpose-built temples and palaces from long gone kingdoms. It ranks as one
of Thailand’s most ambitious hotel projects and is aimed firmly at the super
rich. Even if the city has yet to attract that kind of tourist numbers, it’s
an excellent confidence booster for Chiang Mai as a destination, attracting
gob-smacked travel journalists and TV crews.
Another bold move is that of the uber-trendy D2 boutique
hotel in the heart of the Night Bazaar area. Developed as a pilot project,
it signals a new direction for the Dusit Group which specifically chose
Chiang Mai as a more accurate litmus test for its funky new hotels. It’s
targeted at urban hipsters, and is a counter move to the usual Lanna style
and soft-adventure sales pitch. The attention to stylized detail is
refreshing and it detracts from the hotel’s position among street-side
vendors and girlie bars. But the decision to develop a renovated hotel in
this bustling area was a shrewd one considering the recent hike in property
prices since the TCC Group snapped up a clutch of properties here. Their
recent acquisitions include the Kalare Centre, Chang Klan Plaza, Anusarn
Market and Panthip Plaza, as well as building the new Le Meridien which will
occupy one of the city’s prime corners.
Nearby is another chic new hotel, the Chedi, and we spoke
to GM Eleanor Hardy about her impressions of Chiang Mai’s outlook. A
relative newcomer to the North, Hardy feels confident of the city’s appeal,
provided it doesn’t try to copy Phuket, and lose its charm in the process.
The Chedi itself is an interesting property case study, for it incorporates
the former British Consulate building – a grand colonial edifice that
occupies an enviable position besides the Ping River. Other new hotels, such
as the popular Tamarind Village, have incorporated historic or neo-Lanna
buildings into their development to retain the character of this
700-year-old city.
But the coveted riverfront position also proved
disastrous when unprecedented floods in 2005 wrecked the hotel’s ground
floor and basement installations, six weeks after it opened. The deluge
might have had a profound effect on property in the area but the enormous
Shangri La going up further down Chang Klan road has buoyed confidence, and
the recent opening of a Lacoste outlet is evidence that posh retailers rate
this street’s potential. Hardy sees the floods as a freak one-off and is
confident in their future. “When the big marketing machines of the Sofitel
and Le Meridien kick in, it is hoped all of Chiang Mai will benefit,” she
says.
The most famous of Chiang Mai’s luxury hotels is
undoubtedly the Four Seasons, out in Mae Rim. Frequently mentioned as one of
Asia’s best hotels in travel magazines, the hotel was a pioneer in the
luxury concept more than 10 years earlier. It’s set around rice terraces and
offers a complete hideaway experience that has attracted the likes of Hilary
Clinton, among others. It also offers an interesting benchmark on what
happens to property in the area. A serene lakeside housing project was
subsequently developed across the road and trendy galleries and coffee shops
gradually filled the pretty rural road adjacent to the hotel. A little
further down, a futuristic luxury development named Baan Azaya is marketing
itself as a “unique investment opportunity.”
Four Seasons general manager Andrew Harrison is cautious
about the expansion. “We need the airflow, particularly from cities in China
and India,” he says. He also shares the cynicism of many about Chiang Mai’s
ability to step up to the challenge the boom is creating. For instance,
guests staying at the Dhara Dhevi’s US$500 a night rooms first have to be
limousined past a sham-bolic road construction debacle that has been mired
in incompetence and graft for the past two years. “If Chiang Mai goes
up-market,” Harrison says, “it cannot exist with screwed up pavements and
the Night Market the way it is now.
“We have to be careful this five star tourism is matched
by city services, otherwise we won’t survive at this level if we don’t keep
up.”
But even if the public sector displays a typically
lackadaisical northerner’s approach, the private sector isn’t waiting
around. Sunday Night’s walking street has breathed new life into the
property along Ratchadamoen Street. The opening of the smart new Kad Klang
Wieng “cultural arcade” is evidence of the gentrification going on in these
areas. In February last year, Property Report documented the emergence of
Nimminhemin street and since then parts of this “avenues” suburb have become
barely recognizable with trendy new arcades and modernist coffee shop
facades. Property prices on this street have become almost unaffordable for
residential use, but it wasn’t always like this. The Amari Rincome, Chiang
Mai’s oldest surviving luxury hotel, occupied the corner with Huay Kaew road
at a time when cow pastures comprised much of the adjacent land. Former GM,
Marc Dumar, who has witnessed 19 years of changing Chiang Mai, was
responsible for managing their property on the adjacent soi 1 with its
humble shop houses. Today it is one of the most exclusive retail streets in
the city, thanks to the annual Nimminhemin Arts and Crafts Festival which
has turned the entire area into a home d้cor Mecca.
The Chedi Hotel on the banks of the Ping River
Dumar is now overseeing the opening of the city’s newest
luxury hotel, the Sofitel. Set to open in March, it too has a riverside
location and meets all the expectations of modern up-market Asia travelers.
He has one major advantage too, the hotel is owned by the progressive mayor
Boonlert Buranuprakorn. There was a previous wave of hotel development in
the eighties, he explained. Big names have come and gone but he believes
this time around the development is more genuine. “We need more sports and
cultural events to keep the momentum going.
“The Royal Flora expo proved we can handle three million
tourists, it was mostly well organized and it filled up the lower-end
hotels, which pushing more foreign tourists to us.” Indeed, numerous
opportunist developers completed condos in time to rent them out for short
stays during the unprecedented flood of tourists.
And herein lies the real secret for smaller investors and
developers. A surprising fact to emerge was the lack of luxury serviced
apartments in the city. Twin Peaks, developed by Siam Zokie and aimed at the
Japanese ex-pat crowd, is one of the few luxury modern condos in the city.
Not surprisingly it sits right beside the new Shangri-La, and hasn’t had
trouble selling despite the ‘luxury price tags’. While many small boutique
hotels are opening up on quiet sois, more and more visitors are coming back
to Chiang Mai to spend months, not weeks here during the winter months. One
of the hotel GM’s we interviewed expressed frustration over the shortage of
high-end condos in the city, and pointed out that several of the hotel’s
guests had since returned and settled here. If they can afford five star
rooms, they’ll certainly be looking for new, comfortable, luxury-priced
serviced apartments. We had difficulty finding suitable suggestions other
than the newly opened Frangipangi, tucked away quietly behind the historic
Wat Chiang Man. Competitively priced compared to the hotels, yet offering a
similar level of comfort, it seemed an ideal answer for the up-market guests
that Chiang Mai is forecasted to attract.
Reprinted courtesy of Property Report Thailand - a leading monthly
publication available at local bookshops or online: www.property-report.com
