Istithmar's Thai resort set to open

Istithmar World will open its US$100 million (Dh367.3m) W resort in Thailand next month although none of the luxury residential villas that are a major part of the development have yet been sold. Selling the villas has been a challenge because of the global economic environment and recent political instability, the joint-venture partner in the project says.

The W Retreat and Residences Koh Samui has 75 hotel villas and 17 residential villas. The residences range in price from $2m to $6m, said Sunny Bajaj, the managing director of Amburaya Hotels and Resorts, the Thai developer that has partnered with Istithmar on the project. "Of course everyone takes a wait-and-see attitude before committing to buying such a property," said Mr Bajaj. However, he said that interest was starting to pick up.

"We're in the midst of negotiations for a couple of properties." Selling the villas had taken a "back seat", he said, as the company focused on opening the hotel, which he said would help boost interest in the properties. The resort is scheduled to open on November 1 and had already received bookings.

The island of Koh Samui, a popular tourist destination, is off the east coast of Thailand. The W brand is part of Starwood Hotels and Resorts. The property is to be the first under the W Retreat brand in Thailand.

Mr Bajaj said Dubai World's debt problems had not affected the project. Last December, Istithmar lost control of its W hotel in New York in a foreclosure auction. Istithmar also has stakes in the Fontainebleau hotel in Miami Beach and the Mandarin Oriental hotel in New York. "It hasn't affected the project because this project was fully-funded before any of the issues came about," said Mr Bajaj. "We have never had any problem."

Analysts said Bangkok's tourism industry in particular had been hit hard as tourists stayed away from the Thai capital because of political tensions. Strengthening of the Thai baht also hurt the sector. But Thailand's tourism authority was working hard to revive the industry, analysts said. The project is being completed amid adverse investment conditions in Thailand.

"The current investment climate in Thailand remains subdued as banks are reluctant to place pressure on mortgages which are in default," said Mike Batchelor, the managing director of investment sales at Jones Lang LaSalle Hotels.

"Hotel financing from Thai banks remains challenging, with stricter lending criteria being implemented. In contrast, we are witnessing a number of Thai groups over the past 12 months invest in hotel properties outside of Thailand at attractive prices. We expect to see this trend continue into the second half of the year."

Mr Bajaj said the resort would benefit from its remoteness from the mainland. Thailand remained a popular tourist destination, he said. "There's a lot of excitement and a lot of pent-up demand for Thailand. We're heading into the high season in December, so time will tell, but the indications are good."

rbundhun@thenational.ae