Anthony McDonald of X2 Group on Redefining Thai Resorts

Editor's note: This interview was originally published in 2013. Market conditions have evolved considerably, but the insights on branded resort residence investment in South-East Asia remain highly relevant. Since this conversation, X2 (Experience Squared) has grown into a recognised boutique lifestyle brand with properties across Thailand, Vietnam, Cambodia and beyond, cementing the philosophy Anthony outlines below.

Seven years before this interview, Anthony McDonald set foot in Thailand as a traveller. Dissatisfied with the predictable tropical aesthetic and what he described as "un-interesting, un-refreshing" service, he made it his mission to fill the gap. Today, X2 (Experience Squared) is a widely recognised resort and residence brand operating across South-East Asia. We spoke to Anthony, CEO and Co-Founder of the X2 Group, about his properties, the evolution of Thailand's resort market, and what buyers of holiday homes can expect from this part of the world.

The Interview

In brief, please tell our readers about your work in Thailand and your international expansion.

At the time of writing we were taking to market two new X2 Residences — in Koh Samui and Kui Buri — as well as planning new developments on Koh Kood and Phuket (X2 Kamala). These residences combine private pool villas and apartments that owners can buy as holiday homes and place into a managed rental programme. The concept mirrors what established brands such as Banyan Tree, W Resorts and Ritz-Carlton have done with their private residences, but at a price point that reflects an emerging brand rather than a mature one.

Our Sydney apartment — X2 Sydney — was also launched around this time: a four-bedroom luxury property with direct views of the Harbour Bridge and Opera House, offered to the executive vacation rental market. It signalled our ambition to take the X2 brand beyond South-East Asia, and in the years since the brand has continued to evolve across the region, with new properties in Vietnam and Cambodia adding further depth to the portfolio.

Please tell us about X2 Villa Chiang Mai and the thinking behind expanding beyond the traditional beach markets.

Chiang Mai was a deliberate move. We found a large five-bedroom pool villa in the centre of the city that we felt would translate the X2 brand perfectly into an urban context — luxury, privacy and strong design sensibility without the need to be beachside. It speaks to a traveller who wants to be immersed in a city's culture, not isolated from it.

Our broader thinking is that the obvious beach markets — Phuket, Koh Samui — are well understood by the international buyer. The more interesting opportunities lie in less-developed destinations where land values have not yet caught up with the trajectory of tourism growth. That philosophy guided our early focus on the Gulf of Thailand strip between Pranburi and Prachuab Khiri Khan, and on island destinations such as Koh Kood and Koh Chang. These areas had strong natural appeal and limited supply of quality resort residences, which is exactly the combination that protects long-term asset values.

Where in Thailand should a buyer look for property today?

The answer depends entirely on what a buyer values. Thailand is a mature market in parts and a frontier market in others. The traditional destinations — Phuket and Pattaya — have seen significant development over the past two decades. There is still room for niche quality products in both, but buyers need to be selective and must understand what genuinely differentiates one development from the next.

Our view has always been that uniqueness is the primary protector of asset value. If you buy a unit in a development of two hundred identical condominiums, you will compete with every other owner when you try to rent or resell. If you buy a limited-edition villa within a managed resort concept, in a location with restricted supply and strong tourism growth, you have a fundamentally stronger investment proposition.

Beyond Phuket and Pattaya, the Gulf coast destinations — particularly those between Hua Hin and Chumphon — remain underdeveloped relative to their appeal. Koh Kood, in the eastern island chain near the Cambodian border, offers white-sand beaches and protected marine environment with virtually no mass-market tourism infrastructure. These are the markets where buyers with a ten-year horizon and a tolerance for lower initial liquidity can achieve the most meaningful capital appreciation.

What is the typical buyer profile you see at X2?

The vast majority of our serious enquiries come from expatriates already based in South-East Asia. The profile tends to be 35 to 50 years old, successful, often running their own business, and working in a sector with a creative or entrepreneurial dimension — architects, media professionals, designers, technology founders. They are sophisticated enough to understand that they are buying a lifestyle asset that also has an investment dimension, not a purely financial instrument.

Geographically, the shift over the past decade has been striking. Where we once received significant enquiry from Europe and North America, we now see the majority of interest originating from Singapore, Hong Kong, China, and India. Wealthy Thai buyers — particularly past guests of our resorts — have also become a meaningful part of the X2 Kui Buri buyer profile. They understand what they are acquiring because they have experienced it firsthand.

Are most buyers at X2 investors or lifestyle buyers? What is the ratio?

The great majority are buying for lifestyle — a holiday home they will use several times a year, in a place they genuinely love. That said, these are sophisticated buyers and they do assess the investment angle: rental income potential, future capital gains, brand growth. The lifestyle motivation is primary, but it is supported by a credible investment case.

Very few buyers at X2 are purchasing with a view to using the property as a full-time primary residence. The model is designed around the second-home buyer who wants professional management, a strong rental programme, and a brand name that adds credibility when they eventually resell.

What should buyers look out for when evaluating a resort residence purchase?

Several things. First, the track record of the developer and operator. First-time developers frequently underestimate the cost and complexity of building to a genuine resort standard, and the operational challenges of managing a mixed-use property with owner-occupiers, rental guests and service staff. The failures happen early and they are expensive. Choose a company that has already built and run properties successfully.

Second, legal structure. In Thailand, as in most South-East Asian markets, foreign buyers cannot acquire freehold land directly. The legal architecture — whether leasehold, condominium freehold, or a company structure — matters enormously and buyers should take independent legal advice before committing.

Third, rental management. A villa that sits empty for ten months a year is an expense, not an asset. The quality of the rental programme, the booking infrastructure, and the management team's track record of occupancy and yield generation should be scrutinised carefully.

Finally, rarity. Limited supply in a compelling location is the single greatest driver of long-term value. Avoid any development where you cannot clearly articulate what makes it genuinely different from the fifty other projects for sale on the same island.

What about competitive supply around X2's own developments?

In our earlier locations — Kui Buri and Koh Kood — there was and remains very little competition. On Koh Kood in particular, X2 was the only villa development being offered for sale when we launched. That scarcity is exactly what we look for.

In Koh Samui there is more competition, but our research indicated no other condominium offering with freehold title within a five-star beachfront resort with a fully managed rental programme. The distinction matters. Most competing condos come with basic pool and gym facilities and leave the owner to arrange their own rental agents and maintenance. X2 takes care of every aspect — from rental marketing to accounting — which is a meaningful operational advantage for an absentee owner.

In Kamala, Phuket, the competitive set includes branded residences from Banyan Tree, Marriott and others. Our proposition there is that X2 gives buyers the structure and service standards of an internationally recognised brand, but at prices that reflect a brand still in its growth phase. The established brands have already appreciated to reflect their recognition. At X2 you are buying into a brand before it reaches that maturity — which is precisely where the investment upside lies.

What capital appreciation can a buyer reasonably expect over five, ten and fifteen years?

In our less-developed locations — Koh Kood in particular — we were confident at the time of launch that values would double within five years, driven by the combination of location growth and brand growth. Gulf coast destinations such as Kui Buri offered similar potential. In more established markets like Koh Samui and Phuket, overall land and property values move more slowly, and returns are more dependent on rental yield and brand premium than on underlying land appreciation.

What I would say more broadly is that the buyers who have achieved the strongest returns in South-East Asian resort real estate over the past two decades are those who committed to emerging locations and quality brands before the mainstream arrived. That window still exists in several markets, but it narrows with each passing year as international capital becomes more familiar with the region.

The fundamental principle does not change: buy quality, in a limited-supply location, with a professional operator, before the crowd discovers it. That is as true today as it was when we launched X2.