Land prices in Kanchanaburi province, especially in areas closest to the Dawei special economic zone in Myanmar, have risen 10-fold and will continue to go up.
Baan Phu Namron near the border has sen the highest rise in land prices over the past year, to six digits per rai now five digits.
Suchin Jienjitlert, assistant managing director of the River Kwai Village Hotel, said some buyers are aiming at land speculation.
Major investors came from other provinces to buy land in Kanchanaburi, he said.
The most popular area is Baan Phu Namron, which is close to the Dawei development project in Myanmar.
"The problem is many land plots in Kanchanaburi have no legal documents or are owned by the Army or Treasury Department. This will lead to a future problem similar to the forest encroachment in Nakhon Ratchasima's Wang Nam Khieo," said Mr Suchin.
Kanchanaburi is expected to be a key checkpoint and western gateway for Thailand in the future.
Mr Suchin said the Dawei project will bring businessmen and expats and create room for middle- and upmarket hotels.
Songwut Sealdanchan, president of the Tourism Promotion Society of Kanchanaburi, said Thai hoteliers may reap benefits in the first five years after the Dawei deep-sea port operates since hotels in Myanmar are expensive and less convenient compared with those in his province.
"After five years, I'm not sure we'll be able to keep all the benefits to ourselves, as there will be luxury hotels in Myanmar as well. We should be realistic and prepare ourselves for that," he said.
Local hoteliers must upgrade their services and products, as investment from other provinces and countries will arrive soon, said Mr Songwut.
He said the maximum investment budget of local investors is 100-200 million baht, while foreign investors have virtually no limit.
Local hoteliers will face difficult times, as new investment will offer better products at similar prices.
"Investment through nominees cannot be avoided. The question is how to survive when they come," said Mr Songwut.
There are now 10,000 hotel rooms in Kanchanaburi, only 10% at five-star hotels.
This means the five-star hotel segment has plenty of room to grow.
The number of tourists visiting the province will increase to 8 million for revenue of 5 billion baht this year, up from 7 million visitors for revenue of 4 billion baht last year.
Thai tourists make up 80% of total arrivals.
Dawei has seven hotels, and the average room rate is twice that of hotels in Kanchanaburi.
The Tourism Authority of Thailand (TAT) predicts the Dawei project will be a key factor boosting international tourist arrivals to Kanchanaburi by at least 30% after the first phase of the special economic zone launches in 2016.
TAT governor Suraphon Svetasreni said the number of business travellers to Kanchanaburi will significantly increase in the future.
The Myanmar government has granted Italian-Thai Development Plc a 75-year concession to develop the special economic zone in Dawei.
The project covers 647 square kilometres, 10 times the size of Rayong's Map Ta Phut Industrial Estate in Rayong.
Dawei is about 350 km west of Bangkok.
The Thai government is in the process of developing a motorway from NonThaburi's Bang Bua Thong district to Kanchanaburi.
The route will connect with another one running to the border with Myanmar to facilitate logistics at Dawei.