As reported by CBRE Thailand, for many years Phuket’s property market has been dominated by smaller, foreign property development companies. Generally, such developers are less well-funded and rely heavily on buyers’ deposits for construction to go ahead. As a result, when the financial downturn occurred many of these smaller developers struggled to continue, and were forced to postpone various construction projects.
The Phuket resort residential sales market has moved in phases since the 1990s but has experienced a slow down since the 2008 global crisis, given the market’s dependence on foreign demand. CBRE believe the market is now ripe for another positive phase of development which is characterised by changes in the key players, the product, as well as the buyers’ profile.
Despite a global financial crisis four years ago that postponed many property development projects, CBRE Thailand has reported that the real estate market in Phuket is once again ready for another phase of positive development. Managing director of CBRE Thailand, Aliwassa Pathnadabutr attributed Phuket’s new lease of life to changes in the key players involved, the products available and the profile of the potential property buyer.
However, CBRE Thailand states that many of the developers involved in Phuket’s current property market are much larger corporations, some of which are publicly listed. In addition, today’s property market in Phuket is made up of both foreign and Thai developers. Such changes have boosted the professionalism of the property market in Phuket. Today’s chief developers in Phuket include Supalai, SC Asset, Sansiri and Land & House, and are corporations that are already well established in Bangkok’s property market.
Even though most of these developers historically target the affordable mass market with their property development projects, many are shifting their attention towards the resort home market, and to foreign investors.
Pathnadabutr reports that the rising number of tourists visiting the island each year means a higher potential for new sources of resort property buyers. According to Pathnadabutr, the majority of potential buyers are from countries with emerging economies, particularly Russia and China. Furthermore, tourist numbers in Phuket received a boost from the start of direct flights to the island from the Middle East. Convenient access from the gulf region may propel future demand for Phuket’s resort residential properties, according to Pathnadabutr.
Pathnadabutr also emphasises that Thai property developers already established in Bangkok have the potential to attract their existing Thai client base to Phuket, even if it was not a destination where they had previously considered purchasing property.
An important consideration for potential buyers is the affordability of property, particularly in the resort condominium sector. CBRE Thailand report that there is consistent demand for properties within the THB5-15 million (US$164,000-490,000) price range. Pathnadabutr points out that in addition to being competitively priced, projects in Phuket must also be well designed to satisfy the new wave of demand, and be comparably larger than unit sizes in Bangkok or Pattaya to maintain the luxurious resort atmosphere.
According to CBRE Thailand, future property developments to look out for in Phuket are Amari Residences, situated in one of the island’s most exclusive areas, in addition to Rosewood’s branded villas developed by New World located on the Emerald Bay, Patong and Anantara-branded luxury villas in Layan.
West is clearly still the best. Whilst prime west coast sites are scarce, projects launched in these locations will continue to do well as it remains the key area sought after by resort property buyers. West coast areas from Karon up to Bang Tao have been the core areas for residential developments. Today, the areas north of the airport such as Mai Khao are now playing catch up.
The development of Mai Khao is to some extent similar to Bang Tao with the launch of Laguna Phuket, but in a more advanced phase given the area already has a number of established five-star hotels including Anantara, JW Marriott and Renaissance. As an area for residential resort homes, Mai Khao is just emerging with the recent acquisition of a new development site by Sansiri.
Summing up, Pathnadabutr commented, “As the high season is kicking in on a positive note, both in terms of exciting new launches and the ever-growing tourist arrivals, this upbeat trend will continue into 2013”.