Favourable Future in Phuket

For over 25 years, I’ve studied what makes investment markets move — the psychology, the tipping points from currencies and bonds to equities and commodities, the hedge funds and real estate. Our clients seek absolute returns, which is another way of saying positive returns, and the world is our oyster. I was a founding member of the UK’s Financial Planning Association, way back when, and I’ve held the post of Chairman of the Hong Kong Technical Analysis Society, where “The Trend Is Your Friend”.
Over the past few years, property has become a major asset class for institutions including hedge funds and, now, specialist real-estate funds. Among private individuals it’s also becoming more of an asset class. The currently troubled markets do have a silver lining for the astute investor. On the property side, these institutions see no prospects for growth in mature markets in the US and Europe, and instead are looking to emerging markets. Asia will be a major beneficiary. Often, bad news is good news and good news is bad news. (But more, perhaps, on why that is so at another time.)

For now, let’s take the example of the coup. Last year, this ‘event’ really slowed down the property market in Thailand. Many institutions went in search of opportunities in neighboring countries, and have now come to the conclusion that, in spite of the political games, there’s nowhere quite like Thailand. I would go so far as to say that, if the politicians ‘behaved’ themselves, this would be the best economy in Asia. Right now, the smart money is looking to acquire land in Phuket, as it will never be this cheap again.

Now I know many readers will be astounded when I say “cheap”. Over the past six or seven years, my calculations show the transacted prices of land as being up over 400 to as much as 500 percent. It’s still rising at over 30 percent per annum. In addition, we now have escalating building costs due to rising material prices and labour costs. Recent tenders show prices up over 40 percent from just 15 months ago, and still rising!

Property and land prices in Phuket never fell — not through the Asia crisis, the tsunami nor the coup. In fact, over the past six years property prices have doubled. With rising land prices and build cost, this rate of growth is set to escalate. The market is now nearing the tipping point, and getting set to move to the next stage of the cycle as a major retirement location. Murphy’s Law is at work. As more people buy retirement houses, the more others, including friends come to see why all the interest.

Eight years ago, there was nothing but fabulous beaches and T-shirt shops. Now, there are three-lane highways, world-class shopping malls, cinema complexes, fine dining, sailing, golfing, top-quality medical facilities and international standard schools — all the ingredients to make this a viable retirement location. Pockets of retirement communities are spreading throughout Phuket. Recently I’ve had regular calls for a barbecue here, a boat trip there, a dinner party somewhere else, golf, soccer… You name it. It’s a pretty busy social calendar.

Some don’t like the way things are progressing, as they worry that the beauty of the island will disappear. It won’t, even if it is no longer a deserted tropical paradise. But, hey — if you want that, within 10 minutes by boat you can be on a deserted tropical island out in Phang Nga Bay with some of the most fabulous scenery you’ll ever see. Phuket has no real competition. The cost of living, although perhaps a bit high by Thai standards, is still one of the lowest in the world. For example, in Hong Kong, if something costs HK$100, in Phuket it’ll cost 100 baht. At approximately 5 baht to HK$1, that’s about one fifth of the price.

Cost of living is a major factor when looking for a retirement location. It probably ranks highest, alongside medical facilities, and in this area Phuket is amazing. Bangkok Hospital Phuket and Phuket International Hospital are world class, and offer their services at relatively affordable prices.

For me, the journey started with the Himmaphan, a boutique resort development that sleeps 16 people, making it ideal for family get-together, corporate events and getaways or other special events such as weddings, anniversaries, birthdays or just general get together with friends and family. Then came The Residence, in Bangtao, with 87 private luxury pool villas, only 6 of them still for sale. Chefs, drivers, gym, caf?e, spa and the soon-to-be beach club make this an ideal investment or retirement home.

Eight years ago, I had a vision of what Phuket would become, and that vision is fast becoming a reality. At the Richmond Group, we are developing a brand that stands for quality and design, management and maintenance. We have a very good reputation, but we always strive to improve. Our focus now is on our resort management side, driving returns and yields for our owners. As you might imagine, it’s not always easy with such challenges as tsunamis, coups, language barriers and labor shortages. But we’re getting there.

With projects like The Pier, an ocean-front condominium in Chalong; the Loch Palm, next to the beautiful Loch Palm golf course; The Park, a select luxury development of just 10 villas lying a stone’s throw from the Laguna Golf Course or The Place; and our first condominium project, still on pre-launch prices at Kamala, the future does indeed look bright.

Phuket is getting ready to move up to the next level, and the smart money knows now is the time to position yourself for the boom that is about to come. International conference facilities, mega yacht facilities, Bali’s Ku De Ta, Bangkok’s Bed Supper Club — they’re all looking for sites.

Many people who have been around Phuket for the past 10 years think it has already all happened. But, as the saying goes, “You ain’t seen nothin’ yet!”

Written by Graham Bibby
Featured by Phuket Post