Phuket News / Daily Updates from Paradise

After the tsunami of December 2004, the tourism market was a little slow in 2005. However, the property market in Phuket remained attractive among buyers and investors, with the increasing number of tourists in 2006 and 2007 proving this.
Location is a key factor for sales, and people pay a lot attention to the site, the scenery, as well as the surrounding atmosphere of the project. The demand for residential units originally focused on the western coast of the island. However, there is a major shortage of oceanfront and good sea view land in Phuket. Beachfront land is a finite resource that is all but exhausted, and that leaves panoramic ocean view land as the next most desirable option. Even that is becoming increasingly scarce. This is a nonreplaceable resource under the current building code, which restricts residential construction at elevations greater than 80 metres above sea level.

Recently, the eastern coast area has caught the interest of many foreigners since it will be the area in which yacht marinas can be constructed, thus luxurious projects have existed in the area, such as The Yamu, Royal Phuket Marina and Sri Panwa, etc.

Currently, the two-bedroom segment is most promising, as it appeals to the new group of foreigners now coming to Thailand. Investment driven, those considering buying studios are warned that they are not so easy to rent out because of the huge stock in the market, so Phuket’s market gap will be filled with new condominiums.

Our study indicates that the purpose of foreigners buying property in Phuket for permanent stays shows a proportion of 35 percent of total foreigners buying property in Phuket, while another 65 percent are for seasonal stays.

Our survey shows that the majority of property investors in Phuket are expatriates based in Asia, particularly in Hong Kong and Singapore. For the most part, they have lived and worked in the region for a number of years and tend to know Phuket well, having spent holidays there since there are daily morning flights from Phuket to Hong Kong and Singapore. Their decision to purchase a villa or condominium tends to be investment-led, and they are looking for good potential capital appreciation and possibly rental income.
From our study, there will be tourists from seven parts of the world who will be the major nationalities interested in the resort residential market in Phuket.

Russians are travelling to Phuket more and more each year, and the trend of Russians who like to buy their second home in Phuket has increased year-on-year. Approximately 120,000 Russian tourists travel to Phuket each year. Russian tourists always travel during the high season, which is in November, and in the peak season, which is in December.

The popular Andaman Sea beach resorts of Phuket and Khao Lak remain the prime destination among Scandinavian visitors. The percentage of Scandinavian repeat visitors is about 62 percent. The sharp decline in Scandinavian visitors to Phuket in 2005 is directly attributable to the 2004 tsunami. However, the market bounced back quickly and maintained its upward trend in 2006.

Australians love travelling to Phuket and are interested in buying resort residential property in Phuket.

Tourists from the Middle East normally travel to Phuket during the low season, which is between June and September. This group will fill in the number of tourists in Phuket during the low season.

Quality Indian tourists travel to Phuket during the low season, similar to the Middle East tourists.

The British love to stay in Phuket for a long stay period, which is in the range of one to six months. Our study has found that in 2007 there were approximately 2,692 visitors from England staying in Phuket for a long-stay period.

The Germans are fond of Phuket and are in the third position for the highest number of long-stay visitors after the British and Swedish.

The prices of new developments in Phuket remain very solid with no discounting, and completed resale properties still yield substantial profits for sellers.

In terms of pricing, location remains the key factor to commanding high prices. Beachfront properties and those with sea views are becoming scarce, since most of the prime sites in Phuket are being developed.

The price of land on the west coast of the island with good sea views climbed by 30-40 percent from 2007; however, there is no availability of such plots of land for future development. The future development projects will be focused on the northern part of Patong, called Kamala Beach, since there are some plots of land available there at this moment.

In the Eastern Area, there are many luxury, resort-style properties, which is the favoured concept in this sector, with modern, fusion designs and generous on-site facilities. Developments such as The Yamu Phuket include private marinas, a spa, and a courtyard where residents can enjoy cocktails or playing chess with the background of sunsets.

From our study, it is discovered that the land price in the Western and Eastern areas have a wide gap. The selling price per square metre in some projects on the eastern coast is higher than that on the western coast. Our analysis shows that the land price per rai in the Western Area is on average 35 million baht per rai, while the land price in the Eastern Area is on the average 17 million baht per rai. However, the selling price of residential units in the Eastern Area shows the average price of around 130,000 baht per square metre while the selling price of residential units in the Western Area is approximately 100,000 baht per square metre.

Unlike in many other parts of Thailand, properties have been sold on 30-year renewable leases for more than 10 years on Phuket, so most agents and brokers have plenty of existing leasehold clients on their books. Even in the condominium sector, renewable leasehold purchases are often a preferred option, as relatively low local demand for high-end units means developers cannot fill the required 51 percent Thai ownership quota for the building. Thai buyers from Bangkok are something quite uncommon at the upper-end of the Phuket market.

The upper tier of Phuket?s real estate market saw a number of new launches in 2007, most in the million dollars-plus range and mostly branded products. This bracket of the Phuket market has proven resilient to the challenges the industry has faced over the last 18 months or so, and bucks the trend having recorded solid growth. Another strong period of growth in the million dollars-plus bracket is expected in 2008, with a number of branded villa projects on the drawing board awaiting launch.

This growth in high-end luxury Phuket villas has been mirrored in the increase in the number of private jet arrivals and departures. In 2007, there were a total of 941 private jet arrivals and departures from Phuket, compared to 832 in 2006, an increase of 13 percent, with the tourism high season of November to April proving to be the busy months.

News by Phuket Post – phuket-post.com