Phuket property market round-up
CBRE has identified a change in Phuket’s real estate market, starting late 2012, which it says is likely to be the most significant change since the Asian crisis in 2007. The change is driven by a number of factors, which include the entry of Bangkok based developers, the move towards smaller units, and an increase in the number of Thai buyers. The consultancy said:
“After a period of slowdown following the global crisis in 2008, the Phuket market is now enjoying a new wave of activity. By 2011, the stage was set for a change when Bangkok based, Thai public listed developers such as Sansiri and Supalai entered the Phuket market in a significant manner. Their first projects focused on the mass entry level market and were met with instant success, selling out within days from launch to a predominantly local Thai buyer base.
“The success of these projects has led a number of developers to consider the viability in Phuket of Pattaya and Hua Hin style developments which attract both Thai and foreign buyers. This model is characterised by smaller unit sizes and significantly cheaper total unit prices. CBRE believe this is the beginning of a new and sustainable market for Phuket.
“At the end of 2012, Laguna Resorts & Hotels Plc. launched Laguna Shores in an almost beachfront location overlooking a lagoon within the Laguna Phuket integrated resort development. The project features small unit sizes from 42 sqm with a starting unit price of under THB4 million [US$134,630] at launch. Up to 47% of the units were sold in Q4 2012 to a largely foreign buyer base. This was followed in Q1 2013 by the launch of an absolute beachfront project, Baan Mai Khao by Sansiri Plc. which has attracted significant Thai demand for a Phuket project, due in part to the loyal following Sansiri has in the Thai market. The launch of Baan Mai Khao also marks the emergence of the Mai Khao area, already the location of several upscale hotels and an area with growth potential that can be compared to the development of Bang Tao in the early 1990s at the start of Laguna Phuket.
“Another new project which recently began pre-sales is Amari Residences Phuket, a hotel-serviced residence located in one of Phuket’s most prime locations overlooking Patong Bay. Backed by Italthai Plc, the development is fully managed and serviced by the existing Amari Phuket Resort, providing rental management and offering a 6% guaranteed yield for the first 3 years.
“The launch of these projects represents a significant change for the market as they are being built by credible Thai developers who are not dependent on immediate cash flow from sales to commence construction. These projects can therefore be delivered on a timely basis and give buyers greater confidence compared to projects built by first-time developers with limited funding. The presence of these developers has also resulted in a marked difference in the product being offered where developers bring their expertise from other markets to Phuket. This is shown in the level of professionalism, quality of show suites and marketing presentation which is setting a new benchmark for the market.”