Property sales rebounded in Phuket in the first quarter, signalling a recovery in the market, says CB Richard Ellis Thailand.
Chairman David Simister said the island province remains the pinnacle destination for second-home purchases in Southeast Asia, with the villa market topping the charts in terms of high-end developments and prices.
Neighbouring countries do not have the same international desirability as Phuket. The Vietnamese market has many new projects but attracts only domestic buyers. Bali, Phuket’s main competitor, does not attract the same number of tourists or high-income property buyers.
Between 2008 and last year’s third quarter, Phuket’s property market saw a slowdown triggered by the global financial crisis. However, prices held firm and there were few distressed sales.
But there was a clear shift from off-plan sales to resale units. Within the resale market, villa products with good reputations and good management were the top sales performers, with Andara being the most desirable.
New research on Phuket by CBRE shows the second half of last year was the turning point for the villa market, with increased activity in the luxury sector. The high season continued to drive interest, with more than 20 villa transactions in this year’s first quarter, indicating increased buyer confidence.
“However, developers cannot become complacent. While the market shows signs of recovery, developers need to realise that the number of buyers has reduced, the buyer profile has changed, and the criteria for successful sales are much more precise,” said Mr Simister.
Eilidh Callum, a senior economist at CBRE, said projects that were devised before 2008 but postponed would not necessarily succeed in today’s market.
In this new era, much more thought must be given to the design and final product if it is going to appeal to buyers. A further change in buyers’ behaviour is the level of consideration given to assessing quality, specifically property management.
The CBRE research shows sales activity is now dominated by end-users rather than investors buying for capital appreciation and rental returns.
“We are seeing many more enquiries and increased sales from high-net-worth individuals, especially from Russia and India,” said Prakaipeth Meechoosarn, director of resort residential sales at CBRE’s Phuket office.
These buyers are successful business people and entrepreneurs. They are financially independent and typically seeking large four- or five-bedroom pool villas that feature high-quality fittings and finishes in a good location with ocean views.
They want to take advantage of a luxury tropical lifestyle without the restrictions of leaseback schemes or compulsory rental pools.
At the other end of the market, demand has increased for entry-level villas priced at 5-10 million baht.
In all market segments, the Andaman coast is the preferred location, although some buyers have preferred to move farther up to Phangnga Bay for ocean front properties rather than purchase inland or along the Gulf of Thailand.