Representing the Best Real Estate in Phuket

NEW SUMMIT TIPPED FOR PHUKET IN JUNE

The government plans to host an Asian leaders’ summit in Phuket in June, after red shirt protesters forced the recent cancellation of the Pattaya conference.

Prime Minister Abhisit Vejjajiva said the Foreign Ministry was considering Phuket as the venue for the meeting between Asean leaders and dialogue partners from China, South Korea, Japan, Australia, New Zealand and India.

He stressed the need to consult other countries about their confidence in returning to Thailand before making the final decision on the date and venue.

Normally the choice is made by the host. Thailand now holds the Asean chair.

“Thailand will still host the summit and the date will be set as soon as possible, because many member countries are needed to seek ways to solve the global economic slowdown together,” he said.

Mr Abhisit said it was uncertain whether talks between Asian leaders and the chiefs from the Institute for Global Dialogue would be held this time, because of the new summit’s schedule.

The international agencies are the World Bank, the World Trade Organisation, the Asian Development Bank, the United Nations, and the UN Conference on Trade and Development.

Asean secretary-general Surin Pitsuwan said the new summit should take place by June.

Phuket was a candidate for the original conference’s venue, but the government opted for Pattaya instead.

The Pattaya meeting was cancelled after red shirt protesters broke into the venue at the Royal Cliff Beach Resort hotel on April 11.

Phuket governor Vichai Praisangop, and the Tourism Business Association in Phuket’s president Somboon Jirayus, said the southern resort island was ready to hold the summit.

“If Phuket is selected as the summit venue, people will be ready. It will boost tourism in Phuket and Thailand’s image,” Mr Vichai said.

Pattaya mayor Itthiphol Khunplome yesterday asked the prime minister to consider his city to host the new summit.

Mr Itthiphol and an executive of Royal Cliff Beach Resort said the hotel would sue leaders of the red shirts for damages.

Mr Itthiphol said the damages bill could come to about 10 million baht.

Source : http://www.bangkokpost.com/

IS PHUKET REAL ESTATE TOO EXPENSIVE?

The discussion about the value of Real estate in Phuket has been going on for a few years already. Some found it to be overpriced already some years ago and expected ‘the bubble’ to burst at any given time whilst other found that they could have a real nice property here for not even a third of what it would cost them in their own country.

So the question whether Phuket Property is too expensive is not an easy one to answer.

Phuket’s Real Estate market is not something that can easily be analyzed. One needs to consider the various components and needs to look at all the different parts of information. As generally known, the majority of buyers in the mid to upper market are pre-dominantly foreigners. Research has shown that this is about 70%.

Looking a bit more in detail you can split this up in to those who use the property as their full time residence, and others that use it as a holiday home, second residence or as an investment property which is most of the times located in a resort style managed estate with rental management or rented through estate agents. Almost all of these properties were purchased on a cash basis.

Although Phuket has evolved a lot over the past 5-6 years, it remains a developing market.

Looking back a few years to 2002 when the market started an upward cycle of double digit year on year, capital appreciation, favorable supply/demand ratios and prices have continued to increase significantly each year. Looking back a bit closer, one can see that the current slowdown did not start with the sub prime. It started 2 years before that with the political instability, the proposed changes to the ‘Foreign Business Act’ and a huge increase in supply of new developments in all price ranges.

During these past two years certain segments have continued to do well. The luxury high end market has taken advantage of the lack of availability whilst the lower end up to 4 million Baht has seen some speculative buyers, mostly Thai nationals who have access to mortgages from the banks.

So far, also in these very turbulent times, prices for property in Phuket are holding on. We did see some private property owners giving some discount and also some smaller developments have offered some incentives like free furniture packages, payment terms spread over a few years, up to 50% financing over 3-5 years… Mostly this has been the case for completed or far advanced developments where only some units remained available and where the developer wanted to cash in and exit the investment.

An often overlooked factor is the exchange rates which are important when foreign buyers bring their money from overseas.

Over the past year or so, the Thai Baht has gained about 15% against most major currencies and it is expected to gain another 5%. This means that overseas buyers lose about 20% of the value of their money compared to last year when they buy property in Phuket now. Over the past high season, although sales were down from the same period last year, we could still see a lot of interest from people looking to purchase a property in Phuket. Most of them are postponing their decision until the exchange rates become more favorable again.

As pointed out by many in the past, the key to growing Phuket’s Real Estate market remains in the availability of financing, which would allow it to compete with the more developed markets. This, together with more favorable foreign ownership regulations would make a huge difference and be a big support at times like this when the market is a bit slow.

While lowering prices could be beneficial in the short term, long term growth can only be achieved if stability and investor’s confidence are maintained.

PHUKET REAL ESTATE UPDATE

The Government Housing Bank’s Real Estate Information Center (REIC) recently confirmed that demand for residential projects in Phuket has seen a slight drop due to the global economic downturn.According to a survey they recently performed, residential projects ready for sale in Phuket now numbered 139, or 12,334 units REIC Director General Samma Kitsin said at a recent seminar.

Eighty-eight of these projects are detached-house projects with a combined total of 8,561 units. Of these, 5,508 units are already sold.

In addition there are 51 condominium projects. These have a combined total of 3,773 units of which 2,054 have been already sold.

Foreigners are the main buyers of residential property in Phuket and many of them have delayed their decision to buy because of the unfavorable currency exchange rates at the moment. Interest of foreigners in purchasing a property in Phuket, however, remains very high.

About 51% of foreign buyers on the island are investors who are looking to generate a rental income or sell the property on once it has increased in value. 34% buy to use the property as a holiday residence while the remaining 15% is buying to use the property as a long term stay.

Property priced between 10 and 40 million Baht are most popular with buyers looking for a holiday home or investment.