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June 16, 2010
Q4 2009 saw a continued recovery in the Phuket property market. Sales of resort property improved but were still at low levels and mainly concentrated in a limited number of projects.
The level of built but unsold inventory of completed condominium and villa units is low.
Prices for built property have remained relatively stable with few examples of forced sale situations.
Purchasers are cautious and are focusing on projects promoted by known developers where there has been visible construction progress. We believe that demand is recovering.
The total supply of completed resort condominiums was 2,681 units at the end of Q4, an increase of 9% Q-o-Q and 30% Y-o-Y. Five Condominium projects were completed in this quarter. The single unit type that accounts for the largest proportion of Phuket’s completed condominium supply are two-bedroom units in entry-level projects.
No new condominium projects were launched in Q4 2009.
We estimate that 13% of completed resort condominiums have not been sold.
During Q4 2009, the average asking price of condominiums being marketed was THB 86,755/m2.
Villa
The total supply of completed villa projects was 3,472 at the end of Q4. There were 13 villa projects completed in this quarter.
As expected, completed units have the highest sales performance, with 76% sold. 58% of villas in projects under construction have been sold. We estimate that there are 372 units that are under construction still available for sales.
The average asking price of luxury villas being marketed was THB 124,110,000.
Outlook
Overall Phuket has come through the combination of the global financial crisis and Thailand’s political problems relatively unscathed.
The opportunity and challenge is for developers to identify target markets and create properties that match those requirements. Potential buyers will be more cautious and will want to be confident about ability of developers to deliver product both in terms of their financial resources and development expertise Phuket Villa Sales - Read full report
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June 11, 2010
The Thai market has historically shown it can weather crises without damage to investors.
The ‘Red Shirt Protests’ that turned parts of Bangkok’s shopping and financial district into a barricaded fortress for more than 2 months is unlikely to lead to dramatic drops in property values, although some people have deferred buying decisions for the time being, reveals a study by a company well known for its research.
The reason is because the property market has been dampened by political uncertainty for the last five years.
Those who have followed the pattern of property values during periods of political uncertainty in Thailand will have noticed that prices rise in good times but hold and do not drop in bad times, with steady growth again after the situation improves.
One exception was real estate prices did drop dramatically during the 1997-98 Asian economic crisis, when real estate prices did drop dramatically. But it has to be explained that these plunges took place among secondary grade properties and not prime ones, whose values held up.
The impact of the recent protests, in the opinion of most people living in Thailand, both Thai and foreigners, will be short-lived
So all in all we are still seeing substantial confidence in the Thai property market.
Turning to the resort markets, the study shows that there was no evidence of a drop in value in Phuket and Koh Samui as existing foreign owners of property on the two islands are choosing to hold on to their assets.
The fundamentals of the resort markets are that they are predominantly foreign markets with purchases made with surplus funds. Since there is no financing available to foreigners to buy property, almost all purchases are 100% cash.
Looking at Phuket, most of the buyers are sitting on positive financial gains on their investment and there is no direct pressure to sell. So generally speaking, people only sell when they have made substantial profit. This means there is generally little stock on the market at any one time.
In fact, it has been the global financial crisis that has had the prime influence on the resort markets and this has led to the cancellation of many developments. While big Thai companies have launched major projects in Phuket in recent years, quite a lot of the developments have been foreign-led, although some of these projects have been quite small.
From our experience we have seen a reduced volume of sales but prices are still recording substantial gains for those few sellers in the market.
Despite the recent problems, Thailand is still a top resort destination. And although good prospects in emerging markets such as Cambodia have been reported over the past couple of years, there is no stock of quality resort properties there today.
To see the full report, click here.
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While Thailand’s tourism recovers from political demonstrations in the capital Bangkok and some northern provinces, which saw governments advising their citizens not to travel to Thailand, the paradise island of Phuket, 900 km south of Bangkok, has received a major accolade. Phuket was voted ‘Best Asian Maritime Capital’ in the annual Asian Boating Awards 2010 hosted by luxury magazine Asia-Pacific Boating.
Yachting, whether sailing or power boating, is one of Phuket’s best-kept secrets. But probably not for much longer as word of this magical cruising area spreads. Compared to more established yachting destinations in other parts of the world, the waters and small islands around Phuket are unspoiled and little traveled. Deserted beaches and otherwise inaccessible ‘treasures’ await those who explore by sea.
MyPhuketInfo.com supports Phuket’s high value/low impact yachting tourism with page after page of detailed information and images on every aspect of boating holidays in Phuket, including day trips, sailing yacht charters, speed boat tours, sport fishing and yachting events.
Demonstrating the resilience of this branch of tourism, all the while tourists were shying away from Thailand, fearful of becoming embroiled in the protests, the Top of the Gulf Regatta went ahead in Pattaya, while the Koh Samui Regatta maintained similar entries to last year and interest in Phuket’s own forthcoming Six Senses Phuket Raceweek was gathering pace.
As Phuket’s local travel guide, MyPhuketInfo.com is an invaluable source of independent information on the growing number of charter boats plying Phang Nga Bay just off the north of Phuket, as well as the countless pristine islands and beaches to the south. Each year, the number and quality of boats available for charter - many of them built in Phuket itself - expands, with operators departing from all points on the island.
For the adventurous traveler who wants an escape from the hustle and bustle of Phuket’s major tourist beaches, there is nothing to beat taking to the water in search of Greater Phuket’s real paradise.
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 It is no secret to us here, on the ground in Thailand, that the coverage of the ‘Red Shirts’ protests in Bangkok by the international media, especially by CNN and BBC was very poor and very biased. They made it look like these protest were an up-rise by the poor rural people from the north and north east of the country, against the so called ‘elite’ from Bangkok, and were demanding democracy and equal rights. However, nothing could be further away from the truth!!
‘Democracy’ was used as a façade, a mask, to hide the true intention of the ‘Red Shirt’-leaders to organize these protests: to cause mayhem, trying to bring the Abhisit government down, by such paving the way for new elections, so that the real ‘brain’ behind the protests, their paymaster, convicted and fugitive criminal Thaksin Shinawatra, who is living in self imposed exile to avoid a 2-year jail sentence after being found guilty of corruption while in office as Prime Minister, could return to power if ‘his’ party was to be voted back in power. By ‘buying’ enough votes, an illegal, yet very common practice by Thaksin’s party ‘Pheu Thai’, his return to Thailand and power, and white wash of all his crimes would have been assured.
That the poor and uneducated people from the rural north can be fooled by such demagogue practice can be understood. And these people could very well use the 500 to 2,000 Baht a day they were being paid to attend the protests. A fact that can be proven by many videos that can be found on ‘You Tube’, but ignorantly ‘forgotten’ to be mentioned by most international media.
What is more difficult to understand is how even European leaders could fall for this nonsense? Below I have summarized the major points made during the European Parliament session on 20th May:
1) This conflict is about the red shirts versus yellow shirt government supporters.
Now, this is where they are already wrong. No, it is not red versus yellow. The People’s Alliance for Democracy (PAD) supports Sondhi Limthongkul and the New Politics Party, which isn’t a part of the coalition government. They haven’t done anything in this crisis other than sit on the sideline talking tough and making threats. They condemned the government’s handling of the situation at every turn.
2) There is mass censorship. All media has been blocked.
No, wrong again. Only the red media has been blocked. And for a very good reason. It was calling for violence, arson and terrorist attacks like bombings, burning Bangkok, killing the Prime Minister… Would not any other country in the world shut down media that is inciting violence?
3) The government should have applied the road map.
Yes, and they intended to. But how could they? The UDD (Red Shirts) turned down the road map. Somebody (CNN and BBC) forgot to report that part.
4) All citizens should enjoy a free election.
Ah, finally, here they are correct. At least, partly. Because… all Thai citizens were about to enjoy a free election, on 14 November this year to be precise, as proposed by Prime Minister Khun Abhisit as part of his road map. Initially, the UDD (Red Shirts) agreed to accept that offer. But after talking with the paymaster in exile (Thaksin Shinawatra) they changed their mind.
5) They spoke out against Emergency Law.
Bombings and shootings in the streets, the two months long occupation of the major business and shopping district of Bangkok, causing millions in damage daily, making people losing their jobs, people went out of businesses, attempting to take over ThaiCom, the communication lifeline of the country… Was none of this reported by the international media in the months prior to May 19?
Please see below links to ‘You Tube’. I feel that the links give a very good account and feedback to what has been going on here in Thailand and the way forward, as presented by the Prime Minister Abhisit to an International delegation.
1. http://www.youtube.com/watch?v=q4-hEoESykk
2. http://www.youtube.com/watch?v=PHsE6uLQYA0
3. http://www.youtube.com/watch?v=oL1GBht7vvY
4. http://www.youtube.com/watch?v=56XUERrfUQI
5. http://www.youtube.com/watch?v=oju0Dt9VjXA
6. http://www.youtube.com/watch?v=ptBf5fFVKk4
7. http://www.youtube.com/watch?v=SVbj0vOQ9qM
8. http://www.youtube.com/watch?v=Fr8DLa13vOE
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May 28, 2010
When the news was out that clashes had erupted between troops and the red-shirt demonstrators in Bangkok, many tourists worldwide ignored their government’s warning to reconsider vacationing in Thailand.
Most travelers may be avoiding Bangkok, if not Thailand in general. But still many visitors appear to be insulating the tropical resort island of Phuket from the effects of the recent violence. Indeed, the island’s comparative prosperity shows how shifts that transform the global economy, can also supply visitors to an attractive destination so steadily that it becomes relatively immune to temporary disturbances. Their nationalities simply change.
Consider the Australians: in recent years, increasing exports of iron ore, copper and coal from Australia to booming China sent the Australian dollar soaring, pushing down the cost of imported fuel and, with it, airfares. That in turn helped to put Phuket within reach of more and more Australians, with airlines responding with more direct links.
As a result, Phuket now attracts more Australian tourists every year than it does from any other country. That means that with just over 22 million people, Australia sends more people to the island than countries like Japan and South Korea that are not only more populous but much closer.
Scandinavians, whose currencies have rocketed upward recently as the euro has dived, have also been coming in increasing numbers, along with tourists from oil-rich Russia and the Gulf.
All of which is good news for an island whose economy is dominated by the export of sun-kissed beachgoers. Tourism accounts for an estimated 70 percent of all jobs on Phuket, representing a $3.15 billion industry that has helped turn it into one of Thailand’s wealthiest provinces.
So business owners and officials here have been understandably anxious about whether Phuket might suffer as tourists heard advice from their embassies to avoid Thailand altogether. Last week, Phuket’s governor, Wichai Prisangob, published an open letter reminding travel agents and airlines that no anti-government “red shirt” demonstrators had been spotted on the island.
Tourism officials in Thailand estimate that the recent protests in Bangkok could cut the country’s tourism revenues, which are already under pressure of the global economic crisis, by almost one-fifth this year. Hotels in Phuket, however, have reported only a slight increase in cancellations. ‘We have had some impact, but not as much as in Bangkok’, said Somboon Jirayus, president of the Phuket Tourist Association and a 20-year veteran of the island’s travel industry. Mr. Somboon’s family owns two hotels on Phuket. But room cancellations are one thing and airport arrivals are another. The number of international arrivals into Phuket last month (April) increased by 41.4% over April 2009.
The negative effect of the global economic crisis on tourism in Phuket actually pales in comparison with what happened late December 2004, when the tsunami hit the resort island and surrounding provinces, killing about 5,400 people, of which only 250 on the island. In the year after the disaster, tourist arrivals to Phuket were cut in half.
Perhaps the most lasting effect has been on Phuket’s popularity in Taiwan. Before the tsunami, Taiwan was to Phuket what Australia is now, supplying more visitors than almost any country. Only two Taiwan visitors were killed in the disaster, yet visitor numbers from Taiwan dropped off afterward and have never recovered, according to statistics from the Thai Ministry of Tourism and Sports.
But Phuket seemed to become only more attractive to Swedes, even though Sweden lost more citizens to the tsunami than any other country. More than 500 Swedes died because of the Tsunami. In 2006, as the dollar sank against Scandinavian currencies, Swedes began pouring back into Phuket, becoming one of the biggest groups of visitors to the island.
Nowadays, Scandinavians are offsetting a shrinking number of visitors from the countries that share the rapidly declining euro.
Russians are another fast-growing source of new arrivals, as evidenced by an increasing number of restaurants and shops here sporting signs in Cyrillic lettering. Rising oil prices and a climbing ruble have brought down the cost of heading to the tropics during the depths of the Russian winter.
Thailand’s tourist industry is quick to exploit new markets like these. After Russians first started coming to the country in sizable numbers in 2006, the Tourism Authority of Thailand opened an office in Moscow to promote the “Land of Smiles.” Now, Russians represent the fifth-largest group of visitors to Phuket, with more arriving each year than from the United States and Canada combined.
Mr. Somboon says the Phuket Tourist Association is currently aiming to promote the island to tourists in that other emerging economic powerhouse: India. Phuket is vying to host the annual Tourism Association of India meeting later this year to give it greater exposure to the subcontinent’s travel industry.
But Phuket’s popularity seems to have more to do with its relative cost to a country’s travelers than with their economic strength.
One country that is still underrepresented in Phuket, for instance, is China. While the number of mainland Chinese visiting Phuket grew rapidly during the global economic boom, they have since fallen relative to other groups and, in the last year or two, have actually declined.
Australia has been a particularly strong source of reinforcements. Not only was it one of the few non-Asian nations to avoid a recession during the financial crisis, but it has the added advantage of being in the Southern Hemisphere. That means that when Australians decide to escape their winter for sunny Thai beaches, it is summer in the Northern Hemisphere, which is typically Phuket’s low/green season.
Some Australians say Phuket’s popularity is a reaction to a terrorist bombing in Bali in 2002 that killed 88 Australians. Others say it is a simple question of cost.
Australian arrivals in Phuket did not start to surge until the Australian dollar did in 2004, along with commodity prices. Then, in late 2006, Jetstar Airways, the budget subsidiary of Qantas, began offering direct flights to Phuket.
A round-trip ticket from Sydney to Phuket can run as low as 930 Australian dollars, or $739. The surge in Phuket’s popularity coincided with a wider boom in low-cost airfares from Australia abroad. “In 2009, for the first time since about 1983, outgoing passengers outnumbered inbound,” said Peter Harbison, managing director of the Center for Asia Pacific Aviation in Sydney.
Australians who switched to Phuket from Bali seem to prefer its greater level of development and its more freewheeling style.
“Here’s more of a big town,” one visitor from Adelaide said as he downed a lunchtime tequila at the Kangaroo Bar. “I’ll never go to Bali ever again.”
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March 25, 2010
Thai business aircraft operator MJets has opened the country’s first dedicated fixed-base operation (FBO) at Bangkok’s Don Mueang airport to exploit the growing demand for business aviation throughout the South-East Asian country.
According to flightglobal.com, the executive lounge includes showers, a business centre for passengers and pilots, and flight planning and pilot briefing facilities.
“The business jet market in Thailand is growing. In addition to the jets that we have, several local tycoons and air charter companies are interested in buying more jets or trading up to a bigger aircraft. A variety of aircraft are being purchased in Thailand,” says MJets spokesman Navdeepak Vaid.
MJets is also keen to set up an FBO on Phuket Island, one of Thailand’s premier holiday destinations. It was not immediately clear where that FBO would be located, but Phuket International Airport is the only facility in the province with a runway capable of handling jets. The only other runway currently on the island is the 500-metre grass strip at the privately owned Phuket Airpark in Paklok.
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Patong Mayor Pian Keesin has launched an ambitious plan in a move aimed at preventing a repeat of the flooding that deluged Phuket’s premier resort town during last year’s rainy season.
He said he guaranteed that the four projects underway would be completed before the rains start this year.
Khun Pian is not guaranteeing that there will be no more flooding in Patong. But at least, the situation should be much better compared to last year he said.
One project aims to prevent the return of the so called ‘Nanai River’, a 50-meter stretch of Nanai Road which was under about half a meter of water for most of last year’s wet season.
The area that got flooded varied with rainfall but generally reached from the Aroonpat Village housing estate to the Chang Residence Hotel.
Around 200 meters of drainpipe will be laid along the side of the road in order to allow the floodwater to run into the nearby Pak Lak Canal.
Mayor Pian said a tender process for the four-million-baht project was currently underway.
The whole construction should not take more than two months, according to Khun Pian.
Another area that was the site of flooding last year is the canal besides the Patong Hospital. There, two pumps have been installed inside the canal last week.
Khun Pian explained that the pumps would speed up the passage of water through the canal.
In a third project, drainpipes are being laid underneath the new road running behind Jungceylon.
One section, which was completed on Wednesday, will direct water from behind Jungceylon, under the road and past JJ Market Phase 2.
A second section, which is now underway, will direct water from the same place to Patong’s wastewater treatment plant.
“Laying another line will double the water drainage” Khun Pian explained.
Finally, Pak Bang Canal will be dredged and widened to increase the amount of water it can direct into the sea.
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February 8, 2010
As Phuket’s low season is coming to an end and the high season is fast approaching, the island’s property industry has their fingers crossed for a pick-up in business. The signs are looking very positive.
Passenger traffic to Phuket is increasing as flight traffic is also on the rise. Direct flights from Perth by Virgin Blue are expected to begin in November. This is on the back of an earlier announcement by Virgin Blue that they intent to start with direct flights to Phuket from Brisbane and Sydney as well.
Increased flight frequency is also expected from some regional airlines and Air Asia recently announced they want to make Phuket their regional hub.
All this is welcoming news for the upcoming high season which officially starts on the 1st of November.
The island’s hotel industry is also in an increasingly optimistic mood. Advance bookings are on the rise with some hotels reporting 100% occupancy over Christmas and New Year.
Some questions are raised, however, on how long the 2009/2010 high season will last.
Phuket’s high season, in terms of accommodation rates, traditionally runs from 1st of November until 30th April. With the global economy getting back onto its feet, expectations of a boost in hotel bookings and activity on the island is justified, although some feel this much needed boost may slow down towards the end of February 2010.
So what does this mean
for the real estate in Phuket?
According to a recently published mid-year report, the first half of 2009 saw a total sales of nineteen Phuket luxury villas with a combined value of 3,5 billion Baht. There remain a total of ninety-two unsold luxury villas in Phuket with a total value of 10 billion Baht. The report defines a luxury villa in Phuket as being priced at 65 million Baht or above.
With only a few new developments of properties in Phuket being launched over the last 12 months, and many developments already started having slowed construction, the Phuket property inventory is no longer growing at the same pace experienced in the previous 24 months. This bodes well for established and financed developers.
As tourists start to return to the island and the Phuket real estate market is picking up, the Phuket properties that are already completed or nearing completion and those well established in the market are likely to see an increase in sales as new launches are expected to remain low.
However, to paint the Phuket property market with a single brush would be ignorant to the product segmentation. Area, price and product (Phuket villas, Phuket condominiums, foreign freehold, leasehold…) create mini-markets within the Phuket property market with each segment having it’s advantages and challenges and success stories to report.
The fundamentals of the Phuket property market remain the same. Its attractions and infrastructure, and the easy access and central location within Asia remain strong selling points. The relatively low cost but yet high standard of living only adds to the positive factors.
All this combined with the expected increase in air traffic and the already strong advanced hotel bookings makes that the Phuket real estate market is looking set for a very strong high season.
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December 17, 2009
Phuket King’s Cup Regatta remains the most popular and is voted the best regatta in Asia
Phuket - Thailand was voted the favourite sailing venue in Asia and the Phuket King’s Cup Regatta best regatta in Asia, according to a recent survey. The survey found also that the Regatta generated approximately 40 million baht for the Island’s economy during the 2009 event.
The Sailing survey was conducted by the Top of The Gulf Regatta (www.topofthegulfregatta.com) in co-operation with the Phuket King’s Cup Regatta (www.kingscup.com), with the aim to find out sailing trends and provide useful information in helping to attract more sailors to Thailand.
Phuket King’s Cup this year attracted 111 boats, approximately 1,000 registered sailors of 33 different nationalities from all corners of the globe. The survey found that over 30% of the sailors who participated in the 23rd Phuket King’s Cup Regatta have been sailing in Thailand for more than 10 years, while 20% are new – sailing in Thailand for 1-3 years.
The survey found that Thailand is a popular sailing destination with international sailors, with many returning numerous times to enjoy the cruising grounds and sailing events Thailand has to offer. 56% said that the Phuket King’s Cup Regatta is their favourite regatta in Asia while 71% said that Thailand, with the main sailing areas being Phuket, Pattaya and Samui, is the best sailing venue in Asia due to an ideal geography, good weather conditions and beautiful scenery.
31% of the surveys were sailors who have been sailing in Asia for more than 10 years, with 27% newcomers (having sailed in Asia for only 1-3 years) and 15% having sailed in Asia for 4-6 years.
Asia has long been a popular sailing region with residents and expatriates. This was reinforced recently with the confirmation of an Asian series of the popular European Extreme 40 Sailing Series. More recently, there has been confirmation of Hong Kong being part of the Louis Vuitton Series in 2010. Such events bring the world’s attention on Asia as a leading sailing destination.
When asked how they found out about regatta’s/sailing events in Asia, 50% said ‘Friend/ Sailing community’, followed by 38% who said “specific event website.”
One of the aims of the survey was to find out what kind of people, and from where, attend the Phuket King’s Cup Regatta, and approximately how much money does the event generate for the Island economy. It was found that participants in the Phuket King’s Cup Regatta are truly international with 35% from Australia and New Zealand, 30% from Europe, 27% from Asia with strong participation from USA, Canada and Russia, amongst others.
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December 11, 2009
Phuket is already most popular island destination in Thailand, and very soon, it could be giving Bangkok a run for its money as the top destination in the entire country. At least as far as Australians are concerned.
Last month, Pacific Blue started with direct flights to Phuket from Perth. On the 3rd of December, V Australia joined started with non-stop flights from Melbourne. Next week, Jetstar puts on two more flights per week from Sydney, bringing the carrier’s total number of flights to five per week during the busy months of December and January.
“Phuket is a favorite international holiday destination for Australians”, according to Simon Westaway, Jetstar’s Head of Corporate Relations. “The people are gracious and friendly, the food is reasonably priced, the accommodations are wide ranging and, of course, the beaches are second to none. Adding an additional Saturday and Sunday service makes it all the more accessible.”
Jetstar isn’t stopping with Sydney, either. From Dec. 15, Jetstar Asia starts with a twice-daily service from Singapore - services that will connect through to Jetstar’s existing daily Perth-Singapore service.
Statistics released in October by leading hotel booking website Wotif.com show that there is an abundance of interest in Phuket. Australians are leading the way. In 2004, the island was far down the list of preferred overseas destinations. Last year, it ranked ninth, ahead of Fiji, Paris, Dublin and Rome.
“I’m not surprised these airlines have commenced direct service to Phuket,” said Craig Fong, director of sales and marketing for Movenpick Resort & Spa Karon Beach Phuket, site of the inaugural Asia Connect Thailand regional hospitality conference last week. “I think they all would have started sooner if not for global economic crisis and domestic political issues last year, which carried forward into this year.”
“However, the situation is much more stable and you can see demand is returning to pre-crisis levels. With direct service at the ‘right’ price point now too, Phuket is poised to realize big gains.”
Traditionally, Phuket’s hotels have relied on major tour wholesalers for their Australian business. But given the expected influx of travelers from Down Under, even that may change soon. In fact, some Phuket properties are already beginning to develop strategies to shift some of the business direct to the property.
“The online channel represents a substantial opportunity moving forward but you can’t underscore enough the resilience and influence of the major wholesalers,” said Fong. “We will continue to work closely with them while concentrating on delivering the best holiday experience we can for each type of guest.”
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