Representing the Best Real Estate in Phuket

THE PHUKET REAL ESTATE MARKET OUTLOOK FOR 2010 IS LOOKING POSITIVE

A trend that we are seeing lately is that developers are trying to simplify their offerings. In the case of this particular development, this can be seen with the project focused on 45-60sqm one-bedroom and 55 to 70 sqm two-bedroom offerings. A few penthouse units will also be available. These will be featuring roof top terraces.
Because resort living is more aimed towards owners or tenants coming on holiday or only staying a short period of time, some extra attention needs to be given to the design. For resort style condominiums in Phuket and other types of resort style properties in Phuket, most developers are offering full resort facilities like you can find in four- and five-star hotels. Some also include upscale restaurants, with the management renting out the space to a reputable service provider. Other facilities like a sun deck, pool bar, a gym and room service are being offered as well. In terms of furnishings, there are usually several optional furniture packages available to choose from. This offers the buyers of real estate in Phuket the opportunity to have their units ready to move in at handover and getting rid of the headache the delivery of furniture can be.
When it comes down to the actual units, potential buyers are certainly interested in how their living space will look and feel.  It is very important to have fully furnished show units, giving the potential buyers get a very good idea of how their condominium in Phuket will actually look like.

In the resort market, there is a new condominium development in Phuket to hit the market soon and which will draw a lot of attention.
Situated in the heart of Patong, ‘The White House Condominiums’ is an exciting resort-style development of 215 high quality one- and two bedroom apartments for sale in Patong. The units measure from 44 sqm up to 111 sqm. Seven units will have direct access to the swimming pool from their balcony.
Jungceylon shopping centre, the nightlife and the beach are literally only a few minutes walk away. The development offers you full resort-style facilities such as a large free-form swimming pool, international restaurant, fitness centre, and a communal courtyard with a green zone and jogging track.

These Patong apartments will be a perfect choice for your home in Phuket. Buyers can expect a high return of investment due to the central location and quality of the development. In addition they will be able to choose to participate in the optional rental program. An optional furniture package will be offered for the buyers’ convenience and to those who wish to participate in the optional rental program.

‘The White House Condominiums’ will be professionally managed ensuring that all common areas will be maintained and looked after.

So for everyone who is looking for a great condominium in Patong which is set to generate good rental returns and capital growth, these Patong condominiums are certainly worth considering. You can find more info at www.thewhitehousecondominiums.com.

As for the villa market, the soon to be launched Grand Residences by Banyan Tree is a good example of a development of luxury villas in Phuket that will be carefully designed to meet the most up to date demands of buyers of high-end real estate in Phuket.
The development will consist of eighteen luxurious 4-5 bedroom villas located around a lagoon. Six properties will be released in phase one of the launch along with a show villa.
With all areas of the market picking up by the improved economic fundamentals, Phuket real estate developers who work hard to satisfy the buyer’s expectations and demands should find themselves in a good position for the year ahead.

FOREIGN DEMAND IN PHUKET SHOWS SIGNS OF RECOVERY

Since about two months now we see signs that foreign demand for real estate in Phuket is recovering.

 

Most enquiries are coming from potential buyers in European and Australian, where the exchange rates are very favorable at the moment.

 

The market for Phuket real estate started to improve at the beginning of the high season for tourists last month.

 

There are also a lot of enquiries for rentals of Phuket villas and rentals of Phuket apartments. As for sales, there is still a slight preference for resale units. But we see the confidence that the world economy is improving again as now many potential buyers seem to also consider off plan projects again.

 

Property developers and investors are also becoming more active and are showing interest in buying large plots of beachfront land for developing high-end Phuket villas, hotels and resorts.

SOME PROPERTY INVESTMENT ADVISE FOR THE CURRENT MARKET SITUATION

Finding the most suitable property in today’s Phuket Real Estate market takes some research and evaluation. Following are a few points that might be able to help you to choose the best location and best type of Phuket property to fit your expectations and requirements.

Investing in a property in Phuket can have several goals. This includes buying a Phuket property with the intention to generate rental returns, capital appreciation and short term speculation. Yet, one thing remains clear. For foreign visitors, as has been the case for some time, prices for Phuket properties remain tempting.

The Managing Director of the Agency For Real Estate Affairs, Dr. Sopon Pornchokchai recently said “prices in Thailand are still low compared to those currently seen in other markets in the region. Even Vietnam is more expensive on average than Thailand, and so there is good potential for healthy investment returns.”

The prices remain relatively low, despite the fact that the country’s economic foundation is quite sound. Thailand appears to indeed be riding out the economic storm with unemployment at lower levels than expected and with most asset classes gaining ground.

‘Property prices did not increase at the same pace as they did the previous years due to political uncertainties, but buyers who buy now at current market value will be in a good position to achieve very good ROI.” Khun Pornchokchai said.

The Thailand property market is diverse, providing interested investors with both city center and resort options. In the residential sector, villas and condominiums/apartments are the most popular vehicles for generating rental returns and capital appreciation.

As for the type of properties that suit foreign investors the best, condominiums remain the more secure option.

This is particularly so for Bangkok where condominiums in the center of the city are a safe bet over the longer term, enjoying the unique advantage of prime location. Property in prime tourist destinations such as Phuket, Samui, Pattaya and Chiang Mai, is very attractive to foreign buyers.

“Whilst property in resort areas may have the potential to sustain higher vacancy rates as compared to the city center properties, there could well be some opportunities available that will provide good capital appreciation over the medium and longer term.” Khun Pornchokchai added.

With many overseas tourists experiencing a resort environment as part of their visit, the reason for their purchase may well be for personal use as well as rental, in which case vacancy rates are not really a major concern.

Today’s Phuket Property Market

With debt and equity effectively sidelined, there is tremendous value in the Phuket property market that has not existed in the past several years. According to Bill Barnet, Managing Director of C9 Hotelworks, property remains a cyclical business. So, while it could be a long recovery, it will be upward. “Appreciation will not be 20-25% per annum anymore like in the years when property in Phuket was booming. Investors have to be pragmatic and look at the longer term. Nevertheless, there is some very good buy low, perhaps sell high properties coming into the market, both new and re-sales”.

Secondary sales during the first half of 2009 were a significant part of Phuket’s transaction volume and it is expected that both re-sales and rentals will grow as the Phuket Real Estate market matures over the next couple of years. Rental yields in resort areas are traditionally volatile and depend mainly on tourism. “Most buyers of luxury properties in Phuket only want to cover the running costs. But for smaller investors, who may look at promised levels of yield, supply is presently outstripping demand, so in reality, resort grade property is best viewed as a longer term property play” Barnett added.

Many experts are still of the opinion that the economical recovery is on the way and that once people have some spare funds available again, they will again choose Thailand as the place to spend their holidays. This will then in return continue to drive sales and rentals of properties in Phuket. Over the past few years, Thailand/Phuket has proven to be very resilient to all sorts of challenges (9/11 when everybody was afraid to fly, chicken flue, SARS, Bali bombings, 2004 tsunami…) and fundamentally remains a very attractive destination.

At this moment works at the Phuket International Airport are underway to expand the airport so it will be able to receive 12,5 million visitors each year. This amount of visitors is expected by 2012. All these people will need accommodation, so although the past few months were low, sometime soon things will pick up for the hotel and Phuket villa rental market.

When it comes to financing, options for getting a mortgage for buying a Phuket property remain almost non-existing. Some individual owners are opening up to the idea of selling their property on a payment term, which makes it easier to close a sale. But developers generally still prefer a cash discount to a long payment schedule so there are still very limited developer finance options.

Despite these obstacles, supply and demand fundamentals for the high-end property in Phuket are continuing to strengthen, with excess supply being snapped up while macro issues constrain demand for new product launches.

“Overall market recovery prospects are being set back to 2011.” Bill Barnett said. “But there has been a continued gradual upswing in activity, driven primarily by an earlier than anticipated momentum in many of the financial source markets where potential overseas buyers for property in Phuket originate”.

Recent research carried out by Bill Barnett’s C9 Hotelworks revealed that the existing stock of luxury villas in Phuket is valued at 10 billion Baht, with 92 units currently on the market. In the period between January and June of this year (2009), 19 properties got sold, while the re-sale market emerged with over 1 billion Baht in transactions. The report concludes that continued tight equity and debt market will limit new developments, while barriers to entry, highlighted by very limited ocean or beach front land, indicates very positive long term stability. Furthermore, re-sales, rentals and an emerging fractional ownership market will create wider investment opportunities in the near to medium term.

THE PHUKET REAL ESTATE INDUSTRY IS LOOKING FOR A STRONG HIGH SEASON

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 1^st 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 1^st of November until 30^th 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.

PHUKET LUXURY VILLAS REMAIN POPULAR

Despite the fact that the overall Phuket property market has slowed down this year, demand for Phuket luxury villas has remained steady. The most popular holiday destination in Thailand has seen transactions for high end villas in Phuket reach 3,5 billion Thai Baht for the first half of 2009, according to a report from consultants C9 Hotelworks.

Demand for luxury villas in Phuket will probably remain constant for the remainder of 2009 the report says. The report also predicts that 2010 will remain fairly steady as the supply of luxury property in Phuket will not change much, but the overall market should see a significant growth in 2011.

C9’s Managing Director Bill Barnett noted that supply and demand fundamentals for Phuket high end property are continuing to strengthen and that excess supply is being absorbed. While market recovery prospects are being set back to 2011, we have seen a continued gradual upswing in activity. This has been driven primarily by earlier than expected momentum in many of the financial source markets where potential overseas buyers originate from.

The Phuket luxury villa market has seen a slow down in new properties under construction. This will help to drive increased value for buyers and sellers in the coming months and years as there will not be enough properties to meet the demand. The property dynamics look at more ocean front villas in Phuket or ocean view villas in Phuket, resort style managed properties in Phuket and buyers who keep coming back to Phuket.

According to the report, the existing inventory of luxury villas in Phuket is valued at 10 billion Thai Baht with 92 units on the market at this moment. From January to June of this year (2009) a total of 19 new high end properties in Phuket were sold with a total value of 3,5 billion Thai Baht. The resale market emerged with over 1 billion Thai Baht in transactions.

The report concludes that continued tight equity and debt market will limit new developments while barriers to entry highlighted by limited availability of ocean or beach front land indicates positive long term stability. Resale’s, holiday rentals in Phuket and long term rentals in Phuket are tapped to drive more demand in the near to medium future.

Source: Property Report

SITE INFRASTRUCTURE OF ISTANA PHUKET COMPLETED

Prism Estates, the developer of the Istana Phuket real estate project, has completed the final phase of its infrastructure and has commenced construction.

Istana Phuket is a development of 19 individually designed Phuket luxury villas created by Gary Fell of GFAB Architects. Nine of the 4 to 6 bedroom villas have sold with the 10 remaining villas being for sale at a starting price of 111,000,000 Thb.

Istana Phuket has been featured in a number of real estate industry publications as being one of the top luxury villa projects in Asia. These publications include the recent summer issue of Robb Report Vacation Homes and Asia’s real estate publication Property Report where it was named one of Thailand’s Top Ten Luxury Properties.

The development is located on a 69 rai site overlooking Naithon Beach. Land plots sizes range from 1,589 to 3,527 sqm with villa living areas ranging from 971 to 1,960 sqm. All villas have views overlooking the Andaman Sea.

These high end Phuket villas include features as home theatres, Italian Poliform kitchens and wardrobes, Lutron smart home lighting systems, large kitchen areas for catering to parties, gyms, fully fitted Antonio Lupi bathrooms, stone and timber floors, separate staff quarters and walk-in wine cellars.

The infrastructure building process involved intensive planning in order to save the site’s old trees while improving the site by creating two lakes and a river that flows through the property. Innovative Geo-Textile materials were also used to allow for the villas to be built using the natural contours of the land.

Prism Estates, the Hong Kong based developer of Istana, has been involved in real estate projects around the world. This ranges from resort style properties in Spain, Bali and other parts of Thailand, to land sub-divisions in Australia and commercial building projects in London.

You can find more details about this development here.

NAITHON BEACH RAPIDLY DEVELOPING AS HIGH-END PROPERTY AREA

Lately, the area of Naithon, in the North West of Phuket, is attracting a lot of interest of hotel and residential developers. Being one of Phuket’s least crowded and most beautiful beaches, Naithon looks set to experience dramatic growth over the next few years. In the past Trisara and Andaman White Beach Resort framed a lovely area on the fringes. More recently, Pearl of Naithon and Naithonburi went straight to the heart of the matter across from the beach road.

Now that Pullman has announced it will develop a 280-key hotel project at the north end of Naithon Beach, for the area were most businesses were to close down in low season, the sleepiness looks to be coming to an end. Malaiwana is continuing to expand their Phuket Luxury Villas and reportedly are possibly looking to add high end condos and a beach club. At Istana, development is now at full speed.

Rumours have it that a second hotel near to the Pullman is being planned which would take op most of the remaining open land on the beach road. This still leaves the opportunity of redeveloping the existing units on the main road in a Surin type model and the valley in the back that has some similarities to Kamala.

Source: The Phuket Insider

AIMING FOR THE RICH

In the eyes of many Phuket does not need more tourists, but needs richer tourists instead. In fact they say it needs the ultra-rich. One of the reasons for this argument is that one really high-end visitor spends as much as 50 package tourists but puts only 1/50 of the strain on the infrastructure. And that high-end tourist’s money is spent in Phuket, not at a travel agency abroad.

In the past, the Tourism Authority of Thailand (TAT) has in the past said it is willing to attract ‘high end’ tourists. But in recent years Phuket has been hit by so many global events that had an negative influence on tourism that simply filling up all the hotel rooms has been  the main target of TAT. It started in 2001 with 9/11 and the subsequent wars in Iraq and Afghanistan. Then there was SARS, bird flu, the Tsunami, the military coup in 2006. More recently we have the Mexican (swine) flu and the political turmoil in Bangkok which put people off visiting Thailand. The global economic crisis has made quiet a few well off people being less well off, and some rich people wanting to spend less money.

So it has been up to the private sector to try to provide the pleasures and facilities the super rich expect to get when going on holiday. This has been done with varying levels of success. The very high end property market has been surprisingly resilient, taking in consideration that some properties have price tags of USD 6M and more. This has also increased the market for luxury properties for holiday rentals which is something Phuket did not have about five years ago.

Luxury items like good wine or Cuban cigars are now readily available with some companies even delivering these goodies at your door at any time of the day and night. Recently a second marina for super yachts has opened in Ao Po and is rapidly filling up. The management of Phuket International Airport has plans to build a terminal for private jets (see: http://www.phuket-tropical-realestate.com/blog/?p=75); five years ago the arrivals of private jets in Phuket could be counted on the fingers of one hand. Now there are private jets arriving daily.

Luxury restaurants serving all types of international food are easy to find. European-style nightlife venues are now also all over the island. The only downturn to this is that the opening hours are still restricted. Many of these clubs are forced to close their doors at a time many Europeans actually just start to party.

There is still a lack of luxury cars for rent on the island and there is only one car dealer that sells high-end imported cars. The Ferrari dealer in Bangkok considered opening a branch in Phuket has put these plans on hold for the time being. Also for buying a Rolls Royce, Lamborghini or Porsche you still need to pay a visit to the City of Angels.

A few years ago the Thai government decided to drop as good as all the taxes on imported boats. This resulted in an instant boom in the Phuket marine tourism industry. It is now very easy to rent a luxury yacht with crew, including bar staff and gourmet food from one of the many companies offering luxury yacht cruises in Phuket.

For those who prefer the airspace instead of the water, there are now two companies offering chopper charter flights and Phuket Bangkok Hospital’s emergency helicopter is also available for joyrides when it is not being used for transporting the sick.

For those with their own light aircraft there is now a strip near the island’s east coast. There are land plots for sale for those who want to build their home with hangars next to the strip.

Overall the private sector has achieved a great deal at the luxury end of Phuket’s tourism market, which has in the process helped to fuel an increasingly high end property market.

VILLA AND CONDO RENTALS IN PHUKET BECOMING VERY POPULAR

In resort areas like Koh Samui, Phuket and Pattaya, over the past 10 years luxury properties have been popping up all over the place at a very strong pace. The luxury holiday market has expanded and also shifted from the Caribbean to Asia. Because of that, private regional investment has increased sharply as rental returns that can be generated from second homes offer opportunities for owners to enjoy an income while their property value appreciates. Although the current global economy situation has slowed down new investment in resort markets across Asia, for the rental side of it the downturn has prompted a concentrated effort to increase yields while investors wait for sales to recover.

When compared to a 4-5 star resort, the construction of a luxury villa or condo is both cost-effective and quick. Therefore, in Thailand rental clients can now choose from a wide range of high quality beach and hillside properties that offer as much, if not more, than hotel accommodation in similar price ranges. With hundreds of residential properties now available for long and short term holiday rental in Thailand alone, the range of designs, sizes and locations already rivals those offered by hotels and resorts. Branded hotel chains have already launched their own private residences, in order to catch a share of what many industry leaders say will continue to be a growing market.

Private villas and condos offer better value for money and privacy compared to a hotel. They are perfect for families who don’t want babysitting hassles every night. They are also good alternatives for groups of friends looking to party in private or people just looking for a relaxing break. The only type of clientele they don’t have a considerable advantage for is probably couples travelling alone.

The wider market for Phuket villa and condo rentals is still growing fast. Easy online booking systems, promotional offers and the very best services available now make private villas just as accessible and appealing as hotel accommodation.

The key is to offer more privacy, more personalized services, more facilities, and to match the requirements of each guest thanks to the variety of styles offered. Sharing a villa or condo is certainly cheaper than staying at 4-5 star hotels, especially when you consider the low daily cost of living. Guests can get their food and beverage at local market prices and additional services such as a private chef or driver can be enjoyed without adding too much cost to the holiday.

As well as personalized service, the cost also is important in today’s market. And for those considering renting a villa or condo, even at the high-end, prices remains highly competitive. But choosing the right property to suit is not always easy and it is our job as a Phuket property agency to carefully guide our clients beyond price.

For any enquiry about villa or condo rentals, both long and short term, please visit our ‘Rental’-section on our website. Please also check out our ‘Special Deals’-section which features rental properties currently offering some incentives. Or you can send an E-mail with your requirements to sa@phuket-tropical-realestate.com.

WHY BUYING DURING THIS CRISIS IS A GOOD IDEA

Over the past six months or so my sales assistants and I spend a lot of time driving interested people around the island looking at properties that could be of interest to them. Some of them have committed and have put down a reservation fee to reserve the property of their choice. Some of these people have already signed the ‘Sales & Purchase Agreement’ and are already planning their first stay in their new home or are calculating the rental return the purchase will generate which is a nice extra in times that banks virtually offer no returns at all.

Many of the other people we showed around decided not to buy at this moment in time and are waiting. Waiting because the prices for property here might come down and the property they are interested in will be available cheaper then. Or it could be that some other property they maybe might like just as much will become available at a dramatically reduced price.

What is following now they might not be happy to read:

If the world economy should worsen further, it is the natural reaction of mankind to spend even less. It does not matter how much the prices should come down. In that case that dream home in Phuket is probably further away than it is now.

Also, what many people are nor really aware of or do not take in to account, but which is in fact an extremely important factor, is that the property market in Phuket is a cash market. This factor makes that the Phuket Property Market is very strong and resilient against falling prices. This also makes that there is no need for property owners to put their property on the market at bargain prices because they can not afford to pay back their mortgage anymore. Should the situation get worse it is very likely that the good offers which are currently available will be withdrawn or even disappear entirely. Adding this to the fact that the cost of living a luxury live on this paradise island is only about a third of that in comparable locations plus the fact that almost no owner is forced to sell because of the pressure of a mortgage, the developers and owners are very happy to wait until the storm has passed, wait for the economy to get better again and offer their properties back for sale again then at normal market rates.

So if you are really serious about buying a property in Phuket and you think like the people in my example, do not expect to buy a property soon. If that is your strategy, expect to pay more rather than less. Expect the current good deals on offer to be gone. Expect to have less choice of completed properties and be prepared of having to buy something off-plan which involves higher risk because the properties/developments which are completed or are now nearing completion will be sold.