As arrivals to Asia’s leading resort destination in the first half of the year increased 20% over the same period in 2010 and an unprecedented number of new hotel rooms opened, sagging infrastructure is creating a widespread danger to the island’s tourism industry.

In the changing dynamic of guest demographics the Patong area, which accounts for 35% of the 43,571 accommodation rooms on the island, has edged into the mainstream. Patong-wide occupancy hit 82% in the first half of the year, with China and Russia now taking a quarter share of the market.

Numbers are straining the handling capacity of the airport, with Airports of Thailand (AoT) expecting a throughput of 7.95 million passengers (arrivals and departures combined) this year, which will exceed the stated capacity (6.5 million) by 22%.

A US$ 164 million expansion plan that will increase handling to 12.5 million by 2014 will only see the start construction next year, and tourism operators are increasingly concerned over mounting delays by travelers.

First-half hotel trading by volume markets saw a surge in Phuket’s average occupancy across all hotel tiers, to 73%. Key market Revenue per Available Room (RevPAR) moved up to its highest level since the global financial crisis in 2008.

The island’s top 5 tourism source markets to date are China, Russia, Australia, South Korea and Sweden.

Somehow, Phuket has gone into a retro stage where tour groups, wholesalers and the mass movement of visitors are once again the norm rather than the exception.

A leading indicator in the cyclical development was shown in 2010 when charter flights hit their highest-ever level, equating to a 153% increase in year-on-year growth.

Commenting on a steady rise in airlift, Laguna Resorts and Hotels Plc Managing Director Michael Ayling said, “The increase in the number of direct flights into Phuket is resulting in better accessibility and affordability of travel to the destination.

As long as the infrastructure keeps pace with the increased numbers of tourists, expansion of hotels and faculties that are well planned and implemented, the hotels will be able to properly manage their room rates in line with supply and demand.”

Investment in Phuket’s hospitality sector brings strong, positive business sentiment with a supply pipeline for the island of 6,968 rooms. This will see an increase of 16% by the end of 2014.

As the northern part of the island is preparing for work to start on the new International Convention and Exhibition Center, Minor International’s Bill Heinecke says, “We have reviewed opportunities to expand our very successful Anantara Vacation Club and Mai Khao is the destination of choice for a new 100-key resort that is set to open in late 2012.”

Looking toward the future, increasingly, the number of existing hotels will face the necessity to upgrade, rebrand, or downgrade market position while transaction activity is expected to remain active.

In this business, either you move forward or go backwards; there is no standing still.

Unfortunately, progress now faces increasing waiting time and delays at the island’s international gateway, and progress by the tourism industry could be derailed without a greater sense of urgency by AoT and Immigration officials.

Source: Phuket Gazette

A report on the esteemed Wall Street Journal’s site, quoting the highly-regarded HSBC bank Expat Explorer annual survey, rates Thailand as the best place in the world for expats to live.

And as the expats on Phuket know, despite a few grumbles about expensive tuk-tuk transport, the moods of the beaches and the monsoon weather, Phuket is the best place to live in the best country in the world for expats to live.

The Wall Street Journal also mentions: ”Patong Beach Phuket, Thailand: It may be beaches like this that make the country rank No. 1 in a report on expat life.”

The blog goes on to say: ”The best place to live as an expat? Apparently Thailand, which ranked high in all the categories considered, including ease of setting up finances, work-life balance, entertainment and ease of integration with the local culture. Canada and Bahrain ranked second and third.”

Who needs Canada with all that cold, or Bahrain with an overdose of sand? Thailand and Phuket clearly have the balance about right, especially if money is no object . . . or money is not the object.

Thailand’s political upheavals clearly count for little because the Wall Street Journal blog says the HSBC report is based on a survey of 4127 expats from more than 100 countries, conducted between April and June, by a third-party research firm.

Bangkok was hit by red rallies and a dramatic deadly army put-down in April and May.

Despite the over-the-top travel warnings by various ill-informed countries, tourists continued to come to Thailand, and especially to Phuket and the Andaman coast.

Expat residents of Phuket have never needed a survey to tell them why Thailand is the best place in the world to live, especially if you happen to be living on a tropical paradise island in the best country in the world.

Now it appears as though Phuket’s secret is out. The best place in the best place in the world for an expat to live.

Visitors are welcome to come to see how good we have it, tuk-tuks, monsoon rainy days, moody beaches and all.

No wonder British Prime Minister David Cameron and his family have chosen Thailand for their New Year break in the sun, following 840,000 British tourists who made it to Thailand (and for many, Phuket) last year.

Thailand also came top in the so-called silver rankings, which rate countries according to their popularity among retired expatriates.

And if this is just a dream, please don’t wake us up in the morning.

Source: Phuketwan

It is believed that political stability will reinforce consumer confidence, not only for Phuket property for sale but for Thailand as a whole.

The study said the economies of the countries where many of the buyers of Phuket condominiums and Phuket villas come from (Singapore, Australia, Germany, Switzerland, England and Russia) were on the rise. This allows buyers in those countries to feel more confident about buying holiday homes in Phuket.

It was also found the average selling price of villas in Phuket dropped by 14% to 50.3 million baht (1.6 million USD) in the first quarter this year from 59 million baht (1.89 million USD) last year. This was a result of political uncertainty that forced villa owners to reduce their prices to attract buyers.

Although the market was slow in the second quarter due to the political situation, not much supply entered the market. Most villas in Phuket are not pre-built. This is reducing the chances of oversupply.

The supply of Phuket condominiums for sale during the first quarter was 4,686 units, up 65 from the end of last year. New projects were small developments while the average selling prices slightly increased to 89,113 baht (2,849 USD) per square meter from 88,885 baht (2,841 USD).

Not to say that sales are up to ‘pre-crisis’ level again. But with the events of April and May slowly getting out of the people’s minds, and high season fast approaching again, the near future of Phuket’s property market does not look all that bad.

There are some good deals to be made for those that can make a quick decision. These days most sellers, both for new developments and re-sale properties, are reasonable and realistic in their pricing and willing to work out a deal that makes all parties satisfied. Sellers that continue to sell at pre-crisis conditions are finding it harder to get their product sold.

On the other hand, interested buyers who are still waiting (hoping) for prices to drop to 30-40% will also place themselves out of the market. Resources of prime land are quickly drying up and early August we saw tougher building codes for new developments approved. This will certainly have an upward effect on prices for new developments.

So if you are seriously considering purchasing your Phuket holiday home or just wanting to invest in Phuket property to make money on capital gains or rental returns, the coming high season might very well be the right time to make your move.

Please click here to see the latest Phuket Residential Property Research.

                                                 BIS Headmaster Dr George A Hickman (left) receives the
                                                 award from PM Abhisit Vejjajiva.

The British International School Phuket (BIS) has triumphed as the “Best Provider of International Education for 2010” in the Prime Minister’s Export Awards.

Collecting the prize in person from PM Abhisit Vejjajiva at Government House in Bangkok last week was BIS Headmaster Dr George Hickman.

In a recent school newsletter, Dr Hickman explained that the award follows hot on the heels of BIS recording its best International Baccalaureate (IB) examination results in the school’s 14-year history.

“Our IB Class of 2009 produced an overall set of final scores which exceeded the world average, and this outstanding achievement is something of which students, parents and teachers can be justly proud,” said Dr Hickman.

“It is also noteworthy that the SAT scores in our primary school showed marked improvement this year, which is another indicator of our continuing commitment to excellence in the development and delivery of an educational program which is second-to-none anywhere,” he added.

Source: Phuket Gazette

Although the market was slow in the second quarter due to the political situation, the supply of new developments was limited. Therefore, the affect it had on the market was limited as well. However, foreign investors interested in Phuket real estate have started making more inquiries for properties for sale in Phuket during the past two months.

Phuket villas

Most Phuket villas are not pre-built. Therefore, the chance of oversupply in the market is reduced. The research noted that prices of villas for sale in Phuket dropped with 14% in the first quarter – from an average selling price of 59 million Baht (1.89 million USD) during the previous year to 50.3 million Baht (1.6 million USD). That was also for a big part as a result of the political uncertainty which forced villa owners to reduce their prices to attract buyers.

Phuket condominiums

In terms of Phuket condominiums for sale, the supply during the first quarter of 2010 was at 4,686 units, which is only 65 units up from the end of last year. New projects were small developments with one- and two-bedroom units, while the average selling prices were slightly increased from 88,885 Baht (2,841 USD) per sqm to 89,113 Thb (2,849 USD) per sqm.

This price increase does not sound reasonable when compared to the slowdown in the Phuket property market. However, the survey found that there were a number of condo transactions from time to time. This seems to confirm that the market of condominiums for sale in Phuket is in a better shape that the villa market.

Political stability will help regain investors’ and buyers’ confidence. Not only for Phuket, but for Thailand as a whole. Moreover, the local economies of Phuket’s main buyers of property in Phuket, such as Singapore, Australia, Germany, Switzerland, England and Russia, are on the rise.

This allows buyers in those countries to feel more confident about buying property in world famous tourist destinations such as a holiday home in Phuket. In addition, increases in direct flights to Phuket, as well as an expansion of Phuket International Airport, which is scheduled for completion in 2013, are added positive factors.

Zeman, a property developer with over four decades of experience, noted that Phuket, unlike Bangkok, hasn’t experienced any major political instability which would discourage tourists.

He told the Bangkok Post yesterday that, “Apart from the aforementioned reasons, I decided to invest in a resort and mall business in Phuket because I’ve been a regular visitor for the past 30 years.

“Phuket is like a second home to me and I find the local people friendly and charming. The island has much to offer in terms of culture, history and food. It’ll remain a hotbed for sustainable tourism growth for years to come.”

However, regulations from October 1 will retain the limit on building above 80 meters on Phuket. The regulations are subject to review every two years.

And in a change that will tighten the property industry on Phuket, the new regulations are expected to oblige all consultants to register and be tested before being licensed to apply environmental assessments and impact studies.

Real estate speculators are inclined to believe that once the pressure on land below 80 meters produces price rises that make sales prohibitive, the limit, imposed to protect Phuket’s natural environment, could be lifted to 100 meters or 120 meters, or be removed entirely.

The head of Phuket’s Natural Resources and Environment Department says the 80-metre limit is unlikely to ever be lifted.

This will keep the availability of ocean view land in Phuket to build on extremely limited. As a result, prices for these prime land plots or already existing properties on such exclusive locations will not come under pressure for the foreseeable future. On the contrary; the shortage of these prime spots will only assure that the value of ocean view villas in Phuket for sale will only continue to rise.

Prices of prime Phuket property are amongst the cheapest of the world’s most popular international homes market according to a new report.

The International Residential Report published by Chesterton Humberts discovered the price of new homes for sale in Phuket were 3,500 Euro (4,460 USD) per sqm. Prices for similar homes in Singapore were recorded at 16,200 Euro (20,650 USD), and at 19,500 Euro (24,850 USD) in Hong Kong. Monaco remains the world’s most expensive location for property, with prices for a second hand home coming it at 45,000 Euro (57,350 USD) per sqm.

The report also said that while the Asia Pacific region is largely maintaining healthy growth rates with China and India leading the way, the road to recovery remains bumpy in Europe and North America – a scenario that is broadly mirrored in the respective residential property markets.

It also noted the millionaire population is rising fastest in the Far East – with Singapore, Malaysia and China all recording growth of 35 per cent, 33 per cent and 31 per cent respectively.

The report went on to conclude that several Asian markets, like China and Singapore for example, are already exhibiting signs of overheating. If another bubble is developing, this would indicate a worryingly short cycle from trough to peak and back again although both the Chinese and Singaporean governments have taken decisive action to head off such an occurrence through a combination of restrictions on purchases, tax penalties and increased public land sales.

The Phuket Natural Resources and Environmental office has confirmed that tighter controls on building on hillside land in Phuket came into force on July 31, some two months earlier than expected.

“After we receive an official letter from the Department of Natural Resources and Environment Policy and Planning Division in Bangkok, we will immediately send letters informing related organizations to recognize the new regulations,” an officer said.

The new regulations, gazetted on July 30 and brought into effect July 31, impose tougher measures aimed at constraining hillside development and ensuring that all new developments have at least the minimum mandated “green areas” reserved with no structures built upon them.

Construction projects now must follow the new regulations. However, the new rules will not affect applications that have already been submitted and are currently being processed. The Phuket Natural Resources and Environmental office receives about 30 building applications each month.

The new rules allow structures to be built on gradients of up 50%, compared with 35% under the previous rules, but with a slew of tougher new conditions.

Structures on hillsides with gradients from zero to 20% are limited to eight meters in height, while those on gradients of 20% to 50% are limited is six meters.

Also, buildings on gradients between 20% and 35% must leave at least 70% of the total property area as “open space”.

Buildings on gradients more than 35% must leave at least 75% of the total property area as “open space”, with at least half of the open space area maintained as a “green area”.

Regarding the size of the structures to be built, buildings on slopes of 20% to 35% gradient cannot be larger than 90 square meters and the area of the land must be at least 400 square meters.

Buildings on gradients of 35% to 50% must not be larger than 80sqm in size and the land area must be at least 480 square meters.

While the above rules apply generally, building applications may also subject to additional requirements, notably depending on in which “zone” the plot is in and how far it is from the high-tide mark.

The Royal Thai Government Gazette of July 30 has a full list of all the requirements and conditions that now apply.