Opportunities await Phuket property market has prevailed amid political drift and cautious optimism persists, reports Nina Suebsukcharoen
Not many people want to admit it, but two years of political turmoil have hurt Phuket’s property market, with a lot of money that could have flowed into Thailand going to Vietnam, Malaysia and Bali.
This is especially important to keep in mind as signs of political unrest begin to surface once again.
Tom Travers, managing partner of Indigo Real Estate company, said that while Thailand did see investment during the two-year period, it lost opportunities.
‘‘Bali is busy and as popular as it was before the (year of the) bombing, and the market is very hot,’’ he said.
However, the troubled times did not affect land prices on the island. Mr Travers said they actually went up by 50%. ‘‘So the market in my opinion has been resilient . . . It’s like a lid has been kept on the market in Thailand as a whole, as prices have not really gone down but have risen very little compared to prices in Hong Kong and Singapore and the other neighbouring countries. The cost of a luxury condominium in Singapore versus Bangkok, depending on whether it’s a branded condo, could be five to 10 times as much per square metre.’’
Fortunately the new government’s economic stimulus package reduces the specific business tax from 3.3% to 0.1% and the transfer fee from 2% to 0.01%. ‘‘We have noticed a difference just in the past eight weeks in inquiries, sales and confidence,’’ Mr Travers said. ‘‘Many buyers are still waiting for more positive news from the new government, but the initial announcement, eliminating the land transfer tax, has really put a very positive light on the government.’’
The resort island has also remained unscathed from the credit crunch in the US. ‘‘It hasn’t affected the ability to buy here, as yet we haven’t felt that, certainly not on any scale,’’ he said.
One reason could be that a lot of expatriate buyers in Phuket are based in Asia; Indigo and other major real estate companies typically have just a few North American clients. Also the US economic downturn is actually hitting middle- and lower-middle income people rather than the very wealthy, who are usually the ones drawn to real estate here.
While foreigners do buy homes in the mid-price to lower bracket in Phuket, most are unable to obtain mortgages. This rules out leverage and keeps speculation out of the market.
‘‘There was nervous money going back a year ago,’’ Mr Travers said. ‘‘[Those in the] mid-range market were concerned about the political instability because that’s their nest egg and if anything happened they would be in financial trouble.’’
Regardless of the political and economic situation, those who yearn for a holiday home on a tropical island continue snapping them up. Mr Travers said the hottest projects on the island at the moment are Jumeirah Resort and Spa, which is on a private island 500 metres off the east coast; Andara, which overlooks Kamala Bay on the west coast; and Istana on Naithon beach, which is near Bangtao beach on the west coast. All have luxury villas for sale.
In addition, he said, Bluepoint condominium is located on a hill and offers stunning views of the developed Patong beach. Bluepoint is causing quite a stir with 12 of 20 units in the small boutique development already sold.
One of the first buyers was a Thai from Bangkok, which is something quite uncommon at the upper-end of the Phuket market. Its uniqueness is not just the views of Patong beach from the approximately two- to three-rai site, but that the design, worked out by Paul Raff Studio in Toronto in conjunction with a local architect firm, is very eco-friendly. It has three eight-metre-high three-floor buildings with grass roofs and and lots of natural shading.
‘‘The walls that wrap around the buildings are all going to be living walls, not just concrete because it will be framed in and covered with vines and plants,’’ he said. ‘‘So when you are looking at it you only see grass and green vegetation. You see very little concrete and steel.’’
Being close to Patong could be a plus or minus depending on one’s personality. It’s the busiest beach in Phuket and receives up to three million people a year.
‘‘One thing about Patong is that it has critical mass, which means there are hundreds of restaurants, hundreds of places to go and eat,’’ Mr Travers said. ‘‘Now they have the Jungceylon Plaza, so they have a modern shopping mall with movie theatres and a bowling alley.’’
Land in and around Patong is more expensive than other areas, costing as much as 30 to 40 million baht a rai. In the east coast it would be around five to seven million baht a rai.
Despite this, there is only a small difference in the price of condominiums. Bluepoint costs 110,000 baht a square metre and those on the east coast about 80,000 to 90,000 baht a square metre.
Mr Travers lamented the lack of a big selection of quality properties for sale in the secondary market because there is demand for them from people who hesitate buying off-plan. Five years ago the island had very few developments, so supply of second-hand villas and condominiums is tight even though many new projects were completed last year.
