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Phuket property sales rebounding – CBRE
Saturday 28 May 2011, 01:43AM
Property sales activity has rebounded in Phuket, according to David Simister, Chairman of CB Richard Ellis (CBRE) Thailand. CBRE tracked figures recorded by their Phuket office and noted there were more sales and more active enquiries in the first quarter of the year than in the same period of 2010. This, the company believes, signals a recovery in the market. Mr Simister said at a recent conference on resort markets, “Phuket remains the pinnacle destination for second home purchases in Southeast Asia, with the villa market topping the charts in terms of the range of high-end developments and the prices paid. “Neighbouring countries’ resort markets do not have the same international desirability as Phuket. The Vietnam market has a significant number of new projects but it is really attractive only to domestic buyers. “Bali, Phuket’s main competitor, does not attract the same volume of tourists or, more importantly, the [same numbers of] high-income individuals and property buyers.” In its latest report on property trends on the island, CBRE says, “2008 to 2010 saw a slowdown in the market triggered by the global financial crisis, although Phuket prices held firm and there were very few distressed sales. “However, there was a clear shift from off-plan sales to resale units. Within the resale market, hotel-branded villa products with a good reputation and good management were the top sales performers, with Andara being the most desirable.” The Phuket report shows that the latter part of 2010 was the turning point for the villa market, with increased activity in the luxury sector. The high-season tourism period continued to drive interest, with more than 20 villa transactions in the first quarter of 2011. But, CBRE warns, “Developers cannot become complacent. While the market shows signs of recovery, developers need to realise that the number of buyers has [shrunk], the buyer profile has changed and the criteria for successful sales are much more precise.” Eilidh Callum, Senior Economist at CBRE, explains in the report, “Projects devised before 2008 that were temporarily postponed will not necessarily succeed in today’s market. “It is not just a case of proceeding as before, adding an extra bedroom, a larger pool or replicating other previously successful developments. “In this new era much more thought has to be given to the design and final product if it’s going to appeal to today’s buyers.” For example, she says, buyers are now looking very carefully at management programmes. “Buyers in all segments of the market are seeking good quality management programmes, so they can be confident that their asset will be looked after in their absence.” She cites Amanpuri, Laguna Phuket, Trisara and Andara as examples of such programmes, along with CBRE’s own. Another change is that more buyers now are end-users rather than investors. Prakaipeth Meechoosarn, Director of Resort Residential Sales in Phuket, notes, “We are seeing many more enquiries and increased sales from high net-worth individuals, especially from Russia and India.” These buyers, she says, are financially independent and are typically seeking large four- and five-bedroom pool villas with high-quality fittings and finishes in a good location with ocean views. These buyers, she explains, want luxury tropical lifestyles without the forced restrictions imposed by leaseback schemes or compulsory rental pools. “There are currently two or three popular projects in the US$5-million-and-above (B150-million-plus) segment that offer products that meet these buyers’ needs.” At the other end of the market, CBRE also notes an increase in demand for entry-level villas priced from B5 to B10 million. Despite the global situation, buyers still want to own a tropical home. But with less equity than before and with rising construction costs, these buyers are not expecting sea views and their focus has shifted to more affordable homes they see as representing good value for money. Demand in this segment of the market is predominately from European residents who prefer completed or mostly-completed developments. In all market segments the west coast is still the preferred location, though some buyers are looking at Phang-nga where they can still get west-facing oceanfront property at prices comparable with property inland or on the east coast of Phuket. Ms Callum concluded, “We are concerned that [some] developers have not taken note of the changes in the market – they have taken on board the signs of recovery but they are failing to focus on the right market.” However, she added, “We are confident in the market, we see it both broadening and growing.”