Phuket property sales on the rise

Malaiwana Residences

By Andrew Batt

Property sales in apartments, condominiums and villas in Phuket continued to improve generally during Q1 2012 according to new research from CBRE Thailand, although the new wave of Asian travellers have yet to become significant property buyers on the island.

David Simister, Chairman of CBRE Thailand, said: "Despite healthy increases in tourism arrivals, we are not for now seeing proportional increase in sales in resort property market. The traditional market of European expatriates in Asia and European buyers have less of an appetite to buy property. We believe in part due to European and global financial problems and in part concerns on investment in Thailand. The rising tourism numbers are mainly from Asia who has yet to become resort property buyers. Over time repeat tourists will create new buying demand and in time new product will emerge to match their requirements."

In the condominium and apartment market, CBRE Thailand's statistical analysis is based on prices per sqm. The company noted this this does not always provide a completely accurate picture of the market because of the wide range of unit sizes. There are one bedroom units with high prices per sqm and larger condominiums with high total prices but mid-range prices per square metre. This needs to be taken into account when reviewing the research.

During Q1 2012, CBRE Thailand estimated that there were 84 resort condominium sales, compared to 74 units in Q1 2011 and 94 units in Q4 2011. The majority of sales were one-bedroom 43-68 sqm units with an average price of THB 5.9 million.

Malaiwana Residences (pictured) was the only new launch. This is a luxury project with 12 units priced between THB 77 million (RM7.7 million) and THB 106 million (RM10.6 million). The developer reported that 50 percent of the development has been sold, showing there is demand for the right product, and that there is more than just demand for THB 6 million (RM600,000) one-bedroom units.

Tourism arrivals continue to grow, the growth is mainly from Asian arrivals and as yet they have not been big property purchasers in Phuket. CBRE Thailand noted that these new growth markets will generate repeat visitors. "We have seen that in the Thai resort markets, repeat visitor can become potential property purchasers," the report noted.

Whatever the nationality, buyers prefer completed developments with completed units outperforming those under construction, 85 percent sold compared to 54 percent respectively. Those only in planning stages do not give buyers the level of confidence they are looking for and as a result sales are poor.

With growing tourism arrivals and the strong reputation of Phuket, CBRE Thailand expects the overall performance of the condominium and apartment market continue to improve in 2012.

According to CBRE, a total of 60 villas were reported as sold in Q1 2012 compared to 51 villas in Q4 2011. The entry-level segment demonstrated the strongest performance with 30 villas sold, while the luxury segment showed the lowest performance with only two villas sold.

Statistically the entry-level segment (THB 5 million to THB 15 million) performed best this quarter, with 30 unit sales, increasing from 18 villas in Q4 2011. This was followed by the mid-range segment (THB 15 million to THB 35 million) with 37 percent of the total sales this quarter and 22 recorded sales, falling slightly from 23 villas in Q4 2011.

A total of six high-end villas priced at above THB35-90 million (RM3.5-9 million) were sold in Q1 2012, increasing from five villas sold in Q4 2011. This segment of the market is one of the more volatile segments as buyers in this price range are typically more sensitive to economic conditions than those purchasing in the luxury segment. The luxury segment of the market, where villas are priced at THB 90 million and above, recorded two villas sold, decreasing from five villas sold in Q4 2011.

In Q1 2012, one project comprising five villas was completed. The total stock of completed villas was 2,721 units, increasing slightly from 2,716 units in Q4 2011. The Sunrise Ocean Village Phase I was the only newly-completed project in Q1 2012, with asking prices of THB 16.9 million (RM1.69 million).

For the villa buyer profile in this quarter European, Canadian and Russian buyers focused on the entry-level segment of the market. The middle-range segment was focused on by Australian buyers. Asian-based buyers and Indian buyers focused on the high-end and luxury segments, while Russian buyers were active across all segments.

CBRE Thailand expects performance to continue to improve in Q2 2012 and onwards over the rest of the year. Demand will continue for affordable villas (entry-level and middle-range segments) and we expect the luxury segment, especially in view of the new launches, to be a low-volume high-value segment.

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