Post-tsunami Phuket’s property market is enjoying a boom fuelled by rising demand from expatriates. Real-estate consultants say foreign investors from Singapore, Hong Kong, Europe and the Mediterranean from the bulk of buyers who are snapping up properties across the island.
Property on Phuket has always been sought after, owing to its status as a top resort destination in Southeast Asia. About the size of Singapore, the 570 sq km island attracts tourists and investors with its striking natural beauty, unique brand of Thai hospitality and cost of living that is lower than other markets in the region such as Hong Kong and Singapore.
“[Phuket distinguishes itself by its unique blend of safety, unrivalled hospitality, and the degree of sophistication of its economy and property market. It is a fully serviced island with first-class facilities, very accessible from anywhere in the region, thanks to its international airport, and benefits from a fantastic natural environment,” notes David Simister, chairman of CB Richard Ellis Thailand.
It’s not just luxury villas that are being snapped op on Phuket. Consultants say the island is enjoying strong demand across the entire spectrum of properties available. Supply has also evolved to fit all budgets, from US$70,000 ($1 approx US$ 0.64) to above US$ 7 million.
Where are these investors coming from? Analysts say demand has historically been from cosmopolitan Hong Kong and Singaporean residents, as well as western expatriates living in the region. That profile, however is changing. “We are now seeing an increasing number of high net worth individuals coming from areas such as China, and expect to see more and more buyers from Europe as Mediterranean resort prices continue to rise and people realise that Phuket can offer a very good value-for-money exotic lifestyle,” says Simister.
Potential buyers on Phuket invariably look for ocean-view properties, which are highly sought-after because of limited supply. These fast-selling developments include Trisara, which consists of exclusive US$ 2.6 million to US$ 5.3 million ocean-view and ocean-front villas on 1,300 to 2,900 sq.m. land plots adjoining an eponymous six-star hotel. Another sought-after development is The Heights, with 200 to 415 sq.m. sea-view condominium units priced from US$ 400,000 to US$ 950,000. Both projects sold half the units released within months of launching.
While buyers previously looked to projects on the traditionally popular west coast of the island. Phuket’s south and east coast are steadily gaining prominence as an alternative, as a result of the exhaustion of prime land in the west coast. A high-end project with prices lower than that on the west coast is Supalai on Ao Por, which offers three-and four-bedroom villas with sea views for less than 20 million baht. Just 20 minutes from Phuket International Airport, the area is less crowed and located near amenities such as golf courses and marinas. Such properties represent much better value for money, with higher capital-appreciation prospects as the area develops.
While consultants say Phuket’s property rental market is still in its infancy and most investors buy for owner-occupation, properties can offer healthy yields depending on their type, location and furnishings. Simister of CB Richard Ellis estimates that yields for an actively managed property can range from 6% to 12% a year, based on 100 nights’ occupancy. He adds that rental returns usually reach their full potential once the property and development it is in are fully completed and have been in operation for high seasons.
CB Richard Ellis is more bullish. Simister says, “Far from being a bubble, the high level of real estate activity seen on the island is only the beginning. Phuket is in the early stages of a long-term growth curve. The market has only one way to go, which is up, in terms of volume of sales, and range and sophistication of properties and facilities offered.”
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