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Thai market and expat market developers are struggling on Phuket

Phuket Property Market Remains All at Sea

Sunday, June 21, 2009
PHUKET real estate is suffering a dramatic slowdown because of the global economy and the falloff in tourism, says Tanan Tonpiboon, President of the Phuket Real Estate Association.

Up to 30 percent of construction has ceased, he said. Of developments where construction is complete, sales are running at 20 percent to 40 percent.

Banks are not lending money to potential buyers, he said.

''The wheels are not turning for real estate on Phuket,'' he said.

''Most of the problems rest with the banks, who are being very strict with loans.''

Many developers will be hoping the market picks up, along with tourism, in the 2009-2010 high season.

He expects the hiatus in sales to last for at least six months and perhaps up to a year.

If tourists do not return in the high season, the outlook for property on Phuket will be dour, he said.

However, many projects with in-house funding, especially those aimed at the Thai residential market, appear confident of the future and are going ahead with construction.

It's a critical juncture for those who think the island property business needs to slow down anyway.

This week, the Governor, Wichai Praisa-nob, told the visiting British Ambassador, Quinton Quayle, that he thought Phuket has enough development.

Khun Wichai, whose background expertise is in land titles, has previously said that he prefers Phang Nga province's balance with nature to the more developed Phuket model.

Projects aimed at expat buyers are suffering to the same extent, if not worse, than developments aimed at Thai buyers.

One expat property expert told Phuketwan this week that cash flow problems were even forcing developers to sell their show homes, in some cases at a vast discount.

''This is a no-win situation for the showhouse buyer,'' he said. ''They may have picked it up at a reduced price.

''But if the lack of other sales continues, they will be left as the only house on the development.

''If sales pick up slowly, they may end up being surrounded by houses under construction for perhaps the next decade.''

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Comments

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I've seen this at first hand. I have a villa that I am now trying to sell at 'Direct Cost' and even that isn't easy.
There's not going to be a high season this year. People simply don't have the money to spend on holidays and while the banks actively restrict lending the overall economy cannot get kick-started into sustained future growth.

Posted by Noddy on June 22, 2009 14:41

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The way that I see it from an investment point of view is this:- It is pointless to pay really high prices for something you cannot own. End of story, why buy a house or home here, if it is not yours, not your spouses, if she is thai and then not even own the land. Everything screams DO NOT BUY HERE, LEAVE.

Posted by Mouse on June 22, 2009 18:02

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Plenty of cheap luxury housing to be had at discounted prices, (if you're Thai.)
Thailand's successful cycle of getting foreigners to build at premium costs so Thais can move in at discounted prices continues.

Posted by Thai Wary on June 23, 2009 08:26

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I fully agree with Mouse on this issue. I'm now waiting to sell my villa and I'm outta here. Phuket has become a greedy, violent and quite frankly a very unattractive place to live.

Posted by Noddy on July 4, 2009 19:35

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I have good intention of purchasing a villa in a good area perhaps in Laguna. Looks like I might now reconsider my plan after reading Noddy's & Mouse's post. I've not yet done much research of Phuket in area of security & the rest. But anyway thanks a million to both you guys on your frank comments. Take care.

Editor: Do your research thoroughly. For every unhappy person on Phuket, there are plenty who wouldn't want to live anywhere else.

Posted by bobyeoh on August 11, 2009 22:05


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