Phuket Property Sales 'Going OK' Despite Economy Slowdown
Tuesday, August 11, 2015
PHUKET: A slowdown in sales of Phuket property is likely until next year because of concerns about the economy, says the Chairman of the Phuket Real Estate Association, Thanusak Peungdet.
He predicted it would be a good time for buyers on Phuket to get a good price and for investors to seek better deals on land valuations.
About 2000 homes and 5000 condominiums are on the market on Phuket, Khun Thanusak said.
''Sales are going ok,'' he said.
''But land prices in Patong and the Kata-Karon area are now at more than 100 million baht per rai. Even so, very few spaces are available.
''One continuing issue is the need for the government to speed connections of electricity, water and other infrastructure for properties that will be developed over the next year or so.''
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It's never a good time to buy property in Thailand. Plenty to rent. No reason to buy and plenty of reasons not to. The last person to ask how the real estate industry if doing is the Chairman. One other note: asking the government to speed connections is exactly the wrong thing to do. There should be a moratorium on building until the infrastructure catches up (it never will).
August 11, 2015 11:14
There are booms and busts in real estate in the majority of countries but not in Phuket it seems, I think there are a lot more than 2000 homes for sale and some have been on the market for 5 years and longer.
August 12, 2015 13:00
A good friend of mine has been in the real estate business for years. He recently said he hadn't sold a single property in over 18 months.
It would appear that the potential buyers have been made aware that the Land of Scams is NOT the place to buy property.
Property for most is not just a home but an investment; with the fact that prices here are extremely over-inflated and the fact that you cannot legally own what you buy it is a wise person that would avoid the Thai property market like the plague.
Renting is the only sensible solution.
August 12, 2015 13:56
There was a time on Phuket when buying a property represented good value. With second-hand homes not so easy to move and ridiculous prices being asked for very ordinary houses, the market is far smaller than people imagine.
and with a secondary market being in general cheaper than a primary market,what a wonderful investment opportunity! "you sell to the whole world" [at loss] - excellent marketing slogan!
August 12, 2015 14:07
Condominium business is going badly, let's build a condominium.
In Kamala are several condominiums.
I know people who live there, they say that about 20% condos were sold there. The rest is rented out by the operators, booking capacity is lousy.
I seriously wonder who paid for those projects and why?
And where I live, are two huge new projects under construction.
Spend money without retracting win, actually makes sense only if you have to get rid of it necessarily.
Much room for speculation, the result is another piece of destroyed nature of this once beautiful island.
Georg The Viking
August 12, 2015 15:02
I have been looking for a second home as a investment for my wife for 6 months.
All I want is a property that will still be worth as much as I pay for it in 12 months time not less
If sold in the future capital gains of 5% per annum would be fine not the ridiculous capital people expect here
If you are a real estate agent show me a listing that is worth purchasing in your opinion and we will see if we agree
August 12, 2015 15:51
I agree. I have been considering the same for a few years and what you get in Phuket compared to other Thai tourist location costs 2-3 times the price. Even accepting the inflated prices, there are just too many unresolved issues around land titles and government policies to be comfortable making any decision.
August 12, 2015 16:37
A Thai friend of mine just built a nice spacious 2 storey house in Nakhon. I asked him how much and he said under 2 million baht. The prices some people ask on Phuket are just ridiculous. I just saw some duplexes for 1.5 and they looked like places they want 10 million for on Phuket.
August 12, 2015 16:54
Maybe you missed the part about the land prices in some areas? Plus the fact that Phuket is the richest Thai province is permanently increasing the cost of living in Phuket. Unfortunately this cost is passed on to the new buyers and now we are on approx 120 - 200,000 THB per sqm already. Way too much in my opinion !
August 12, 2015 18:52
unfortunately, I can't give you competent professional opinion on the subject, as I'm not in this business on Phuket
I've been for quite a number of years in property development, residential (main residence) and commercial, and then not here, but in Europe - so out of that I have some perspective how that market functions, also what is behind the scene, and left untold, but here is mainly holiday homes market, about which I have not understanding on professional level, and moreover, the 1st and the 3rd market segments interweaves.
My opinion on Phuket market is one of the observer, that are rather common truth points:
Phuket, in general, of course, is not primarily luxury market, most of transactions are within low-cost brackets.
These are tow completely different approaches, which can be possible or can be not possible to reconcile:
to buy real estate that fits to your taste,
to buy a real estate that is most liquid one.
That mean the more vanilla design you get, both of exterior and interior, multi-purpose location the better liquidity, so the less peculiar features the better.
If you target a house that is within residential market, i.e. mainly for Thais, I think it is important to calculate in inflation of expectation of standard, as younger Thais are more and more used to modern contemporary urban designs and comforts, away form any Thai traditional house compromises.
Thais' tastes are undergoing transformation, so that is an important factor.
If that what is a holiday house, then the question is, can you forecast who will be major buyer's groups and what will be their tastes..?
It is quite safe to tell that in 10 yrs time regional buyers (like British on Spanish holiday homes/appartments market) will dominate - PRC + SAR, Singapore, but in which price bracket they will buy? And what will be their expectation for location, design, interior, features..?
I recently read on NyTimes impressions from Miami agents for luxury sector visiting major promotion event in PRC - what they said, Chinese customers even in that segment still forming their opinions and tastes, actually, they are disoriented and have no particular preferences or interests, hence - no sales.
The same is true for lower segment and this will keep up for quite number of years.
However, when regional buyers - from PRC - will finally arrive , that probably will give a amrekt quite an upsurge in liquidity, volumes and prices. Whether it will happen in 10 years time, or 15 years time , is a subject of guessing.
Availability of mortgage for foreign buyers would play important role too.
Friends of mine, like 7-8yrs ago bought in Pattaya beachfront condo high floor within quota, I guess ca. 50k per sqm, and still got the local bank financing - that he didn't need at all, but still signed up as a matter of fun.
Until then,I think market will stay more or less stagnant.
I don't see realistic opportunity to get into investment with an average 5% capital gain per annum within few years, giving all the market conditions.
You may realize (immediate) gain if you buy distressed assets on auction, but that is different thing.
Since there are many offers on secondary market, then it should be pretty difficult for a primary market to keep the current prices with a level of the current demand level.
My personal perference - if I would buy to use premises myself - would be Pilai/Natai beach, Khok Kloy, it is deserted beach, with local food at vicinity - that is all I need, nice villas - but, yes, they are quite expensive, yes, and in regard of liquidity, albeit there are many people with the same preferences about setting and tranquillity, you may wait for a buyer 10years to come, giving all that, that is quite theoretical exercise as well.
August 13, 2015 02:30
Interesting. Not a single mention of your involvement in anaylsis and land aquisition for missile silo's?
August 13, 2015 09:04
There are houses built here for the expat market and others for the Thai market
Its the houses built for the expat market that are not selling simply because there are not the buyers anymore
and Thai's are not interested in paying the inflated prices asked for these homes
People who talk about the high end market and only means of transport is a Honda click or a vehicle bought on hire purchase in their Thai partner's name do not impress me.
August 13, 2015 11:07
What's also gone unremarked are the high prices now being asked in middle-class Thai suburbs for second-hand or third-hand properties that would sell for one fifth the price elsewhere in Thailand. Phuket remains a great haven for people with money who can retain their distance from reality.
We built a spacious three-bedroom house up in Issan for about a million baht. Compare and contrast with Phuket and you'll see how hyped up that market is.
August 13, 2015 15:09
Properties do come up at realistic prices and they are usually owned by expats who want to return to their home country or shift to somewhere else in Thailand where property prices are more realistic and value for money, and quite a lot of these expats try to sell them without using agents and advertise them themselves and they sell quickly if priced right, they certainly do not loose money on their investment
August 13, 2015 16:35
of course,buying into that narrow market segment
- "houses built for expats" -
meaning not holiday homes, but those that are located in less preferred locations than West Coast, or East Coast with a nice view,and being in terms of features more frugal,than holiday homes,say,without pool,but usually quite spacious,
will not brink any luck in terms of liquidity.
Many expats who are concerned about budget like retirees buy at Thai market - what is now being built for Thai is quite acceptable for low-frills westerners,both flats and houses.
That segment "houses that are built for expats" is really narrow,and ,to my opinion,rather unpredictable,with avoid chance of being stagnant or even downsized:
- expats living in Phuket, who are retired;
- expats living in Phuket,who derives their incomes from somewhere else;
- and some other groups ,who are not really linked to Phuket,are mobile, and can move easily to another part of Thailand - and they do,as did number of fellow PW commenters:
Phuket is a tourist hot spot,that means relatively higher priced cost of life,and it will like that in a foreseeable future: it only will become more crowded with short term tourists,and hence it will become only more relatively expensive than non-tourist,or less touristy places.
There are very few people who go for retirement to a similar hot spots like Miami South Beach - similarly, but not same,it is about Phuket. Those who retire in Florida usually go for more quite spots.
-expats who are living on Phuket and working here - this a natural category that support that narrow market, both as buyer or tenants -but even this category is prone to shrink,also with growing tourists arrivals:
there is ever more educated Thais available for management and other positions, that have been previously filed in with a foreign work force,
their cost is significantly lower than that of expat staff - not only on account of expat package,if any,but also in regards of salary/remuneration package,incl.that of top management.
Holiday homes market,of course, naturally is more expensive,but giving ever growing PRC visitors arrivals trend - for sure in the middle term,even if some volatility in coming months,but it is more liquid.
Indeed, now it comes to my memory few expats selling their homes in the middle of the island, those that do not qualify to be in demand as a traditional holiday home,and some of them are doing that more than a year without any interest on buyers end. House are nice and large,but with a low probability to be rented out to holiday makers market at a rent rate that supports asking price,that is based on cost. Surely,they can rent their 3BRs also to holiday market at dumping price - and that is what some of them do,but then on that rent rate the asking price should X times lower - and they so far unwilling to go below cost.
Basic construction costs - pure erection of building - are of similar range,whether it is Phuket,Miami,Paris,Moscow or Sydney.
Besides costs related to infrastructure - roads,utilities, that are merely function of a location,another components of price are linked to market demand - land cost,and developer's margin.
Distressed assets in Miami like completed ocean facing residential building in Miami Beach were sold at auction at a price ca.1,500USD per sqm of a general space,that reflected a cost of construction. Upon market revival and completion of inferior works,it sold at prices that reflects market demand -10,000-40,000USD per sqm,in other less hot locations market price could be just few thousands of sqm.
Same in Phuket,a market price reflects higher demand here than ,say,in North East towns,nothing more.Whether it should be that high,in various segments,also Thai ones,I don't know,but clearly Phuket prices in any segment should significantly higher than anything in more tame locations in the country.
August 13, 2015 17:35
Oh Sue dear, here we go again.
"Unfortunately, I can't give you competent professional opinion on the subject, as I'm not in this business on Phuket" Followed by 650 words of blah blah.
Sue, if you choose to reply to me please realise that any invective (that means naughty words) will only define your personality even more. Check mate, mate...
August 13, 2015 23:23
about 20 yrs ago i was going to buy in phuket.my very close friend a thai lady advised me not to buy. if i wanted a property she would buy and it would be half of what i would pay.then she would sell to me at the price she paid.was very good advice
August 21, 2015 05:10
Let me guess - she wanted you to stay away from the negotiations/property, give her the money to buy it but then promised she'd transfer the ownership to you ?
Excellent advice indeed.
PS. I have a bridge to sell if you are interested.
August 21, 2015 10:17
Sue you need to get out of fantasy land, stop your long drawn out rants, get on your bicycle and ride around Phuket and actually compare prices of similar properties, then you may have a clue what is value for money and what is not in any price range
You sound like a time share salesperson with your long drawn out posts
August 21, 2015 11:13
Most people, whether on bicycles or not, can see that average home prices on Phuket are at least twice those in other provinces.
I agree with you Alan, sometimes up to 6 times the price in other provinces that's why they are on the market for years, waiting for a mug buyer who are getting rare and far between
Most people who have properties on the market will happily sell for their asking price and then they can buy 2 similar properties for what they get for one
This applies to both Thai and farang sellers
Only genuine sellers are selling their properties at present and there are not a lot of these but if you follow the market there are a few, less than one a month on average, they did not over pay for their property when they bought it and usually get 5% or more capitol gains per annum when they sell
August 21, 2015 11:54
Please....how can you compare Issarn prices with Phuket,or the majority of other Thai provinces for that matter ( perhaps excluding Bkk ). Of course they are cheaper.
Instead compare Phuket with Singapore, Hong Kong, Bali and you will start to see that we represent very good value.
City facilities; movies,hospitals, Malls,Bowling Alleys,inter-schools..etc etc. Mix that into a tropical beach lifestyle, wonderful food, and an international mix of friends and good natured Thais, and I'll tell you where I'd rather live.
Phuket has some issues which are slowly resolving, but as has been told to me several times... "Phuket will become Asia's Hawaii" and no, I'm not a Property Agent or someone with a barrow to push. I just live here and enjoy it.
August 21, 2015 14:41
I didn't realise you were into self-deception, HJ. Nobody I know compares Phuket with the lifestyle in HK or Singapore - or Bali. If you have enough money, you can live well in all those places. But the lifestyles are very different. Phuket is certainly still an appealing place to live, but you need vastly larger sums of money these days than you once did. Most people with money care very little about those who don't have money. That's certainly true of Hong Kong, Singapore, Bali and Phuket.
I don't drive a bycicle for a purpose of transportation, for that purpose I drive a car - only for recreational purposes, and not on Phuket.
I just pointed your attention, that you are trying to buy into a narrow,and probably contacting market segment:
a houses, that falls short of being a regular holiday house,because of location, lack of holiday home's features like a pool etc.,and whch go above the market for This.
This segment is occupied by long term expats (who do not pay for a real holiday house and go for a cheaper options),who may be in Phuket on employment or for other reasons - the sector that seems to be contracting,and you yourself pointed out to such dynamics.
Then, you are not satisfied with a price level, you expect a material drop in prices AND a sustainable capital appreciation on your purchase then.
Are there any sign that this market segment is going to crash? No,although the segment is contracting/stagnating,this low liquidity, sellers are not in general over-leveraged,and mostly do not have a mortgage attached to a property,so they are not so much under pressure to sell,so they will often chose to wait for years for a buyer,pay upkeep costs all the way, and don't go down with a price below the cost.
Your wish to buy cheap at this segment can be realized on!y through fire-sale/auctioned property - like it could happen at any other segment,not because this segment price level crashes. First,Good luck to find such nice opportunity.
Second, if you still buy at discount to the current price,you may not obtain a notional capital appreciation up to a national market price level at which you didn't wish to buy - but then this appreciation probably doesn't exist and can't be realized,assuming that other buyers are as rational as you,so ,no instant capital appreciation and it could be assumed that the price you pay is a market price.
Then,since the market is stagnating/contracting,where from a desired capital appreciation will come from? It will not come,and it could happen that this segment over the years will become to illiquid ,so it will be sood at Thai market segment and at Thai prices - if you will be lucly to get house for expat - in general much larger than those at Thai segment, for a price for for a liquid Thai segment,then very good,but so unlikely,so that means you would bear a risk of capital depreciation,not appreciation, further down Thai market segment.
On top,there is a lot of apartments,that are not holiday condos (=cheaper), that may suit for low- and middle-ranking expat employees,whether they are awarded an expat package or not,that was not here 10years ago,and only adds pressure on "homes for expats" segment.
As I said,I'm not professional on this market,just observation of passerby.
Still,it is possible to make some analysis and make some conclusions.
If you assume that everything in consideration of such things like is simple,hence short, then good luck in your endeavours being that fortunate to buy and then sell as you envisaged! ))
August 21, 2015 14:47
Sue there were houses and good ones with swimming pools ensuite bathrooms and 3 bedrooms, well built on decent sized blocks of land 600 to 800 sq mtr 3 years ago for under 9m baht( not what the owners were asking for them but what they would except) if you spent your time looking around to find them, these are not Thai design houses but western style and well equipped and fitted out available from the north of the island to Rawai
Established homes which are the type I am interested in if well maintained are excellent value and it's also easier to check if they were built to government standards/ plans and if there are any problems with ground subsiding when a few years old
Lots of problems here with sub standard builders.
You prefer areas you want to live and we prefer Rawai as we already own a home here and if another one comes up worth buying it will be in the same general area, may let my son in law and his family use it for free if they decide to move down to Phuket, if you do not pay to much its a lot better than money in the bank here, interest does not keep up with inflation, property should
Lots of expats in the village we live in have bought their homes and in the whole village there is only one Thai style house
I do not need your advice on property investment, I still have valuable investment properties in Australia which I have no intention of selling, I do not need the money, how about you, you like to advice people on property investments, or is it just all talk
August 21, 2015 20:06
Unless you are considering something in the stratosphere bracket which is a law unto it's self anywhere, I'd forget it. Lived here half my life and have a pretty good handle on property here. The lower/mid rung condo market is finished bar a few very selective tourist beachy projects, and the over supply is a joke. 1000's of Thais (and some foreigners) I'd imagine, have ended up listening to the sales patter and are now stuck with condos that the market is starting to show are worth about half what they paid (won't ever sell) and half the rental the sales staff kindly 'projected'! Not a minute too soon and this is not like 20+ years ago, most of these are mortgaged properties.
The land price bit is BS, you can buy a comparable house for 1/3rd the price comparing total area and it's not stacked 7 stories high.
Wait a couple of years and see this thing unwind, then see how you feel.
September 19, 2015 17:35
Why would anyone buy something they can never own?
Jee wizz that is just plain stupid. No I did not fall for this trap, I got out of business when it started falling flat in 2011.
I will never do business here again, ever.
September 20, 2015 00:04
Well, where I live every house being built are sold pretty fast and families, both thai and farang, are moving in. Mainly middle/upper middle class people buying TO LIVE. That's the difference, people don't buy with an eye to selling for profit within a year or two.
September 20, 2015 08:31
Why would one not buy property in their wife/partners name, most Thai people are trustworthy and like a lot of people I know who have brought money into Thailand I trust and respect my wife, she is not a farang who some I have found are untrustworthy and always trying to borrow money or trying to get you to invest in one of their losing scams or failing businesses or acting as illegal real estate gents hoping to get a commission which will be added onto the selling price of a property , Its not Thai people who are the biggest cheats, conmen and rogues in Phuket
Property especially land is a long term investment and if you know what you are doing you will always come out in front over time, money in the bank loses value with inflation much higher than interest paid by Thai banks
September 20, 2015 12:16
Just a quick heads up from Central News Network.
This story is the number one read on bbc.co.uk at the moment.
The Phuket property nightmare
The 10 minute clip was also featured on the BBC 1 channel during the day time last week.
Central News Network
September 25, 2015 11:52
if you are interested there are 6 auctions of real estate going to happen by Phuket Legal Execution Department = bailiffs, total 1.6B THB,incl. 42 houses with an estimate 102M THB - Nov 28, Dec 19,Jan 9, Jan 30, Feb 20 , Mar 19 .
I am not sure if there any house that fit a definition "enough good for a farang", but clearly it is an opportunity , upon opurchase to realize immediate gain, as sales prices likely to be under prevailing market price level.
November 9, 2015 14:57
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