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Phuket, Samui Villas and Condos Going Unsold
By Alan Morison and Chutima Sidasathian Tuesday, March 16, 2010
A DISMAL picture of the property development scene on Phuket and Samui emerges from the latest figures provided by the Government House Bank, which specialises in loans for housing.
The Director of the Real Estate Information Centre, Sammana Keetasin, reports that sales all over Thailand are down, but especially on the two holiday islands.
Given low demand, there appears to be an oversupply of both villas and condominiums.
While the latest political protest in Bangkok may not have had a dramatic effect on tourism on Phuket, which is relying more and more on direct flights, the global economic downturn and continuing unrest in the capital appear to have unnerved potential real estate buyers.
On the current figures, Phuket and Samui are experiencing an oversupply that could take years to whittle down.
The expat market is largely a cash market because Thai banks will only grant loans to foreigners in rare circumstances.
Very few sales are being recorded on Phuket and Samui.
Three villas were sold on Samui in Q3 of 2009, the report says, while results have been equally stagnant on Phuket.
On Phuket, the report says, 13 villa projects were offering discounts of between 10 and 20 percent.
Given the outlook, it's little wonder that upmarket villa and condo estates have converted to resorts to retain cash flow and a positive future.
Phuket Villas
80 projects involving 1900 units
Average price: 30 million baht
Sold: 900 villas
Unsold: 1000 villas
Samui Villas
50 projects involving 800 villas
Average price: 29 million baht
Sold: 300 villas
Unsold: 500 villas
Phuket Condominiums
90 projects involving 5000 units
Average price: 8 million baht
Sold: 2780 units
Unsold: 2250 units
(Phuket City studio apartments have proved popular, attracting 44 percent of buyers)
Samui Condominiums
14 condo projects involving 500 units
Average price: 7.4 million baht
Sold: 250 units
Unsold: 250 units
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Comments
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These numbers look puzzling. The number quote here suggests there are 900 villas on the market with an average selling price of THB 30 million each.
It would be interesting to see something to substantiate that number as the actual number of luxury villas in the market at that pricing point is a fraction of this.
As for Samui's Q3 figures with 3 transactions which says Phuket is similar would be highly questionable. Resale and new transaction levels were far higher than that.
I believe the data points the report lists out should be looked at. While condos can be verified at the land department, transactions for resort grade villas are often done in two contracts, being land and structure and land the land department does not show the link so there is a gaping hole on missing transactions if reports rely only on land department transactions.
Often villas are sold though share sales off shore and transactions occur with no record at the land department.
While the broad property market in Phuket was fairly restrained in 2009, luxury sales and resales were consistent so the picture provided in the report may not accurately portray the true market volume.
Think some looking beyond the numbers here might be needed to understand trends.
Editor: The figures, we are told, are based on information obtained from local authorities by the Real Estate Information Centre at the end of Q3 in the ''hotspots'' of Phuket, Samui, Cha-Am/Hua Hin and Pattaya. Some of the developments included go back to 2005. Approved rather than completed projects are included (as are, presumably, sales off-the-plan).Hopefully, sales have improved in the past six months. The compilers of the figures appear to have every reason to make them as accurate as possible. As you know, reliable figures are difficult to come by. Perhaps an update is in order once the industry has looked at the stats more closely?
Posted by
Bill Barnett
on
March 16, 2010 15:22
Bill Barnett,
I'd like to know, do you have vested property interests in Phuket ?
Posted by
Christy Sweet
on
March 17, 2010 07:40
Bill, you are right, resales will always sell, but by how many, and like you say, no one can truthfully say.
As far as Phuket goes, I had a drive around the island last week from south to north, east to west.
I am sorry to say it looks very sad, nearly all the developments, medium end, high end, look unfinished, no one in sales offices many estate agencies closed ,no confidence whatsoever.
This was all over the island, too much of everything and looks like no customers.
Posted by
jd
on
March 17, 2010 09:43
I'm not sure who, these days, would want to invest so much money for a condo or villa on Phuket or Samui. Phuket/Samui prices now rival those of the South of France, how crazy is that ?
Posted by
elizabeth
on
March 17, 2010 12:53
For between 5 million baht and 66 million baht, better to buy yourself a luxury boat, live on it and when the ball of wax hits the fan here, you simply sail away.
Try moving your house out the country...get my drift here?
Why " Buy " something you cannot own? Seems logical to me, buy the yacht.
I know some beauties for sale.
Posted by
Graham
on
March 18, 2010 12:13
I think the explanation is simple! Real estate in Thailand is very highly overpriced, especially in Samui and Phuket. If the prices are more sensible like in the other areas, probably this can generate more sales
Posted by
Luxury villas in Thailand
on
March 18, 2010 15:18
Yes, Bill Barnett is in the property business. He runs a Phuket property web-site and it's in his own interests to talk up the Phuket property market.
Posted by
Sir Burr
on
March 19, 2010 10:21
Thanks for that Sir Burr,
Gazette merely discloses its columnist Barnett is a "Consultant,..appears on CNN,.." Blah Blah (due in part to Gazette's high Google rating, no doubt ..)
I'd like to know if he has a company that owns property.
Posted by
Christy Sweet
on
March 20, 2010 07:43
Try looking at noise pollution as one of many reasons why people won't invest in property around here
Posted by
sky
on
March 22, 2010 07:56
Noise is definitely a hidden assassin of Thai tourism and investment.
Posted by
Philip
on
March 22, 2010 10:03
I've talked to many people who have decided to leave Patong altogether just for the noise factor alone...residential areas are now directly affected by all night music from bars and outdoor concerts, neighbors blaring car stereos, etc
Posted by
sky
on
March 22, 2010 18:53
Smoke pollution from burning rubbish is also a problem. I visited with some recent retirees who had put their life savings into an expensive villa, only to find that everyone in the area burned trash at all hours of the day and night.
Their villa was constantly filled with a toxic fog.
The poor wife was on the verge of a nervous breakdown and was talking about just packing it all in and going home.
Posted by
Treelover
on
March 24, 2010 10:57
Well if the greedy developers lowered their prices to a reasonable level then this over supply would not have occurred.....Phuket has priced itself out of the market....with prices in Phuket at these crazy levels, investors/retirees prefer to look at the Philippines, Malaysia, Vietnam or even China....and the rules regarding visa and property ownership are more friendly to foreigners.
Posted by
Anonymous
on
March 26, 2010 09:47
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These numbers look puzzling. The number quote here suggests there are 900 villas on the market with an average selling price of THB 30 million each.
It would be interesting to see something to substantiate that number as the actual number of luxury villas in the market at that pricing point is a fraction of this.
As for Samui's Q3 figures with 3 transactions which says Phuket is similar would be highly questionable. Resale and new transaction levels were far higher than that.
I believe the data points the report lists out should be looked at. While condos can be verified at the land department, transactions for resort grade villas are often done in two contracts, being land and structure and land the land department does not show the link so there is a gaping hole on missing transactions if reports rely only on land department transactions.
Often villas are sold though share sales off shore and transactions occur with no record at the land department.
While the broad property market in Phuket was fairly restrained in 2009, luxury sales and resales were consistent so the picture provided in the report may not accurately portray the true market volume.
Think some looking beyond the numbers here might be needed to understand trends.
Editor: The figures, we are told, are based on information obtained from local authorities by the Real Estate Information Centre at the end of Q3 in the ''hotspots'' of Phuket, Samui, Cha-Am/Hua Hin and Pattaya. Some of the developments included go back to 2005. Approved rather than completed projects are included (as are, presumably, sales off-the-plan).Hopefully, sales have improved in the past six months. The compilers of the figures appear to have every reason to make them as accurate as possible. As you know, reliable figures are difficult to come by. Perhaps an update is in order once the industry has looked at the stats more closely?
Posted by Bill Barnett on March 16, 2010 15:22