THE PREDICTABLE line is being promoted within the property industry that it's business as usual on Phuket, and that the sub-prime mortgage crisis hasn't reached the island and probably never will.
This seemingly sound piece of logic is based on the fact that Phuket is a cash market. But it is wide of the mark.
What is certainly true is that not many foreigners who purchase property on the island need to seek loans before buying.
In any case, housing loans are difficult to come by for foreigners in Thailand. If a loan is required, the cash most often has to come from home-country banks.
So, the theory goes, while the rest of the world suffers from sub-prime contagion, Phuket rolls blissfully along on the path to higher prices and continued prosperity.
That, at least, is the theory. But it's wishful thinking.
Phuketwan can tell you unequivocally that the sub-prime crisis is having an effect and will probably threaten and erode the property market for at least the next six months.
The theory that Phuket is some kind of sanctuary would be fine, except for one plug-ugly word that has become impossible to ignore this century: globalisation.
The simple truth is that Phuket is affixed to Planet Earth. It doesn't float in heavenly bliss above the Andaman Sea.
It might be different if Phuket was still a bargain for high-end property investors, the way it was back in 2001. But real estate prices on Phuket and in the surrounding region are no longer attractive in their own right.
Where Phuket's advantage still lies is in the climate, the beauty of the beaches, the reefs, and the jungle, the food and the people, reinforced by the international quality of its education and health services.
When high-end buyers come to look at Phuket, they are usually weighing the advantages of buying in Phuket against other destinations around the world.
If the planned purchase is a holiday home, Phuket remains a great place to buy. If it's an investment, then there's a lot more competition these days.
Having seriously eroded property markets in the US and Europe through 2007, the sub-prime effect is now causing the reaction that real estate people dread: cuts in high-end prices.
The local real estate market held its nerve in the testing year after the tsunami. But the sub-prime pressures are now becoming more insistent.
With prices considerably higher than those of 2005, the downward pressure is becoming more difficult to resist.
The cash is still there. But so is the competition. And the megarich don't waste their money.
Many of them have now opted to take a wait-and-see approach, anticipating that as the crisis continues, sub-prime will trigger price cuts.
And it's happening.
One astute source tells us that a high-end New York property was ''given a haircut'' the other day, with the asking price falling from $15 million to $12 million.
The optimists will say: ''Don't be silly. Phuket is different. Prices on Phuket cannot be affected by a downward trend in New York.''
Here's hoping they are right. Meanwhile, like the megarich hold-outs, we will wait and see what the next six months reveal.
Do you have a view about Phuket property prices? If so, please tell us at Phuketwan. And look for TRENDS here regularly.
This seemingly sound piece of logic is based on the fact that Phuket is a cash market. But it is wide of the mark.
What is certainly true is that not many foreigners who purchase property on the island need to seek loans before buying.
In any case, housing loans are difficult to come by for foreigners in Thailand. If a loan is required, the cash most often has to come from home-country banks.
So, the theory goes, while the rest of the world suffers from sub-prime contagion, Phuket rolls blissfully along on the path to higher prices and continued prosperity.
That, at least, is the theory. But it's wishful thinking.
Phuketwan can tell you unequivocally that the sub-prime crisis is having an effect and will probably threaten and erode the property market for at least the next six months.
The theory that Phuket is some kind of sanctuary would be fine, except for one plug-ugly word that has become impossible to ignore this century: globalisation.
The simple truth is that Phuket is affixed to Planet Earth. It doesn't float in heavenly bliss above the Andaman Sea.
It might be different if Phuket was still a bargain for high-end property investors, the way it was back in 2001. But real estate prices on Phuket and in the surrounding region are no longer attractive in their own right.
Where Phuket's advantage still lies is in the climate, the beauty of the beaches, the reefs, and the jungle, the food and the people, reinforced by the international quality of its education and health services.
When high-end buyers come to look at Phuket, they are usually weighing the advantages of buying in Phuket against other destinations around the world.
If the planned purchase is a holiday home, Phuket remains a great place to buy. If it's an investment, then there's a lot more competition these days.
Having seriously eroded property markets in the US and Europe through 2007, the sub-prime effect is now causing the reaction that real estate people dread: cuts in high-end prices.
The local real estate market held its nerve in the testing year after the tsunami. But the sub-prime pressures are now becoming more insistent.
With prices considerably higher than those of 2005, the downward pressure is becoming more difficult to resist.
The cash is still there. But so is the competition. And the megarich don't waste their money.
Many of them have now opted to take a wait-and-see approach, anticipating that as the crisis continues, sub-prime will trigger price cuts.
And it's happening.
One astute source tells us that a high-end New York property was ''given a haircut'' the other day, with the asking price falling from $15 million to $12 million.
The optimists will say: ''Don't be silly. Phuket is different. Prices on Phuket cannot be affected by a downward trend in New York.''
Here's hoping they are right. Meanwhile, like the megarich hold-outs, we will wait and see what the next six months reveal.
Do you have a view about Phuket property prices? If so, please tell us at Phuketwan. And look for TRENDS here regularly.
