Phuket Condos Are Very Attractive For Investors – The Island is Becoming a Year-Round Destination
Phuket’s condominium market is expected to stay active, with demand strengthened by investors and tourists. Colliers International Thailand reports mid-prices villas (10-40 million Baht range) were the most active segment in 2017, with pool villas in the Thai contemporary style as the top sellers. Sales were strong in 2017 and first quarter of 2018 because new supply was limited after 2016.
The villa market was strong on the West side of the island – close to Laguna Phuket and new high-end developments on Kamala beach. This segment of market was dominated by European and Russian buyers (60%) and remaining 40% were Asians from Singapore, Hong Kong, China, Japan and South Korea.
Sales in the luxury segment were also strong with 95% domination of Western buyers. The most expensive sale was a villa of 1.6 billion Baht at Surin Panwa Phuket.
Colliers International Thailand forecasts mid-priced villa market will continue to be healthy in the second half of 2018, since many developers are looking to acquire plots for new projects, mainly in Kamala Beach and Surin Beach.
Kamala and Surin beaches offer guaranteed return of investment of 6-7% and offer properties priced 80,000 – 140,000 Baht per sqm, driven by the tourist market.
Phuket condos are very attractive for investors, so that some of newly launched condos with 70% of units sold, have bought units back from buyers and revamp the projects into hotels as the tourist market booms and hotels grow even more attractive for project owners – as reported by Colliers International Thailand.
According to CBRE, villa sales in 2017 increased by 21% from 2016. More than 90% of villas sold in 2017 were in the lower-end segment (5 – 35 million Baht a unit).
The most sales were in the entry-level segment, with units priced below 15 million Baht. Sales were concentrated in the investment-oriented and income-generating products for both villas and resort condos. Most of these projects offer rental programs with promissed yield 5-7% for 2 to 5 years.
The top three Phuket resort property buyers are Thais, Europeans expatriates and Chinese, while Russian and Chinese buyers are looking for investment properties in the lower-end market (below 35 million Baht per property) with rental returns, and Europeans are mainly looking for vacation home.
CBRE predicts more hotel-branded residential developments in Phuket, as branded management has become a sought-after criteria for rental guarantee programs. In 2018, the growth in tourist arrivals will continue to be a key driver of demand in the Phuket market, both for residential sales and hotels.
CBRE expects investors in the lower-end segment to continue to dominate the residential sales market.
For condos, the most sales last year were in the entry-level segment – units priced under 8 million Baht – because of their affordability, with most of them offering rental programs.
Phuket has its fourth streight year of record tourist numbers at 8.4 million in 2017, according to Tourist Authority of Thailand, that is the key driver of demand in both he residential and hotels markets. Consulting firm C9 Hotelworks said Phuket last year posted 11.3% year-on-year growth, surpassing 8.4 million incomming passengers. Air traffic was a key catalyst as market-wide hotel performance continued to see untick in occupancy at 77%.
With an average of 641,863 passanger arrivals a month in 2017 during the low season (versus 759,703 in the high season), the island is becoming a year-round destination.
Courtesy: Bangkok Post