Phuket property worst hit at “high end”

PHUKET: More than 10 residential projects with a combined market value of nearly 10 billion baht remain “on hold” in Phuket, because demand from both domestic and foreign buyers – especially for luxury homes – has fallen to less than half of last year’s level.

Wanwipa Horbut, deputy managing director of luxury property developer Surin Hill Development, said demand for luxury homes in Phuket had continued to fall since the onset of the global economic crisis last year. Both domestic and foreign buyers have fled the market, leaving the company unable to sell its most recent condominium project, Baan Thai Layan. The company values the development at about 1 billion baht.

“We launched this project with a focus on buyers interested in investing in Phuket. When the global recession hit last year, most investors delayed or suspended their plans. As a result we cannot sell our project,” she said.

Surin Hill Development is trying to find new distribution channels to sell the condominium units completed so far, and is revising plans for a third phase of the development to meet changes in demand from home-buyers.

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Wanwipa said although the company had “missed its target”, it was continuing with construction. Fourteen units have been completed in the first phase and construction is continuing on 16 units in the second phase.

Pisarn Tangkasombat, president of the Arayaburi Group, which owns hotels and resorts and develops residential projects on Koh Samui and in Phuket and Krabi, said domestic and foreign demand for residences in Phuket was continuing to fall against figures from last year.

“Some Thai investors are interested in buying our residential projects, but the banks reject their loan applications. This is the main problem for local investors,” he said.

Pisarn said a friend of his who planned to launch a residential project in Phuket worth nearly 1 billion baht suspended his project when he saw diminishing demand for homes on the island.

“We cannot say how many property projects have been suspended in Phuket, but we know of more than ten,” he said.

Phanom Kanjanathiemthao, managing director of Knight Frank Charter (Thailand), said foreign investors continued to delay their investments in projects in Thailand, especially in Phuket, where mainly luxury residences carried high prices.

A survey by the Real Estate Information Center earlier this year found there were 139 residential projects in Phuket offering a total of 12,334 units. Only about half of these have been sold.

Phuket’s main residential market has focused excessively on upper-income earners, the Center says. Most home prices range from 5 million to 12 million baht, quite high for Thailand outside of Bangkok.

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