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By the Book: Property market ripe for a rebound

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PHUKET: Timing in life is everything but timing markets is always difficult. Buy low and sell high is easier said than done. At the top of the market is when most are buying, media news is positive and the consensus is cheery, while at the bottom people are fearful the market will go lower still.

For some time now many of our articles have talked about the market reaching a bottom and that buyers should now be looking to buy back in. This is, of course, viewed with some skepticism of trying to ‘talk up’ the market.

However during April and May, Siam Real Estate has experienced a marked increase in buying activity, mostly in the resale markets where price reductions have reached a level where buyers are buying back in.

We have also started to see more inquiries from developers who are looking to buy new land plots for future development or looking for market information to judge when and what to build.

Why has the market been soft? There are several reasons: 2014 was a peak year in terms of prices. After the Russian economic crisis, Russian buyers’ currency lost half of its value and that market dried up. Oil prices went from US$200 a barrel down to US$30 a barrel. A lot of people employed in the oil industry live in Phuket and buy and rent properties here. The drop in prices caused the oil industry to slow down. Brexit caused ructions for many British buyers looking to invest in the market here. Lastly, of course, Thailand itself has had an eventful few years.

So what has changed? First off, the world economy is gaining strength, interest rates remain at record lows and people are looking to put their cash to work. Phuket real estate has attractive rental returns and despite negative media in the past couple of years, Thailand has proved itself to once again be resilient and is currently very stable with elections due next year.

Real estate in Phuket looks to offer good value right now, especially in the resale market. Compared to many international real estate markets, which are reaching heady heights and look toppy to say the least, Phuket real estate prices have spent the last two years correcting. With the market in Phuket being ‘soft’, at least for a while, there has been a slowdown in new developments and supply.

Phuket properties also produce attractive rental returns. Owners should be able to achieve between 4 per cent and 7 per cent gross returns on their investment. With the long term upward trend of increasing real estate prices in Phuket, this makes for a very good investment.

Research findings by Global Property Guide Research match those of our in-house research into the average rental returns from properties in Phuket.

Should the trend of recent months continue, we will be able to look back and say that Q1 2017 was the bottom of the market by which time deals in the resale market will start to dry up as properties are sold and sellers begin to increase asking prices.

For more information about this article contact Kevin Hodges, Siam Real Estate (SRE) Tel: 076-383646 Email: kevin@siamrealestate.com; www.siamrealestate.com

— Kevin Hodges

 

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