Demand for residential property returns to Phuket

After the Phuket Sandbox programme has seen 4 months since its commencement, it seems to have brought some life back to the island after almost 2 years of a stagnated economy. The Tourism Authority of Thailand says a total of 59,689 international tourists have visited the Andaman Sea vacation island under the Sandbox programme from July 1 to October 30. Although the number is not near as high as what was expected, it is still signalling a ray of hope in reopening the country in time for the high season. And, the residential property market has shown more activity as well. Prakaipeth Meechoosarn, Head of Phuket Property Sales, CBRE Thailand says the Sandbox programme has shown to be a positive move towards reopening.

“The overall Phuket residential market saw a positive movement after the “reopening” under the Phuket Sandbox scheme. During the lockdown period, most of our inquiries have been from local buyers who are looking for vacation or second-home properties. After the sandbox model was opened, the inquiries expanded to foreign residents, expatriates and some international tourists, which has led us to believe the scheme has helped bring back returning clients who have had their eyes on properties for the past years but they could not travel due to border restrictions. However, investors have yet to fully return due to uncertainties over the global economic outlook and the rental market.”

As the Phuket residential market was onced perceived as a market for foreign buyers, its face is now changing to cater towards a broader range of expats and local residents. Prakaipeth says CBRE has seen a wider range of products being offered as a result of the wider targetted market. Due to Covid-19, the market seems to have been reset to become more of a buyer’s market with more options for negotiating and opportunities. Some developers have even been waiting to clear their unsold property supply in the island, making it clear that the buyer’s market will continue to soar until the supply demand balance becomes more stable. The ultra-luxury market has seen activity in both its resale and the number of remaining units from developers as there have been limited launches due to the scarcity of prime beachfront lands that boast a spectacular sea view.

Now, Prakaipeth says the company has seen a trend of buyers being interested in ready-to-move-in properties as it makes them feel more secure seeing their potential property already completed. And, those buyers are also moving towards using such properties as safe havens during the Covid epidemic. Now, with the hybrid work model making it easier to move between city and beach life, vacation homes are rising in demand. Such modern properties with a sea view and/or beachfront are the most sought-after by present buyers.

But, the Phuket residential supply is low despite increasing demand. As only a few new projects were launched in the past 2 years due to the pandemic, the effects are visible. CBRE cites its own research as concluding that the total number of newly-launched units for condominiums and villas has decreased by 98% year on year in 2020 and 34% in H1 in 2021. Demand for some premium projects in Phuket’s prime locations is still there, which has resulted in developers deciding not to give significant Covid discounts. This situation is one reason why ultra-luxury prices have recovered fast, after falling initially in the early stages of the pandemic.

CBRE, along with other sectors, expects to see more international arrivals to Phuket as travel restrictions are eased. The end result being that more tourists and investors will consider getting vacation or holiday homes on the island. However, as new variants arise, such as the Omicron variant, the future is still not clear as to how fast the property market and other sectors will recover. So far, although the newest variant is showing a high amount of mutations, many countries are swiftly closing borders in an attempt to control the variant’s spread.

In recent days, Thailand has seen the new variant confirmed with the first case being that of an American man, who had arrived from Spain. 2 more cases were recently confirmed and were that of Thai women who returned from Nigeria. A Thai man who worked for the UN and had just returned from the Democratic Republic of Congo is the latest person to be suspected of being infected with the Omicron variant according to the director-general of Thailand’s Department of Medical Sciences.

SOURCE: CBRE