Connect with us

Property

Phuket property: Asia’s big two markets mature

Legacy Phuket Gazette

Published

on

Phuket property: Asia’s big two markets mature | The Thaiger

PHUKET: Talk about “dream island destinations” in Asia and without a doubt Phuket and Bali rule the numbers game in terms of popularity.

If talk turns to resort real estate both are heavyweight contenders in the title fight. Round after round, punches or blows only end with the ringing of a bell. Practically speaking, when it comes to the life cycle of property, Phuket arguably has moved through the business milestones faster than its counterpart.

In what is often referred to as the “Golden Age” starting at Y2K (or in much simpler terms the 2000’s) up to the sub prime dilemma, the market went from a developing one to a monster on steroids.

Trends in the past are often the key to understanding the future so we have our work cut out for us.

From the early days, supply and demand were incredibly favorable as buyers flocked to our shores faster than developers could launch projects. First came direct sales, moving into a more sophisticated model of brokerage agencies, which then sprouted wings and multiplied.

Next were investment buyers who supplanted the early end users. The calendar which many thought of as human years turned out to be compacted into a shorter term growth cycle closer to dog years (especially the bigger breeds who are likely to bite the bullet after nine or ten years).

Infrastructure for real estate also moved up and onwards – legal and tax advisors, designers, interior fit out specialists, landscapers, and a host of others arrived. Then glossy publications, mass movement road shows and international profiles took the message far and near.

Later, secondary sales (re-sales) went, with an incredible growth stint, from infancy to now dominate broad resort grade transactions. Short-and-long-term rentals, vacation lets, fractionals, condo and villa resorts – the hybrid products now took the industry to one that was coming of age, mature and mimicking a traditional western model of diversity and depth.

Bali on the other hand, perhaps due to the bombs in 2002 and 2005, came to the party later. While the island always had a large villa market – what was missing were the estates, master planned communities and multi-million dollar ultra villas trading hands.

Strangely enough when the global financial crisis was in full meltdown mode, Bali was just cranking up the volume signaling that a party was going to be held – a real estate rave up. Indonesia’s economic growth remains one of the success stories over the past few years and one key sector – hospitality-led residential or condo hotels – have become a defining characteristic of the market.

At that time, Phuket flattened like a pancake once foreign demand went into hibernation mode, but down south domestic buyers have flooded the shop of dreams over the past five years.

Bali has inched the industry forwards in the curve, just like Phuket had done, but that’s where things start to get interesting. Will a parting of the ways be coming soon?

Phuket has seen an explosion of mid-scale hotels for longer than I can recall and is now hitting a serious tipping point of potential oversupply. A strong wind has propelled domestic investors to lead the pack, with a thriving economy fueling market capital and debt markets.

While the island has its share of mixed-use hotel and residential projects, in macro terms it remains in single digits when compared to the entire total accommodation supply. For the most part, in developments where guaranteed returns are offered, there remains a core hotel component and a secondary property offering. Risk remains mitigated.

On the flip side of the coin, Bali has not only embraced mixed use projects but a substantial number of developers sell out the entire inventory of units, contracting them to a hotel management company, offering a limited period of guaranteed returns which later revert to a revenue or profit split with unit owners.

The buying pool is made up primarily of Indonesians from Jakarta, Surabaya and other key cities across the archipelago. Over the past year, as we have done an increasing amount of work there, I often ask the question – how deep is the market and how long can this last?

Returning from a week there speaking to agents and developers, most anticipate a general slowdown over the next six to 12 months. From our analysis, the long-term effects of this investment-driven product cycle could have a wide-ranging impact on the hospitality sector.

As Bali will eventually see a slowdown in tourist arrivals (the same as Phuket will), and guaranteed returns diminish, hotel demand will retract and unit owners will see fewer returns. This will inevitably trigger units being placed into a newly found secondary market, but domestic investors who have leveraged their condos with the bank could be forced to price these down below current existing values.

An emerging secondary market will no doubt see primary or new sales displaced and flatten the pancake. Potentially the wild card difference between Phuket and Bali is that the latter has a larger proportion of domestic investment buyers which could create a wide scale decline on values.

The darker side is that with thousands of these units operating as hotels, unlike single asset owners who have to take a long term pricing approach, individuals will force managers to offer room rates at any price thus hitting the broader hotel market. Everyone loses. Everyone.

While this is not a doomsday prediction, warning signs remain for Southeast Asia’s largest economy and certainly there are lessons to be learned for Phuket.

Bill Barnett is Managing Director of C9 Hotelworks and can be contacted through c9hotelworks.com.

— Bill Barnett



Find more property for sale and rent across Thailand at Thaiger Property, powered by FazWaz. You can even list your property for free.

Continue Reading
Click to comment

Leave a Reply

Your e-mail address will not be published. Required fields are marked *

Phuket

Reservations now open for ‘Twinpalms MontAzure’ with enticing promotions

The Thaiger

Published

on

Reservations now open for ‘Twinpalms MontAzure’ with enticing promotions | The Thaiger

Celebrate the grand opening of Phuket’s newest beachside hotel by booking now to snap up fantastic deals. Twinpalms MontAzure in Kamala is offering irresistible packages ideal for both short and long-haul getaways for those who book directly from their website.

Guests may choose to enjoy three nights and pay for just two and for those who are looking to book a longer holiday, stay for six nights and pay only three on all Penthouses and Suite types. Guests may book from now until November 30, 2019, for stays from July 1 to 19 December 2019.

The latest addition to the Twinpalms Hotels & Resorts portfolio is set directly on Kamala Beach, on Phuket’s popular west coast and will welcome its first guests in July 2019. A member of Small Luxury Hotels of the World, the boutique beach hotel offers beautifully appointed Penthouses and Private Pool Suites and a collection of stunning Suites.

Suites range in size from 70m2 to splendid Penthouses with private pools and sea views boasting large living spaces of up to 300m2. Guests will also enjoy using a lap pool or an infinity pool offering views of the Andaman sea.

Adding to the collection of fantastic places to be on Phuket, Twinpalms MontAzure will launch its beachside restaurant and lounge, ‘Shimmer’, with uninterrupted sea views. Shimmer restaurant will serve vibrant and tasty food with an Asian focus, delicious and creative cocktails, and a great wine list, all served with the customary gusto and flair expected from the Twinpalms brand.

Designed by Martin Palleros, following the original Twinpalms concept and style, of utilising Phuket’s beautiful landscape, Martin has allowed the design to maximise the sea views from most of the Suites and areas within the buildings, whilst also ensuring the preservation of the views of the mountainside from other perspectives.

Guests of Twinpalms MontAzure also have access by complimentary transport to the brand’s other dining and entertainment destinations, taking full advantage of the three beautiful beaches Twinpalms has a presence on.

HQ Beach Lounge, a few steps away on Kamala Beach, Catch Beach Club, Catch Junior and Palm Seaside, located on Bang Tao Beach and of course, the flagship resort, Twinpalms Phuket is just a few steps from Surin Beach.

Reservations now open for ‘Twinpalms MontAzure’ with enticing promotions | News by The Thaiger Reservations now open for ‘Twinpalms MontAzure’ with enticing promotions | News by The Thaiger

Continue Reading

Business

Phuket hotel watch – 3 months down, 9 to go in 2019

Bill Barnett

Published

on

Phuket hotel watch – 3 months down, 9 to go in 2019 | The Thaiger

by Bill Barnett of C9Hotelworks.com

At the beginning of the year Phuket’s tourism and hotel sector was cautiously optimistic after a strong first half of 2018 and humbling second half. Key terms that kept popping up were Mainland Chinese, Thai Baht Appreciation, Elections and Supply Concerns.

So today, with three months of performance under the belt in 2019 what are the key trends in hotel trading? These can best be compressed in the following points –

According to data from hotel benchmarking group STR, Thailand remains Southeast Asia’s leading destination for Mainland Chinese, but the gloss is being diminished by Vietnam’s meteoric rise, and strong numbers by the Philippines and Cambodia.

Market-wide RevPar shunk by 0.04% in 2018 and flat demand at the onset of the year is now shifting into negative territory moving into February and beyond. Turning back to last year, group demand is falling which is as key concern in a wholesale driven marketplace.

One stark positive is that RevPar is being propped up by rates and not occupancy. A key takeaway is that in peak and high season, Phuket hotels are able to drive rates up in key periods and continue to do so. This of course is a broad trend.  Good hotels tend to perform at higher levels, while poorly managed ones remain subpar.

Getting beyond the numbers, as I speak to hoteliers the expectation is that wholesalers remain a critical component of the island’s hotel industry and despite the expected shift with technology to more direct bookings, the reality is that wholesale models are sensitive to demand volatility and the result of this feeding frenzy most often will be either flat rates for the year or in some cases a retraction.

We expect the remainder of 2019 to be challenging. Some hotels will look at this as an opportunity to reposition, renovate or cut costs. While others will look at new segments, niche offerings or emerging markets like India to regain momentum.

As for the top critical issues facing Phuket hotels, in my opinion these can be distilled in the following Top 3 Things Keep Me Awake at Night…

• Mainland Chinese – If tourism players or hotels believe the damage to Brand Phuket is over, think again. Talking to key tour operators there remains a hangover from last year’s boat sinking incident and travellers remain keenly concerned over safety. Only time and more concentrated promotion will see a return of the numbers.

• Growing Supply and Demand Imbalance – The current pipeline is just over 8,000 keys in development on the island. What’s more concerning is that projects in planning are not represented in this metric, and by our estimate there are approximately 5,000 more keys in planning. While both the pipeline and planning numbers will see some wash, the sum total exceeds current and forecasted demand.

Moreso, the rise of unlicensed condominiums, apartments, houses and villas is continuing unabated and is further exacerbating supply issues. Every time you see a group of tourists renting a 3 or 4 bedroom villa, that’s three or four hotel rooms that lay empty. Government control of unlicensed properties is a key issue facing Phuket’s tourism industry.

• Diminished Natural Resources and Strained Infrastructure – Water tops the list and there is little doubt we are reaching the tipping point with mounting shortages and soaring demand. Electricity is another concern. Lastly is a rising number of vehicles on the road, a urbanising trajectory and slow development of roads and public transport.

To these point’s lets revisit the hotel development pipeline and reflect that a island long term master plan, zoning for new tourism expansion and requirements for developers to invest in public infrastructure to obtain operating licenses is sorely lacking. Something has to give on this front.

In conclusion am I pessimistic about Phuket’s tourism and hotel future in 2019 and beyond? Absolutely not, direct airlinks are growing and the island has a well-structured capacity for handling tourism, but I firmly believe looking into our problems, discussing and finding ways to resolve these are critical to a sustainable growth pattern.

Continue Reading

Business

Buyback Option at VIP KATA Condominium by Phuket9

The Thaiger

Published

on

Buyback Option at VIP KATA Condominium by Phuket9 | The Thaiger

Phuket9 Company announces a buy-back option for VIP KATA Condominium Project with a rental return of 56% over 8 years.

The first two buildings of VIP KATA Condominium were launched in July 2018. After one month in August 2018, Phuket9 commenced construction of the second phase – 2 more buildings including 209 apartments, 2 common swimming pools, rooftop gardens, restaurants and a kids club.

By March 2019 foundation construction of 2 new buildings is completed and more than 50% of apartments are already sold out.

From March 2019 Phuket9 offers an option of re-purchasing apartments registered under leasehold. This offer is available only for a limited number of apartments.

Buyback Option at VIP KATA Condominium by Phuket9 | News by The Thaiger

56% Rental Income

Rental program and apartment management in VIP KATA Condominium has been operating for 8 years and brings 7% income per annum to the customer. Value-added tax (VAT) is deducted from rental income.

At the end of a rental program agreement, further cooperation or agreement extension is discussed on a case-by-case basis.

Instant Rental Income

If a customer purchases an apartment in new buildings of VIP KATA Condominium, he/she has an opportunity to receive income starting the next day after full advanced payment is complete, even before construction is completed. In other words, if a customer decides to make a full advanced payment, his/her investment will bring income instantly after the payment is transferred to a company account.

Condominium Buyback Agreement

Agreement of buy-back by a developer is signed together with a unit purchase agreement from the VIP KATA Condominium. This agreement is an option for our customers.

The unit may be bought out by a developer at the end of the rental program (after 8 years). A customer has an opportunity to get 56% (7% per annum) rental return and plan an investment exit with 100% unit price return.

Condominium unit buyback agreement implies obligatory unit sale to a developer in case customer signed this agreement. If at the end of a rental program customer planning to sell an apartment by himself/herself at the market or extend rental program agreement with a developer, buy-back agreement should be not signed.

Condo Purchase in VIP KATA

If you want to purchase an apartment in the completed buildings of VIP KATA Condominium, or in one of the buildings under construction, you can contact Phuket9 sales department for more information. You will receive a current price list, apartment floor-plans for each level, reservation and payment details, examples of agreements translated into your language.

Purchase Process

You can purchase an apartment remotely. However if a customer has the opportunity it’s better to visit the developer’s office and construction site to see the location, check out the completed buildings of the first phase and construction works of the second phase.

Apartment Reservation

After choosing an apartment the customer makes the first payment 100,000 THB to Phuket9 and gets a receipt of their apartment reservation.

In most cases, apartment reservation is made only after visiting show-room and construction site. After 100,000 THB payment the customer leaves Thailand and further agreement signing is made remotely.

The signing of an Agreement

  1. Preparation of purchase/sale agreement takes from a few days to 2 weeks, depending on how many amendments customer will make.
  2. After all the preparations are done developer sends 2 signed copies to a customer by express mail.
  3. The customer signs 2 copies and sends 1 of them to Phuket9 office address.

Payment by Agreement

After the agreement is signed the customer makes payment in accordance with the payment schedule specified by the agreement. After payment is received, the developer sends a receipt and the agreement comes into force.

Rental Income

Depending on the terms and conditions of the rental program, the developer transfers a percentage to the customer’s Thai bank account twice a year.

Buyback Option at VIP KATA Condominium by Phuket9 | News by The Thaiger

Investment With Guaranteed Income

If you’re interested to invest in VIP KATA Condominium by Phuket9, please check out some of the following advantages of this project:

  • Location – 500 metres away from the beach, developed area facilities
  • Unique concept – more than 380 apartments, kids park, rooftop gardens
  • Completed buildings and 2 more buildings under construction
  • Rental program with 56% ROI – instant income already during construction works
  • Unit buy-back option for fixed investment exit
  • Furniture and decoration packages are included in the price
  • Bonuses for customers like discounted accommodation in company hotels

Phuket9 company is one of the fastest growing development companies in Phuket known for active construction of commercial properties in Phuket – hotels, kids parks, spa, medical clinics.

Welcome to Phuket! Contact us for more information, transfer order to company office or construction site.

Phuket9 sales department contacts:

Receive Project Information

Receive Project Information and get in touch with our team to receive our latest sales kit to your mailbox. 

Сontact us directly:
[email protected]
+66 62 369 8978

Continue Reading

The Thaiger Newsletter

Keep up with all the day’s news. Subscribe here.

The latest news and information from Thailand.

* indicates required
ตัวอย่าง Game of Thrones Season 8  ตอนที่ 2 | The Thaiger
ตัวอย่าง4 hours ago

ตัวอย่าง Game of Thrones Season 8 ตอนที่ 2

K-POP : BTS พาอัลบั้มใหม่ฉายแสงทั่วโลก พร้อมทุบสถิติใหม่รัว ๆ | The Thaiger
BTS1 day ago

K-POP : BTS พาอัลบั้มใหม่ฉายแสงทั่วโลก พร้อมทุบสถิติใหม่รัว ๆ

ตรวจหวย ตรวจสลากกินแบ่งรัฐบาล งวด วันที่ 16 เมษายน 2562 | The Thaiger
ตรวจหวย1 day ago

ตรวจหวย ตรวจสลากกินแบ่งรัฐบาล งวด วันที่ 16 เมษายน 2562

แก๊งวัยรุ่นตีกันงานสงกรานต์ พาพวกตะลุมบอนต่อหน้าห้องฉุกเฉินโรงพยาบาล | The Thaiger
ข่าว2 days ago

แก๊งวัยรุ่นตีกันงานสงกรานต์ พาพวกตะลุมบอนต่อหน้าห้องฉุกเฉินโรงพยาบาล

สงกรานต์หรือสงคราม ถือพร้าคว้ามีดจะอาบเลือดแทนน้ำ [คลิป] | The Thaiger
ข่าว2 days ago

สงกรานต์หรือสงคราม ถือพร้าคว้ามีดจะอาบเลือดแทนน้ำ [คลิป]

ไฟไหม้ “วิหารนอเทรอดาม” อายุ 850 ยอดหักพังถล่ม กรุงปารีส ฝรั่งเศส | The Thaiger
ต่างประเทศ2 days ago

ไฟไหม้ “วิหารนอเทรอดาม” อายุ 850 ยอดหักพังถล่ม กรุงปารีส ฝรั่งเศส

ฉายแล้ววันนี้ Game of Thrones ซีซั่น 8 ep.01 | The Thaiger
ฉายแล้ว3 days ago

ฉายแล้ววันนี้ Game of Thrones ซีซั่น 8 ep.01

สงกรานต์ร้อน ดีเจโซดาเล่นปืนฉีดน้ำในชุดบางแหวกลึก [คลิป] | The Thaiger
K-Pop3 days ago

สงกรานต์ร้อน ดีเจโซดาเล่นปืนฉีดน้ำในชุดบางแหวกลึก [คลิป]

K-POP : สรุปเดบิ้วเสตจ BlackPink บนเวที Coachella เสียงเชียร์กระหึ่ม [คลิป] | The Thaiger
BLACKPINK5 days ago

K-POP : สรุปเดบิ้วเสตจ BlackPink บนเวที Coachella เสียงเชียร์กระหึ่ม [คลิป]

[K-POP] : สุดจี๊ด MV เพลงใหม่ BTS – Boy With Luv feat. Halsey’ | The Thaiger
BTS5 days ago

[K-POP] : สุดจี๊ด MV เพลงใหม่ BTS – Boy With Luv feat. Halsey’

ตัวอย่างแรก Star Wars ภาค 9 : The Rise of Skywalker – ตัวอย่างแรก (Official ซับไทย) | The Thaiger
ตัวอย่าง5 days ago

ตัวอย่างแรก Star Wars ภาค 9 : The Rise of Skywalker – ตัวอย่างแรก (Official ซับไทย)

ด่วน! ไฟไหม้เซนทรัลเวิลด์ ประชาชนหนีตาย โดดตึก [อัปเดต] | The Thaiger
ข่าว1 week ago

ด่วน! ไฟไหม้เซนทรัลเวิลด์ ประชาชนหนีตาย โดดตึก [อัปเดต]

โซเชียลวิจารณ์คลิปสิบเวรใช้ไม้ฟาดพลทหาร ทำรุนแรงกว่าเหตุหรือไม่ | The Thaiger
ข่าว1 week ago

โซเชียลวิจารณ์คลิปสิบเวรใช้ไม้ฟาดพลทหาร ทำรุนแรงกว่าเหตุหรือไม่

ด่วน! ไฟไหม้โรงงานโชคชัย 4 ควันดำโขมง จนท.เร่งดับ [Live] | The Thaiger
ข่าว1 week ago

ด่วน! ไฟไหม้โรงงานโชคชัย 4 ควันดำโขมง จนท.เร่งดับ [Live]

เชียร์สด วอลเลย์บอล โคเรีย-ไทยแลนด์ วอลเลย์บอล ออลสตาร์ 14.45 น. | The Thaiger
วอลเลย์บอล2 weeks ago

เชียร์สด วอลเลย์บอล โคเรีย-ไทยแลนด์ วอลเลย์บอล ออลสตาร์ 14.45 น.

Trending