Property Watch: Evolution of property – Multi-pronged approach to cashing in on Phuket market

PHUKET: There is nothing wrong with short-term goals, striking while the iron is hot and being commercially opportunistic for a profit, if this is all balanced with a long- term view. This principle also applies to the property market in Phuket.

I recently saw an adviser inform a client interested in property in Thailand, that the only investment a foreigner could or should make in property is to purchase a ‘foreign freehold condominium’. Taken aback by this narrow view, I considered the evolution of property in Phuket, and the nature by which various investors, short and long term, have made their fortunes, and in other cases, their losses.

If you take the time to look at the trading values of land in Phuket from the 1970s onwards, which you can do if you dust off some old land title documents, you may share the surprise of many Phuketians with expressions such as “I can’t believe seaview land was 2,000 baht a rai back then”, “I wish I had bought 100 rai while I had the chance, imagine how rich I would be now” and “I can’t believe those two neighbors killed each other over that boundary line” coming to mind.

I am sure at the time seaview land was trading at 2,000 baht per rai, there were some who thought that if they doubled their money to 4,000 baht per rai, they had done exceptionally well.

Phuket property is not just about prime land that can legally be developed, which we have seen plenty of over the last several decades – not that developers are anywhere close to being finished. Phuket property is about villas, condos, apartments, hotels, guesthouses, boutique shopping centers, supermarket chains, franchised fast-food outlets, nightlife, beach, but not much umbrella life, marinas, sailing and super yachts. This means that not only Thais can invest in such, but foreigners can too, subject to various restrictions, some of which are understandable, and some of which remain a mystery.

If you had held onto 100 rai of good seaview land purchased for 2,000 baht per rai in the 1970s and taken a long-term view, retirement would be but the signing of a sale- and-purchase agreement away.
Wealth, appreciation of land and property are relative concepts. This fact is something that escapes many short and long-term investors. If you appreciate your property but the economy just keeps on becoming more expensive to operate in, then cashing in would be a pointless exercise.

However, Phuket has had a fair share of meteoric rises, and falls. If all property investors thought long term, then the property market would freeze while all the hawks simply wait and see. Similarly, if all property investors think short term, then the nearby bulls will wade in, creating distortion.

Phuket is now at another crossroads. It is for the long-term investors to determine where that will lead Phuket. Will the investment in mega malls, a light railway system, improved roads and infrastructure, more hotels, a regeneration of parts of Phuket Town, more lifestyle development on the east coast, ever-expanding airport, more local and international schools, better hospitals and better sea ports result in a long-term gain for property investors in the next two decades?

Or will tuk-tuk parking, jet-ski issues, continuous road accidents, crime, mistreatment of certain tourists, overdevelopment, pollution, lack of environmental protection, behind-the-curve utilities provision and unfair and unpredictable enforcement prevail?

I think the more positive aspects of Phuket will triumph over the negative in the long-term. I wish all those long term investors good fortune, and I hope I am still here to see the positive results.

Desmond Hughes has been an owner and operator of his law firm in Thailand for 12 years, and is a senior partner at Hughes Krupica law firm www.hugheskrupica.com

— Desmond Hughes