Looking at Phuket’s primary and secondary condominium sector and analysing pricing points from the ocean up to 10 kilometres inland, what is clear is that developers and sellers are not maximising what is one of the leading Unique Selling Propositions/Points (USPs) in the trade – location, location, location.
Based on the Phuket numbers from FazWaz, which lists more than 7,000 condos in Phuket, the average value of condominium units located from the ocean front up to just under two kilometres away is 100,000 per square meter (psm), while the number actually escalates up to B117,000psm at a distance of two kilometres. Getting inside the data, what has driven the later number is actually views versus direct proximity to the beach.
Once you move inland on the island and the views disappear, the mean average rapidly drops dramatically to B34,000psm at midway point between three and four kilometres from the beach.
The storyline here is how developers have used low-cost land and delivered entry-point pricing. Underlying land cost remains a critical component of ultimate condominium pricing throughout Phuket.
As you shift away from the beach to increasingly urban areas inland from four to six kilometres, the pricing surges upward again with many units in the B80,000psm to 120,000psm tier. This recurs again when viewing city properties of eight to 10km with pricing averaging B80,000psm to 90,000psm. Urban land prices and strong demand are key factors propelling numbers.
What is clear in the FazWaz data are two things. First is that unlike in many comparable resort real-estate markets, developers have been unable to maximise premium pricing levels in relation to properties near the ocean. Sea views seem to still carry greater weighting for demand with both developers and owners.
Second is that inland properties are rapidly pushing up in value as a result of key commercial, retail and transportation infrastructure. In a nutshell, moving into the next decade Phuket’s property story is not just about the beach.
While the broad trends are very telling, from our analysis of the data on how individuals projects rank in terms of engineering the highest levels of cost, the reality is that developers who have a positive reputation and experience rank high. Other key factors that push up pricing are properties offering investment units with guaranteed returns and those with strong design elements or distinctive qualities.
– Bill Barnett
Bill Barnett is Managing Director of leading Phuket-based hopsitaltiy and real-estate consultancy C9 Hotelworks and a key writer for the FazWaz Property Insider. Visit C9Hotelworks.com and FazWaz.com