The change, CBRE says, is driven by a number of factors – the entry of Bangkok-based and Thai public listed developers; the move towards smaller units resembling the Hua Hin and Pattaya developments and a significant increase in the number of Thai buyers in Phuket.
After a period of slowdown following the global crisis in 2008, the Phuket market is now enjoying a new wave of activity.
“By 2011, the stage was set for a change when Bangkok-based listed developers such as Sansiri and Supalai entered the Phuket market in a significant manner.
“Their first projects focused on the mass entry-level market and met with instant success, selling out within days from launch to a predominantly local Thai buyer base,” CBRE reported.
“The success of these projects has led a number of developers to consider the viability in Phuket of Pattaya- and Hua Hin-style developments that attract both Thai and foreign buyers.
“This model is characterised by smaller unit sizes and significantly cheaper total unit prices. CBRE believe this is the beginning of a new and sustainable market for Phuket.”
Slightly further up the scale, Laguna Resorts launched Laguna Shores at the end of last year, the report notes, with prices from B4 million upwards resulting in almost half the units being sold in the last quarter of the year, mostly to foreigners.
Sansiri, having concentrated on entry-level apartments, which sold in a matter of hours, took a leap upmarket in March with the launch of its beachfront project, Baan Mai Khao, with prices from B7 million to B53 million. Interest came to a large extent from Thai buyers, “due in part to the loyal following Sansiri has in the Thai market,” CBRE said.
CBRE predicted that Baan Mai Khao could also spark a home-building boom along Mai Khao Beach similar to the development of Bang Tao in the early 1990s, when Laguna Phuket led the charge.
“The launch of these projects represents a significant change for the market as they are being built by credible Thai developers not dependent on immediate cash flow from sales to begin construction.
“These projects can therefore be delivered on a timely basis and give buyers greater confidence compared with projects built by first-time developers with limited funding.”
The reputation of these major developers also appeals to Thai buyers, CBRE says. “The developers are able to draw on their track record of success in Bangkok and other resort locations to secure Thai buyers.
“Although the proportion of Thai buyers [compared with foreigners] is still lower than Hua Hin and Pattaya, this represents a significant change.”
CBRE Chairman David Simister noted, “Having been involved in the Phuket property market for the past 25 years, this is the most significant change we’ve seen in the market since 1997.”
The changes, he said, have led to renewed interest in the market by both developers and buyers, and the launch of new projects after several years of slowdown.
“For the rest of the year, CBRE also believes there will be continued activity for the entry-level segment below B10 million, for condominiums, leasehold apartments and small villas in inland locations.
“The top-end luxury villa market (B125 million to B250 million), while limited in volume, will still be sustainable in the long-term as Phuket still has significant unique attractions.
In addition to interest in new projects, the secondary re-sale market in Phuket has also seen an upswing in the number of enquiries and transactions.