“Increasing supply and higher selling prices will be the key drivers, while demand is forecasted to improve slightly,” noted a report issued today (May 25).
“The number of new supply (units) launched in Phuket is predicted to mount continuously and local developers as well as joint-venture development companies will be key players in the market,” the report added.
“Average asking prices per square metre are also anticipated to rise in all areas, while increasing demand for luxury condominium units may see prices approaching new high in 2018, especially those properties located by the sea,” the reported highlighted, adding that the rolling out of projects under the Phuket Smart City umbrella is also expected to help boost the island’s property market.
Among the highlights of the report is that the bright outlook follows Phuket’s condominium market taking a big hit in 2017.
An estimated 1,736 units were launched in 2017; as a result, accumulated condominium stock in Phuket surged to 14,266 units, increasing approximately 14% y-o-y.
However, the number of new units launched in 2017 slashed by 29% y-o-y from 2,478 units to 1,736 units since developers become more selective and exercise greater caution in their investment as well as product offered to the recent buyers’ market, the report explains.
On the demand front, 1,147 condos were sold in 2017, a plunge of 36% year-on-year (y-o-y).
In 2017 alone, the market saw an average take-up rate of 66%, a fall of 6% y-o-y while the absorption rate dropped 35.8% y-o-y.
Average take-up rate for the new partly seaview developments plunged to 65%, representing a decrease of 16.7% y-o-y. Over the same period, take-up rate for the new seaview and non-seaview units witnessed moderate declines of 3.4% and 2.5%, respectively.
On customer profile front, the Phuket condominium market is predominantly driven by foreign buyers, especially those originated from Mainland China, Russia, and Australia. The buyers of these properties tend to buy them for own occupation or long-term capital appreciation.
Demand across the market is expected to continue to be driven upwards by international homebuyers, investors, and expatriates, especially those from Mainland China, Russia and Australia, with a larger portion of buyers from South Korea predicted to play an increasing role.
“Newly launched supply with seaview, partial seaview, and non-seaview accounted for 44%, 54% and 2%, respectively,” the reports noted.
The majority of the new developments are in the high-end market segment, principally located in Karon, Nai Harn and Bang Tao, the report added.
Condominium projects launched in 2017 recorded an average take-up rate of 66%, a fall of 6% y-o-y.
However, certain projects commanding “affordable pricing, attractive down payment packages, exceptional amenities and convenient locations” were able to achieve higher sales within weeks of their launch, the report pointed out.
Meanwhile, the average asking prices of all condominiums launched across the island in 2017 stood at B135,719 per square metre, representing an increase of 2.5% y-o-y.
Average asking prices for seaview units were B181,522 per sqm, up 1.5% compared with the previous year. Driven by increasing selling prices of the new additions to the market, partly seaview units’ average asking prices in 2017 reached B115,828 per sqm, approximately 5% higher than 2016.
Over the same period, average asking price of non-seaview condominiums surged to B103,927 per sqm, up from B102,583 per sqm in 2016.