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Phuket condo market climbs after big hit

PHUKET: The Phuket condominium market is expected to perform better in line with brighter economic forecast and the growing population on the island, according to the latest research report by Knight Frank Thailand.


By The Phuket News

Friday 25 May 2018, 01:48PM


“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.

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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.

 

 

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PhuketRe | 20 June 2018 - 12:47:49

Nice try Knight Frank, but such fake news will not blind the eyes of people. For last 2 years you can see that all the villas and condos drop down with the price. Who wants to sell need to reduce the price by 50%, so these fake news will not change the market and dont bring you profit. Crisis is coming and the riches know it so they are selling property half price to get cash and buy discount

stegee68 | 26 May 2018 - 18:54:51

it would be interesting to know if real estate agent knight frank's researches predicted "Phuket’s condominium market taking a big hit in 2017" and if they didn't- why not??

Kurt | 26 May 2018 - 17:15:57

Climbing? In their dreams. 
All self pep talks to attract buyers
Rental guarantee? In your dream
Receiving a little bit rent minus high admin- plus high maintenance fees
And don't forget the double or more charges for water and electricity bills 
All easy profits for BMW driving 'caretakers'
Come to Phuket? Rent first 1 year. Much available competing rents! Experience the trade

CaptainJack | 26 May 2018 - 12:49:45

Yeah, demand is up, that's why Emerald group and many others are in so much trouble for NOT building units they've taken deposits on, because they sold them all? Nope.

Meantime the resale on all these sky-coffins is non-existant, so once the company folds and your rental guarantee disappears with it you'll be stuck with a property you can't sell on. 

Broncofan | 25 May 2018 - 21:43:18

Anyone who can spin this data as a positive outlook is either in the property business or has no understanding of the property business, or maybe both:)
The absence of integrity in the governmental structure of Phuket has gradually been killing the golden goose for years, and the day of reckoning is upon us. Look around at all of the small shops closing. Chinese tourist groups won't fix that

Discover Thainess | 25 May 2018 - 14:49:36

An article on the resale value of condos would be very interesting. condos being sold today are nearly all sold with a rental guarantee which is what the Asian buyers want. But what happens to these units after the guarantee period runs out and they try to sell? Who is going to buy them all? Has anyone managed to sell a second hand condo in last three years? Huge bubble being created.

Winfield | 25 May 2018 - 14:33:39

1. Beware of agents that hype the market. It is in their own self interest to do so. A 'forecast' is just an opinion. 
2. Make sure you ask if any condo will have hotel license, otherwise daily rentals will not be permitted.
3. I know owners that bought condos in Patong 5-6 years ago, for 3-4 million baht, and are unable to sell them now for 1.8 million baht. What is that ?

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