Phuket’s property market was a mixed bag in the fourth quarter of 2016 as villa sales declined but there was a drastic increase in condominium sales, according to the latest research from CBRE Thailand. The Phuket Residential Marketview revealed that condominium units will continue to be more popular with buyers at least in the short term.
There was a 57 percent growth in sales in the Phuket resort condominium market during the last quarter of 2015, CBRE Thailand noted. Developers in this market are focusing on investors who are interested in rental income and not end users. In order to convince buyers that their developments have high income generating potential, a number of projects secure a hotel brand to manage their property. A total of 6,200 resort condominiums units have been completed, and a further 4,500 units are being developed and should be finished before the end of 2018.
CBRE Thailand noted that there is some evidence of Chinese buyers buying individual units with a few bulk investors from China buying ten units at a time. A handful of Chinese developers are also working on joint venture projects in Phuket as well. However, western expatriates continue to make the largest amount of purchases in this segment and CBRE Thailand reported that the number of Chinese buyers is not significant at the moment but is expected to grow in the near future.
Villas sales in Phuket during this time declined y-o-y with a weak performance from the entry-level sector helping trigger the decline. CBRE Thailand believes that the weak demand for entry level and mid-range villas is in Phuket is being caused by buyers who are now looking for income generation instead of a property they will use.
In the short term, CBRE is predicting that the overall Phuket villa market will continue to be slow but this should change when the global economy recovers and global wealth improves. In the meantime, condominiums are expected to be more active than villas on the island as long as developers ensure they can give enough confidence to potential buyers in terms of providing a quality product.
