While Phuket continues to attract its fair share of extremely wealthy tourists and property investors, the number of foreigners willing to splash out B100 million or more for a luxury villa has been dwindling. By Risinee Sarikaputra
Phuket these days is attracting more mass-market travellers, notably Russians and Chinese, whose numbers help offset the drop in jet-setters.
Some of the latter have been put off by Thailand’s political turmoil, while others are simply looking for new playgrounds. Villas are still selling, but they are more modest, though still priced beyond the means of most mere mortals.
Previously, much of the demand on the island was for huge villas, with usable area of 1,600 square metres or more, and selling prices of B100 million each, or more.
“Millionaires Mile” in Kamala, in particular became famed for its proliferation of luxury residential developments, where most homes cost in excess of B50 million, and some for as much as B250 million.
Developments in the area share common features: low density, beautiful uninterrupted sea views and large villas with more bedrooms than average.
As of the third quarter of this year there were 1,874 villas along the west coast of Phuket from Nai Yang to Rawai beach.
Sixty-four per cent of all units were in the size range from 200 to 800 square metres. Only 9pc, or 178 units, offered more than 800 square metres; the remainder were smaller than 200sqm.
Most of the mega-villas were launched or built before the global financial crisis began in 2008, especially between 2004 and 2007 when markets were booming and wealthy investors were flocking to Phuket.
Villas nowadays tend to be constructed on more compact land plots of 200 to 400sqm, or 50 to 100 square wah. A Knight Frank survey has identified 606 units in this category. A plot of 200-400sqm can support a home with usable area of 100 to 200sqm.
Of the total cumulative supply, 51pc, or 950 units, have been sold for less than B20 million each. Only 18pc, or 348 units, were sold for more than B50 million.
The majority of the supply is concentrated in Bang Tao, which has 770 units (41pc of the total).
The Laguna area remains a highly sought-after part of the island due to the range of facilities and its relative proximity to the airport.
The Laguna complex itself now contains the Banyan Tree and Dusit hotel-branded villas for sale and rent. The selling price of villas managed by Banyan Tree ranges from B59 million to B125 million a unit, while the Dusit properties are priced around B34 million each.
Nowadays, the majority of property buyers in Phuket are expatriates based in Asia, particularly in Hong Kong, Singapore and Shanghai, although other regional markets are growing in significance.
For the most part they have lived and worked in the region for a number of years and tend to know Phuket well, having spent holidays there.
The emerging markets recently are Australians, French, Canadians and Russians, as well as Asian travellers. Russians prefer larger units with three or four bedrooms, while Asians like more compact two-bedroom villas.
Of the 1,874 units available in total, 1,474 villas have been sold, representing a take-up rate of 78.7pc.
Annual take-up of villas before the crisis in 2008 was between 160 and 180 units per year. The figure decreased to 83 units in 2008, and 79 units in each of 2009 and 2010, before improving to 163 units in 2011.
The market has since regained its momentum with sales in the first nine months of 2014 totalling 266 units.
The highest demand now is for villas priced below B20 million with 690 units sold out of 950 available in this price range, or 72.6pc.
Most villas in this range have two or three bedrooms, with usable area of 200-300sqm, located on small plots of 50 to 70 square wah (200 to 280 sqm).
The Phuket villa market remains attractive given that only 400 units remain for sale, while annual take-up is likely to be about 250 units.
As supply dwindles over the next year or so, selling prices will increase.
Villas thus are attractive for both short- and long-term investment. The increased diversity of visitors to the island will create demand for many product segments from budget to high-end properties.
Risinee Sarikaputra is director of Research and Consultancy with Knight Frank Thailand. For more information email risinee.sarikaputra@th.knightfrank.com
This story was first published by The Phuket News and is published as part of an editorial partnership between The Phuket News and PropertyGuru Group.
