CBRE Thailand announced that Phuket’s villa market saw a decline in sales performance in the first quarter of this year. The reason behind this decline was a dip in the region’s entry-level villa market where units range in price between THB5 million and THB 15 million.
Previously buyers from Russia had dominated this segment of the market, but the country’s weakened currency and economic downturn saw these purchases dry up, CBRE Thailand reported. If the Russian economy does not improve, it is expected that the entry-level villa market in Phuket will continue to struggle.
There is hope more Chinese buyers will make purchases in this market segment. CBRE Thailand noted they have already seen an uptick of villa purchases in Phuket from Chinese buyers, but not enough to stabilize the market. It is possible that these buyers may start making purchases in bulk, but this is unlikely to occur until they have more confidence in the market. CBRE Thailand said it did not expect that Chinese buyers would replace the decline in Russian buyers in the short term, but would be something to keep an eye on for the longer term.
The company’s research also noted that sales volume remained stable in other parts of Phuket’s villa market when compared to the entry-level market. There was a relative lack of new supply coming into Phuket’s villa market between 2011 and 2013; however, there was large jump in new supply in 2014. Both 2015 and 2016 are forecasted to see even more new supply hit the market.
Despite this new supply, CBRE Thailand stated that it believes the villa market will remain sluggish, at least for the next few quarters, until someone replaces the Russian buyers. However, it is likely the luxury-level villa market in Phuket will be the least effected.
Image: Point Yamu in Phuket
