Resale villa surge shakes Phuket’s primary market
RISING villa supply in Phuket’s secondary sector is affecting the island’s luxury villa market which is also now facing competition from urban projects in Bangkok and other Asian CBD areas, Bill Barnett, managing director of C9 Hotelworks said in his company’s latest research paper.
Secondary transactions have increased over the past two years because some sellers are offering flexible pricing in the face of global economic condition. This has led to new luxury developments seeing a slowdown in the average absorption rate.
“Part of the current trend is attributed to owners who bought properties early in the growth cycle and are now seeking to exit on profit, hence offering flexible pricing.
“Additionally, buyers are becoming more adverse to project phasing due to the problems arising from long-term construction.
“Thus projects with a shorter development period have reported an accelerated sales pace.
“Lastly, currency appreciation and depreciation also weigh into the equation, particularly for investors from Europe,” Mr Barnett said.
However C9 Hotelworks’ boss forecasts that the sheer volume of luxury properties and the incoming of international hotel brands will revive demand in the medium term.
“Over the next 12 to 14 months, the majority of pipeline projects for luxury villas will include a hotel element, with more global hospitality brands to be represented in the market.”
The Pearl of the South continues to attract buyers from UK, France and Germany which remain its legacy markets while Asian clients from Hong Kong, Mainland China and Taiwan are a rising influence.
“Rental management programs are becoming more important as prospective buyers are now seeking an active investment platform with sustainable income.
“Luxury residential villas are segregated into branded and non-branded properties. Presently there are 13 projects in the in the primary market, with two estate offerings launched last year.”
Mr Barnett added that hotel-branded projects typically offer two-bedroom units while non-affiliated residential villas commonly offer five-bedroom units.
Design preferences are shifting away from traditional Thai influence to a more contemporary style with this being brought about by changes in the demand demographics.
Price range of US$1.5 to 3 million (approximately 52 to 104 million baht) is the most popular band for Phuket’s luxury villas with premium specification.
The average built-up sales price per square meter is 13% lower in the resale sector than new properties but discounting is now taking place among primary market offerings.
TOP: Phuket continues to attract property investors, buyers, sellers and lots of tourists.
INSET: Mr Barnett says most of the new villa projects will have a hotel element.
By Thai Residents reporters