Phuket, the crown jewel of the region’s resort destinations is first and foremost affected by Singapore and Hong Kong, its regional sources of investors. Buyers from these two cities have a long love affair with the island and its properties. Local Thai and expat investors, as well as those from Russia, China and others, leave their mark too.
The ongoing cooling measures in Singapore and HK depress local prices, encouraging investors to look overseas. Billions of dollars are spilt over and part of it is funnelled into the region’s resort properties, especially Phuket – the darling of the high spending investors and buyers looking for a second home.
Despite a relative slowdown in resort markets, I notice an increase in development and high-end property sales in Phuket. The interest from HNWI is there, everybody wants their own slice of paradise. Last year the Angsana beachfront condo by Banyan Tree was launched and its 30 units were sold out off the plan, in just weeks. Another building launched later in the same location was sold out off-plan as well, at prices starting from over 1 million USD for a 2-bedroom unit. These are luxury properties and the pace at which they sell out indicates a solid demand. Phuket is an upscale location and developers who go lower level or construct smaller units, assuming it will be easier to sell these for lower quantum, miss out on the bigger money.
I also inspected an upcoming project in the north-east side of Koh Samui, currently in the design stage, with villas to be potentially designed by a super brand and priced at around 3 to 12 million USD. A few Japanese buyers have already pre-ordered their units. Unfortunately, we don’t see enough Japanese investors in Phuket. For an unknown reason, there are no direct flights from Japan to the island, which is a shame.
But there is more good news – the higher-end Russian tourists seem to be returning to Phuket. There are no statistics yet, but during my recent visits, I noticed many Russian speaking tourists in Phuket’s high-end hotels. The holding oil prices mean we will also see more tourists from the Middle East. It all makes increased rental returns from high-end holiday homes more likely. I’m not concerned about the drop in Chinese groups arrivals. These are not high-end property buyers. Eventually, the HNW Chinese will arrive and will claim their share of investment.
I have a feeling that we will soon see more high-end projects in Phuket; it’s going to be an interesting year for branded property as well. Watch this space as I will revisit this subject later next year.