Phuket villa and condo market stable, but key indicators down, says CBRE

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Real estate consulting firm CBRE Thailand has released fourth quarter 2016 figures for Phuket's real estate market. The figures show that Phuket's market from entry-level condos to luxury villas remains stable but many figures are down when compared to the same quarter last year.

The Phuket villa market remained slow even with the increase in the number of villas sold from 28 in Q4 last year to 35 in Q4 2016. Most sales came from the lower-end segments (B5-35 million per unit) driven by investors seeking rental yield returns of around 5-7% for 2-5 years.

Only two luxury villas were sold in Q4: one in The Residence by Anantara in the B200-500mn range and the other one in Sri Panwa Luxury Pool villa in the B200-300 million range. There were two projects launched in this quarter. One, The Aristo Villa, was an entry-level villa (B5-15mn) and the other, Anchan Hills, mid-range (B15-35 M).

“We believe that the overall Phuket villa market will remain slow with limited new project launches. Purchasers are starting to take into account the viability of the rental programs as it highly depends on the developers’ ability to manage and market the property to have daily rentals,” stated the report by CBRE.

In the residential market, only 560 units were sold during Q4 2016, decreasing by 15% year-on-year (Y-o-Y). Ninety percent of condominium sales in this quarter came from entry-level products (less than B8mn per unit). At least 85% of sales came from projects offering some form of yield guarantee. Forty-eight percent of sales came from projects offering guaranteed yields that will be managed by recognized hotel brands such as Best Western and Wyndham.

The upscale property segment priced above B15 million per unit was stable with 56 units sold in Q4 2016. There was a slowdown in new project launches with just three launches in Q4 2016 compared to five in Q4 2015. Two were entry-level while the third was the only luxury project priced above B20mn which was launched in 2016. The first phase of this newly launched Angsana Beachfront Residences (30 units) sold out within one month as beachfront condominium supply has become more limited.

Buyers at all price levels are seeking rental income while only using the property for their own stay for less than 60 days per year. Western expatriates working in Asia and affluent Thais from Bangkok continued to be the main buyers of resort properties in Phuket. There are also Chinese investors in certain entry-level projects.