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Thailand property market overview
The Thai property market continues to thrive with sophisticated destinations like Phuket leading the way...
The Thai property market continues to thrive with sophisticated destinations like Phuket leading the way, attracting international buyers with its unique blend of western luxury and exotic Asian environment. However, developments are now also branching out into surrounding islands such as Phang Nga and Krabi as buyers demand untouched paradise.
David Simister, Chairman of CBRE Thailand, explains Tourism has always paved the way for resort property markets in Thailand and the recent upsurge as we recover from the Tsunami is motivating the development of both hotels and residential property projects.
A large Bangkok residential developer, recently published research that reported the tourist market is booming again and the property market has followed suit.
A market finding its feet again
The Thai has had a rough ride in recent years. First the tsunami at the end of 2004, then a military coup last September and most recently proposed changes to the Foreign Business Act which would place restrictions on foreign ownership of Thai real estate. However, much time has passed since the horror of the tsunami and those in Thailand at the time of last autumn's coup will no doubt speak of how little it impacted day-to-day life or business activities in Thailand.
David Simister commented, In the week following the coup, CB Richard Ellis has received instructions to acquire land for developments in Phuket and Phang Nga, and inspected several prime sites with investors seeking to develop resort properties. For the level of enquiries over the past few days, we see continuing healthy interest in Thai real estate, especially in resort areas.
Thailand property buyers are dominated by purchasers from Hong Kong, Singapore and Europe who are attracted by properties that feature tropical indoor-outdoor living with large open terraces, expansive living quarters, large kitchens, and swimming pools. Neighbouring Southeast Asian destinations such as Bali have yet to prove themselves as true competitors.
Most buyers of Thai property are regionally based and generally have sound market knowledge and despite an anticipated market slow down, real estate companies and securities analysts remain positive. Terry Meensook, research analyst at Citibank, said in a recent report, We expect consumer confidence will turn up next year, on the back of more favourable trends in interest rates and oil prices, and given greater political stability." The report continued: We foresee overall strong demand in the condo and townhouse segment, though a pick-up in sales of single detached houses (SDH) might be delayed until 2007."
This positive outlook was once again dented recently by the proposed changes to the Foreign Business Act (FBA). The government's recommended leasehold option is viewed as a sound proposal by many industry insiders, however.
Property in Thailand has indeed performed very well in the past few years and this trend seems set to continue with high build quality firmly established coupled with competitive pricing. Thai property is luring buyers away from regional competitors like Hong Kong, Singapore and Bali with its low costs of both building and living, exotic natural beauty and the infamous brand of hospitality that Thailand delivers.
Phuket
Property investors are currently being attracted by Phuket’s increasing reputation as both a holiday and retirement destination. According to CBRE Chairman David Simister, Phuket’s property market has in seven years seen prices increase (on quality developments) by 300-400%. Even today, many projects see their value double between launch and completion.
Andrew Howard describes the types of purchasers who are snapping up Phuket property. "Europeans purchase villas on Phuket as both holiday homes and investments, they are finding it more difficult to generate decent returns on their Spanish and French properties. The Far East expatriates from Hong Kong, Singapore and Kuala Lumpur are using Phuket as a holiday base largely due to its extensive transport links, Phuket International Airport has over thirty flights a week to Singapore, Hong Kong and Kuala Lumpur and these short flights mean that business people can leave their offices and be sitting beside their swimming pools in Phuket, with a cool drink in hand within a few hours.
Koh Samui and Phang Nga
Property purchasers who enjoy an island lifestyle may also find it across from Phuket on the resort island of Koh Samui. Located on the east coast of Thailand, this is a holiday destination with development on a smaller scale due to local building regulations which specify that no building can be higher than the coconut trees (12 metres), resulting in smaller more intimate developments.
For true island developments the Phang Nga bay area has seen developers starting to fully exploit the island lifestyle with recent launch of The Village on Coconut (Maphrao) Island. A water sports resort based on the well established Sunsail formula (villa prices range from £175,000) and Barama Bay has now sold out its 31 plots at prices from 3 million dollars.
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