|This section outlines some of the findings from the CBRE Phuket Property Report, a quarterly subscription report which brings professional analysis and transparency to the growing Phuket villa market. (Phuket Villa research)
Phuket Villa Supply:
- Sales performance increased in Q2 2016 compared to Q2 2015.
- The increase in this quarter’s sales was driven by higher-end villa projects with prices of THB 35 million and above.
- There were no new projects launched in Q2 2016.
Prior to 2004, the villa market had total stock of approximately 220 units. From 2004 onwards, both the supply of and the demand for villas grew significantly because of the expanding tourist market in Phuket and the accelerating regional economy. However, the villa market was affected by the global financial crisis of 2008 and, although prices did not fall, the potential buyers started to reconsider their financial position which led to a decrease in demand. Additionally, developers faced financial difficulties resulting in the postponement or suspension of a number of projects. Consequently, the number of villa completion slowed down.
In Q2 2016, there were 22 villas completed increasing the completed supply of villas to 3,433 units. There are 978 units of villas which are planned or under construction. There are 290 villas which are due to be completed in 2016. However, as many developers will only start building a unit after it is sold, not all of the scheduled projects will actually be completed.
Phuket Villa Market Summary:
In Q2 2016, villas sales increased compared to the same period last year. The increase in sales performance in this quarter was driven by the rise in the number of higher-end villas sold; five higher-end villas were sold compared to only one sold in Q2 2015.
We believe that the demand for entry-level and mid-range villa properties has been driven by income-seeking investors.
We do not think that the shift in the buyer profile of resort properties is permanent and when the global economy recovers and the global wealth level improves, more holiday home buyers will return to Phuket.
Going forward, we believe that the overall Phuket villa market will remain stable with limited project launches and a slight growth in sales of certain market segments. We think that Chinese investors will participate more in the Phuket property market; but condominiums will be more active than villas, especially in the entry-level and mid-range market.
For further information on the Phuket property market, download our latest Phuket Residential MarketView