|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:
- Thirty-five villas were sold in Q4 2016, increasing from 28 villas sold in the same quarter last year.
- One entry-level project (THB 5-15 million) and one mid-range project (THB 15-35 million) were launched in Q4 2016.
- Income seeking investors have continued to be the main buyers for entry-level and mid-range villa projects.
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 Q3 2016, there were 43 villas completed increasing the completed supply of villas to 3,472 units. There are 958 units of villas which are planned or under construction. There are 247 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:
The Phuket Villa market remained slow even with the increase in the number of villas sold from 28 to 35 in this quarter. Most sales came from the lower-end segments (THB 5-35 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 THB 200-500 million range and the other one in Sri Panwa Luxury Pool villa in the THB 200-300 million range.
There were two projects launched in this quarter. One was an entry-level villa (THB 5-15 M), The Aristo Villa, and the other one was a mid-range villa (THB 15-35 M), Anchan Hills.
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.
For further information on the Phuket property market, download our latest Phuket Residential MarketView