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Global and Local Problems Halt Greater Phuket Plans

By on Jun 22, 2010 in Property News

Published on Bangkok Post dated 18 June 2010 by Nina Suebsuckharoen

Not too long ago, property developers in Phuket were extremely optimistic about the future of the resort island and began talking in terms of a “Greater Phuket” market that included the neighbouring provinces of Phangnga and Krabi.

Sadly, the global economic crisis and local political problems have stalled this ambitious push.

David Simister, chairman of the property agency CB Richard Ellis, said recently that the still weak global economic recovery had held back the development cycle on the southern resort island with several projects on the drawing board for the west coast of Phangnga now all on hold.

“Developers haven’t dumped them, they are still waiting for the right opportunity,” he said.

However, he added that the value of end-user units and good land plots  is not so much in question with the key issue being that the number of prospective buyers has declined. “There are buyers and the sales that do take place are at good prices. It’s just that it’s not hte same volume of buyers.”

Although demand has decreased and this has led to a consolidation of the Phuket property market.

Mr Simister believes properties on the island are still a good investment, with no examples of distressed sales during the height of the global economic shakeup.

“Phuket isn’t about short-term speculation, it’s about long-term holding and a combination of use and capital appreciation.”

Rather than expanding into neighbouring provinces, the move now is toward Mai Khao beach on the northerwestern side of the island. Although some major projects were launched on the island’s easterm coast in recent years, the majority of the stock has been completed and there does not seem to be a wave of new developers undertaking projects on that side of the island.

“If I were to draw a value map. I would say the most valuable areas are probably in Surin,” says Mr Simister. “But again, you have to compare like with like. If you are comparing uninterrupted ocean view, hilltop view, promixity to the beach, all thest things will differ project to project but generally you are looking at Kamala, Surn and Bangtao as the prime strip, and values reduce as you go either farther north, east or south.”

Mr Simister says that people who want to buy property in Phuket should do so today because new developments will inevitably be more expensive. It is still a market of limited volume, because all that has happened over the past two years is absorption of property.

While certain that foreign developers will come back to the island once economic and political conditions improve, Mr Simister does not think a foreign developer is an essential ingredient to get a new project going. That has been amply illustrated by the success of Thai developers on the island.

In fact, the entry of well-heeled local developers has been a healthy counterbalance to the tendency earlier of some developers who were selling off-plan and working with minimal capital.

Mr Simister said the reason companies such as Supalai Plc, which recently launched the well-received Supalai Park@ Downtown Phuket condominium, are constructing residential buildings inland is because land for smaller bungalow developments is getting scare. As well. people who work on the island are as keen to snap up these units as those in Bangkok eager to get a condominium near a mass-transit station.

They can certainly afford to buy them because Phuket remains under any circumstances a very wealthy province.

Aliwassa has been the Managing Director οf CBRE Thailand for a number of years. As a Thai national, Aliwassa is extremely knowledgeable about the sale of property in Thailand, specifically large scale high value condominium developments largely in Bangkok.

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