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Phuket Residential – Q 2 2009

By on Oct 20, 2009 in Research, Residential

The second quarter of 2009 continued to be a quiet period for property sales in Phuket, with a reduced number of enquiries and buyers compared to the beginning of last year. The effects from the global economic crisis and Thailand’s political instability are certainly still impacting sales performances.
Overall, Q2 saw a more active residential market compared to the previous quarter. Condominium sales outperformed villa sales, with luxury and entry-level units performing best in the current market. Whilst sales volumes this year are far off from 2008 levels, prices have held up at a similar level for both re-sales and primary units. The market in the first half of 2009 has also been largely inactive as buyers were in no rush to make purchase decisions due to the lack of discounts. This said, buyers are now beginning to realise that discount levels they were expecting are not available in the market. The overall sales performance remains healthy with limited completed unsold inventory as 90% of completed villa and condominium units have been sold as of Q2 2009.

The tourism industry also continued to feel the impact from the global economic crisis in this quarter. Adding to the bleak performance was Thailand’s political tension, which peaked in April with the Songkran riots and disruption of the ASEAN summit, combined with the outbreak of H1N1 flu. Both events have raised health and security concerns for travelers planning their trips to Thailand.

During Q2 2009, the total number of passengers at Phuket International Airport was 1,187,855, down 8.9% y-o-y and 26.4% q-q-q. International passengers at Phuket International Airport were also down 12.91% y-o-y. We expect to see a growth in passenger numbers at the end of Q3 and the beginning Q4 during the high season, in line with improvements in the global economy and stability in Thailand’s political situation.

With more positive sentiments globally and Thai politics settling, the second half of 2009 looks to be more upbeat for the Phuket residential market. Interest levels at the beginning of Q3 have increased, with some developers reporting up to a 30% increase in enquiries. With real estate markets in key Asian cities including Hong Kong and Singapore picking up, we expect resort real estate to follow the recovery path, although at a slower pace. On the development side, we expect to see a limited number of new project launches for the remainder of the year as developers are unlikely to launch projects until there is a clear upward movement in price and most developers are focusing on clearing existing inventory first.
Buyers who have adopted a ‘wait and see’ attitude are now more active in their property search and those who do find the right product appear to have more willingness to invest. The high season in Q4 will give a better indication of the market recovery.

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