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Recovery Sign in Luxury Market

By on Sep 28, 2010 in Residential
Published on The Nation dated 10 September 2010 by Somluck Srimalee 

 

Real-estate firm upbeat on outlook for medium term in Bangkok, Phuket.

Property firms are reporting a recovery of purchasing power affecting the luxury residential markets in Bangkok and resort destinations such as Phuket and Koh Samui.

Promotional activity is beginning to awaken as projects suspended as long as two years ago in the face of global recession and political turmoil are reopening their books for presales.

The Met at Sathon, which suspended sales two years ago, has seen a resurgence of demand for luxury residences and has opened sales once again for the final 40 units in the 370 unit development.

Pace Development began work last week on a new marketing strategy to drive sales at its two luxury condominiums, Saladaeng Residence and the MahaNakhon project. The company has seen a resurgence of demand for both projects over the past two months, resulting in sales worth Bt600 million.

Meanwhile,demand for residences at tourist destinations such as Phuket and Koh Samui has recovered significantly in the second half of this year, with foreign investors from Europe, Hong Kong, Singgapore, and India returning to the market.

CB Richard Ellis (Thailand)‘s chairman David Simister said that medium-and long-term demand for residential projects in Phuket and Koh Samui had recovered significantly.

He said that for two years, residential projects in Phuket and Koh Samui had been affected by a combination of local politics and the global financial crisis. The purchasing power of foreign buyers has been reduced by the strength of the baht against depreciating European currencies and the continuing economic crisis,while local politics has not helped,he said.

However,the leading real-estate services firm believes that current prices and market performance is already affecting these factors.

Looking forward, there is potential for improvement in Thailand’s resort markets in the medium term. The company expects the number of foreign buyers to increase for two primary reasons: an improvement in the economies in which they live and work, and an improved local-political outlook.

Thailand’s resort market is well positioned for growth in that it has a lot to offer in terms of lifestyle, quality beaches and value for money and it enjoys a high percentage of repeat visits.

In the lead up to the high season, CB Richard Ellis’s Phuket office is seeing an increasing number of inquiries and interest in residential properties, while the company expects property viewings and sales to increase during the high season, Simister said. However, this will be far below precrisis levels.

Demand from European markets has not fully recovered because of the weakness of European currencies.Instead, the company is seeing concentrated demand for Phuket properties from within the region. It is also seeing more interest and inquires from the Indian market.

Buyers are focusing on resaleproperties and completed projects as most are unwilling to take risks. The island’s west coast remains the primary area of interest on the development side, with a limited number of project launches in the upper end of the market. Most new launches are condo minium projects.

Simister said he also saw a trend towards more action among Thai developers who already have strategic land holdings in Phuket. Some are already active in the Phuket market, but are looking to expand, while others who acquired prime sites many years ago and are now looking to develop. There are several projects in the pipeline, mainly in the planning and design phase.

Although Koh Samui has a smaller volume market than that in Phuket, Simister said he believed there were individual bargains to be had in both land and properties and certain sites could be purchased at prices lower than those of two to three years ago. However, continued growth is seen in the medium-to long-term. People still enjoy Thailand and there are repeat visitors who are ready to become purchasers, he said.

The Samui market is also trending upwards, with the opening of luxury hotels such as the Banyan Tree, W Retreat and Conrad Koh Samui Residences at the end of this year. Projects such as the Conrad Koh Samui Residences are offering a very good investment deal with a 7-per-cent guaranteed yield for five years.

Pace Development’s CEO Sorapoj Techakraisri said his company believed that demand for luxury residents had returned because it had succeeded in selling 10 units in its MahaNakhon project, worth Bt600 million, since the start of August.

“Half of our customers are from the domestic market and the rest are foreign buyers from Europe, Singapore and Hong Kong,” he said.

If Thailand’s political situation remains stable, the company believes that demand from foreign buyers will return to the market because the price of residences in Thailand is lower than those in other countries of the region, he said.

In Thailand, luxury condominium units in the Bangkok’s central business district are priced between Bt200,000 and Bt250,000 per square metre.

In Hong Kong and Singapore the price is more than Bt1 million per square metre, Sorapoy said.

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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