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Bullishly snapping up a portfolio of million-dollar properties to off-load for large profits in the future can be overstated. William Pinsent is familiar with the big-spending high roller through the success of his own high-end Jomchang project, and sees this end of the market on Phuket as having a finite lifespan. “These properties haven’t been bought by people to speculate, and it is not a purely financial investment that anyone makes when they buy a luxury villa here. It’s somewhere they’re going to have fun in and enjoy. A villa is part of their portfolio of possessions, alongside their cars, yachts and other properties that they own around the world. This means that, even if owners don’t find time to use their villa, they’re very unlikely to sell, so I don’t see a huge number of units coming back on the market.”
Coupled with the fact that all the prime sites for construction on the west coast have already been bought, the opportunity to join this most exclusive of property clubs is now limited. The construction of Jomchang, which occupies a magnificent and secluded piece of headland south of Kamala, will begin at the end of the year. Only 11 villas are being built on 35 rai (1 rai = 2/5 of an acre = 0.16 of a hectare) of land, ensuring that privacy is one of the key features of the development. This is made possible by the fact that all the buildings fit into the contours of the land and ensures that no one will overlook their neighbours. Each villa is also fully adapted to the existing natural environment of the site. In common with the other successful projects on the island, the developers have found that this environmental awareness is a useful marketing tool to stand alongside high-quality management as a major selling point.
With much of the best land now gone, developers are having to think laterally in order to chase different marketplace sectors, which can only be good news for people who don’t have US$2-3 million to spend on a property. Developers are either having to look further south, as is the case with the highly successful Katamanda project and the upcoming Baan Kataburi, both in the hills above Kata, or exploit the benefits of a location with high recognition value, as is the case with Laguna Golf Villas that are located on the Banyan Tree Golf Club’s lush fairways and include free lifetime golf membership and full access to all the facilities at Laguna Phuket in the purchase price. Also benefiting from a close proximity to Laguna, is Lakewood Hills, the second development from the Lakeshore Villas team, which will feature three, four and five bedroom villas in the 15-32 million baht price range.
However, William Pinsent cites numerous customers visiting Phuket Land to look for 5-7 million baht properties and leaving, disappointed at the lack of options on the island. Ironically the problem is that cash is often easier to generate on high-end and mid-range properties than on lower-value ones, which require up-front investment and construction.
This gap in the market is occasionally being filled, but a degree of diversification is necessary to marry price, location and quality. A good example of this is found at the Boat Lagoon development currently being undertaken by Andaman Properties. Although her family still own large swathes of land on the Diamond Mile road between Kamala and Patong, managing director Sunata Kolsamon and her partner Rolf Jannson have instead elected to think small and have recently begun construction on a small project at the Boat Lagoon. Offering full Western-standard design and construction, the four spacious townhouses are finished in marble and teak, directly overlook the lagoon and include personal moorings out front. They fall firmly into the 5-7 million baht price bracket and further benefit from offering full access to all the Boat Lagoon’s facilities, which include a pool, fitness centre and several restaurants.
“We’re the first private development within the Lagoon,” Rolf Jannson says. “The location may not be close to a beach, but I believe that the quality of the houses and the facilities on offer compensate for that. In this price range it’s also possible to build all the houses first, so people can see exactly what they are getting and do not have to buy off-plan.” A canny investor may also figure that the project’s proximity to the new multi-million dollar marina complex will not do any harm to local property values.
Currently displaying probably the most flexible attitude to development on the island (and perhaps pointing to the future for several of the other big players) Asia Island Homes have found success through covering as many angles in the market as possible. The company is responsible for the 40-50 million baht modernist west-coast Samsara development, the 8-10 million baht lakeside Surin Spring, and the beachfront condominium project Baan Chai Nam.
The company can now successfully offset the relatively time-consuming process of completing a sale on Samsara against the swifter cash flow being generated by the smaller projects. The lower end of the market is also providing immediate profit for their customers, as managing director Colin McKay explains: “Several of the Surin Spring buyers have bought and resold different properties in the project several times. They’ve bought a property off-plan and then sold it mid-way through construction for considerable profit. In this market, a completed property is much easier to sell and, as we begin to complete the landscaping, the house values are rising again. Just like anywhere else, a variety of factors affect property values. For example, if you buy in the rainy season and then sell a few months later in the high season, you’re more or less guaranteed a decent profit.”
With Asia Island Homes’ first three projects now approaching completion (and four more in advanced stages of development), the company is looking to fuel future growth by floating on the MAI stock exchange for developing companies. It’s a bold move, but one that seems in keeping with the new international outlook of the big developers on the island. All the companies benefit from local skills, workforce and financing, but are increasingly bringing in the big guns to help realize their dreams and achieve the highest possible standards. Samsara, for example, is being built by Thai Leighton, a subsidiary of the Australian construction giant. Trisara is using British firm Bovis, and Ayara is utilizing one of the world’s leading landscaping firms, Belt Collins Hong Kong Limited, at Ayara Baan Thai Kamala.
As long as supply is never again allowed to outstrip demand, as happened in 1997, the Phuket property market is more or less guaranteed future growth. The events of 1997, when developers borrowed heavily against projects that would never be completed, have now been put firmly in the past (though lessons have been learned) by the current cash-driven boom.