Sales of Phuket property have been soft during the low season, but one real estate firm is reporting that enquiries for real estate on the island are now picking up as the traditional high season – November through until April – approaches.
Property firm Siam Real Estate said that activity in the resale market has been increasing during the last 12 months as sellers have been offering what they describe as being some great discounts on property and real estate on the island.
Recent research from the company noted that on Phuket, and also in the rest of Thailand, the majority of property buyers prefer to purchase new properties.
“There are numerous reasons why buyers prefer new properties over resale: new properties have never been lived in, they offer the latest in terms of building materials and quality, while some property developers also offer extended payment terms during construction with special terms for buying off-plan – resulting in a higher capital appreciation.
“Furthermore, buyers may enjoy an average annual rental return of between 5 percent and 7 percent.”
According to Siam Real Estate, typical capital appreciation when buying during the pre-sale period is 30 percent and between 5 percent and 10 percent when buying during the construction phase.
Sellers of resale property, to compete with demand for new property, are able to offer attractive price discounts. Therefore, Phuket’s resale market is starting to offer better value.
It added there are numerous reasons why sellers are able to offer discounts on resale property. Foreign buyers in Phuket who bought five or six years ago, or longer, saw the Thai baht appreciate against their home currencies – up to more than 20 percent at various times during the past five years. Therefore a lot of foreigners who want to sell can do so at a much lower price than the true market value of the property. When these sellers repatriate their money they gain on the exchange rate.
During the last 10 years construction costs on Phuket have increased significantly. Those buyers who bought units between five and ten years ago can offer a lower price than a comparable new development and still make an attractive capital gain.
Land prices have increased dramatically over the last five years too. In some locations prices have doubled. This increase has adding to the cost of new developments as developers have to pay higher prices to purchase land plots.
Despite this, Siam Real Estate noted that some property developers are now running sales promotions with “excellent offers” for new, off-plan properties due to what was a poor low season and a lack of buyers visiting their sales offices.
The company also noted how the Phuket property rental market has softened during the last 12 months. It said the Russian market has disappeared and the offshore oil industry expatriate market has also declined. However, it said that good quality properties are still enjoying strong demand, particularly for high season rentals.
Kevin Hodges, the North branch and Investment Manager for Siam Real Estate in Phuket, told Dot Property Group: “We expect to see an improvement in market conditions as we get closer to an elected government, but by that time prices will have recovered and the bargains will have gone.”
Image: A two-bedroom freehold sea view condo overlooking Patong in Phuket, for sale through Siam Real Estate for THB 5.4 million.