Phuket’s residential property market should continue to improve in line with the global economic recovery given no new political turmoil, according to new research from Knight Frank Thailand.
The company believes that political stability will reinforce consumer confidence, not only for Phuket but for Thailand as a whole.
Managing director Phanom Kanjanathiemthao said the economies of the countries where many of Phuket’s condominium and villa buyers come from Singapore, Australia, Germany, Switzerland, England and Russia were on the rise.
“This allows buyers in those countries to feel more confident about buying holiday homes in Phuket,” he said.
The company found the average selling price of a luxury villa in Phuket dropped by 14% to 50.3 million baht (US$1.6 million) in the first quarter this year from 59 million baht ($1.89 million) last year. This was a result of political uncertainty that forced villa owners to reduce their prices to attract buyers. Knight Frank has seen more inquiries from foreigners in the past two months.
He said although the market was slow in the second quarter due to the political situation, not much supply entered the market. Most villas in Phuket are not pre-built, reducing the chances of oversupply.
Phuket condo supply during the first quarter was 4,686 units, up 65 from the end of last year. New projects were small developments while the average selling prices slightly increased to 89,113 baht ($2,849) per square metre from 88,885 baht ($2,841).
“The increase in price doesn’t sound reasonable when compared to the slowdown in the Phuket property market. However we found sporadic condo transactions. The condo market seems to be in better shape than the villa market,” said Mr Phanom.
He believes the strong baht and high interest rates should not have a major effect on the villa and condo markets in Phuket as most villas are sold in US dollars and buyers generally tend to pay in cash.