Across the Land: Evolution of Phuket’s property scene
The property market in Phuket has seen an increasing amount of supply over the last five years with both Thai and foreign developers jumping on the bandwagon, building projects all over the island. The island continues to witness the growth in construction and some clients have commented that since the last time that they were in Phuket (which was only the year before) they noticed increased clusters of development everywhere.A significant difference from last year is the marked absence of Russian tourists and property buyers in the market. Due to the downfall of the Russian ruble and the ongoing war with Syria, even the traditional high season over Christmas and New Year has been quiet on the island. It looks like Putin got his wish in keeping nearly the entire Russian population at home this winter instead of having them basking on sunny beaches and ringing in the New Year in warmer countries.
Property developers targeting Russian clients will no doubt have to change marketing strategies, or look for a totally new market, or pray that the ruble recovers.
The mainland Chinese tourist presence is reasonably big and increasing yearly as the Chinese love Thailand and it is one of their most popular holiday destinations. But mainland Chinese are what we call ‘purists’ as they are purely tourists doing all the touristy things like going to the islands, visiting temples and so on. They are not the kind that will buy properties in Thailand, but even if they were, the Chinese government makes it very difficult for them to transfer funds from China for such an investment.
The Singaporean and Hong Kong Chinese (mainly expatriates), however, have traditionally been big players in the Phuket property market, and with the ongoing strength of the Singapore and US dollars, Phuket properties may get a much needed boost from this segment.
The most traditional property buyers in Phuket are Europeans and even today they are still one of Phuket’s main property buying groups. Though the Euro has weakened against the Thai baht in recent years, that has fortunately not stopped the Europeans from coming to Thailand. Instead of looking for a property with a budget of 1 million euro, the budget is now reduced to 500,000 euro, which incidentally has created a new demand for properties in that price range.
The recent bombing and terrorist situations in Europe may also create a higher demand for properties, as Europeans seek an alternative destination to escape from the uncertain situation back home, as well as the harsh winter conditions.
That’s a strong hint to Phuket developers to create new products for this segment. We use the word ‘create’ here as most current developers ‘copy’ rather than create. Copying can be good, but putting some thought into functionality, being creative with design and maximizing space, together with use of quality materials that are relatively low in maintenance, are key to penetrating this segment successfully.
Amy Koh is the sales manager of Engel & Voelkers Phuket. To contact Amy, visit engelvoelkers.com/en/phuket
This article first appeared in the January 23-29 issue of the hard-copy Phuket Gazette newspaper.