Political woes drag down Phuket property market

Real Estate May 16, 2014 00:00

By Somluck Srimalee
The Nation

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The property market in Phuket has witnessed a decline, with many domestic and foreign buyers having delayed their decision to purchase a home so far this year.

The resort-island’s residential inventory – condominiums and low-rise property including detached housing, townhouses and villas – was more than 7,000 units as of April 30, according to research by the Phuket Real Estate Association.
Association president Thanusak Pundget said that up to 60 per cent of the inventory waiting to be sold was in projects developed by property firms from Bangkok that had been expanding their investment in Phuket since 2012, while the remainder was accounted for by Phuket-based developers.
Meanwhile, some 3,000 of the 7,000 units are in residential projects launched last year, with the remainder in new projects launched so far this year.
The roughly 7,000 units will take more than one year to sell out, now that demand has fallen in both the middle- and upper-level residential markets, he said.
Yuthachai Charanachitta, CEO of Amari Real Estate, a developer of luxury homes in Phuket, accepted that demand for luxury residences on the island had dropped since the final quarter of last year. 
He put this down largely to the political uncertainty, which had dragged on to the extent that foreign investors were delaying their purchasing decisions.
“Our sales have dropped by up to 30 per cent when compared with the same period last year,” he said.
Jones Lang LaSalle managing director Suphin Mechuchep said residential demand in Phuket had declined because both local and foreign buyers had postponed their decisions to buy in the current climate.
They are concerned about the political turmoil, which has in turn impacted the economy, she said.
Meanwhile, in a bid to boost demand, Thanusak said the association had joined forces with property agency Harrison to hold an auction for 500 residential units worth Bt10 billion combined from 20 projects this coming weekend. 
The units on offer are a mix of condominiums, detached housing, townhouses and villas generally priced from Bt2 million to Bt10 million apiece, with some homes expected to fetch even more.
“We target sales of at least Bt3 billion from the two-day event,” he said, adding that the association was trying to boost the market during a slowdown period in the first half of the year.