BANGKOK’S cooling condominium market is leading buyers to look at new locations for investment opportunities.
One location that has continued to show demand is Phuket, along with other major southern resorts including Koh Samui, Krabi and Phang-Nga. These locations are popular due to their ease of access with international airports, beautiful landscapes and pristine beach access with clear waters. The combination of these positive elements makes them great locations for vacation homes and retirement.
Phuket originally gained popularity as a luxury resort villa market catering predominantly to western buyers at the top end of the market. Local developers and investors made up the lower end with no prominent brand names or expertise.
Starting around 2010 large national builders expanded into the area, lured by growing demand for resort properties and bringing with them their professional expertise in product development and construction standards. They targeted mostly the low- to mid-range buyers with products under Bt10 million, with some developers also creating projects that targeted the higher-end market share.
The mass-market projects offered smaller unit sizes with lower prices than the luxury beach villa projects that Phuket had become famous for. These mass-market projects by big name builders were located mostly in the downtown/non-coastal areas rather than along the seacoast in order to keep their investment costs down.
Today, the property sector in Phuket has matured. The primary investor group has shifted from western buyers looking for ultra-luxury vacation homes priced between Bt100-150 million to local Thai and Asian buyers looking for pure investment properties which can yield a profitable return.
CBRE has found that the price ranges most investors seek are Bt3-10 million for non-coastal properties and Bt 10-25 million for coastal properties.
Prime beachfront land in west Phuket has historically been the most coveted beach location, due to the quality of its beaches and views. Today, most of this prime beachfront property has been developed, pushing most new developments to look within a broader radius on the east, north and south sides of the island. Some developers are also beginning to look further out such as to Phang-Nga and Krabi.
Land investors most often look for three defining characteristics: land on a slope with ocean views (preferably with beautiful beaches), accessibility by land, and reasonably close to a major transportation hub such as Phuket International Airport or Krabi International Airport.
In branded residence projects managed by a well-known hotel company, properties such as The Residences at Sheraton Phuket, Grand Bay and ClubMed Krabi have received greater interest from luxury-property investors due to the brand image and the hotel quality services they will receive. The brand-name reputation carries with it a certain level of assurance that the workmanship of the development and the maintenance will meet an acceptable standard of quality.
Another benefit of the resort developments is that developers often offer a rental management programme. This allows the investor to get decent rental yields and use the property as a resort home for a certain number of days in a year.
On the supply side in the current market, beachfront or sea-view developments with hotel branded management in the price range of Bt10-25 million are limited.
With a slowing downtown Bangkok market, CBRE has seen growing investor interest in these resort locations.
The success of a development in luring buyers will depend on their ability to meet the key aspects of ocean facing sloped land, preferably with beach access, accessibility by land, and reasonable proximity to major transportation hubs and city amenities.
The projects that can meet these requirements will better draw investment buyer interest.
Writer by Aliwassa Pathnadabutr, managing director of CBRE (Thailand)