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PHUKET VILLA MARKET REPORT 1H 2016

RESIDENTIAL RESEARCH

2

FIGURE 1

Phuket Villa Existing Supply & New Supply, 2008-1H 2016

HIGHLIGHTS

RISINEE SARIKAPUTRADirector, Research and Consultancy

“The primary super prime villa launches have pushed the price of secondary vil-las up in Phuket. There were many re-sale transactions for villas in the past couple years, while the absorption rate of primary super prime villas remained stable.”

Overview

Phuket is growing at a rapid rate with

increases in the numbers of tourists

yearly and massive investments from

both the private and government sectors.

During 2015, there were many super

prime villa projects launching in Phuket.

In the near future, we will see more

super prime villa projects launching

and those super prime villa projects

will be managed by international hotel

chains, located in convenient but tranquil

locations in Phuket. Phuket villa buyers

vary, including about 36 nationalities of

buyers. However, the majority of buyers

are European, Russians and Asians;

the latter are mostly from Hong Kong,

Singapore, Mainland China and Taiwan.

Koreans also love Phuket but they are

customers who rent rather than buy.

Koreans choose Phuket as a honeymoon

destination and they prefer to stay in a

villa during their honeymoon. Super Prime

• TheaccumulatedsupplyofPhuket

Villa as of 1H 2016 was around 2,363

units.

• Bangtaoistheareawherethemajority

of villas are located, with around 39% of

the total supply. The Kamala headland

has become known as a super prime

location for villas in Phuket.

• PhuketvillabuyersareEuropeans

from France, Germany and England.

Australians are also major buyers, with

an increasing number of buyers from

Singapore, Hong Kong, Mainland China

and Taiwan.

• ThedemandforPhuketvillaswas

approximately 1,809 units sold out of

2,363 units, representing the sold rate

of 76.6%, with only 554 units available

for sale. The highest demand during the

first six months of 2016 was the area in

the southern part of the island which are

Rawai, Naiharn and Saiyuan.

• Theaveragenewlylaunchedselling

price of an oceanfront villa as of 1H 2016

wasapproximatelyTHB347.6million

per unit, whereas the newly launched

seaview villa and inland villa were sold

attheaverageofTHB113.7millionand

22.8 million per unit, respectively.

Villa projects are located in the areas of

Kamala,SurinandBangtao.ThePhuket

villa market is so far from the oversupply

stage as the villas have been sold off

plan; developers start to construct such

villas when they have already been

reserved and the buyers have signed

sales and purchase agreements. The

Phuket villa compound is typically small

and cosy, with less than 10 villa units in a

project. The successful super prime villa

project is one that offers the right price in

the right location with management by an

international hotel chain.

Supply

As the first half of 2016, there were

approximately 2,363 villa units along the

west coast of Phuket from Naiyang to

Rawai beach. We have excluded the area

inPhangnacalledNataibeach.Before

the global crisis in October 2008, the new

supply of Phuket villas was around 200 to

2008

0

500

1,000

1,500

2,000

2,500

2009 2010 2011 2012 2013 2014 2015 1H 2016

Existing Supply New Supply

202

748

62

950

82

1,01

213

1

1,09

423

2

1,22

518

4

1,45

721

1

1,64

134

6

1,85

216

5

2,19

8

Source : Knight Frank Thailand’s Research

3

2007

0

500

1,000

1,500

2,000

2,500

2008 2009 2010 2011 2012 2013 2014 2015

90.0%

80.0%

70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%1H 2016

Supply Demand Sold Rate

748

35.7 %

44.4 %49.9 %

53.4 %

60.7 %

66.4 %

72.1 %76.9 %

72.1 %76.6 %

267

950

422

1,01

2

505

1,09

4

584

1,22

5

744

1,45

7

967

1,64

1

1,19

69,

852

1,42

42,

198

1,58

52,

363

1,80

9

FIGURE 2

Phuket Villa Supply, Demand & Sold Rate, 2007-1H 2016

RESIDENTIAL RESEARCHPHUKET VILLA MARKET REPORT 1H 2016

250 units a year. After the crisis, the new

Phuket villa supply decreased to 62 units

in 2009 and 82 units in 2010. The Phuket

villa market started to picked up again in

2011, with the new villa supply added of

around 131 units. For the first six months

of 2016, there were approximately 165

villa units added to the Phuket villa

supply. The average selling price of the

newly launched units this year was in

therangeofTHB20millionto25million

a unit, compared to the average selling

pricein2015ofTHB65millionto75

million a unit. The majority of the newly

launched units comprised 4-bedroom

villa unit.

The majority of supply was concentrated

inBangtao,withabout916units,

followed by the area in the southern part

of the island, which are Rawai, Naiharn

and Saiyuan, and the area in Kamala,

with about 490 units and 375 units,

respectively.TheBangTaoareawasfirst

developed with the Laguna project. In the

time following the inception of Laguna,

several high-end projects came on the

market, followed recently by more middle

market developments, and economy villa

projects. The Laguna area remains a very

sought after part of the island due to the

range of facilities in the area whilst being

close to the airport. In Laguna, there are

international hotel branded villa projects,

whichareBanyanTreeandDusit.The

sellingpriceofvillamanagedbyBanyan

TreewasintherangeofTHB59to125

million a unit, where the villa managed by

Dusitwaspricedlower,aroundTHB34

million a unit.

The Kamala headland has become known

as “The Millionaire’s Mile”. It established

itself as a prime location for luxury

residential developments, and most

projectssellinexcessofTHB30million.

Developments located there share

common features: low density, beautiful

uninterrupted sea views, and large villas

with a higher number of bedrooms than

average. Kamala has been extremely

popular with certain segments of the

tourist demographic, with Germany and

other Europeans returning year after year.

Scandinavians were also longer-staying

guests, attracted by large, suite-type

rooms. The premium villa developments

in this area are Andara Signature, Ayara

BaanThaiKamala,LaemsonVillaand

much more.

Demand Recently, the Phuket villa buyers are

Europeans from France, Germany and

England. Australians are also major

buyers, with an increasing number of

buyers from Singapore, Hong Kong,

Mainland China and Taiwan. People

buying a villa in Phuket are most often

owners of a property elsewhere and in

many instances, they own two or more

properties throughout the region and

world.

Location is a key factor for sales, and

people pay a lot of attention to the

site, the views, and the immediate

environment, including other

developments and the availability of

amenities in the immediate area. Also,

branded hotel management is a must for

luxury villa buyers.


4

The demand for Phuket villas was

good as of the first half of 2016, with

approximately 1,809 units sold out of

2,363 units, representing the sold rate

of 76.6%. There were only 554 units

available for sale. The highest demand

during the first six months of 2016 was

the area in the southern part of the

island, which includes Rawai, Naiharn

and Saiyuan.

Selling Price

In terms of pricing, location remains the

key factor. Oceanfront villas with nothing

blocking the view command higher

prices. Sea view villas with panoramic

sea views located far from the beach

come in the second rank. As properties

with sea views become rarer, their re-

sale value also increases. Developments

are now emerging inland with no clear

natural assets. Priced considerably

cheaper, they represent good value for

money. New parts of Phuket previously

overlooked are becoming popular.

Proximity to the airport is no longer a

requisite but successful projects have

easy access from the main roads and

facilities either within the project or

nearby.

The historical price appreciation of

Phuket’s real estate is a strong pull factor

as is the potential for rental income.

Beforethe2008crisis,thesellingpriceof

an oceanfront villa from a newly launched

projectwasTHB168.5millionaunit;

after 2008, the average new unit price

increasedtoTHB132.5millionaunit,

and in the first half of this year, the price

wasTHB347.6millionaunit.Theunit

specification will be higher, and the villas

are on a larger land plot, with spacious

internal areas and management by a

international hotel chain. In the first half

of 2016, the newly launched sea view

villawassoldatanaverageofTHB113.7

millionaunit,increasingfromTHB63.8

million per unit in 2007. The inland villa

wasTHB22.8million,increasingfrom

THB19.5millionin2007.

Outlook The Phuket villa market outlook seems

good. The new luxury villas launched

have pushed the price of resale villas in

Phuket. There are many transactions of

re-sales villa units where the sale of a

new villa in the primary market is quite

slow. The villa segment that performed

well during the first six months of

this year was the villa with the selling

pricesbelowTHB20millionaunit.The

emerging location of the villa is in the

southern part of the island, due to close

proximity to Phuket Town. There are

many private development projects, for

instanceBluPearlbyTheMallGroup.

The absorption rate of a Phuket luxury

villa(pricedoverTHB100millionaunit)

is slow. The average selling price in the

secondary villa market increased sharply,

while the primary villa market remained

stable. There are some successful

developers of Phuket condominiums

entering the villa segment; for instance,

the developer of Aristo Condominium.

Villa Type

Knight Frank has defined three types

of villas in terms of their views and the

proximity to the beach as follows:

1. Oceanfront or Beachfront Villas

are those that are located in the front

directly facing the ocean, with nothing to

block the view, or villas located right on

the beach, with beach access.

FIGURE 3

Avg Selling Price of Newly Launched Villa by Villa Type, 2007-1H 2016 (THB Million)

1H 2016

In land

SeaView

ceanfront

2015 2014 2013 2012 2011 2010 2009 2008 2007

22.815.413.912.116.610.618.319.332.219.5

113.7113.6

347.6347.5

23.324.2

35.748.2

54.268.5

78.2132.4132.5

168.5

23.325.340.648.658.063.9


5

For the latest news, views and analysison the world of prime property, visit

KnightFrankblog.com/global-briefing

GLOBAL BRIEFING

Thailand Contacts

Phanom KanjanathiemthaoManaging Director+66(0)[email protected]

Chaturawit WattanaprukExecutive Director+66(0)[email protected]

Surasak Limpa-ArayakulExecutive Director, Head of Valuation and Advisory+66(0)[email protected]

Roong SitthisankunchornExecutive Director, Head of Property Management+66(0)[email protected]

Marcus BurtenshawExecutive Director, Head of Commercial Agency+66(0)[email protected]

Frank KhanExecutive Director, Head of Residential +66(0)[email protected]

Risinee SarikaputraDirector, Research and Consultancy+66(0)[email protected] Phuket ContactNattha KahapanaExecutive Director, Knight Frank Phuket+66(0)[email protected]

Important Notice© Knight Frank LLP 2016 – This report ispublished for general information only andnot to be relied upon in any way. Althoughhigh standards have been used in the preparation of the information, analysis, viewsand projections presented in this report, noresponsibility or liability whatsoever can beaccepted by Knight Frank LLP for any loss ordamage resultant from any use of, reliance onor reference to the contents of this document.As a general report, this material does notnecessarily represent the view of Knight FrankLLP in relation to particular properties or projects. Reproduction of this report in wholeor in part is not allowed without prior writtenapproval of Knight Frank LLP to the form and content within which it appears. KnightFrank LLP is a limited liability partnership registered in England with registered numberOC305934.Ourregisteredofficeis55BakerStreet, London, W1U 8AN, where you maylook at a list of members’ names.

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2. Sea View Villas are the villas that

are located on a cliff or hill, providing

panoramic sea views; however; the

villa may be located further back, at a

distance to the beach.

3. Inland Villas are the villas that are

emerging inland with no clear natural

assets. The projects may be located in

close proximity to the beach but they

have no sea views or are located inland

at quite a distance to the beach.

Knight Frank has classified villas into

four categories :

Villa Category

Super Prime Villa

• SellingpriceoverTHB50million

• MostlybeachfrontorOceanfrontVilla

orBrandedHotelVilla

• Goodandsecureneighbourhoods,

ensuring privacy of residents

• Goodbuildingdesign,layoutand

decoration

• Goodstandardofconstructionusing

high-quality materials and

specifications

• Comprehensiverangeoffacilities,

including swimming pool, gym, squash

and tennis courts, etc.

• Professionalmanagement/hotel

management

High-End Villa

• SellingpriceoverTHB30millionbut

lessthanTHB50million

• Seaviewfromtheunitand/orclose

proximity to the beach

• Goodandsecureneighbourhoods,

ensuring privacy of residents

• Goodbuildingdesign,layoutand

decoration

• Goodstandardofconstructionusing

high-quality materials and

specifications

• Professionalmanagement/hotel

management

Mid-Range Villa

• SellingpriceintherangeofTHB20

million to 30 million a unit

• Majorityarenon-seaviewbutlocated

in a good community and near

facilities and amenities

• Moderatestandardofconstruction

using moderate-quality materials and

specifications

• LocalManagement

Economy Villa

• SellingpricelessthanTHB20million

a unit

• Noseaviewfromtheunit

• Locatedquitefarfromthebeach,

facilities and amenities

• LocalManagement

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