siam real estate - phuket residential property market report 2014

PHUKET RESIDENTIAL MARKET REPORT

1 November 2014

This 34 page report provides detailed information and analysis from Siam Real Estate’s comprehensive and unrivalled Phuket database, combined with our own exhaustive market and property surveys.

Our research gives home buyers, investors and developers an accurate image of what is currently occurring in the market place and enables key real estate decisions to be made.

Phuket Residential Market Report 2014

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SRE PHUKET PROPERTY MARKET REPORT NOVEMBER 2014

CONTENTS

� Executive Summary 2 � Phuket report areas 3 � Location Information 4 � New Property Developments 5 -‐ с � Land Prices 7 π ф � Condominium Prices мл -‐1п� House Prices 1р -‐нл � Rental Market 2м -‐2р � Economic Overview Thailand & Phuket:

a. Phuket Tourism 2с -‐ол b. Demographics 3м c. Phuket Infrastructure Projects 3н

� SWOT Analysis 3о -‐3п

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Executive Summary

Phuket’s residential property market remains a ‘Green’ market with new property developments in higher demand than resale and nearly all new developments occurring on green field sites. Buyers in Phuket have a preference towards new homes rather than resale and in Phuket there is still a lot of undeveloped land suitable for new residential property developments. Until land available for green field property developments becomes scarce this trend will continue and the resale market will remain immature. The dynamics of Phuket’s residential real estate market have changed in the past decade: the market is currently strong in the area of second/holiday home purchases for less than 10m baht, 30 – 60 sq. m. condos and small land plots of 2 rai or less. The market is showing signs of recovery in the mid-‐price range (15m – 25m) and the resale market in this price range is growing substantially due to better value vs. new properties. However, the high-‐end/luxury sector (greater than 1m USD) of the residential market still remains weak. To keep prices in line with market demand residential property developers in Phuket have moved with the market trend and are building smaller properties on smaller land plots at lower prices but, to higher standards of quality.

West: remains the number one destination in Phuket for tourists and property buyers/developers, where the allure of Phuket’s long white sandy beaches and traditional resort locations continues to attract investors. We are seeing a trend of new residential property developments moving more inland where land prices are lower. This is because large hotel resorts have driven up land prices within a kilometer of the West coasts beaches. Central: in recent years we have seen a surge into lower priced condominium and housing developments in the central location of Phuket driven by some of Thailand’s biggest names in property development: Land & House, Sansiri, Pruksa. These central located property developments are mainly targeted at Thai home buyers and investors and have been very successful with high take up rates. South: continues to grow in popularity with smaller developers and local higher end luxury developments have moved into the market in recent years. North: has seen little in the way of new developments in recent years, land prices in the north still remain reasonable and we are seeing individual buyers who are looking to build large residential homes taking advantage of lower land prices. Longer term land investors looking to land bank have also been attracted to the north as land price increases have lagged the rest of Phuket. The property rental market in Phuket remains extremely strong and continues to provide attractive return on investment for home owners. In the last 5 years tourist arrivals to Phuket have been growing rapidly and with this demand for rental properties. This demand for rental properties has far outpaced the supply of properties available to rent and rental prices, both holiday and long term, have increased as a result with high occupancy rates.

The future of Phuket’s economy is very bright: the growth in airport arrivals at Phuket International has been extremely strong and looks set to continue with the airport expansion well underway, this clearly shows the resilience of Phuket as a number one tourist destination in SE Asia. Phuket is investing heavily in its infrastructure and tourism sector, investment is being driven by government and private sector spending, all of which bodes well for the future of the paradise island.




Phuket Report Areas




Location Information

West

The West coast of Phuket with its long white sandy beaches, Andaman Sea and sunset views boasts the traditional tourist locations in Phuket: Patong, Kata, Karon, Kamala, Surin, Laguna and Bangtao. More recently the previously undeveloped North West beaches of Nai Thon, Nai Yang and Mai Khao are now seeing property developments spring up as Phuket’s West coast development spreads North West. The traditional locations of Kata, Karon, Patong and Laguna have seen extremely resilient property prices in the face of weak global economic conditions in recent years. Even though prices on the West coast are higher than other areas in Phuket buyers are still keen to get a foothold in the West coast Phuket property market.

South

The South of Phuket is made up of Nai Harn, Rawai and Chalong: the past decade has seen a boom in the real estate market in these locations as more Expats and tourists are moving away from the traditional West coast locations. The South now has all the necessary amenities and infrastructure for a flourishing property market: there are international schools, hospitals, western and Thai restaurants, boating and a marina at Chalong and one of the best beaches in Phuket at Nai Harn beach. There are now many first class property developments in the South to match the increasing demand from the Expat and Thai market.

Central

This area includes Kathu, Cape Yamu, Cape Panwa, Phuket Town, Koh Kaew and is home to some of the best golf courses on the island: Phuket Country Club, Loch Palm and Red Mountain, numerous international schools including the British International School, three international first class hospitals and two marinas. Three years ago several public listed property developers: Sansiri, Land & House and Pruksa started large scale residential property developments to compliment the high-‐end residential developments by MBK PCL in the Loch Palm area. The Central location is very popular with both Thai and Expat property owners due to its convenience and many amenities.

North

The North of Phuket remains the least developed location on the island; however this will change in the future. There are two deep water marinas at Ao Po and Yacht Haven, the Phuket International Academy and School which boasts some of the highest education standards and sports facilities in Thailand and three golf courses: Blue Canyon (2 x 18 holes) and Mission Hills. Land in this area is inexpensive compared to other locations in Phuket and there are some great opportunities to buy very reasonably priced land with views of Phang Nga bay. The added benefit is Phuket international Airport close by.




Phuket Property Developments

Charts 1 and 2 below show the proportion of new residential property developments under construction in Phuket;

Chart 1.

Chart 2.




Both charts clearly show that the West coast of Phuket is still the number one choice for residential property development.

There are currently no condominium developments under construction in the North of Phuket. Central Phuket has seen an explosion in the number of condominium’s being developed in recent years, with the likes of Sansiri, Land & House and Pruksa moving into Phuket’s property market. The Central location has seen a lot of developers building smaller studio, one and two bedroom units between 30 – 70 sq. m.

In terms of villa/housing development the South is now well established as the second most popular location after the West coast, nearly 30% of current housing developments are in the South.

Mai Khao

Nai Yang

Pa Khlok

Kamala

Patong

Boat Lagoon

Karon

Rawai

Chalong

Phuket Town

Koh Kaew

Koh Sirey

Mission Hills

Ao PorNai Thon

Bang Tao

Surin

Kata

Nai Harn

Cape Panwa

Kathu

ThalangLayan

Ao Yamoo

Kung Bay

P ak Pra

Ch

an n e l

ANDAMAN

SEA

GULF OF

PHUKET

CENTRAL

NORTH

WEST

SOUTH

30+m THB/Rai

20-30m THB/Rai

10-20m THB/Rai

5-10m THB/Rai

less than 5m THB/Rai

SIAM REAL ESTATE PHUKET LAND PRICE MAP NOVEMBER 2014

*Disclaimer: The coloured borders are an approximation guide only and an indication of likely price range in that zone and should be considered as such and are based solely on our research, database and experience.

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Phuket Land Prices

Chart 3.

Table 1.

Land Price/rai* (average) THB USD

Central 10,192,923 318,529 North 4,931,275 154,102 South 10,876,837 339,901 West 12,636,236 394,882

*1 Rai = 1,600 sq. m.

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14 000 000

2014

Chart showing average Phuket land price by region

North Central South West




Table 2.

Land Price Range Region Min price/rai* (THB) USD Max Price/rai* (THB) USD Central 3,333,333 104,167 23,855,422 745,482 North 2,900,000 90,625 15,000,000 468,750 South 4,000,000 125,000 32,711,104 1,022,222 West 2,428,571 75,893 40,000,000 1,250,000

*1 Rai = 1,600 sq. m.

The results of the average land prices by region (table 1) clearly show that the West coast of Phuket has the highest land prices. Table 2 shows land prices on the West coast of up to 40m baht per rai. However, this does not take into account ocean/beach front land in locations such as Patong or Kamala’s “Millionaires Mile” where land prices would be well above 40m baht per rai. On the West coast of Phuket there is a growing trend of new residential property developments moving more inland to locations such Cherng Talay and Layan and further North to Nai Thon, Mai Khao and Nai Yang. This growing trend is due to the lower land prices in these more inland and less developed locations. The price of land within 1km of Bangtao beach has been driven up by the large resorts, in particular the Laguna resort area which continues to expand. For property developers to keep their selling prices in-‐line with market demand residential developers have had to move to new locations where land prices are lower.

Land prices in the North of Phuket continue to remain significantly lower than the rest of the island; this is largely due to a lack of development in this area. However, due to the lower land prices and the improving infrastructure in this area (such as: new shops/supermarkets, less traffic congestion, international schools, proximity to the airport) we would expect to see a growing trend of increasing land prices as developers and individual buyers take advantage of the lower land prices in an area which is increasing in popularity.

Land prices in the Central area have been driven upwards in recent years due to the expansions plans by Central Shopping Mall and the plans for The Mall Group (Siam Paragon) to open a new Shopping Mall in the area. As previously mentioned the central area has seen a growth in the development of Condominiums which is adding to the increase in land prices.

Land prices in the South of Phuket match those of Central Phuket, the South has seen a steady increase in residential property development as prices are much less than the West coast. The South has a thriving Expat community; Chalong marina for boat and diving enthusiasts, access to beaches attractive to tourists and has the necessary infrastructure to support the growing demand.




Condominium Prices Phuket

Chart 4.

Table 3.

Resale Condo Price/Sq. M. by region

THB USD

Central -‐ Resale 62,730 1,960 North -‐ Resale 66,477 2,077 South -‐ Resale 67,216 2,100 West -‐ Resale 82,004 2,563

Average 69,606 2,175

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2014

Resale Condo Prices/Sq. M.

Central -‐ Resale North -‐ Resale South -‐ Resale West -‐ Resale




Table 4.

The average price per square meter for resale condos in Phuket is 69,420 baht / sq. m. (2,169 USD). Condo prices are highest on the West coast, where the average price per sq. m. is almost 20% higher than the rest of Phuket. The West coast also boasts the highest per sq. m. price at 181,818 baht / sq. m.

There is a lot of good value in the condo resale market in Phuket compared to new developments which can be seen in table 5. Currently in Phuket we are seeing resale properties at lower values per sq. m. than new developments for the following reasons;

� Exchange rates – a lot of foreign buyers in Phuket who bought 5 years ago or longer have since seen the Thai baht appreciate strongly against their home currencies. In the case of USD, Euro & GBP the Thai Baht has appreciated more than 20% during the last 5 years. Therefore a lot of foreigners who are now selling can do so at a much lower price than the true market value of the property. When these sellers repatriate their money they gain on the exchange rate.

� Construction Costs -‐ In the last 10 years construction costs (materials and labour) in Phuket have increased significantly. Those buyers who bought units 5 – 10 years ago can offer a lower price than a comparable new development and still make an attractive capital gain.

� Land Prices – have increased dramatically over the last 5 years, in some locations prices have doubled. This increase in land prices is adding to the cost of new developments as developers have to pay higher prices to purchase land plots.

� Transaction fees -‐ After 5 year’s ownership property transaction tax is reduced from 5.3% to 2% on freehold property. � As the resale market in Phuket continues to mature we expect resale prices to align with the prices of new developments. Currently the majority of

buyers in Phuket prefer to purchase brand new properties: these have never been lived in, offer the latest in terms of building materials and quality, offer extended payment terms during construction with special introductory terms for buying off-‐plan resulting in a higher capital appreciation (typically, capital appreciation when buying during pre-‐sale period is 30% and 5 – 10% when buying during the construction phase http://www.siamrealestate.com/news/?id=153). There are also still a lot of available green field land plots for developers to build on. To be competitive with new developments, owners who are trying to resell their properties need to offer a discount to the new developments to make their resale properties more attractive to buyers. However, as the availability of suitable green field land plots in Phuket becomes scare in the future, we will see the resale market begin to mature as the demand for resale properties will increase.

Resale Condo Price Range (Price/Sq. M.) Region Min price/sq. m. THB USD Max Price/sq. m. THB USD Central 34,117 1,066 126,623 3,957 North 52,000 1,625 97,656 3,052 South 29,839 932 125,000 3,906 West 31,500 984 181,818 5,682




Chart 5.

Table 5.

Condo Developments Price/Sq. M. by region THB USD

Central -‐ New 78,223 2,444 North -‐ New -‐ -‐ South -‐ New 75,342 2,354 West -‐ New 105,224 3,288 Average 86,263 2,696

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120 000

2014

New Development Condo Prices/Sq. M

Central -‐ New North -‐ New South -‐ New West -‐ New




Table 6.

Condo New Developments Price Ranges (Price/Sq. M.) Region Min price/sq.m. THB USD Max Price/sq.m. THB USD Central 30,984 968 117,788 3,681 North -‐ -‐ -‐ -‐ South 54,167 1,693 130,435 4,076 West 54,083 1,690 223,152 6,974

Chart 5 above and tables 5 and 6, clearly show that the sq. m. prices for new condos are on average higher than resale units. Once again those properties on the West coast of Phuket command the highest price per sq. m. The South and Central locations of Phuket have similar prices, with the central location offering the lowest priced units.

Fig. 1 below shows the per square meter price for condo units in Bangkok’s central business districts (CBD), the table shows the average, lowest and highest prices. The table clearly shows that these prices are much higher than the prices of comparable condo units in Phuket, with average prices in Bangkok well in excess of 100,000 baht per sq. m. Due to the higher prices of condo units in Bangkok and the oversupply compared to Phuket, rental returns in Bangkok are much lower due to lower rental prices and occupancy.




Fig. 1.

Source: “Demand high for Bangkok condo units” Bangkok Post 17th Sep 2014 http://www.bangkokpost.com/business/news/432689/demand-high-for-bangkok-condo-units




Villa / House prices in Phuket

Chart 6.

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10 000 000

20 000 000

30 000 000

40 000 000

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60 000 000

70 000 000

80 000 000

90 000 000

2 Bed 3 Bed 4 Bed 4+ Bed

Villa/House Resale Average Prices (Baht)

West South Central North




Table 7.

Villa/house Resale Average Prices (Baht) 2 Bed 3 Bed 4 Bed 4+ Bed THB USD THB USD THB USD THB USD West 9,124,167 285,130 20,013,050 625,408 58,856,843 1,839,276 84,059,091 2,626,847 South 8,562,857 267,589 13,372,606 417,894 21,067,021 658,344 30,792,581 962,268 Central 10,487,500 327,734 18,163,600 567,613 36,856,667 1,151,771 62,118,875 1,941,215 North NA* NA* 12,666,667 395,833 19,600,000 612,500 14,000,000 437,500 Average 9,391,508 293,485 16,053,981 501,687 34,095,133 1,065,473 47,742,637 1,491,957

Table 8.

Resale villa/house price/sq.m. THB USD

West 44,095 1,378 South 27,831 870 Central 35,507 1,110 North 21,501 672 Average 32,233 1,007

Table 9.

Villa/house Resale Price Ranges (Baht)*** 2 Bed 3 Bed min (THB) min (USD) max (THB) max (USD) min (THB) min (USD) max (THB) max (USD) West 4,700,000 146,875 18,000,000 562,500 5,100,000 159,375 91,271,167** 2,852,224 South 3,900,000 121,875 17,000,000 531,250 4,300,000 134,375 49,000,000 1,531,250 Central 3,900,000 121,875 19,000,000 593,750 4,400,000 137,500 105,000,000** 3,281,250 North NA* NA* NA* NA* 4,100,000 128,125 16,500,000 515,625 *Insufficient data available




4 Bed 4+ Bed min (THB) min (USD) max (THB) max (USD) min (THB) min (USD) max (THB) max (USD) West 9,500,000 296,875 249,590,522** 7,799,704 12,900,000 403,125 292,500,000** 9,140,625 South 6,800,000 212,500 55,000,000 1,718,750 11,000,000 343,750 95,000,000 2,968,750 Central 8,500,000 265,625 90,000,000 2,812,500 11,300,000 353,125 195,300,000** 6,103,125 North 6,200,000 193,750 26,000,000 812,500 7,200,000 225,000 54,000,000 1,687,500 *Insufficient data available ** In Phuket there are a small number of high end, luxury, ocean front villas which are part of 5 star resorts. Comparing maximum price to the average prices in table 7, we can see the prices of these villas are well above the norm. *** Data should be used in conjunction with table 7.

Chart 6 and tables 7, 8 & 9 all show a clear trend that villas/houses on the West coast are the highest priced in Phuket, the West coast is the most sought after location and land prices are highest so you would fully expect villa/house prices to follow this trend. The Central location of Phuket has the second highest villa/house prices in Phuket, this is due to the high-‐end luxury housing/villa developments at Cape Yamu and Cape Panwa pushing up prices in these locations. The South and North of Phuket offer the best value particularly for larger villas/houses.

There are many factors affecting the prices of villas/houses: land size, built up area, location, environment, views, estate/development etc. Tables 7 – 11 compare properties prices based on the number of bedrooms and location and do not take into account other factors. There are a small number of villas/houses listed for resale in Phuket at an asking price in excess of 500 million baht. We have excluded these properties from this report as they make up a very small proportion of the market but skew the results and analysis of property prices in Phuket. Those properties at the extreme end of the maximum price range for villas/houses are privately owned, ocean front properties which are part of 5 star resorts.




Chart 7.

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2014

New Villa/House Developments Average Prices (Baht)

2 Bed 3 Bed 4 Bed 4+ Bed




Table 10.

Villa/house New Developments Average Prices (Baht) 2 Bed 3 Bed 4 Bed 4+ Bed THB USD THB USD THB USD THB USD West 22,955,917 717,372 20,645,744 645,179 38,360,155 1,198,755 154,601,650 4,831,302 South 10,676,609 333,644 15,679,218 489,976 26,588,889 830,903 34,526,250 1,078,945 Central 16,096,667 503,021 26,433,008 826,031 38,690,067 1,209,065 166,800,000 5,212,500 North 21,989,489 687,172 24,693,964 771,686 15,350,000 479,688 58,833,333 1,838,542 Average 17,929,670 560,302 21,862,983 683,218 29,747,278 929,602 103,690,308 3,240,322 Table 11.

Villa/house New Developments Price Ranges (Baht)** 2 Bed 3 Bed min (THB) min (USD) max (THB) max (USD) min (THB) min (USD) max (THB) max (USD) West 5,900,000 184,375 85,000,000 2,656,250 8,800,000 275,000 68,000,000 2,125,000 South 5,900,000 184,375 21,500,000 671,875 7,900,000 246,875 32,838,750 1,026,211 Central 3,690,000 115,313 50,000,000 1,562,500 8,000,000 250,000 45,000,000 1,406,250 North NA* NA* NA* NA* 8,900,000 278,125 45,000,000 1,406,250 4 Bed 4+ Bed min (THB) min (USD) max (THB) max (USD) min (THB) min (USD) max (THB) max (USD) West 14,000,000 437,500 144,280,447 4,508,764 37,600,000 1,175,000 283,804,397 8,868,887 South 15,000,000 468,750 42,900,000 1,340,625 22,500,000 703,125 43,078,750 1,346,211 Central 26,070,200 814,694 200,000,000 6,250,000 25,000,000 781,250 300,000,000 9,375,000 North 14,900,000 465,625 55,800,000 493,750 19,000,000 593,750 125,500,000 3,921,875 * Insufficient data available **Data should be used in conjunction with table 10




As shown in table 11 above the highest priced villa/house developments can be found in the West and Central locations with the South and North offering lower priced options.

Once again we see the similar trend in the villa/housing market as we do in the condo market: with the exception of 4 bedroom villas/houses* the average prices of new properties are higher than resale’s. There is a lot of good value in the villa/house resale market in Phuket compared to new developments which can be seen when comparing table 7 to table 10 above. Currently in Phuket we are seeing resale properties at lower values than new developments for the following reasons;

� Exchange rates – a lot of foreign buyers in Phuket who bought 5 years ago or more have since seen the Thai baht appreciate strongly against their home currencies. In the case of USD, Euro & GBP the Thai Baht has appreciated more than 20% during the last 5 years. Therefore a lot of foreigners who are now selling can do so at a much lower price than the true market value of the property. When these sellers repatriate their money they gain on the exchange rate.

� Construction Costs -‐ In the last 10 years construction costs (materials and labour) in Phuket have increased significantly. Those buyers who bought units 5 – 10 years ago can offer a lower price than a comparable new development and still make an attractive capital gain.

� Land Prices – have increased dramatically over the last 5 years, in some locations prices have doubled. This increase in land prices is adding to the cost of new developments as developers have to pay higher prices to purchase land plots.

� Transaction fees -‐ After 5 year’s property transaction tax is reduced from 5.3% to 2% on freehold property. � As the resale market in Phuket continues to mature we expect resale prices to align with the prices of new developments. Currently the majority of

buyers in Phuket prefer to purchase brand new properties: these have never been lived in, offer the latest in terms of building materials and quality, offer extended payment terms during construction with special introductory terms for buying off-‐plan resulting in a higher capital appreciation (typically, capital appreciation when buying during pre-‐sale period is 30% and 5 – 10% when buying during the construction phase http://www.siamrealestate.com/news/?id=153). There are also still a lot of available green field land plots for developers to build on. To be competitive with new developments, owners who are trying to resell their properties need to offer a discount to the new developments to make their resale properties more attractive to buyers. However, as the availability of suitable green field land plots in Phuket becomes scare in the future we will see the resale market begin to mature as the demand for resale properties will increase.

For additional information on property valuations please see the following link http://www.siamrealestate.com/docs/valuation.pdf

* The average price of resale 4 bedroom villas/houses on the West coast is significantly higher than the prices of new developments. As we already mentioned the market for properties priced above 1m USD is currently weak, therefore to keep prices in line with market demand residential property developers in Phuket have moved with the market trend and are building smaller properties at lower prices but, to higher standards of quality. In the past there was a strong demand for large villas in Phuket as land prices and building costs were lower and the Thai Baht was weaker against major currencies.




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20 000

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120 000

Studio 1 Bed 2 Bed 3 Bed

Mon

thly Rate (bah

t)

Phuket Long Term Rental Prices: CONDOS

West

South

Central

North

Phuket Rental Market

Chart 8.




Table 12.

CONDO: Long Term Rental Prices (average monthly price) Studio 1 Bed 2 Bed 3 Bed THB USD THB USD THB USD THB USD West 27,667 865 36,519 1,141 63,019 1,969 106,577 3,331 South 22,650 708 32,567 1,018 35,867 1,121 46,800 1,463 Central 16,500 516 19,769 618 39,150 1,223 100,600 3,144 North NA* NA* NA* NA* 36,500 1,141 45,000 1,406 Average 22,272 696 29,618 926 43,634 1,364 74,744 2,336

*Not enough data available




Chart 9.

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100 000

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250 000

1 Bed 2 Bed 3 Bed 4 Bed 4+ Bed

Mon

thly Rate (bah

t)

Phuket Long Term Rental Prices: HOUSE/VILLA

West

South

Central

North




Table 13.

HOUSES: Long Term Rental Prices (average monthly price)

1 Bed 2 Bed 3 Bed 4 Bed 4+ Bed

THB USD THB USD THB USD THB USD THB USD

West 65,000 2,031 89,750 2,805 106,859 3,339 150,713 4,710 193,750 6,055 South 32,882 1,028 41,911 1,310 63,077 1,971 103,862 3,246 109,400 3,419 Central NA* NA* 37,909 1,185 61,390 1,918 103,611 3,238 203,273 6,352 North NA* NA* 42,250 1,320 46,667 1,458 57,000 1,781 123,333 3,854 Average 48,941 1,529 52,955 1,655 69,498 2,172 103,797 3,244 157,439 4,920

*Not enough data available

Charts 8, 9 and tables 12, 13 above, show the average rental prices for properties in Phuket by property type, number of bedrooms and location. Once again those properties on the West coast command the highest prices. The Central and Southern locations have similar rental prices until the number of bedrooms increases to 4+ for villas/houses and 3 bedrooms for condos. This is due to large properties at high-‐end, luxury developments in Cape Yamu and Sri Panwa which drive up the prices for larger rental properties in the Central location.

Table 14 below gives an indication of return on investment (ROI) on properties in Phuket; we have used resale villas/houses against long term rental prices. The table shows that the average rental returns for resale villas/houses in Phuket is 4% – 5% per annum, in our own experience this can be higher. Those owners who seek to maximise rental returns by letting out their properties over the high and peak season in Phuket are likely to be able to generate higher than average returns.

Table 14.

LTR Rental Returns: Resale Villas 2 bed 3 bed 4 bed 4+ bed West 6% 6% 3% 4% South 6% 6% 6% 4% Central 4% 4% 3% 4% North NA 4% 3% 9%* Average 5% 5% 4% 5%

* Small quota of data available, data skewed by outliers




Chart 10.

1 Bed Peak

1 Bed Peak

1 Bed Peak

1 Bed Peak

2 Bed Peak

2 Bed Peak

2 Bed Peak

2 Bed Peak

3 Bed Peak 3 Bed Peak

3 Bed Peak

3 Bed Peak

4 Bed Peak

4 Bed Peak

4 Bed Peak

4 Bed Peak

4+ Bed Peak

4+ Bed Peak

4+ Bed Peak

4+ Bed Peak

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40 000

60 000

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120 000

West South Central North

Daily holiday rental prices Phuket 2014: VILLAS

1 Bed Summer 1 Bed High 1 Bed Peak 2 Bed Summer 2 Bed High 2 Bed Peak 3 Bed Summer 3 Bed High

3 Bed Peak 4 Bed Summer 4 Bed High 4 Bed Peak 4+ Bed Summer 4+ Bed High 4+ Bed Peak




Economic Overview Phuket

Phuket International Airport

In fiscal year 2013, Phuket International Airport served 41 scheduled airlines, with a total of 70,198 flights, representing an increase of 18.17%. From the said number, 38,814 of which were international flights or increased by 24.68% both scheduled flights and charter flights while domestic flights grew by 10.99% to 31,384 flights. Passenger movements rose by 19.85% to 10,979,537 passengers, with 6,144,912 international passengers, up by 27.57%, and 4,834,625 domestic passengers, representing an increase of 11.29%, largely thanks to the growing number of Thai and foreign tourist visitors (Source: AOT annual report 2013).

Fig. 2.

Source: AOT annual report 2013




Fig. 3.





Passenger arrivals 2014

Fig. 4.





The first 6 months of 2014 has seen growth in the number of aircraft and passengers through Phuket’s International Airport. Phuket’s aircraft movements have increased 5.62% internationally and 8.94% domestically on the previous year. Passenger movements have grown by 4.42% to 3,367,574 passengers internationally and by nearly 1% domestically to 2,460,990.

The growth in international airport passengers to Phuket’s airport is in sharp contrast to a decrease in international passenger movements to the rest of Thailand (except Chiang Mai & Chiang Rai). The continued growth proves Phuket’s economic resilience in the face of the recent negative international media reports surrounding Thailand’s political situation in the first half of 2014. Although Phuket’s arrival numbers have dropped off during the aftermath of the coup arrival numbers are recovering well and will most likely return to growth in Q4 2014.




Low Cost Carrier’s

Fig. 5.


In the first 6 months of 2014 LCC’s accounted for 25.14% of Phuket’s international passengers, this is a total number of 846,526 passengers and an 8.22% increase on 2013. LCC’s account for 44.93% of domestic passengers at HKT, this is a total of 1,105,804 passengers in the first 6 months of 2014 and an increase of 7.26% on 2013.

The increasing numbers of passengers through Phuket’s International Airport shows a healthy growth in tourist arrivals to Phuket.




Tourism Demographics

Fig. 6.

Fig. 7.




Phuket Infrastructure Projects

Table 15.

Source: C9 Hotelworks Market Research

Project Description Status Completion Date Phuket International Airport Expansion Budget: US $180 million

New international terminal, apron extension and multi-‐storey car park

Piling work is currently underway

May 2015

Underpass: Central Festival Intersection Budget: US $20 million

850-‐meter underpass along Chalermprakiat Road

Partially open, north bound traffic only

November 2014

Underpass: Tesco Lotus Intersection Budget: US $20 million

600-‐meter underpass Construction underway March 2015

Underpass at Koh Kaew Intersection Budget: US $15 million

300 meter underpass Under contractor selection process T.B.A

Underpass: Chalong Circle Junction Budget: T.B.A

1km two way underpass joining Chaofa West rd and Wiset rd

Route approved, construction start date 2016

2017 -‐ 18

Underpass or Flyover at 4 key highway intersections Budget: T.B.A

Intersections include Airport, Nai Yang, Thalang, Heroines Monument.

Under review T.B.A

Patong Tunnel Budget: US $170 million

Two way tunnel approx. 1.5km. Project transferred to EXAT

Feasibility consultant selection. Tentative construction schedule is set to commence in 2015

2018




SWOT Analysis

� Strengths

Price stability – Property prices in Phuket are extremely stable, for foreigners buying property in Thailand it is extremely difficult to get a mortgage on the property. Therefore nearly all foreigners buying property here are cash buyers so there is very little debt. There is a large demand from retiree Expat’s buyers and these buyers will not slash prices to sell as the property is part of their retirement fund. Thai buyers have not over extended home loans so there is currently no bubble in the property market.

Quality properties – the build quality and standard of materials used has improved considerably over the past decade and now Thailand is producing quality properties to international standards.

Choice – there is a huge amount of choice on offer for buyers in Phuket: there are many different property types, locations and price ranges for buyers to choose from.

Accessible – Phuket is becoming more and more accessible with the expansion of Phuket’s International Airport. Direct flights to Phuket are now available from Europe, the Middle East, Russia, Australia and many other countries within SE Asia.

Infrastructure – Phuket has very good roads, hospitals and international schools and the infrastructure on the Island is improving all the time.

Lifestyle – an improved lifestyle offered by living in Phuket is a major attraction for many Expats. The weather, Thai culture, Thai & International cuisine, beaches, established Expat community and sporting activities are some of the main advantages of living in Phuket.

Low property taxes – compared international Thailand’s property transaction taxes are relatively low and there are no municipal taxes (see link for more details http://www.thailandpropertydoctor.com/category/thai-‐taxes/).

� Weaknesses

Lack of market information & transparency – there is no true independent agency offering market research in Phuket, data is available from local district offices but it is not widely available and difficult to obtain and evaluate.

Lack of regulation – There is very little regulation in the real estate brokers industry and there are many unqualified brokers offering poor advice.

No Multi-‐Listing-‐Service (MLS) – This adds to lack of information and transparency, and means that buyers do not have access to the whole property market.




� Opportunities

Good value resale options – As found in this report resale properties in Phuket are on average priced lower than new properties. This provides opportunities for above average ROI through rental returns and capital gains.

More families relocating to Phuket – There is a growing trend of more families using Phuket as a hub to do business throughout the SE Asian region.

Neighbouring Markets -‐ Property markets in Singapore and Hong Kong are now extremely expensive in comparison to Phuket, a lot of expats in these locations now looking to invest in Phuket as they have been priced out of the market in HK and Singapore.

Airport expansion – Phuket’s International Airport is expanding, there has been an increase in passenger arrivals and LCC’s and this will mean more tourists and more potential buyers.

Phuket not yet over developed –there is continuing market demand for new property developments.

� Threats

Other destinations in the SE Asian region -‐ Growth in popularity from neighboring and competing tourist destinations inside Thailand and within the SE Asian region could attract tourist arrivals at the expense of Phuket.

Further Strengthening of the Thai Baht – this is unlikely as the US has ended its QE program and is very likely to start increasing interest rates next year (2015). This will see funds follow out of Thailand and back to the west which in turn will see the Baht weaken against the USD and other major currencies.

Renewal of political instability – currently this is not an issue; the military government has provided much stability to the Thai economy and political environment. Prior to returning power to the electorate the NCPO plans political reforms which will provide a stable base for future Thai politics.




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This report was written by Kevin Hodges: North Phuket Branch Manager and Investments Manager Email: [email protected]