Mr. Nattha Kahapana, Executive Director, Knight Frank Phuket Co., Ltd. said that the real estate business in Phuket is one that has grown in tandem with the growth of the local tourism industry. This is because foreign tourists comprise the main property buyers in Phuket. As such, the real estate business generates significant income for the island, and condominium projects launched in Phuket guarantee rental returns.
Supply
From research conducted by Knight Frank Thailand, as of the end of 2019, the condominium supply in Phuket encompassed 25,932 units total. In 2019, there were up to 5,545 newly launched condominium units from 21 condominium projects. It can be seen that, from 2017 onwards, there was a large increase in the number of newly launched condominium units in Phuket. During the period before 2016, there was an average of 1,800 to 2,000 newly launched condominiums in Phuket each year. In the past three years, the number of newly launched condominium units in Phuket has increased to 4,000 units, and in 2019, the highest figure of newly launched condominiums in Phuket was 5,545 units.
Up to 20% of the condominiums launched in 2019 were located around Surin Beach, followed by Layan and Rawai Beaches, which accounted for 17% and 14%, respectively. The Surin Beach area boasted the highest number of new condominium launches due a large condominium project that was unveiled. As for the Kamala area, a project called Otium that caters to retirees was launched.
Demand
In 2019, the accumulated sales of condominiums in Phuket included 19,199 of 25,932 units, the total amount of the supply, or a 74% sales rate. There are approximately 6,733 units available for sale. The number of new condominium units sold in 2019 was 4,177 units. This is comparable to that of 2018, which had 4,022 new units sold. It can be seen that condominiums in Phuket have been selling well from 2017 to 2019. In 2017, there were 3,114 units sold; in comparison, from 2012 to 2016, there were only 1,000 to 1,800 units sold each year.
The group of buyers who purchased a condominium in Phuket in the past comprised foreigners (almost 100%), including tourists and investors that have a passion for travel in Phuket. While most of the buyers are still foreigners (90%), there are more Thai buyers (10%) in the market. Also, buyers include foreigners doing business in Bangkok. There is a large variety of foreigners buying condominiums in Phuket. The larger groups include Mainland Chinese, Hong Kong Chinese, Singaporeans and Russians.
One main factor that makes condominiums in Phuket sell well is that the many newly launched projects tend to offer a return on investment to buyers in 3 to 5 years (guaranteed return). Also, buyers have the option for self-occupancy of 30 to 45 days per year. It can be seen that 18 of the 21 new projects launched in 2019, or 86%, offer guaranteed returns to buyers.
Sales Prices
Condominium prices in Phuket have been continuously rising. A condominium with a sea view commands an average selling price of 193,590 baht per square metre, increasing from 2011, which was 120,540 baht per square metre. In the 8-year period from 2011 to 2019, condominiums in this segment had a Compound Annual Growth Rate (CAGR) of 7.6%. Condominiums with a partial sea view had an average selling price of 107,000 baht per square metre, up from 2011, which had an average price of 84,500 baht per square metre. In the 8-year period from 2011 to 2019, such condominiums had a Compound Annual Growth Rate (CAGR) of 3.3%. As for condominiums without sea views, they achieved an average selling price of 79,300 baht per square metre. This was an increase from 2011, which had an average price of 62,100 baht per square metre. In the 8-year period from 2011 to 2019, these condominiums had a Compound Annual Growth Rate (CAGR) of 3.5%.
Outlook for Phuket Condominiums
The condominium market in Phuket in 2020 is expected to be greatly affected by the Novel Coronavirus, or Covid-19, as a majority of condominium buyers or up to 90% have been foreigners, mainly from China, Hong Kong and Singapore – countries heavily affected by the Coronavirus outbreak. During the beginning of the epidemic, tourists from China, Hong Kong and Singapore have decreased greatly. In addition, European tourists have also reduced travel to Asian countries, including Thailand. It is also expected that the effects of Covid-19 would extend for another 6 months. The outlook in 2020 from Coronavirus (Covid-19) is that it will have a negative impact on demand, supply and sales prices of condominiums, which would decline.
