Knight Frank Thailand has released its highlights on investing in property in Thai resort areas, including Phuket, Hua Hin and Pattaya.
“Investment in property in Thailand’s popular resort areas continues to attract interest from local and foreign buyers,” says Ms Risinee Sarikaputra, research and consultancy director of Knight Frank Thailand.
“While such activity has slowed, each of these markets retains specific attributes that continue to drive sales and new project developments.”
The report has this to say of Phuket: “The Phuket condominium market has transformed itself to accommodate the change in buyers’ preferences, as well as reflect the scarcity of land.
“Before 2008, the condominium supply in Phuket tended to include larger sized units of over 100 square metres – 84 per cent of supply were units larger than 70sqm and only 16pc of the supply were units smaller than that.
“From 2008 to 2014, 82pc of the total supply included units smaller than 70sqm, with 18pc of units being larger than 70sqm.
Units smaller than 40sqm could be sold only when they were priced below B5 million. This represented the shift in buyers’ intention from self-occupancy to pure investment purposes.
Ms Risinee explained, predictably, “For investing in Phuket condominiums, a good area would be the west coast of Phuket, from Mai Khao to Rawai beach.
“The compact one-bedroom unit has investment potential; however, the two-bedroom seaview units, from 71 to 99 sqm, would be even better due to the scarcity of such units.”
From 2007 to 2014, the report noted, the compound annual growth rate in value of a seaview unit in Phuket was 5.2pc.
As for stand-alone homes, Ms Risinee said, “Phuket continues to attract its fair share of extremely wealthy foreigners and property investors, but the number of foreigners willing to spend B100 million or more for a luxury villa has been dwindling.”
“This year, Phuket has been attracting more mass-market travellers, notably Asian and Chinese nationals whose numbers help offset the drop in jetsetters.
“Villas were still selling, but the number was more modest, though still priced beyond the means of most buyers.
“Previously, the demand on the island was for large lifestyle villas, with usable areas of at least 1,600sqm and a price point of B100 million or more.
“But lately, demand was highest for villas priced below B20 million, with 690 out of 950 available units, or 72.6pc, sold in this price range.
“Most villas in this range have two to three bedrooms, with usable area of 200 to 300sqm, located on small plots of 50 to 70 square wah.
The small one-bedroom performed reasonably well, the report said, but less well than the more sizeable homes. The overall take-up rate for the entire market continued to improve – with 78.7pc for the first three quarters of 2014.
The report zoomed in on Patong and Bang Tao as the most interesting locations for investing along the western coast.
“The Bang Tao area was first developed with the Laguna project. Since 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 and its proximity to the airport. There are also international hotel-branded villa projects, including Banyan Tree and Dusit,” said Ms Risinee.
The selling price of villas managed by Banyan Tree ranged from B59 to B125 million a unit, whereas the villas managed by Dusit were priced lower, at around B34 million.
She added, “Ideally, though the villas do not have seaviews, the distance to the beach should be short. The surrounding environment of the villa project should be tranquil.”