Phuket Residential MarketView Q3 2010 In the third quarter we saw a continued recovery in tourism arrivals and expect that this trend will continue into the high season in the fourth quarter. The best performing sectors of the property market were in the very best properties that have sea frontage with an established reputation and entry level projects. Quarterly Highlights – Condominium and Apartment The total stock of completed resort standard condominiums was approximate 3,000 units, up 3% Q-o-Q and 31% Y-o-Y. We estimate that approximately 84% in completed of condominiums buildings have been sold. The average asking price of condominiums by developers was approximately THB 90,000/m2. Quarterly Highlights – Villa There was no new supply in this quarter. The total stock of completed villas in Q3 2010 was 2,787 units. There are a total of 133 villas that are expected to be completed in Q4 2010, with 343 villas expected in 2011. Two new projects were launched in this quarter with a total of 7 units. Based on our new survey, the sales performance of total existing and future units was 77%. Out of 3,749 villas, 2,897 units have been sold and 852 units are still for sale. The sales rate of all existing and future luxury and high-end units was 74%. Out of 880 luxury and high-end units, 653units were sold as of Q3 2010, leaving 227 units remained unsold. Source:thailandpropertynews.com .
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A Continued Recovery in Tourism Arrivals in Q3 2010
Only large developers on the stock market remain on the Thai market, as they can access a source of funding. Prices of single detached houses and townhouses only rose moderately over the past year, with condominium prices increasing the most to more than 100,000 baht a square metre in Bangkok from 80,000 to 90,000 baht.
The easiest way to own property in Thailand is still by purchasing a condominium. Foreign nationals wishing to buy a condominium have to fulfil one of the following three conditions:
* The foreign national must be a permanent resident, or
* Investment promotion privileges must be obtained from the Board of Investment, or
* The funds used to buy the condominium must originate from a third country.
The last condition means that anyone with sufficient funds is able to purchase a condominium in Thailand. Currently foreign nationals are restricted to buying condominiums only in Bangkok and Pattaya, unless approval has been obtained from the Board of Investment (BOI). There are some restrictions on the number of condominiums in a building that can be owned by foreign nationals. This is usually 49% of the total number of condominiums, but under BOI privileges, this can be waived.
Secondly, the real bargains to be had following the Asian financial meltdown of the late 1990s are becoming more difficult to find, as Thais are aggressively snapping up houses from desperate owners still in negative equity. The effect of inflation means that prices are starting to reflect their proper market value.
Thirdly, real estate prices are predicted to rise steadily over the medium to long-term, as long as the government takes care not to allow the kind of bubble economy that caused so much damage in the 1990s. This is a double-edged sword for the foreign property investor. On the one hand, people who enter the market early enough are likely to see a good return on their investment. On the other hand, getting in on the market is going to cost more.
At the end of 2002, quality “Grade A” condos in the Central Business Districts ranged from $148 to $170 per square foot. Ongoing projects in the same area now sell for $193 to $273. Both expats and investors mostly seek two- and three-bedroom units. But if you drop down from luxury to “decent” level, you’ll find plenty of resale properties in the $62 to $227 per square foot bracket. As in most cities, the smaller the property, the more expensive the cost of floor space.
