Phuket property looking for a strong high season
As Phuket's low season winds down and the Island's high season beckons Phuket's property industry have their fingers crossed for a pick-up in business. And the signs look positive.
Passenger traffic to Phuket is starting to see an increase and flight traffic is also on the rise. Expected to begin in November are direct flights from Perth by Virgin Blue. This is on the back of an earlier announcement by Virgin Blue that they intend to start direct flights from Brisbane and Sydney.
Increased flight frequency is also expected from a number of regional airlines and Air Asia announced in August they plan to make Phuket their regional hub.
All this bodes well for the upcoming high season which officially kicks off 1st November.
Hoteliers are also in an increasingly optimistic mood as advanced bookings are on the up and some hoteliers reporting full occupancy during the peak season period (over Christmas and New Year).
The question being whispered on the Island, however, is how long will the 2009/10 high season last?
Phuket's high season, at least in terms of accommodation rates, runs from 1st November until 30th April. With the global economy struggling back onto its knees, expectations of a boost in accommodation and island activity is just, though many feel this much needed boost may taper off towards the end of February 2010.
What does all this mean for Phuket real estate?
According to a mid-year report by C9 Hotelworks, in the first half of 2009 total luxury villa sales totalled THB3.5 billion (19 units) while the market of unsold luxury villa inventory remains THB10 billion (92 units). (The report defines a luxury villa being THB65 million or above)
With few launches having taken place in the last 12 months, and many active developers having slowed construction, Phuket's property inventory is no longer growing at a pace anywhere near that experienced in the previous 24 months. This bodes well for well established and financed developers.
As visitors to the island return and the real estate market picks up, those properties that are built and those well established in the market are likely to see an increased uptake, as new launches are expected to remain few.
However, to paint Phuket's property market with a single brush would be to ignore the market's product segmentation: Area, price and product (villa, condo, freehold, leasehold) create mini-markets within the Island's larger property market, and each segment has it's own strengths and challenges and success stories to report.
One commonality heard from most commentators is that the mid market is highly competitive and reaching a point of oversupply.
The issue of oversupply and product variance is being addressed as Phuket's market evolves, with a rapid rise in the interest in alternative proeprty ownership schemes – Fractional Ownership in particular – and how/whether than can open up new revenue streams and tap into a new market of buyers.
Not a new idea worldwide, and a concept that has been applied to everything from property to executive jets, yachts and even supercars, Fractional Ownership is however, relatively new to Phuket with the Absolute Group pioneering the idea at two of their boutique condo developments – Nakalay and Bangla Suites – and more recently at yooPhuket.
Whatever the outcome of Phuket's property market evolution, the fundamentals currently remain the same. It's attractions and infrastructure, and it's ease of access and central location within Asia, remain key selling points, while a relatively low cost of living and high standard of living, adds to the positives.
Combine that with an expected increase in air traffic and already strong advanced hotel bookings, and Phuket property looks set for a resurgent high season.