Who will be the market drivers for property this coming high season in Phuket?
Phuket has always been a hotpot mix of nationalities, whether it be the long-term residents, holiday home buyers or tourists.
Long-term residents in Phuket basically fall into two broad segments. The first segment tends to be families from the surrounding Asian regions, such as Malaysia, Singapore, Hong Kong or Dubai, who are looking for a change of environment, reducing the family’s overhead costs or seeking a better quality of life.
This segment also includes families from Russia, although the numbers of families have declined over the last year or so due to the decline of the Russian ruble.
This segment would be looking for properties closer to the international schools and should they have previously been living in a condominium, they would opt for a property with a garden and one that offers more space. Properties within a 30-minute drive radius from the popular international schools are usually snapped up pretty quickly before the start of each school term.
The second segment consists of couples who had previously lived in Asia due to work commitments for years and have decided to retire and live in Phuket. This segment also includes retiring couples from Europe who prefer to live in a warm country rather than endure the cold winters back home.
Some of the holiday home buyers are savvy investors looking for ‘good bargains’ in a market where they hope to see a return on investment (ROI) in the future. Some properties in Phuket also offer investors a fixed guaranteed ROI over a certain period, or a shared profit split after management costs and other overheads. This works out pretty well for investors who are looking for a hassle-free property investment with net returns ranging from three to six per cent.
Investors who manage their properties and seek returns by renting their property out, whether on their own or through Airbnb, real estate agents and websites, may achieve a slightly better return of five per cent and above. Another set of holiday home buyers are owners who purchase a holiday home just for their own or family’s use and may use the property just two to three months throughout the year.
The traditional holiday home buyers from Europe are still some of the biggest buyers on the island, but a stumbling block has been the currency exchange where the strong Thai baht against the weak Euro is postponing or delaying sales. The US dollar is expected to strengthen this summer and this will hopefully bring a fresh round of investors to the property market.
It’s very easy to spot who are the latest tourists in Phuket, just walk into any restaurant or shop in Patong; whatever language the menu or the posters on the wall are written in will give you the answer. At the moment it’s all up in the air as to who will be the market drivers for the coming high season – place your bets.
Amy Koh is the sales manager of Engel & Voelkers Phuket. To contact Amy or for more information, visit www.engelvoelkers. com/en/phuket