Imagine that Phuket’s beaches were buzzing with holidaymakers during peak season, as they soak up the island’s unique mix of sun and sea.
Honeymooners sat in resort cabanas while their families set sail on snorkeling trips. The children played in the cerulean water as they frolicked.
However, the same shorelines that were once home to international visitors and homebuyers have been silent since the pandemic ravaged Thailand’s borders.
The residential property market in Phuket is different from other Thai destinations. It has historically relied heavily on foreign investors.
According to Knight Frank, a global real estate consultancy, foreigners bought 90 percent of the new 5,471 condominium units in 2019. Many of the foreigners hail from China, Hong Kong and Singapore. They are buoyed in part by high rental yields and second-home possibilities that are largely unobtainable in their home countries.
The pandemic is still affecting the property market in Phuket and Thailand, despite the fact that travel restrictions remain in place in Phuket’s primary investor markets. Knight Frank noted that 1,862 units were sold from seven condo developments last year, a drop of 66%.
Some developers are willing to stop marketing efforts and take the plunge. Some have cut prices, while others are being creative and offering value-adds such bespoke furniture packages or long-stay visas like Thailand Elite Card. The rise in domestic Thai demand is one of the most important trends that have emerged over the past 20 months.
“The pandemic caused a shift in the second-home market,” states Bill Barnett, managing director at C9 Hotelworks, a Phuket-based hospitality company and chairperson of PropertyGuru Asia Property Awards. “We have witnessed a new segment of luxury Thai buyers.” It’s called urban angst, but lifestyle property is hot again for Thais.
This surge in resort property interest is due to international travel restrictions, Bangkok’s worsening pollution, and uncertainty at work. Urban investors who are wealthy and looking for a better lifestyle and escape from the city are also interested in resort properties.
Barnett adds that while five years ago, island realty was primarily focused on investment-type condos, today it’s single-family homes and second residences.
Hua Hin is well-positioned to capitalize on this domestic investment revival. A two-and-a-half drive from Bangkok, the coastal town’s combination of high-end villa developments, world-class golf courses, and watersport-orientated lifestyle activities has long been a hit with international investors and retirees. However, 64 percent of all transactions in Hua Hin were made on the domestic market over the past 12 months.
The Banyan Thailand is already helping One Hua Hin develop from this new wave. This resort community is known for its top-ranked golf course, designed by Pirapon Namatra, a well-known local architect. You can find bespoke villas or plots here, starting at THB14m (USD429.053) and ending at THB80m ($2.45m).
The majority of residents are from Western Europe. In recent years, domestic investor interest has risen with Bangkokians leading this charge. The pandemic has undoubtedly accelerated this trend. However, Tjeert Kwant, the resort’s CEO, also attributes it to changing perceptions of Hua Hin.
He says that the town was once seen as a retirement destination. However, the pandemic has changed that perception. “For example, many highly influential bloggers visited last year, and they loved it. This is a testament to how much the town has to offer.
The Banyan was inspired by the increased demand for Bangkok-friendly vacation homes and the lack of foreign buyers. In mid-2020, it changed its marketing strategy to concentrate primarily on Bangkok. Tjeert says, “Me being Dutch, Bangkok is equivalent to a neighboring target market the same size as Belgium.”
The new generation of property developers in Phuket is also changing their product offerings. In recent years, large condominium blocks containing small studio units were the default market. Mixed-use properties with upscale lifestyle amenities and condominium blocks are still in the pipeline.
Tomas Noren (Managing Director of Phuket property firm Resava Real Estate) says that developers will be focusing more on high-quality and low-density developments. He was a former member of PropertyGuru Thailand Property Awards’ judging panel.
Utopia Corporation has been one of Phuket’s most prolific developers over the past few years. It has shown that the “pile-them-high” approach to development is declining. The company’s ability to differentiate its offerings thematically is a unique selling point. Utopia Thalang is a villa development that draws inspiration from Japan, while Utopia Yamu uses Moroccan design elements.
These themed properties are a long-standing hit with Utopia’s Chinese investor base. However, CEO Hachi Yin believes that the diverse product range will appeal to Thai buyers.
He says, “We began to think about how we could open up to the Thai markets as we hadn’t targeted it before.” “The Thai market is now our priority for 2021. But, unlike China, nobody in Thailand really knows us.”
With the recent launch of its new project, this may change. The Bay of Icons, a development of 20 rai (3.2 ha) located on Phuket’s sunrise coast with views of Phang Nga Bay and Ao Po Grand Marina. Utopia plans to make the area a master-planned leisure and lifestyle enclave over the next five year. The hotel will include exclusive residences as well as the first Tonino Lamborghini-branded hotel in Southeast Asia. Additional perks include a private marina with 300-berths and a helipad, designer boutiques and high-end dining options.
Like most launches in the past two years, Utopia’s ambitious lifestyle destination is going to be tested by the eventual reopening the island. This will be aided by the Phuket Sandbox program. Since its launch on July 1, the program which allows foreign tourists who have been vaccinated to enter the island has been quite successful. Although it will not be possible to travel to Phuket due to ongoing quarantine restrictions in other countries, it is a positive sign for the property market and other important markets in Thailand.
Noren states that the long-term outlook for Phuket is positive because the fundamentals are not affected by the pandemic. “Property prices remain very affordable in comparison to many countries, and can often provide great rental returns.
“Let’s not forget, this is still an amazing place to live with incredible natural resources for its inhabitants to enjoy.”
