The Phuket condo market is expected to recover to pre-Covid levels within the next two years, driven by the resumption of tourism, with the pool villa market tipped to keep growing.
Nattha Kahapana, managing director of property consultant Knight Frank Thailand, said the condo market in Phuket would need another 1-2 years to fully recover to pre-pandemic levels as it has to wait for tourists to meet the regular rate recorded before Covid-19.
"Foreign tourists continue to choose Phuket as their main tourist destination," he said.
"They will be interested in condos and will buy for investment as they want to escape the cold weather in their countries to use as a place of refuge during the unusual situation in their countries."
This year, many condo projects under construction will gradually be completed and open for service in the form of a hotel to welcome an increasing number of tourists, particularly Chinese visitors.
"If there are no new condo projects launched, the rental market will be popular as there will be no new assets for investment," he said.
Last year, Phuket's condo market recovered gradually as foreign tourists came back in a larger number.
Developers relaunched marketing campaigns and resumed project construction after freezing such work due to the problems concerning the transport of construction materials.
As of 2022, condo supply on the west coast of Phuket from Mai Khao beach to Rawai beach tallied 24,211 units, of which 941 were newly launched during the year, up from zero in 2021. This was the second lowest level since 2013.
"We found a missing supply from the market from 2018 to 2022 amounting to 4,247 units as project development was frozen," he said. "Developers of these projects lacked financial liquidity during the pandemic."
Last year, most of the newly launched condos were located by Bang Tao beach which accounted for 45%, followed by Layan beach (31%), Nai Yang beach (18%) and Kata beach (6%).
As of the end of 2022, accumulative condo units being sold stood at 18,613 from a total supply of 24,211 units, representing a sales rate of 76.9%, down from 78.3% in 2021. Unsold units totalled 5,598.
Only 397 units were sold last year, a decrease of 35% from 613 units in 2021, representing a continuing downward trend since 2020. The main buyers were still almost entirely Russian.
"Average asking prices slightly increased in all areas due to long stagnant demand and the fact that the return of foreigners hasn't yet fully resumed," he added. "Condo demand recovered in the second half last year but is not as hot as villas."
VILLA BOOM
Artitaya Kasemlawan, head of residential sales project at property consultant CBRE Thailand, said the Phuket property market would see more new villa projects being launched in the first quarter.
"Completed villas had been sold since the fourth quarter last year when foreigners started returning to Phuket," she said.
"There are good opportunities in this market and developers should pay attention to it while the market is still booming."
The main buyers were still Russians who preferred pool villas with 2-5 bedrooms as they wanted more space for the family.
The price range was 20-60 million baht, while popular locations were Choeng Thale, Laguna, Bang Tao and Layan which offered many facilities.
Besides pool villas, several sea view villas were sold and were typically found in the resale market.
They might be located on hillside areas while the most popular location was Surin beach.
"The resale market was active as buyers wanted ready-to-move-in units," she said. "Whether they bought directly from developers or purchased a resale unit, they wanted a ready-to-move-in unit as they wanted to travel and then remained."
The price range in Bang Tao was 70-150 million baht for a villa with 4-5 bedrooms. Due to the bigger size, the prices were higher than those of pool villas.
"The Phuket tourism market shows a clear rebound with a return of tourists of all nationalities, which is a positive sign for the resurgence of real estate purchases in Thailand," said Ms Artitaya.