Below we share some of the privileged commentary we learn by sitting in the middle of the Phuket property market, on what buyers are actually buying and what sellers say is selling. A collection of opinions for you to consider in buying or selling a property in Phuket.
Sophisticated Residential Buyers Spend Less but still get the luxury lifestyle properties they want – the rise of Branded Residences
Not so very long ago, a successful family living overseas would think nothing of spending around a million dollars and more on an overseas resort property in Phuket. Used as an occasional holiday home or maybe as a longer term retirement place, no thought was ever really given to day-to-day management, resale value, how to rent it out, how much annual maintenance is required (remember all that lovely hardwood on the floors and windows?) and by not keeping the property up to date, the time and price for resale can be very disappointing.
Attention to the finances is part of the change. Another is the fact that generally everyone has a lot less time for holidays. The average length of stay for an overseas owner used to be 7-15 days per trip. Now in 2017/208, trips are rarely more than a long weekend of 4 -5 days. Few overseas owners stay more than 3 – 4 weeks in any year and of course when they arrive they want to relax, with everything working as it should be and no problems that need fixing or chasing.
Today’s residential buyers are looking at, and buying into mixed-use property as a solution. Whether a villa or an apartment, they look for comfort and excellence for the limited time they are available to make use of it, and for a professional management team to rent out and manage it throughout the year, doing whatever fixing is required to make sure it is always maintained and therefore in an ideal condition to sell when the time comes. The fact that the properties are perhaps only 1/2 or 1/3 as big as they would have liked, is overshadowed by much better designs, locations, designer supplied furniture and fittings and top-end resort facilities.
Branded Residences in Phuket are particularly attractive to buyers who want more but don’t want the cost and headaches of a larger individual property. The price per sqm is higher, but so is the per sqm resale price, especially for internationally known brands such as Banyan Tree, Marriot, Sheraton, YOO, Ramada, Montazure, Hilton and Anantara.
Mixed Use Branded and Non-Branded Properties for Property Investors
Forward looking buyers may choose to pay a bit more and go with the safety, kudos and confidence that comes from a branded residence. Generally offering larger units, a better fitout and a better location, they can use their international network to better provide an ongoing marketing capability for reliable income returns.
That said, other buyers will be attracted by low prices and income guarantees for properties in the range THB2-4.5M (USD65-130,000), where the guarantees often cover over time at least half of the property purchase price. Resale-ability and resale price, especially in developments of 200-400 units, are the biggest things to consider as well as understanding that mostly earned income attracts taxes.
Alternatively, investors may look to buy individual private properties either for refurbishment or for long term rental. Buying good sea view property at a low price and making it available for long term rental is a good option.
Shared ownership – sharing a property title and the expenses.
Fractional ownership became a dirty word, tied up and mis-used in the context of timeshare (where you own only a right to use for a period of time). FRACTIONAL in its proper sense mean SHARED OWNERSHIP. Four upscale developments in Phuket have made part of their inventory available for fractional purchase. Ask us for the details.
As a real illustration, you can buy outright a brand new 4 bedroom fully furnished exclusive villa with pool for the asking price of USD2,000,000 (as others have already done). OR, you can buy a quarter share for US$520,000 and have a rotating three months per year private usage. Don’t want to use all of your 90 days? Then the hotel will rent it and provide you with an income. And on resale, you get ¼ back of the resale price back. To understand the real benefit, I was told these:
” why buy and own one property, when you can buy and own fractions in four different types of property
in four different locations and use them throughout the year”
” why have to pay for the whole pizza when you only want a (large) slice?”
Worth checking out the possibilities with Asia 360 before you commit to a major outlay.
The Attraction of Affordable Pool Villas Continues
The market for new-build pool villas remains strong and is mostly in two price clusters THB12-18M (USD300-600,000) and THB25-38M (USD750-1,200,00) , reflecting differences in location, size of accommodation and of land size. These are usually off-plan, with an 18-24 month build timescale over which payments can be staged and where you will have to pay extra for furniture. Whilst not strictly qualified for hospitality and rental management, some do include rental services and income guarantees. We carry some of the leading providers in the central west coast (Layan, Surin areas) and the southern west coast at Nai Harn, if you are interested.
The market for re-sale pool villas offers greater value for money than the new builds, with larger accommodation located on larger land plots and in locations closer to the beaches and/or facilities. Often they will already be furnished (some, but not all, will require some updating) and they usually need to be paid for in one go – so no opportunity to pay over a few years which puts buyers off. We have many, many that you can choose from at prices lower than the new builds. (If you remember your business training, you lock in your profit when you buy not when you sell – so if preserving your money is important, look at re-sales as well as new projects!)
New Locations – Within 20 minutes of Phuket
Phuket has become one of Asia’s most livable tropical cities – yes I did say cities. It has pretty much everything you would expect from – from major connections by air, road and sea, supermarkets, shopping malls international schooling, universities, world class sporting for yachting, golf, cricket, surfing, international hospitals for emergency and a range of elective surgery including cosmetic and coronary related. That’s great for most people. But others miss the laid-back Phuket of yesteryear or just don’t like the density (still very low) of popular areas such as kamala, Layan, Karon or with the current road works don’t want to drive for an hour south from the airport. So, what’s happening in the “New” areas?
Mai Koh – This is the West beach location just before you drive over the bridge from Phuket to the mainland and Phang Nga. Long sandy beaches, cooling breezes and sparsely developed it feels remote and beach-like, yet has the JW marriot, Splash Jungle, Sansiri and other 5 star resorts and residences in the neighbourhood. Beachfront villas 2-5 bedrooms are the best property picks, at prices about 70% of those further south in the more established hot spots.
Phang Nga – West coast Nati beach in particular is just 20-30 minutes of highway driving to the north of Phuket airport. Long stretch of white sand beachfront with tropical rain forests and mountains just behind, it has the feeling of a distant and remote beach location. Yet there is a new airport coming, new international shopping centre and a number of beach clubs and 5 star hotels have already landed to provide facilities, beach clubs, restaurants and tourism services. Property prices are not that much lower here, but you get a lot closer to the beach for your money and the property age is either off-plan or very newly constructed.
Koh Naka, Koh Yao Yai, Koh Yao Noi, Coconut Island – all on the eastern side of Phuket, varying in time by small boat between 10 and 20 minutes from Phuket. Coconut Island with an early development called The Village is perhaps best known, with Naka Island known for The Luxury Collection by Starwoods hotel group and Koh Yao Noi famous for the magical Sixth Senses Spa and Resort.
To date most of the finished property you can buy – mostly villas – is from the private owners on the residences side of established hotels. This means they are very well maintained, in the best locations and already designed for both residential use and for renting out.
The alternative is to buy land and build. We explored and have listed some amazing land plots, in conjunction with architects, of sixes to support single villas on 1 rai (1,600 sqm) up to 24 rai for small residential or resort developments.
Resale Properties in General
For my own taste, I generally prefer re-sale properties over new builds because it is already built, the legals can be confirmed, I can see exactly what I’m getting and even though a re-seller will have given me a lower price, I can still negotiate hard. I also know that when I buy new, it becomes a resale to the next buyer, so – if I can find two properties that are about the same, one new that costs me more, and one re-sale that costs me less even with any required upgrade or refurb expenses, then my rational head says buy re-sale.
Phuket re-sellers don’t do themselves any favours when it comes to re-selling their homes. Few sellers do any of the staging of their homes that we would normally do in London, or New York. As a result they always present unfavourably compared to a developers new show home, with a sales gallery, extra lighting, jazz music and the smell of coffee in the background. Re-sellers should consider offering stage payment terms ( as with new villas) and describing their price discount (compared to a new villa) as a substitute for rental income that the new villa is surely offering. My point is that one day, a new home that you buy will become that resale and you will need to meticulously maintain and enhance that property to compete with the new homes of the day for a buyer.
Asia360 Co. Ltd
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