_ Phuket Condo Market Showing Signs of Recovery

Mr. Nattha Kahapana, Managing Director, Knight Frank Thailand Co. Ltd., said the Phuket condominium market needs time to recover and is waiting more foreign tourists to increase.  However, the market remains an attractive investment opportunity with good ROI figures especially for foreign investors.

Market Overview

After the COVID-19 epidemic situation subsided, the condominium market situation in Phuket began to recover slowly. Foreign tourists have come back to travel in Phuket more. Developers started to re-launch marketing campaigns and develop projects again after the project was paused due to transportation problems of construction materials. In addition, foreign investors cannot make international money transfer for payment term during the construction of the condominium according to the contract conditions. Thus, many projects were not able to continue building projects for a certain period. As such, the overview of the condominium market in Phuket has slowed down both in terms of supply and demand. The survey and data gathering during the second half of the year until the end of 2022 found that the demand for the condominiums market is increasing but still not popular compared to the villa market in Phuket during the same period.

Supply

At the end of 2022, the total supply of condominiums on the west coast of Phuket from Mai Khao Beach to Rawai Beach amounted to 24,211units. Throughout the year, there were 941 new condominiums units launched for sale. As the overall market has not fully recovered, most developers focus on selling the existing supply first. From the survey, it was found that there was a missing supply from the market from 2018 to 2022 amounted to 4,247 units because the project development was ceased due to the lack of financial liquidity of the project owners during the COVID outbreak situation. Moreover, there were problems in obtaining a construction permit in an area that is not suitable for project development and those projects have not currently made any further development progress.

The new condominiums launched for sale are mostly located in Bang Tao Beach, with 45 percent of the total new supply, followed by Layan Beach at 31 percent, and Nai Yang Beach and Kata Beach at 18 percent and 6 percent, respectively.

The added supply this year have a view that does not overlook the sea but still be within walking distance as the land plots by the beach or with sea view are relatively scarce.It is projected that the future condominium development projects will be further away from the beach.

Demand

At the end of 2022, there were 18,613 condominiums sold out of a total supply of 24,211 units, representing a sales rate of 76.9 percent. The sales rate decreased by 1.4 percent from 2021, which stood at 78.3 percent with approximately 5,598 units left for sale. Only 397 new units were sold in 2022, which decreased almost half from 2021 and represented a continued downtrend since 2020. The main buyer of new units is still almost 100 percent Russian. They come to Phuket during the high season (October-February) for both work, as they can work online, and for leisure. Some are Europeans who buy for staying during this high season. The reopening of the city and the arrival of tourists this year do not stimulate an increasing demand for condominiums. On the other hand, it was found that there were more demand in buying villas for both living and investment. Most of the foreigners who come to Phuket are Russians.

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