Villa supply remains limited due to developers’ delays in new launches (thanks to Covid-19) and a shortage of suitable development sites, says CBRE.
The luxury villa market in Phuket is now a buyers’ market but not for long, predicts CBRE, a leading international property consultant. It has received increasing enquiries for luxury villas since Q4 2020 with demand coming from both local and international purchasers, CBRE revealed in a press release.
In general, the Phuket market has remained sluggish since the Covid-19 pandemic started early last year. But the villa market is heating up due to its relative rarity which is attributed to a chronic lack of supply.
CBRE Research says that due to curfews and other restrictions in the first half of 2020, the completion of some under-construction projects has been affected with only five villas completed in H2 2020. This would add to the total existing supply in all grades of nearly 4,300 villas in Phuket.
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In the luxury segment where prices are above THB 90 million per villa, the total supply as of Q4 2020 stood at 320 villas with only seven new luxury villas expected to be completed in 2021, and no future supply expected in 2022.
As a result, it is clear that the luxury villa supply will be very limited in the coming years and suitable land plots for top-end villa development in Phuket is becoming a rarity.
Says Prakaipeth Meechoosarn, Head of Advisory & Transaction Services – Resort Property Sales at CBRE Phuket: “The surge of luxury villa demand is coming from two main sources; firstly, well-heeled regional buyers from Singapore, Hong Kong and Mainland China who are seeking a second home or a retirement home in a post-pandemic tropical location and are already familiar with Phuket’s natural attraction and landscape.
“The second group are the local buyers, both Thais and expatriates, who are looking for a luxury resort home to stay or for investment purpose. The unexpected turn of the Phuket market into a buyers’ market phase has prompted these high-net-worth individuals (HNWIs) to look for a worthwhile long-term investment in a property sector that had been dominated by foreign investors for many decades.”
CBRE also reckoned that the Thai government’s recent approval of the Phuket Sandbox programme starting in July may potentially play a significant role in Phuket’s recovery by the end of 2021.
Phuket still No: 1
“Phuket remains one of Thailand’s top destinations for tourism and for anyone looking for holiday homes. CBRE believes that the Phuket luxury villa market can expect to recover by the end of 2021 despite being hit by the third wave of Covid-19 now,” says Prakaipeth.
She adds that now is a good window of opportunity for buyers seeking second homes or income-producing properties to enter the Phuket market. “The supply in the market is currently stocked with the best choices, flexible price and a variety of product options which may not be available when the market situation returns to normal.”
This is provided that the Thai government ensures that the third Covid-19 wave is kept under control and the vaccine is rolled out successfully. The Thai government is mulling allowing international vaccinated tourists to visit Phuket without quarantine. If all of these take place, the return of inbound tourists will definitely help to revive the Phuket property market.