Few Skirmishes For Phuket Property: Us Report

[Boater]

AN ARTICLE in the influential New York Times asks by way of an introduction: ''When there's blood in the streets, can you sell real estate, even if it is your own?''

In contrast to encouraging reports that Phuket's property market is thriving despite the global downturn and political turmoil, the piece in the US newspaper's online site is headlined: ''Turmoil Stalls Phuket Vacation Home Boom.'

Author Alex Frew McMillan visited the island and talked to key people, including Gulu Lalvani of the Royal Phuket Marina.

McMillan was told there have been no property sales at RPM since Lunar New Year, in late January.

''People are not in the mood to buy second homes,'' said Mr Lalvani, whose own Grand Villa covers 1900 square metres at the entrance to the marina, with space for three yachts in front of an expanse of lawn.

Even more to the point is Larry Cunningham, chief executive of Phuket One Real Estate, who told McMillan: ''The market is not slow in Phuket; it is dead. It is absolutely dead.''

In the first local reaction to the NYT article, resort and property consultant Bill Barmett of thephuketinsider.com labeled the piece ''a harsh assessment.'' He concluded: ''The prospects of market recovery remain fundamentally solid.''

In the NYT, McMillan recognises that advocates of the Phuket market have long described it as ''bulletproof,'' ironic in terms of the street skirmishes and an assassination attempt in Bangkok over the Songkran holiday.

'The island's property advocates ''are starting to pick their words more carefully,'' McMillan writes.

He looks at some specific projects.

''Across the road from a sign pointing to 'Tomato Beach,' construction on Shangri La's Phuket Resort & Spa stands idle, a watchman and a guard dog the only signs of life.

''The development, which would have had a residential component, is stalled indefinitely, as its backing came from Lehman Brothers, which is now defunct.''

He notes difficulties or delays at three Lersuang Group sites, the Four Seasons project in Rawai, Raimon Land's Amalfi villa project in Surin, and trendy east coast developments The Yamu and Jumeirah Private Island.

Sales at Richard Ellis are down 50 percent on last year and have been ''particularly slow'' in the first three months of this year, McMillan was told.

The article contrasts sharply with a recent report from Colliers International Thailand.

Based on market research, the number of residential units for sale in Phuket peaked in 2006 with 1473 units for sale, but dipped last year by 44 percent.

This year, however, the figures have rebounded and show a healthy growth, the Colliers report concluded.

While the image that the Phuket market is distressed was rejected, the New York Times article concludes: ''Although some Thai banks claim they offer mortgages to overseas citizens, local expatriates say that is window dressing, and no such mortgages ever get approved.

''Phuket's boosters hope the fact that it is a cash market will be its salvation.''

http://phuketwan.com/property/skirmishes-p...y-report-11047/

[pkrv]

While the image that the Phuket market is distressed was rejected, the New York Times article concludes: ''Although some Thai banks claim they offer mortgages to overseas citizens, local expatriates say that is window dressing, and no such mortgages ever get approved.

http://phuketwan.com/property/skirmishes-p...y-report-11047/

A single quote from the article sort of sums up the level of research done. You need to bring in 100% of the value of the 'property' (actually probably condo) as a Farang. As always test the market/water yourself.

[thaiwanderer]

While the image that the Phuket market is distressed was rejected, the New York Times article concludes: ''Although some Thai banks claim they offer mortgages to overseas citizens, local expatriates say that is window dressing, and no such mortgages ever get approved.

http://phuketwan.com/property/skirmishes-p...y-report-11047/

A single quote from the article sort of sums up the level of research done. You need to bring in 100% of the value of the 'property' (actually probably condo) as a Farang. As always test the market/water yourself.

The reference to thai banks whilst a little shallow is not incorrect.

I actually like the NYT article as it is not disproportionately influenced by local advertising revenue as compared to the myriad of 'reports' that are little more than advertorials. A recent article (property report maybe? cannot recall at the moment) had assessments from various 'professionals' on the island (with vested interests obviously but we can rely on their extensive knowledge of the market nonetheless ) who spun political instability and global credit crisis around to say there are bargains which won't last etc. and 'fundmentals' remain blah blah blah.

The Larry Cunningham quote sounds incomplete from what one normally hears - things are bad BUT...... - maybe NYT journalist had a BS filter????

Phuketwan's half hearted attempt at a rebuff relies on Bill Barnet (!!!) and 'FACTS' from colliers researched saying that the number of units FOR SALE (not sales) has rebounded??????

As always with phuket-pro publications it ends with the cash buyer syndrome - somehow as farang market is mainly cash orientated it therefore only relies on wealthy individuals with liquid cash sitting gathering dust in their pockets who therefore are not affected by credit crisis- absolute 100% fallacy.

Anyone want to buy a bridge? /

[johnnyk]

Just the fact they quoted someone saying the market is dead tells us its not the usual real estate puffery.

[donx]

I actually found the NYT article better than the article that references it:

Turmoil Stalls Phuket Vacation Home Boom

I especially liked this part from the article:

'“It’s not distressed selling,” Ms. Filleul said. “Sellers are not willing to drop prices. Buyers are looking for a 50 percent discount.”'

[Boater]

'“It’s not distressed selling,” Ms. Filleul said. “Sellers are not willing to drop prices. Buyers are looking for a 50 percent discount.”'

that is the trouble here, there ARE buyers around but they are looking for properties at 50% off, but sellers are not willing to sell at that price!

i mean, you can buy a hilton hotel in London or new york CHEAPER then a non branded hotel in Bangkok !

You can buy a 2 bedroom apartment in spain CHEAPER then a 2 bedroom apartment in Phuket !

need i say more

[trogers]

'"It's not distressed selling," Ms. Filleul said. "Sellers are not willing to drop prices. Buyers are looking for a 50 percent discount."'

that is the trouble here, there ARE buyers around but they are looking for properties at 50% off, but sellers are not willing to sell at that price!

i mean, you can buy a hilton hotel in London or new york CHEAPER then a non branded hotel in Bangkok !

You can buy a 2 bedroom apartment in spain CHEAPER then a 2 bedroom apartment in Phuket !

need i say more

Then it becomes a non-issue. Invest in some other places other than Phuket. Take Phuket out of your investment portfolio, like me. I invest only in Bangkok, and only along a certain stretch of road.

[pkrv]

While the image that the Phuket market is distressed was rejected, the New York Times article concludes: ''Although some Thai banks claim they offer mortgages to overseas citizens, local expatriates say that is window dressing, and no such mortgages ever get approved.

http://phuketwan.com/property/skirmishes-p...y-report-11047/

A single quote from the article sort of sums up the level of research done. You need to bring in 100% of the value of the 'property' (actually probably condo) as a Farang. As always test the market/water yourself.

The reference to thai banks whilst a little shallow is not incorrect.

Hi 'thaiwanderer' (BTW I think your posts are great!) It is IMO a matter of context, and in context IMO it throws nothing but confusion into the pot.

Its a New York Times article aimed at I guess US citizans - As Farangs they will need to bring in those funds full stop - Thai mortgages are irrelevent to them.

Sure if you a 'local' Thai based Farang, with a job that kind of stuff I am sure it is possible to apply for a mortgage, but I haven't got a clue as to what would happen.

And for Thais of course such options are open.

It was the market that the article was aimed at that counted - IMO the answer was massively misleading - if not an outright deception, in the context of the US audience it was addressing.

[thaiwanderer]

well 'i' don't need such mortgages and if phuket's property 'professionals' are to be belived as they always remind us (incorrectly and dishonestly) farang buyers are always fluid cash buyers anyway

to be fair any article on phuket / thailand etc. by a publication such as NYT is perhaps not going to have its finger directly on the pulse just as any story by Phuketwan about matters other than what phuket's property 'professionals' or whatever have told them is perhaps not going to be entirely objective - but they can perhaps be forgiven for minor slips

my counter on the mortgage issue was more to do with defending the NYT article against the view that in all it says it must be wildly off the mark as you seem to be suggesting

as posted earlier phuketwan's 'rebuttal' was half hearted to say the least and for me would have carried more weight if they had just referenced the article and then said 'we disagree' - instead they reference Bill Barnett and colliers' figures on number of units for sale - damned by a weak defence

would you disagree with the main thrust of the article that the market in phuket is currently dead?

[trogers]

would you disagree with the main thrust of the article that the market in phuket is currently dead?

A dead market is better than a sliding market of fire sales. It shows that property owners are not over leveraged. it is just that demand prices are lower than min. asking prices, thus no sales.

[pkrv]

Hi 'thaiwanderer' - excellent explorative post to which I will always respond. I am sorry, but Farangs have no choice but to be fluid cash buyers. It is Thai Law. IMO The NYT article WAS wildly off the mark for US based Farangs, thinking about Thailand.

For me phuket is a small seaside town. Yes I have been to a resort called

http://www.thavornbeachvillage.com/

I think my brain would dribble out of my ears if forced to live there. I am a mega city type guy. But yes as an asside fun for a few (could I emphisise a few) weeks to unwind.

Who knows, not my type of place (quite obviously), we only know what happens when someone tests the market.

Edited April 30, 2009 by pkrv

[mommysboy]

would you disagree with the main thrust of the article that the market in phuket is currently dead?

A dead market is better than a sliding market of fire sales. It shows that property owners are not over leveraged. it is just that demand prices are lower than min. asking prices, thus no sales.

Do you think buyer's will up their bids then?

It's the calm before the storm IMHO, look at this:

BoT says Q1 GDP down 5-6%

By: Bangkokpost.com Published: 30/04/2009 at 08:52 PM The economy in the first quarter was estimated to have contracted by 5-6% from the same period last year as a result of a decline in exports and the domestic economy in March, according to the Bank of Thailand's latest economic assessment.

Amara Sriphayak, senior director for the Domestic Economy Department, said exports in March grew in certain markets including the Middle East, Australia and China, particularly for hard disk drives.

Overall shipments decreased 23% to $11.4 billion in March from the same period last year, and imports shrank 35% to $9.2 billion.

Manufacturing picked up slightly in March. On a quarterly basis, industrial output contracted 10% from the previous quarter and 20% from the same period last year.

Private consumption nudged up in March, but slid 5% on a quarterly basis. Private investment also slackened in March and shrank 13% on a quarterly basis.

Dr Amara said an improvement of export orders in March could derive from temporary inventory increases, as opposed to a sustainable recovery.

She said the central bank's business sentiment survey reflected poorer confidence in the economy and political stability in the future. Meanwhile, declining capital utilisation would delay the recovery of private investment for the future.

Dr Amara said tourist arrivals were down 15% on the quarter from the same period last year, a better-than-expected recovery from the political turmoil in the second half of last year. The number of visitors decreased 12% year-on-year in March while hotel occupancy rates averaged 52%.

Pretty dismal stuff for an emerging market.

Given the equally dismal state of western economies ( who can at least say that there poor performance is part explained by being a mature economy), how do you honestly justify the idea of a plateau?

[trogers]

Were you here during the Tom Yum Kung crisis? I will start worrying when owners start selling their rolex watches and Benz at Soi Thonglor.

Edited April 30, 2009 by trogers

[thaiwanderer]

Hi 'thaiwanderer' - excellent explorative post to which I will always respond. I am sorry, but Farangs have no choice but to be fluid cash buyers. It is Thai Law. IMO The NYT article WAS wildly off the mark for US based Farangs, thinking about Thailand.

For me phuket is a small seaside town. Yes I have been to a resort called

http://www.thavornbeachvillage.com/

I think my brain would dribble out of my ears if forced to live there. I am a mega city type guy. But yes as an asside fun for a few (could I emphisise a few) weeks to unwind.

Who knows, not my type of place (quite obviously), we only know what happens when someone tests the market.

thanks - still disagree on fluid cash though - farangs may bring cash into the country - doesn't mean they aren't juggling credit on that outside the country

(as to thavorn agree with you there - see from their website they have managed a shot of the bay with only a traditional junk sailing - photoshop perhaps?????? - its not unknown)

(agree on the dead V fire sales, .......for the moment)

Edited April 30, 2009 by thaiwanderer

[pkrv]

thanks - still disagree on fluid cash though - farangs may bring cash into the country - doesn't mean they aren't juggling credit on that outside the country

Yes I agree they could have mortgaged in their home country, but IMO to throw in Thai mortgages was a complete red herring (and a very negative one at that), for that particular US audience anyway.