No Fire Sales Taking Place In Phuket

[george]

No fire sales taking place in Phuket

PHUKET: -- Those expecting to acquire property in Phuket at fire-sale prices are in for a disappointment as no discounting is taking place on the resort island, say executives of two international real estate agencies.

David Simister, chairman of CB Richard Ellis (Thailand), said sales activity was continuing in Phuket at the same prices with developers not offering discounts because they are committed to costs. On the other hand, developers of new projects are checking the situation before proceeding.

A lot of progress has been made on the resort island with a great cleanup job undertaken, even though some shophouses still need repairs, he said. But tourists are still thin on the ground in what is normally the high season for both tourism and property sales.

Stephen O'Brien, the managing director of Knight Frank Phuket, said the Phuket market has not discounted. ``People are rather cautious now ... and they are not discounting. Prices are holding,'' he said.

Knight Frank Phuket has had a lot of inquiries for beachfront land adversely affected by the tsunami with the owners perhaps having not insured the property on it. Even though there may be one or two such cases, it is not widespread.

``I don't think we are going to find places in Patong where a hotel once stood and that hotel site is up for grabs,'' Mr O'Brien said. ``There may be a lot of disappointed investors trying to take the opportunity to acquire a cheap beachfront site, but you are not going to get that.''

Mr Simister does not see a long-term impact on property values.

``Some people came looking for fire sales but there was only one plot of land offered at a cheaper price,'' he said. ``However, with so many people showing interest, the seller has increased the price.''

Mr O'Brien admitted some developers might be rethinking project launches or marketing and holding back their advertising, which is not something he thinks they should do.

``But is there going to be a cut in pricing? I hope not, so far no, but I think time will tell in the next three to six months, we have to adopt a wait and see attitude. I don't think it's smart to [hold back], I don't think we need to, but I think it will be the inexperienced developers who will feel the pressure and might just panic,'' he said.

Mr Simister said hotels were going through a rough time but not residential property developers because there was very little borrowing with developments mostly done on a cash basis. Underscoring CB Richard Ellis's certainty that the market looks promising in the long term is its decision to continue operating the office it opened in Phuket late last year.

However, Khao Lak is a different story and it will take substantial time to revive infrastructure, property and tourism.

``I was in Khao Lak last weekend and, my God, the force of this wave, you have no idea, it was three kilometres inland, it was unbelievable,'' Mr Simister said

``I think Phuket will lead the recovery along with Krabi, I think those are the two that will quick-start the process,'' added Mr O'Brien.

The concern of most people who live and work on the island and are trying to revive their businesses is the perception of negative reporting by the international media, especially on television.

``I think the strongest thing that is going to hold us back from growing is the negative reporting that is being done by the international press,'' Mr O'Brien said. However, he praised the Thai press which he said had helped get a balanced view across to the national and international communities.

``Looking at the brighter side, if there is one to be seen, certainly now the world knows where Phuket is. Unfortunately, it has put us on the map for all the wrong reasons,'' he said.

It is the investment market that has been most strongly affected by the disaster as it dovetails with the success of tourism.

``If there are no tourists, there are no buyers for investment products,'' Mr O'Brien said. ``Ultimately the investment market, which accounts for 40% of all sales in Phuket, will need a rebound in tourism and we can see that coming in the fourth quarter of this year. A lot of hotels have already started to receive some bookings in healthy volumes for the Christmas peak period.. A rebound is imminent for sure.''

On the other hand, the lifestyle market, which is a totally different market with buyers being people who have always intended to buy in Phuket and come regardless of whether there is a disaster or a terrorist attack, remains quite healthy.

``Villa Santi, just north of Patong, has recorded four sales since Dec 26 without any discount in price, and obviously places like Laguna, which have got the credibility and branding, have also recorded quite healthy sales,'' Mr O'Brien said.

The worst-hit areas of Phuket are Kamala and Patong beaches. Karon had virtually no damage but Kata down the road was the scene of some heavy destruction. A safer area is the island's east coast where Boat Lagoon and Royal Phuket Marina are located. The difference between the east and west coasts is that the former is where all the marinas are located with the water being quite still while the latter has the surf and white sandy beaches.

Land on the east coast is more affordable and abundant and it is now the preferred location for a lot of developers. This is not because of the tsunami but is a trend that started before the tidal wave disaster, with the trigger being the soaring cost of land on the west coast, Mr O'Brien said.

Mr Simister said two to three hotels were going to open on the east coast, which would help that area develop faster.

The central area of the island is the safest but it is not attractive to be so far from the seaside. Among the few developments that could take place here is a golf course such as Loch Palm.

Generally speaking, though, very few residential projects were affected by the tsunami since most of the prime beachfront sites have always been devoted to hotels and not housing, the executives pointed out.

--Bangkok Post 2005-02-07

[Digger]

No fire sales taking place in Phuket

PHUKET: -- Those expecting to acquire property in Phuket at fire-sale prices are in for a disappointment as no discounting is taking place on the resort island, say executives of two international real estate agencies.

David Simister, chairman of CB Richard Ellis (Thailand), said sales activity was continuing in Phuket at the same prices with developers not offering discounts because they are committed to costs. On the other hand, developers of new projects are checking the situation before proceeding.

A lot of progress has been made on the resort island with a great cleanup job undertaken, even though some shophouses still need repairs, he said. But tourists are still thin on the ground in what is normally the high season for both tourism and property sales.

Stephen O'Brien, the managing director of Knight Frank Phuket, said the Phuket market has not discounted. ``People are rather cautious now ... and they are not discounting. Prices are holding,'' he said.

Knight Frank Phuket has had a lot of inquiries for beachfront land adversely affected by the tsunami with the owners perhaps having not insured the property on it. Even though there may be one or two such cases, it is not widespread.

``I don't think we are going to find places in Patong where a hotel once stood and that hotel site is up for grabs,'' Mr O'Brien said. ``There may be a lot of disappointed investors trying to take the opportunity to acquire a cheap beachfront site, but you are not going to get that.''

Mr Simister does not see a long-term impact on property values.

``Some people came looking for fire sales but there was only one plot of land offered at a cheaper price,'' he said. ``However, with so many people showing interest, the seller has increased the price.''

Mr O'Brien admitted some developers might be rethinking project launches or marketing and holding back their advertising, which is not something he thinks they should do.

``But is there going to be a cut in pricing? I hope not, so far no, but I think time will tell in the next three to six months, we have to adopt a wait and see attitude. I don't think it's smart to [hold back], I don't think we need to, but I think it will be the inexperienced developers who will feel the pressure and might just panic,'' he said.

Mr Simister said hotels were going through a rough time but not residential property developers because there was very little borrowing with developments mostly done on a cash basis. Underscoring CB Richard Ellis's certainty that the market looks promising in the long term is its decision to continue operating the office it opened in Phuket late last year.

However, Khao Lak is a different story and it will take substantial time to revive infrastructure, property and tourism.

``I was in Khao Lak last weekend and, my God, the force of this wave, you have no idea, it was three kilometres inland, it was unbelievable,'' Mr Simister said

``I think Phuket will lead the recovery along with Krabi, I think those are the two that will quick-start the process,'' added Mr O'Brien.

The concern of most people who live and work on the island and are trying to revive their businesses is the perception of negative reporting by the international media, especially on television.

``I think the strongest thing that is going to hold us back from growing is the negative reporting that is being done by the international press,'' Mr O'Brien said. However, he praised the Thai press which he said had helped get a balanced view across to the national and international communities.

``Looking at the brighter side, if there is one to be seen, certainly now the world knows where Phuket is. Unfortunately, it has put us on the map for all the wrong reasons,'' he said.

It is the investment market that has been most strongly affected by the disaster as it dovetails with the success of tourism.

``If there are no tourists, there are no buyers for investment products,'' Mr O'Brien said. ``Ultimately the investment market, which accounts for 40% of all sales in Phuket, will need a rebound in tourism and we can see that coming in the fourth quarter of this year. A lot of hotels have already started to receive some bookings in healthy volumes for the Christmas peak period.. A rebound is imminent for sure.''

On the other hand, the lifestyle market, which is a totally different market with buyers being people who have always intended to buy in Phuket and come regardless of whether there is a disaster or a terrorist attack, remains quite healthy.

``Villa Santi, just north of Patong, has recorded four sales since Dec 26 without any discount in price, and obviously places like Laguna, which have got the credibility and branding, have also recorded quite healthy sales,'' Mr O'Brien said.

The worst-hit areas of Phuket are Kamala and Patong beaches. Karon had virtually no damage but Kata down the road was the scene of some heavy destruction. A safer area is the island's east coast where Boat Lagoon and Royal Phuket Marina are located. The difference between the east and west coasts is that the former is where all the marinas are located with the water being quite still while the latter has the surf and white sandy beaches.

Land on the east coast is more affordable and abundant and it is now the preferred location for a lot of developers. This is not because of the tsunami but is a trend that started before the tidal wave disaster, with the trigger being the soaring cost of land on the west coast, Mr O'Brien said.

Mr Simister said two to three hotels were going to open on the east coast, which would help that area develop faster.

The central area of the island is the safest but it is not attractive to be so far from the seaside. Among the few developments that could take place here is a golf course such as Loch Palm.

Generally speaking, though, very few residential projects were affected by the tsunami since most of the prime beachfront sites have always been devoted to hotels and not housing, the executives pointed out.

--Bangkok Post 2005-02-07

<{POST_SNAPBACK}>

Sounds to me like there are problems afoot in Phuket in terms of sales, otherwise these guys would not be undertaking a damage limitation excercise. Would not surprise me if some of the smaller developers end up selling at any price just for cashflow. Unfortunately, just looking at empty land plots does not pay the bills and I suspect many want-to-be-developers are going to get burnt.