Online Poll Highlights Fears Of Phuket Property ‘Bubble’

[Lite Beer]

Online poll highlights fears of Phuket property ‘bubble’

Phuket Gazette –

A view down Thepkrasattri Road in Thalang highlights the growth of Phuket's residential property sector in recent years. Photo: AbovePhuket.com/Helicam

Final results of the latest Phuket Gazette poll indicate that most people foresee a downward trend in real estate prices on the island over the next five years.

PHUKET: A majority of Phuket Gazette online readers feel that real estate prices in Phuket will fall over the next five years due to oversupply, according to the most recent online poll.

A total of 1,868 readers who took part in the 12-day poll were asked:

Tanan Tanpaiboon, former head of the Phuket Real Estate Association, recently warned that over-development in the Phuket real estate sector risks creating a “bubble” that could see real estate prices fall due to oversupply. What do you think will be the overall trend in real estate prices on Phuket over the next five years?

Overall, nearly two-thirds of those taking part (62.5%) thought that real estate prices would fall. Of these, most thought the fall would be large (32.7%), slightly more than those who predicted a moderate decrease (29.8%).

In contrast, just under a third of voters (29.4%) thought prices would rise. Of these, the majority (23.8%) predicted only a moderate rise, while just 5.6% thought the rise would be large.

The remainder of those taking part, 8.1%, predicted real estate prices would hold steady.

In a breakdown by demographic, those identifying themselves as Thais were the most pessimistic, with 71% thinking prices would fall. Of these, more people thought the fall would be large (40%) than moderate (32%).

The trend in voting among those identifying themselves as “foreign local residents” or “tourists or visitors” were almost identical, with more than 60% in each group predicting a fall in asset prices.

For the complete poll results, click here.

To opine on this topic leave a message in the Readers’ Forum below. The Phuket Gazette welcomes all comments that comply with our “house rules”.

To vote in the new poll about police enforcement of traffic law, click here.

Source: http://www.phuketgazette.net/archives/articles/2012/article16606.html

-- Phuket Gazette 2012-08-07

[Lannatyne]

The type of estates and moobahns shown in the photo are the worrying ones - basic, standard 2 or 3 bed properties. Why developers think so many people and families in this category have reason to relocate to Phuket is beyond me.

On the other hand, I feel larger quality property, aimed at foreigners, will remain steady in this market.

[crazykopite]

From what I read of Phuket and its crime problems I do not give two hoots how many houses they build or give away I for one will never move there !!!!!!!!!!!!!!!!

[Tanaka]

The type of estates and moobahns shown in the photo are the worrying ones - basic, standard 2 or 3 bed properties. Why developers think so many people and families in this category have reason to relocate to Phuket is beyond me.

On the other hand, I feel larger quality property, aimed at foreigners, will remain steady in this market.

Apparently this type of clattered houses, ghettos, are attracting people in Thailand, thais as well as foreigners. You can see them everywhere, not just on Phuket. If people did not buy them, new ghettos would not be built. It amazes me that western people (including aussies) who are used to western house technology are willing to put money into these crap places.

[jimbeam1]

A similar thing happened in Hua Hin, much of it was left unfinished, but prices didn't fall much if any?

jb1

[jambodave]

From what I read of Phuket and its crime problems I do not give two hoots how many houses they build or give away I for one will never move there !!!!!!!!!!!!!!!!

+1

[Katipo]

Logically one would think that an over-supply of condos would lead to a price fall, but in Thailand traditional logic doesn't always seem to apply. In Bangkok, where there has been a building boom going on for a few years now, you can see sold but unoccupied condos all over the city. Perhaps due to the Thai trait of ignoring problems in the hope that they go away (which sometimes does work by the way), people keep buying them as an investment regardless of the 'realities' (tax avoidance and money laundering issues aside). As for now, this optimism is keeping the market afloat.

[ggold]

The type of estates and moobahns shown in the photo are the worrying ones - basic, standard 2 or 3 bed properties. Why developers think so many people and families in this category have reason to relocate to Phuket is beyond me.

On the other hand, I feel larger quality property, aimed at foreigners, will remain steady in this market.

Regardless of which end of the property market the fact is prices have been unrealistic. It could take years to sell your property, and someone can go buy the same style house new for less. The same old addage applies, don't invest more than you can afford to loose especially in property and especially in Phuket. It has been a bubble waiting to burst for a few years already.

Sent from my GT-P6200 using Thaivisa Connect App

Edited August 7, 2012 by ggold

[steelepulse]

There are a lot of these housing tracts that have gone up over the past few years and they are a mixture of middle income Thais, and spec houses being rented out. I think with all the new condos being put up over the last 12 months( and still ongoing) aimed at the lower end of the market, this too will become saturated. It's not unheard of for individuals to buy multiple condos in a development and either try to flip for a quick profit, or hold on to them and have the renters pay their mortgage.

I think the high end prime pieces of land/houses will continue to rise, though not as meteorically as the late 1990's through mid 2000's did.

Middle of the road expat houses I can't see appreciating, especially with new units coming onto the market. Who wants to buy an old house when you can buy new?

[smokinfun]

I'm totally perplexed by Thai condo market - all the lights are off in Bangkok condos; but yet they sell like hotcakes. I've been waiting for the bubble to pop - but it never seems to. I think it will take regional slowdown (ala 1997) to pop any Thai bubble.

[kiniyow]

If the crime and corruption is ever cleaned up ( A Big if?) then I would expect prices to rise.....If it is the same old thing with no change in Corruption and a rise in crime then prices will fall because people just won't go there to buy...

[HUAHIN62]

Thailand's property market is more complex than most countries. The expat factor in the market can go both ways. On the one hand you have the European crisis and US crisis to come which should signal a down turn in the market. But there is another factor at play. More and more people are settling in Thailand due to the low cost of living compared to their home countries. A recent article on Yahoo featured Hua Hin as a retirement option and claimed that you could live well on US$ 1,100 per month. There are also others that lost their jobs in Europe and the US and with their savings are trying to weather out the storm in Thailand. These two factors could balance each other out.

The Thai's that are in the property market are also diverse. You have the rich that are buying up lower end properties to rent out and are investing in holiday homes (with the rental option available). A new trend is however for middle class Thai's to invest in a second property. With present rentals paying the bond back it is a way for them to build capital. This trend could however come to a standstill if interest rates increase.

On a macro economic level many companies are seeking growth opportunities in the world (with Europe, US and China stagnate or slowing down). SE Asia is seen as an important region for potential economic growth. If this present view leads to major FDI's we could see an upward trend in property prices.

In the longer term an important factor is the geographical distribution of Thailand's population. In developed countries only 3% to 5% of the population are active in Agriculture. In Thailand more than 40% of the people is still involved in Agriculture (in the 1970's this percentage was above 80%). Thailand on it's development road will see more and more people urbanise which will increase the demand in cities for lower end housing.

In the end the severity and length of the down turn in the world economy will determine the property prices in Thailand. Personally I think it will be a mixed bag. If you buy a property in the right area at the right price you could still see capital growth, but the days of double digit growth are nearing it's end.

[saroq]

Logically one would think that an over-supply of condos would lead to a price fall, but in Thailand traditional logic doesn't always seem to apply. In Bangkok, where there has been a building boom going on for a few years now, you can see sold but unoccupied condos all over the city. Perhaps due to the Thai trait of ignoring problems in the hope that they go away (which sometimes does work by the way), people keep buying them as an investment regardless of the 'realities' (tax avoidance and money laundering issues aside). As for now, this optimism is keeping the market afloat.

It could also be an Asian mindset that accounts for the fact that oversupply doesn't seem to force prices down. I have some experience in the Chinese property market and one of the amazing differences in their attitude to property is what makes a property valuable. For most Western investors we would be looking for capital growth and rental income from a property. For a large segment of the Chinese investors they plan on leaving an investment property vacant. This is because in their mind a property's value is viewed in a similar way to the value of a new car. It's only new and therefore valuable is no one uses it. Thus many apartments are left vacant on purpose to preserve their value. They rely on capital growth rather than rental income. Weird but true. There may be some similar attitude at work here in Thailand.

Edited August 7, 2012 by saroq

[clinique]

The economic problems in US and EuroZone will see investors moving more to Asian economies as their returns are Zero [or virtually zero] vs returns they can earn in countires like Thailand.

The Thai property market [foreign] will see a downward correction followed by a return to growth in pricing but this could take 10 years. Re-Selling a high priced property in Thailand is a long hard road because buyers can buy ' new for less' and Thais will just buy new.

Comparing the Thai market and the foreign/expat market is like comparing apples and oranges.

Thais generally buy for long term hold, the are not net sellers of property- why ?? 1) because they know that over time it appreciates and 2) because of the face issue - if you are seen to need to sell an asset then you have money problems and 3) they are locals and have ways and means to finance / refinance and fend off forced sales.

Phuket is a special case - due to its global recognition as a resort destination. This attracts the high end buyers/investors. However if you carefully research the 'professional' advisers and agents websites they will tell you the market is positive and encourage buyers to invest - but conversely on their Sales pages you will see that most if not all properties listed have been discounted - this tells the true story.

Real estate is a marke with many sectors and it is foolish to generaliseand say that "the" property market is this or that - question is to which sector are you referring..

[luckyman]

A similar thing happened in Hua Hin, much of it was left unfinished, but prices didn't fall much if any?

jb1

Depends on what period you mean, if you bought new in Hua Hin before 2009, prices did fall a lot.

In fact so much, that today there are thousands of homes for sale in the Hua Hin area.

Has to do with the currency exchange rate for the Euro mostly, Thailand isn't as cheap as it used to be 6-7 years ago.

Not all of them visible of course, as in filed with an agent and I believe that at least a third is 'hovering' above the market waiting for prices to rise again back to previous levels.

Phuket's situation is a lot better, in my opinion, also compared to Koh Samui where the prices did drop a lot too the last 4-5 years.

This is simply because Phuket has a lot to offer for many different types of people.

Normal marketing rules donot apply for this island and I believe it will prosper for many, many years to come.

[luckyman]

The type of estates and moobahns shown in the photo are the worrying ones - basic, standard 2 or 3 bed properties. Why developers think so many people and families in this category have reason to relocate to Phuket is beyond me.

On the other hand, I feel larger quality property, aimed at foreigners, will remain steady in this market.

Regardless of which end of the property market the fact is prices have been unrealistic. It could take years to sell your property, and someone can go buy the same style house new for less. The same old addage applies, don't invest more than you can afford to loose especially in property and especially in Phuket. It has been a bubble waiting to burst for a few years already.

Sent from my GT-P6200 using Thaivisa Connect App

Actually to the contrary, I believe. High end properties sell quite well and quite fast even this year too on Phuket.

The problem lies in the lower end of the market, the 2-5 million baht homes which are a dime a dozen and often on bad locations without any nice views too.

The more expensive the property, the better. I have a few friends that put up their homes for sale this year and they were surprised by the interest after only placing a few ads in a local newspaper.

Two are sold already, both in the 10-12 million baht range....both bought by Russians.

[madmitch]

The type of estates and moobahns shown in the photo are the worrying ones - basic, standard 2 or 3 bed properties. Why developers think so many people and families in this category have reason to relocate to Phuket is beyond me.

On the other hand, I feel larger quality property, aimed at foreigners, will remain steady in this market.

Regardless of which end of the property market the fact is prices have been unrealistic. It could take years to sell your property, and someone can go buy the same style house new for less. The same old addage applies, don't invest more than you can afford to loose especially in property and especially in Phuket. It has been a bubble waiting to burst for a few years already.

Sent from my GT-P6200 using Thaivisa Connect App

Actually to the contrary, I believe. High end properties sell quite well and quite fast even this year too on Phuket.

The problem lies in the lower end of the market, the 2-5 million baht homes which are a dime a dozen and often on bad locations without any nice views too.

The more expensive the property, the better. I have a few friends that put up their homes for sale this year and they were surprised by the interest after only placing a few ads in a local newspaper.

Two are sold already, both in the 10-12 million baht range....both bought by Russians.

You may have hit the nail on the head with your final words when it comes to the mid to higher price range. High end properties may continue to sell well but will the price level increase?

[quandow]

I lived in Phuket for a month getting my TEFL, (which was a VERY good investment!). I can't imagine why anyone would want to live there on a permanent basis. I felt cabin fever after the first few days. Great place to visit, but you can do most of Phuket in under a week.

[KarenBravo]

From what I read of Phuket and its crime problems I do not give two hoots how many houses they build or give away I for one will never move there !!!!!!!!!!!!!!!!

Excellent idea. Please stay away.

[Chads]

From what I read of Phuket and its crime problems I do not give two hoots how many houses they build or give away I for one will never move there !!!!!!!!!!!!!!!!

Excellent idea. Please stay away.

Perhaps the problems are more prevalent in the Patong area? Phuket Town seems to be pretty calm.

[gark]

Why anyone would want to live in Phuket is beyond me. I was there last winter, traffic jams almost as bad as Bangkok, overcrowding, pollution, unbearable heat even in February; rough, unswimmable ocean most of the year; overpriced, poor quality food; pretty much overpriced everything... Can anyone tell me, what attracts people to Phuket?

[Jimi007]

Why anyone would want to live in Phuket is beyond me. I was there last winter, traffic jams almost as bad as Bangkok, overcrowding, pollution, unbearable heat even in February; rough, unswimmable ocean most of the year; overpriced, poor quality food; pretty much overpriced everything... Can anyone tell me, what attracts people to Phuket?

Maybe you can't swim in the ocean most of the year, I can as I grew up at the beach. I don't eat out much, my and my wife's cooking is way better than most restaurants at a quarter of the price. There's not much traffic around my area, especially without a bunch of "wonderful" tourists around. Surely I won't miss you or any other tourist that decides to stay away. And yes it does start to get hot in late February. It's not winter, it's the dry season... It's a beautiful 78ºF out tonight. The only sounds I hears are crickets and some frogs.

Edited August 8, 2012 by Jimi007

[cheeryble]

The economic problems in US and EuroZone will see investors moving more to Asian economies

The communications revolution even more so.

I can remember when I lived abroad 30 years ago having the BBC World Service Radio as the only option....and you had to listen live. Now you have a world of high quality entertainment and information at your fingertips, for nearly free if you choose.

Here in CM you can get cheese, cakes, decent healthcare. Things are changing, so demographics will to.

Now people can live anywhere just like home. A growing proportion are bound to take advantage of it.

Re-Selling a high priced property in Thailand is a long hard road because buyers can buy ' new for less' and Thais will just buy new.

..

Condos however are another story.

In CM you cannot buy new for less you pay considerably more.

Edited August 8, 2012 by cheeryble

[Chads]

Why anyone would want to live in Phuket is beyond me. I was there last winter, traffic jams almost as bad as Bangkok, overcrowding, pollution, unbearable heat even in February; rough, unswimmable ocean most of the year; overpriced, poor quality food; pretty much overpriced everything... Can anyone tell me, what attracts people to Phuket?

Perhaps you are actually referring to the Patong area where most of the tourists are. I live in Phuket Town on the other side of the island and it's calm traffic, cheap and good food, and most probably because most of the people living in Phuket Town are Thais.

I know prices and almost everything else are way different in Patong. I never wanted to live there either. But Phuket Town to me is like most other parts of Thailand.

[bobobo]

I think that every company/person/ or an island in this case wants to have a good rep.When You all time hear about crime,accidents,corruption etc I don't think that helps to boost the prices in Phuket...