Siam Real Estate - Phuket Residential Property Market Report 2014

PHUKET RESIDENTIAL
MARKET REPORT
1 November 2014
This 34 page report provides detailed information and analysis from
Siam Real Estate’s comprehensive and unrivalled Phuket database,
combined with our own exhaustive market and property surveys.
Our research gives home buyers, investors and developers an
accurate image of what is currently occurring in the market place
and enables key real estate decisions to be made.

Phuket Residential Market Report 2014
www.siamrealestate.com -‐ All rights to the material are under copyright and proprietary to Siam Real Estate reserved and none of the material, nor its content, nor any copy of it, may be altered in any
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SRE PHUKET PROPERTY MARKET REPORT NOVEMBER 2014

CONTENTS

Executive Summary 2
Phuket report areas 3
Location Information 4
New Property Developments 5 -‐
Land Prices 7
Condominium Prices

-‐1
House Prices 1 -‐
Rental Market 2 -‐2
Economic Overview Thailand & Phuket:
a. Phuket Tourism 2 -‐
b. Demographics 3
c. Phuket Infrastructure Projects 3
SWOT Analysis 3 -‐3


Executive Summary
Phuket’s residential property market remains a ‘Green’ market with new property developments in higher demand than resale and nearly all new
developments occurring on green field sites. Buyers in Phuket have a preference towards new homes rather than resale and in Phuket there is still a lot of
undeveloped land suitable for new residential property developments. Until land available for green field property developments becomes scarce this trend
will continue and the resale market will remain immature. The dynamics of Phuket’s residential real estate market have changed in the past decade: the
market is currently strong in the area of second/holiday home purchases for less than 10m baht, 30 – 60 sq. m. condos and small land plots of 2 rai or less.
The market is showing signs of recovery in the mid-‐price range (15m – 25m) and the resale market in this price range is growing substantially due to better
value vs. new properties. However, the high-‐end/luxury sector (greater than 1m USD) of the residential market still remains weak. To keep prices in line
with market demand residential property developers in Phuket have moved with the market trend and are building smaller properties on smaller land plots
at lower prices but, to higher standards of quality.
West: remains the number one destination in Phuket for tourists and property buyers/developers, where the allure of Phuket’s long white sandy beaches
and traditional resort locations continues to attract investors. We are seeing a trend of new residential property developments moving more inland where
land prices are lower. This is because large hotel resorts have driven up land prices within a kilometer of the West coasts beaches.
Central: in recent years we have seen a surge into lower priced condominium and housing developments in the central location of Phuket driven by some of
Thailand’s biggest names in property development: Land & House, Sansiri, Pruksa. These central located property developments are mainly targeted at Thai
home buyers and investors and have been very successful with high take up rates.
South: continues to grow in popularity with smaller developers and local higher end luxury developments have moved into the market in recent years.
North: has seen little in the way of new developments in recent years, land prices in the north still remain reasonable and we are seeing individual buyers
who are looking to build large residential homes taking advantage of lower land prices. Longer term land investors looking to land bank have also been
attracted to the north as land price increases have lagged the rest of Phuket.

The property rental market in Phuket remains extremely strong and continues to provide attractive return on investment for home owners. In the last 5
years tourist arrivals to Phuket have been growing rapidly and with this demand for rental properties. This demand for rental properties has far outpaced
the supply of properties available to rent and rental prices, both holiday and long term, have increased as a result with high occupancy rates.
The future of Phuket’s economy is very bright: the growth in airport arrivals at Phuket International has been extremely strong and looks set to continue
with the airport expansion well underway, this clearly shows the resilience of Phuket as a number one tourist destination in SE Asia. Phuket is investing
heavily in its infrastructure and tourism sector, investment is being driven by government and private sector spending, all of which bodes well for the future
of the paradise island.


Phuket Report Areas


Location Information
West
The West coast of Phuket with its long white sandy beaches, Andaman Sea and sunset views boasts the traditional tourist locations in Phuket: Patong, Kata,
Karon, Kamala, Surin, Laguna and Bangtao. More recently the previously undeveloped North West beaches of Nai Thon, Nai Yang and Mai Khao are now
seeing property developments spring up as Phuket’s West coast development spreads North West. The traditional locations of Kata, Karon, Patong and
Laguna have seen extremely resilient property prices in the face of weak global economic conditions in recent years. Even though prices on the West coast
are higher than other areas in Phuket buyers are still keen to get a foothold in the West coast Phuket property market.
South
The South of Phuket is made up of Nai Harn, Rawai and Chalong: the past decade has seen a boom in the real estate market in these locations as more
Expats and tourists are moving away from the traditional West coast locations. The South now has all the necessary amenities and infrastructure for a
flourishing property market: there are international schools, hospitals, western and Thai restaurants, boating and a marina at Chalong and one of the best
beaches in Phuket at Nai Harn beach. There are now many first class property developments in the South to match the increasing demand from the Expat
and Thai market.
Central
This area includes Kathu, Cape Yamu, Cape Panwa, Phuket Town, Koh Kaew and is home to some of the best golf courses on the island: Phuket Country
Club, Loch Palm and Red Mountain, numerous international schools including the British International School, three international first class hospitals and
two marinas. Three years ago several public listed property developers: Sansiri, Land & House and Pruksa started large scale residential property
developments to compliment the high-‐end residential developments by MBK PCL in the Loch Palm area. The Central location is very popular with both Thai
and Expat property owners due to its convenience and many amenities.
North
The North of Phuket remains the least developed location on the island; however this will change in the future. There are two deep water marinas at Ao Po
and Yacht Haven, the Phuket International Academy and School which boasts some of the highest education standards and sports facilities in Thailand and
three golf courses: Blue Canyon (2 x 18 holes) and Mission Hills. Land in this area is inexpensive compared to other locations in Phuket and there are some
great opportunities to buy very reasonably priced land with views of Phang Nga bay. The added benefit is Phuket international Airport close by.


Phuket Property Developments
Charts 1 and 2 below show the proportion of new residential property developments under construction in Phuket;
Chart 1.

Chart 2.


Both charts clearly show that the West coast of Phuket is still the number one choice for residential property development.
There are currently no condominium developments under construction in the North of Phuket. Central Phuket has seen an explosion in the number of
condominium’s being developed in recent years, with the likes of Sansiri, Land & House and Pruksa moving into Phuket’s property market. The Central
location has seen a lot of developers building smaller studio, one and two bedroom units between 30 – 70 sq. m.
In terms of villa/housing development the South is now well established as the second most popular location after the West coast, nearly 30% of current
housing developments are in the South.

Mai Khao
Nai Yang
Pa Khlok
Kamala
Patong
Boat Lagoon
Karon
Rawai
Chalong
Phuket Town
Koh Kaew
Koh Sirey
Mission Hills
Ao Por
Nai Thon
Bang Tao
Surin
Kata
Nai Harn
Cape Panwa
Kathu
Thalang
Layan
Ao Yamoo
Kung Bay
Pak
Pra
Chann
e
l
ANDAMAN
SEA
GULF OF
PHUKET
CENTRAL
NORTH
WEST
SOUTH
30+m THB/Rai
20-30m THB/Rai
10-20m THB/Rai
5-10m THB/Rai
less than 5m THB/Rai
SIAM REAL ESTATE PHUKET LAND PRICE MAP
NOVEMBER 2014
*Disclaimer: The coloured borders are an approximation guide only and an indication of likely price range in that zone and should be considered as such and are based solely on our research, database and experience.
© Copyright. All rights reserved
way, transmitted to, copied or distributed to any other party Page


Phuket Land Prices
Chart 3.

Table 1.
Land Price/rai* (average)
THB USD
Central 10,192,923 318,529
North 4,931,275 154,102
South 10,876,837 339,901
West 12,636,236 394,882
*1 Rai = 1,600 sq. m.
-‐
2 000 000
4 000 000
6 000 000
8 000 000
10 000 000
12 000 000
14 000 000
2014
Chart showing average Phuket land price by region
North Central South West


Table 2.
Land Price Range
Region Min price/rai* (THB) USD Max Price/rai* (THB) USD
Central 3,333,333 104,167 23,855,422 745,482
North 2,900,000 90,625 15,000,000 468,750
South 4,000,000 125,000 32,711,104 1,022,222
West 2,428,571 75,893 40,000,000 1,250,000
*1 Rai = 1,600 sq. m.
The results of the average land prices by region (table 1) clearly show that the West coast of Phuket has the highest land prices. Table 2 shows land prices
on the West coast of up to 40m baht per rai. However, this does not take into account ocean/beach front land in locations such as Patong or Kamala’s
“Millionaires Mile” where land prices would be well above 40m baht per rai. On the West coast of Phuket there is a growing trend of new residential
property developments moving more inland to locations such Cherng Talay and Layan and further North to Nai Thon, Mai Khao and Nai Yang. This growing
trend is due to the lower land prices in these more inland and less developed locations. The price of land within 1km of Bangtao beach has been driven up
by the large resorts, in particular the Laguna resort area which continues to expand. For property developers to keep their selling prices in-‐line with market
demand residential developers have had to move to new locations where land prices are lower.
Land prices in the North of Phuket continue to remain significantly lower than the rest of the island; this is largely due to a lack of development in this area.
However, due to the lower land prices and the improving infrastructure in this area (such as: new shops/supermarkets, less traffic congestion, international
schools, proximity to the airport) we would expect to see a growing trend of increasing land prices as developers and individual buyers take advantage of
the lower land prices in an area which is increasing in popularity.
Land prices in the Central area have been driven upwards in recent years due to the expansions plans by Central Shopping Mall and the plans for The Mall
Group (Siam Paragon) to open a new Shopping Mall in the area. As previously mentioned the central area has seen a growth in the development of
Condominiums which is adding to the increase in land prices.
Land prices in the South of Phuket match those of Central Phuket, the South has seen a steady increase in residential property development as prices are
much less than the West coast. The South has a thriving Expat community; Chalong marina for boat and diving enthusiasts, access to beaches attractive to
tourists and has the necessary infrastructure to support the growing demand.


Condominium Prices Phuket
Chart 4.

Table 3.
Resale Condo Price/Sq. M. by region

THB USD
Central -‐ Resale 62,730 1,960
North -‐ Resale 66,477 2,077
South -‐ Resale 67,216 2,100
West -‐ Resale 82,004 2,563
Average 69,606 2,175

-‐
20 000
40 000
60 000
80 000
100 000
2014
Resale Condo Prices/Sq. M.
Central -‐ Resale North -‐ Resale South -‐ Resale West -‐ Resale


Table 4.

The average price per square meter for resale condos in Phuket is 69,420 baht / sq. m. (2,169 USD). Condo prices are highest on the West coast, where the
average price per sq. m. is almost 20% higher than the rest of Phuket. The West coast also boasts the highest per sq. m. price at 181,818 baht / sq. m.
There is a lot of good value in the condo resale market in Phuket compared to new developments which can be seen in table 5. Currently in Phuket we are
seeing resale properties at lower values per sq. m. than new developments for the following reasons;
Exchange rates – a lot of foreign buyers in Phuket who bought 5 years ago or longer have since seen the Thai baht appreciate strongly against their
home currencies. In the case of USD, Euro & GBP the Thai Baht has appreciated more than 20% during the last 5 years. Therefore a lot of foreigners
who are now selling can do so at a much lower price than the true market value of the property. When these sellers repatriate their money they
gain on the exchange rate.
Construction Costs -‐ In the last 10 years construction costs (materials and labour) in Phuket have increased significantly. Those buyers who bought
units 5 – 10 years ago can offer a lower price than a comparable new development and still make an attractive capital gain.
Land Prices – have increased dramatically over the last 5 years, in some locations prices have doubled. This increase in land prices is adding to the
cost of new developments as developers have to pay higher prices to purchase land plots.
Transaction fees -‐ After 5 year’s ownership property transaction tax is reduced from 5.3% to 2% on freehold property.
As the resale market in Phuket continues to mature we expect resale prices to align with the prices of new developments. Currently the majority of
buyers in Phuket prefer to purchase brand new properties: these have never been lived in, offer the latest in terms of building materials and
quality, offer extended payment terms during construction with special introductory terms for buying off-‐plan resulting in a higher capital
appreciation (typically, capital appreciation when buying during pre-‐sale period is 30% and 5 – 10% when buying during the construction phase
http://www.siamrealestate.com/news/?id=153). There are also still a lot of available green field land plots for developers to build on. To be
competitive with new developments, owners who are trying to resell their properties need to offer a discount to the new developments to make
their resale properties more attractive to buyers. However, as the availability of suitable green field land plots in Phuket becomes scare in the
future, we will see the resale market begin to mature as the demand for resale properties will increase.
Resale Condo Price Range (Price/Sq. M.)
Region Min price/sq. m. THB USD Max Price/sq. m. THB USD
Central 34,117 1,066 126,623 3,957
North 52,000 1,625 97,656 3,052
South 29,839 932 125,000 3,906
West 31,500 984 181,818 5,682


Chart 5.

Table 5.
Condo Developments Price/Sq. M. by region
THB USD
Central -‐ New 78,223 2,444
North -‐ New -‐ -‐
South -‐ New 75,342 2,354
West -‐ New 105,224 3,288
Average 86,263 2,696

-‐
20 000
40 000
60 000
80 000
100 000
120 000
2014
New Development Condo Prices/Sq. M
Central -‐ New North -‐ New South -‐ New West -‐ New


Table 6.
Condo New Developments Price Ranges (Price/Sq. M.)
Region Min price/sq.m. THB USD Max Price/sq.m. THB USD
Central 30,984 968 117,788 3,681
North -‐ -‐ -‐ -‐
South 54,167 1,693 130,435 4,076
West 54,083 1,690 223,152 6,974

Chart 5 above and tables 5 and 6, clearly show that the sq. m. prices for new condos are on average higher than resale units. Once again those properties
on the West coast of Phuket command the highest price per sq. m. The South and Central locations of Phuket have similar prices, with the central location
offering the lowest priced units.
Fig. 1 below shows the per square meter price for condo units in Bangkok’s central business districts (CBD), the table shows the average, lowest and highest
prices. The table clearly shows that these prices are much higher than the prices of comparable condo units in Phuket, with average prices in Bangkok well
in excess of 100,000 baht per sq. m. Due to the higher prices of condo units in Bangkok and the oversupply compared to Phuket, rental returns in Bangkok
are much lower due to lower rental prices and occupancy.


Fig. 1.

Source: “Demand high for Bangkok condo units” Bangkok Post 17
th
Sep 2014 http://www.bangkokpost.com/business/news/432689/demand-high-for-bangkok-condo-units


Villa / House prices in Phuket
Chart 6.

-‐
10 000 000
20 000 000
30 000 000
40 000 000
50 000 000
60 000 000
70 000 000
80 000 000
90 000 000
2 Bed 3 Bed 4 Bed 4+ Bed
Villa/House Resale Average Prices (Baht)
West South Central North


Table 7.
Villa/house Resale Average Prices (Baht)
THB USD THB USD THB USD THB USD
West 9,124,167 285,130 20,013,050 625,408 58,856,843 1,839,276 84,059,091 2,626,847
South 8,562,857 267,589 13,372,606 417,894 21,067,021 658,344 30,792,581 962,268
Central 10,487,500 327,734 18,163,600 567,613 36,856,667 1,151,771 62,118,875 1,941,215
North NA* NA* 12,666,667 395,833 19,600,000 612,500 14,000,000 437,500
Average 9,391,508 293,485 16,053,981 501,687 34,095,133 1,065,473 47,742,637 1,491,957

Table 8.
Resale villa/house price/sq.m.
THB USD
West 44,095 1,378
South 27,831 870
Central 35,507 1,110
North 21,501 672
Average 32,233 1,007

Table 9.
Villa/house Resale Price Ranges (Baht)***
2 Bed 3 Bed
min (THB) min (USD) max (THB) max (USD) min (THB) min (USD) max (THB) max (USD)
West 4,700,000 146,875 18,000,000 562,500 5,100,000 159,375 91,271,167** 2,852,224
South 3,900,000 121,875 17,000,000 531,250 4,300,000 134,375 49,000,000 1,531,250
Central 3,900,000 121,875 19,000,000 593,750 4,400,000 137,500 105,000,000** 3,281,250
North NA* NA* NA* NA* 4,100,000 128,125 16,500,000 515,625
*Insufficient data available


4 Bed 4+ Bed
West 9,500,000 296,875 249,590,522** 7,799,704 12,900,000 403,125 292,500,000** 9,140,625
South 6,800,000 212,500 55,000,000 1,718,750 11,000,000 343,750 95,000,000 2,968,750
Central 8,500,000 265,625 90,000,000 2,812,500 11,300,000 353,125 195,300,000** 6,103,125
North 6,200,000 193,750 26,000,000 812,500 7,200,000 225,000 54,000,000 1,687,500
*Insufficient data available
** In Phuket there are a small number of high end, luxury, ocean front villas which are part of 5 star resorts. Comparing maximum price to the average prices in table 7, we can see the prices
of these villas are well above the norm.
*** Data should be used in conjunction with table 7.
Chart 6 and tables 7, 8 & 9 all show a clear trend that villas/houses on the West coast are the highest priced in Phuket, the West coast is the most sought
after location and land prices are highest so you would fully expect villa/house prices to follow this trend. The Central location of Phuket has the second
highest villa/house prices in Phuket, this is due to the high-‐end luxury housing/villa developments at Cape Yamu and Cape Panwa pushing up prices in these
locations. The South and North of Phuket offer the best value particularly for larger villas/houses.
There are many factors affecting the prices of villas/houses: land size, built up area, location, environment, views, estate/development etc. Tables 7 – 11
compare properties prices based on the number of bedrooms and location and do not take into account other factors. There are a small number of
villas/houses listed for resale in Phuket at an asking price in excess of 500 million baht. We have excluded these properties from this report as they make up
a very small proportion of the market but skew the results and analysis of property prices in Phuket. Those properties at the extreme end of the maximum
price range for villas/houses are privately owned, ocean front properties which are part of 5 star resorts.


Chart 7.

-‐
20 000 000
40 000 000
60 000 000
80 000 000
100 000 000
120 000 000
2014
New Villa/House Developments Average Prices (Baht)


Table 10.
Villa/house New Developments Average Prices (Baht)
West 22,955,917 717,372 20,645,744 645,179 38,360,155 1,198,755 154,601,650 4,831,302
South 10,676,609 333,644 15,679,218 489,976 26,588,889 830,903 34,526,250 1,078,945
Central 16,096,667 503,021 26,433,008 826,031 38,690,067 1,209,065 166,800,000 5,212,500
North 21,989,489 687,172 24,693,964 771,686 15,350,000 479,688 58,833,333 1,838,542
Average 17,929,670 560,302 21,862,983 683,218 29,747,278 929,602 103,690,308 3,240,322

Table 11.
Villa/house New Developments Price Ranges (Baht)**
2 Bed 3 Bed
West 5,900,000 184,375 85,000,000 2,656,250 8,800,000 275,000 68,000,000 2,125,000
South 5,900,000 184,375 21,500,000 671,875 7,900,000 246,875 32,838,750 1,026,211
Central 3,690,000 115,313 50,000,000 1,562,500 8,000,000 250,000 45,000,000 1,406,250
North NA* NA* NA* NA* 8,900,000 278,125 45,000,000 1,406,250
4 Bed 4+ Bed
West 14,000,000 437,500 144,280,447 4,508,764 37,600,000 1,175,000 283,804,397 8,868,887
South 15,000,000 468,750 42,900,000 1,340,625 22,500,000 703,125 43,078,750 1,346,211
Central 26,070,200 814,694 200,000,000 6,250,000 25,000,000 781,250 300,000,000 9,375,000
North 14,900,000 465,625 55,800,000 493,750 19,000,000 593,750 125,500,000 3,921,875
* Insufficient data available **Data should be used in conjunction with table 10


As shown in table 11 above the highest priced villa/house developments can be found in the West and Central locations with the South and North offering
lower priced options.
Once again we see the similar trend in the villa/housing market as we do in the condo market: with the exception of 4 bedroom villas/houses* the average
prices of new properties are higher than resale’s. There is a lot of good value in the villa/house resale market in Phuket compared to new developments
which can be seen when comparing table 7 to table 10 above. Currently in Phuket we are seeing resale properties at lower values than new developments
for the following reasons;
Exchange rates – a lot of foreign buyers in Phuket who bought 5 years ago or more have since seen the Thai baht appreciate strongly against their
home currencies. In the case of USD, Euro & GBP the Thai Baht has appreciated more than 20% during the last 5 years. Therefore a lot of foreigners
who are now selling can do so at a much lower price than the true market value of the property. When these sellers repatriate their money they
gain on the exchange rate.
Construction Costs -‐ In the last 10 years construction costs (materials and labour) in Phuket have increased significantly. Those buyers who bought
units 5 – 10 years ago can offer a lower price than a comparable new development and still make an attractive capital gain.
Land Prices – have increased dramatically over the last 5 years, in some locations prices have doubled. This increase in land prices is adding to the
cost of new developments as developers have to pay higher prices to purchase land plots.
Transaction fees -‐ After 5 year’s property transaction tax is reduced from 5.3% to 2% on freehold property.
As the resale market in Phuket continues to mature we expect resale prices to align with the prices of new developments. Currently the majority of
buyers in Phuket prefer to purchase brand new properties: these have never been lived in, offer the latest in terms of building materials and
quality, offer extended payment terms during construction with special introductory terms for buying off-‐plan resulting in a higher capital
appreciation (typically, capital appreciation when buying during pre-‐sale period is 30% and 5 – 10% when buying during the construction phase
http://www.siamrealestate.com/news/?id=153). There are also still a lot of available green field land plots for developers to build on. To be
competitive with new developments, owners who are trying to resell their properties need to offer a discount to the new developments to make
their resale properties more attractive to buyers. However, as the availability of suitable green field land plots in Phuket becomes scare in the
future we will see the resale market begin to mature as the demand for resale properties will increase.
For additional information on property valuations please see the following link http://www.siamrealestate.com/docs/valuation.pdf
* The average price of resale 4 bedroom villas/houses on the West coast is significantly higher than the prices of new developments. As we already mentioned the market
for properties priced above 1m USD is currently weak, therefore to keep prices in line with market demand residential property developers in Phuket have moved with the
market trend and are building smaller properties at lower prices but, to higher standards of quality. In the past there was a strong demand for large villas in Phuket as land
prices and building costs were lower and the Thai Baht was weaker against major currencies.


-‐
20 000
40 000
60 000
80 000
100 000
120 000
Studio 1 Bed 2 Bed 3 Bed
Monthly Rate (baht)
Phuket Long Term Rental Prices: CONDOS
West
South
Central
North
Phuket Rental Market
Chart 8.


Table 12.
CONDO: Long Term Rental Prices (average monthly price)
Studio 1 Bed 2 Bed 3 Bed
West 27,667 865 36,519 1,141 63,019 1,969 106,577 3,331
South 22,650 708 32,567 1,018 35,867 1,121 46,800 1,463
Central 16,500 516 19,769 618 39,150 1,223 100,600 3,144
North NA* NA* NA* NA* 36,500 1,141 45,000 1,406
Average 22,272 696 29,618 926 43,634 1,364 74,744 2,336
*Not enough data available


Chart 9.

-‐
50 000
100 000
150 000
200 000
250 000
1 Bed 2 Bed 3 Bed 4 Bed 4+ Bed
Monthly Rate (baht)
Phuket Long Term Rental Prices: HOUSE/VILLA
West
South
Central
North


Table 13.
HOUSES: Long Term Rental Prices (average monthly price)

1 Bed 2 Bed 3 Bed 4 Bed 4+ Bed

THB USD THB USD THB USD THB USD THB USD
West 65,000 2,031 89,750 2,805 106,859 3,339 150,713 4,710 193,750 6,055
South 32,882 1,028 41,911 1,310 63,077 1,971 103,862 3,246 109,400 3,419
Central NA* NA* 37,909 1,185 61,390 1,918 103,611 3,238 203,273 6,352
North NA* NA* 42,250 1,320 46,667 1,458 57,000 1,781 123,333 3,854
Average 48,941 1,529 52,955 1,655 69,498 2,172 103,797 3,244 157,439 4,920
*Not enough data available
Charts 8, 9 and tables 12, 13 above, show the average rental prices for properties in Phuket by property type, number of bedrooms and location. Once
again those properties on the West coast command the highest prices. The Central and Southern locations have similar rental prices until the number of
bedrooms increases to 4+ for villas/houses and 3 bedrooms for condos. This is due to large properties at high-‐end, luxury developments in Cape Yamu and
Sri Panwa which drive up the prices for larger rental properties in the Central location.
Table 14 below gives an indication of return on investment (ROI) on properties in Phuket; we have used resale villas/houses against long term rental prices.
The table shows that the average rental returns for resale villas/houses in Phuket is 4% – 5% per annum, in our own experience this can be higher. Those
owners who seek to maximise rental returns by letting out their properties over the high and peak season in Phuket are likely to be able to generate higher
than average returns.
Table 14.
LTR Rental Returns: Resale Villas
2 bed 3 bed 4 bed 4+ bed
West 6% 6% 3% 4%
South 6% 6% 6% 4%
Central 4% 4% 3% 4%
North NA 4% 3% 9%*
Average 5% 5% 4% 5%
* Small quota of data available, data skewed by outliers


Chart 10.

1 Bed Peak
1 Bed Peak
1 Bed Peak
1 Bed Peak
2 Bed Peak
2 Bed Peak
2 Bed Peak
2 Bed Peak
3 Bed Peak
3 Bed Peak
3 Bed Peak
3 Bed Peak
4 Bed Peak
4 Bed Peak
4 Bed Peak
4 Bed Peak
4+ Bed Peak
4+ Bed Peak
4+ Bed Peak
4+ Bed Peak
-‐
20 000
40 000
60 000
80 000
100 000
120 000
West South Central North
Daily holiday rental prices Phuket 2014: VILLAS
1 Bed Summer 1 Bed High 1 Bed Peak 2 Bed Summer 2 Bed High 2 Bed Peak 3 Bed Summer 3 Bed High
3 Bed Peak 4 Bed Summer 4 Bed High 4 Bed Peak 4+ Bed Summer 4+ Bed High 4+ Bed Peak


Economic Overview Phuket
Phuket International Airport
In fiscal year 2013, Phuket International Airport served 41 scheduled airlines, with a total of 70,198 flights, representing an increase of 18.17%. From the
said number, 38,814 of which were international flights or increased by 24.68% both scheduled flights and charter flights while domestic flights grew by
10.99% to 31,384 flights. Passenger movements rose by 19.85% to 10,979,537 passengers, with 6,144,912 international passengers, up by 27.57%, and
4,834,625 domestic passengers, representing an increase of 11.29%, largely thanks to the growing number of Thai and foreign tourist visitors (Source: AOT
annual report 2013).
Fig. 2.

Source: AOT annual report 2013


Fig. 3.



Passenger arrivals 2014
Fig. 4.



The first 6 months of 2014 has seen growth in the number of aircraft and passengers through Phuket’s International Airport. Phuket’s aircraft movements
have increased 5.62% internationally and 8.94% domestically on the previous year. Passenger movements have grown by 4.42% to 3,367,574 passengers
internationally and by nearly 1% domestically to 2,460,990.
The growth in international airport passengers to Phuket’s airport is in sharp contrast to a decrease in international passenger movements to the rest of
Thailand (except Chiang Mai & Chiang Rai). The continued growth proves Phuket’s economic resilience in the face of the recent negative international
media reports surrounding Thailand’s political situation in the first half of 2014. Although Phuket’s arrival numbers have dropped off during the aftermath
of the coup arrival numbers are recovering well and will most likely return to growth in Q4 2014.


Low Cost Carrier’s
Fig. 5.

In the first 6 months of 2014 LCC’s accounted for 25.14% of Phuket’s international passengers, this is a total number of 846,526 passengers and an 8.22%
increase on 2013. LCC’s account for 44.93% of domestic passengers at HKT, this is a total of 1,105,804 passengers in the first 6 months of 2014 and an
increase of 7.26% on 2013.
The increasing numbers of passengers through Phuket’s International Airport shows a healthy growth in tourist arrivals to Phuket.


Tourism Demographics
Fig. 6.

Fig. 7.


Phuket Infrastructure Projects
Table 15.
Source: C9 Hotelworks Market Research

Project Description Status Completion Date
Phuket International Airport
Expansion
Budget: US $180 million
New international terminal, apron
extension and multi-‐storey car
park
Piling work is currently
underway
May 2015
Underpass: Central Festival
Intersection
850-‐meter underpass along
Chalermprakiat Road
Partially open, north bound traffic
only
November 2014
Underpass: Tesco Lotus Intersection
600-‐meter underpass Construction underway March 2015
Underpass at Koh Kaew Intersection
300 meter underpass Under contractor selection process T.B.A
Underpass: Chalong Circle Junction
Budget: T.B.A
1km two way underpass joining
Chaofa West rd and Wiset rd
Route approved, construction start
date 2016
2017 -‐ 18
Underpass or Flyover at 4 key
highway intersections
Budget: T.B.A
Intersections include Airport, Nai
Yang, Thalang, Heroines
Monument.

Under review T.B.A
Patong Tunnel
Two way tunnel approx. 1.5km.
Project transferred to EXAT
Feasibility consultant selection.
Tentative construction schedule is
set to commence in 2015
2018


SWOT Analysis
Strengths
Price stability – Property prices in Phuket are extremely stable, for foreigners buying property in Thailand it is extremely difficult to get a mortgage on the
property. Therefore nearly all foreigners buying property here are cash buyers so there is very little debt. There is a large demand from retiree Expat’s
buyers and these buyers will not slash prices to sell as the property is part of their retirement fund. Thai buyers have not over extended home loans so
there is currently no bubble in the property market.
Quality properties – the build quality and standard of materials used has improved considerably over the past decade and now Thailand is producing
quality properties to international standards.
Choice – there is a huge amount of choice on offer for buyers in Phuket: there are many different property types, locations and price ranges for buyers to
choose from.
Accessible – Phuket is becoming more and more accessible with the expansion of Phuket’s International Airport. Direct flights to Phuket are now available
from Europe, the Middle East, Russia, Australia and many other countries within SE Asia.
Infrastructure – Phuket has very good roads, hospitals and international schools and the infrastructure on the Island is improving all the time.
Lifestyle – an improved lifestyle offered by living in Phuket is a major attraction for many Expats. The weather, Thai culture, Thai & International cuisine,
beaches, established Expat community and sporting activities are some of the main advantages of living in Phuket.
Low property taxes – compared international Thailand’s property transaction taxes are relatively low and there are no municipal taxes (see link for more
details http://www.thailandpropertydoctor.com/category/thai-‐taxes/).
Weaknesses
Lack of market information & transparency – there is no true independent agency offering market research in Phuket, data is available from local district
offices but it is not widely available and difficult to obtain and evaluate.
Lack of regulation – There is very little regulation in the real estate brokers industry and there are many unqualified brokers offering poor advice.
No Multi-‐Listing-‐Service (MLS) – This adds to lack of information and transparency, and means that buyers do not have access to the whole property
market.


Opportunities
Good value resale options – As found in this report resale properties in Phuket are on average priced lower than new properties. This provides
opportunities for above average ROI through rental returns and capital gains.
More families relocating to Phuket – There is a growing trend of more families using Phuket as a hub to do business throughout the SE Asian region.
Neighbouring Markets -‐ Property markets in Singapore and Hong Kong are now extremely expensive in comparison to Phuket, a lot of expats in these
locations now looking to invest in Phuket as they have been priced out of the market in HK and Singapore.
Airport expansion – Phuket’s International Airport is expanding, there has been an increase in passenger arrivals and LCC’s and this will mean more tourists
and more potential buyers.
Phuket not yet over developed –there is continuing market demand for new property developments.
Threats
Other destinations in the SE Asian region -‐ Growth in popularity from neighboring and competing tourist destinations inside Thailand and within the SE
Asian region could attract tourist arrivals at the expense of Phuket.
Further Strengthening of the Thai Baht – this is unlikely as the US has ended its QE program and is very likely to start increasing interest rates next year
(2015). This will see funds follow out of Thailand and back to the west which in turn will see the Baht weaken against the USD and other major currencies.
Renewal of political instability – currently this is not an issue; the military government has provided much stability to the Thai economy and political
environment. Prior to returning power to the electorate the NCPO plans political reforms which will provide a stable base for future Thai politics.


Siam Real Estate Phuket Co., Ltd.

SOUTH Phuket Office
2/42 Moo 4, Viset Rd., Rawai
Phuket 83130 THAILAND
Tel: +66 (0)76 288 908
Fax: +66 (0)76 383 646

NORTH Phuket Office
49/21 Boat Avenue,
Cherngtalay
Phuket 83130 THAILAND
Tel: +66 (0)76 324042
Fax: +66 (0)76 383 646

All materials presented in this report, unless specifically indicated otherwise, are under copyright and proprietary to Siam Real Estate. Information contained herein, including projections, has been obtained from
materials and sources believed to be reliable at the date of publication and also taken from our own research sources. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or
representation about it. Readers are responsible for independently assessing the relevance, accuracy, completeness and currency of the information of this publication. This report is presented for information
purposes only, exclusively for Siam Real Estate’s clients and professionals, and is not to be used or considered as an offer or the solicitation of an offer to sell or buy or subscribe for securities or other financial
instruments. All rights to the material are reserved and none of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party without prior express
written permission of Siam Real Estate. Any unauthorized publication or redistribution of Siam Real Estate’s research reports is prohibited. Siam Real Estate will not be liable for any loss, damage, cost or expense
incurred or arising by reason of any person using or relying on information in this publication.

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www.siamrealestate.com

This report was written by Kevin Hodges: North Phuket Branch Manager and Investments Manager

Email: Kevin@siamrealestate.com

Siam Real Estate - Phuket Residential Property Market Report 2014

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