Further Reading:
Is the Market Bottoming Out? Market Trends
In countries with well developed property markets there is a constant stream of widely published data with highly detailed national and regional information on property values, turnover and buyer demographics. Such data is usually collected by government agencies, banks and building societies or the larger national (real) estate agents. It is most invaluable to developers assessing the viability of new projects, and individuals about to commit their life savings to a new home
Unfortunately, this information is rarely available and even less frequently published in Thailand. Furthermore, the information that does infrequently emerge (usually based only on sales tax and transfer fee receipts) is not particularly helpful. Little if any work has been done to compile the data into useful sub-categories, and declared transaction values are invariably only a fraction of the real transfer prices.
Little wonder then that gut instincts, feng shui (the Chinese art of determining an auspicious location) or even the recent advice of a fortune teller often play a significant part in many property purchase and development decisions.
So gazing into my crystal ball for days past (please don’t ask me to provide source data for the following figures) I can tell you that Phuket went through a huge real estate boom in the late 1980’s, during which time land prices were rising as much as 50% and some instances 100% in a single year. Prime residential and resort property saw increases for several years in the region of 30% p.a. and as a consequence a large number of new condominium, residential and commercial projects were launched.
The Gulf war in late 1990 was the trigger that put a stop to the speculative frenzy.
At that time, certain pundits were predicting a total collapse of the market, but the doomsters proved wrong.
The market certainly suffered a huge slowdown in volume and several projects were canceled. However, with a few exceptions, mainly in the less well conceived commercial developments, property prices (or at least property owners) proved resilient and largely held their own.
Certain prime properties however continued to show modest growth through out the period albeit at a slower rate. For example resale prices at a beach front properties have show about 40% increase since mid 1990. Even the new high rise condominium developments that have been under construction in Phuket during the last 3 years and are just now coming on line, have seen list price increases of between 20 - 40% since their launch.
Most of Phuket’s Thai property owners remain convinced of the long term value of their properties and have generally been quite prepared to wait out the current recession.
My own experience drawn from the numbers and types of inquiries received in my office (and a little help from my fortune teller) is that the wait may be drawing to and end.
The growth in new low cost housing projects is already quite apparent, but now the entrepreneurs and venture capitalists, many who have heard of the very successful Singapore sales of the Allamanda condominium, are out scouting for resort sites again. Successful business people from Hong Kong and Europe are also back again searching for their dream beach homes.
The recovery can be expected to be a gentle one - at least compared to the heady returns of the 80’s, but baring a major relapse of the worlds economies, it is likely to be a longer and more sustained one.