Foreign demand in Phuket, Hua Hin shows signs of life

Engel and Volkers team

Engel and Volkers team

Foreign demand for real estate in Phuket and Hua Hin is recovering, says Duangjai Kraus, executive chairman of the property broker Double 8 Realty Co, Ltd,

Most inquiries are coming from potential buyers in Europe, said the master licence partner of Engel & Volkers Asia-Pacific Ltd, a Germany-based broker.

Sentiment in Phuket started to improve last month with the beginning of the peak tourist season, she said. Most customers are Scandinavian, British and Russian.

“They [foreign buyers] were back. They e-mailed us last month and asked about rental villas and residents for sale. But they prefer resale units, in which they had more confidence than off-plan projects.”

Property developers and investors are also becoming increasingly active and showing interest in buying large plots on beachfront land for developing high-end villas, hotels and resorts in Phuket and Hua Hin, she said.

Investors from Thailand, Singapore and Dubai with strong financial backgrounds recognise the potential for high-end villas. Double 8 Realty is negotiating land sales for three projects and expects to close the deals worth 200-300 million baht by year-end, said Ms Kraus.

All available land on Phuket’s west coast and in Hua Hin town has been sold. Developers are now looking at Khao Tao, where beachfront land sells for 20-25 million baht a rai, Cha-am for 15-20 million baht and Kui Buri for 5-6 million baht.

Individual European buyers have asked the company to find large quantities of beachfront villas and condominiums for sale so they can benefit from lower prices during the recession. They plan to re-sell the units to European clients.

“To increase foreign demand for Thai property, the government should consider an extension of the maximum leasehold period to 60 years (from 30) and banks should support mortgage loans to foreign buyers,” she said. “The economy is improving now but the main concern is political stability.”

Demand for condominium resales in Bangkok remains strong despite sluggish market conditions as buyers have lost confidence in off-plan projects, said Mrs Kraus. Asking prices for off-plan projects are falling while resale prices for completed projects are rising.

In the first half of the year, the resale price for completed high-end to luxury freehold condominiums rose by 7% to approximately 110,000 baht per square metre, while the average selling price for similar off-plan projects declined by 8% to 10% to approximately 128,000 baht per sq m.



Off-plan projects can expect to sell out about 75% of their units before completion. The riverside area has the lowest sales of just 60%, she said.

Research by Double 8 Realty shows six condominium projects with about 650 units were launched in downtown Bangkok in the first half. Some 45 off-plan projects with about 3,000 units were being marketed in the same area.

The company has two offices, in Hua Hin and Phuket, with a portfolio of 200 resale properties. It plans to move its headquarters from Hua Hin to a new office on Thong Lo Soi 3, in Bangkok, which will open on Dec 3.

The company has further plans to open 15 new offices across the county within 2011, starting with Samui and Pattaya next year. It plans to increase its registered capital to 100 million baht from 80 million next month.

“Bangkok is a very competitive market, especially in luxury property,” she said. “We’re listing and gathering resale units in Thong Lo and the surrounding area, which we estimate to be around 10,000 units.”

Mrs Kraus said the company would focus on units priced higher than 80,000 baht a sq m to match demand for high-quality products from its clients.

Engel & Volkers, a broker founded in Germany 32 years ago, has one million active clients on hand.

The company expects sales of 200 million baht from about 30 resale units in Bangkok by the first quarter of 2010 when tax breaks for property will expire.

Since last year the company has reduced its offerings of off-plan projects due to lower confidence among buyers and investors.

“The residential market will improve next year in line with the economic recovery,” Ms Kraus said. “We will resume taking new projects for sales management and will start property management service in the near future.”

SOURCE: bangkok post

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