Phuket developers told to offer clients less risky projects

Developers in Phuket should take actions to assure buyers of their ability to complete projects, as the trend today has leaned toward completed and well-managed properties to minimise risks in the currently slow market, according to Dexter Norville, head of estate management of Jones Lang LaSalle in the resort island.

The company finds that confidence has receded among buyers, causing them to be more cautious about buying resorts, condominiums or villas on the island. Some potential buyers have postponed their purchases while others have concentrated only on completed properties.

The more cautious approach has caused difficulties for projects of which construction has shown little progress. Different strategies have been implemented to attract potential buyers such as low booking fees and low property management costs.

However, he warned about potential danger involving property management as the lower costs may compromise the quality and standards of the maintenance and management of common areas and facilities.

The average monthly management costs for standard-sized resort and condominium units in Phuket range between 55 and 80 baht per square metre. For luxury villa resorts, the costs range from 30,000 to 80,000 baht per villa per month.

Mr Norville also added it was important for developers to assure buyers about their financial status and make sure that all sales and purchase agreements are drafted and presented clearly. Developers should also identify reliable management companies to run the properties after they are completed.

The Phuket holiday home market depends mainly on demand from international buyers, which has dropped since the global financial crisis escalated in late 2008. Sentiment started to revive in the last quarter of 2009 but buyers’ confidence declined again in light of the recent political unrest in Thailand.

The company expects the Phuket holiday home market to rebound in the next 12 months provided politics becomes stable. Until then, completed projects are well-positioned to attract buyers in the next high season.

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