Phuket hotel occupancy and residential demand on the rise

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Property management company CB Richard Ellis Thailand has just released its Q1 2012 Phuket Property Report conducted by the company’s own research team.

The report shows some significant changes in several sectors of the Phuket market.  Q1 2012 was a record first quarter for tourist arrivals with 594,999 domestic and 730,667 international passenger arrivals.  Despite global economic uncertainty, tourism continued to grow with the expansion coming from Australia, China and Russia.

The Aquaminium at Royal Phuket Marina, a CBRE managed property, offers condominium units for sale starting from THB 5 million. The Aquaminium at Royal Phuket Marina, a CBRE managed property, offers condominium units for sale starting from THB 5 million.

Hotels benefited from the increase in arrivals with the average occupancy rates increasing to 82.7% from 80.5% in Q4 2011.  Luxury and first-class hotels were the best performers in terms of occupancy.  The average achieved room rate of these hotel grades were THB 22,835 (6.8% Y-o-Y) and THB 7,425 (5.0% Y-o-Y), respectively.

There are currently 13,171 keys in 83 existing upscale hotels and 5,471 keys under construction in 30 hotels due for completion by 2014.  According to David Simister, chairman of CBRE Thailand, “New supply is not confined to the West Coast, but shows a wider geographic footprint including Koh Siray which is located east of Phuket Town on a peninsula.”

The overall resort residential property market remains solid on values, but quiet in terms of new launches of both villa and condominium projects.  Developers have focused on clearing inventory.  Notable new launches include the Malaiwana condominiums and beach club, a luxury product part of a larger successful villa development with an average price of THB 80 million, and the Vertigo Villa project on Surin beach with prices ranging from THB 60-90 million.

A new residential market has emerged, non-beachfront non-resort condominiums, developed by Bangkok listed developers such as Sansiri and Supalai.  New off-plan projects have been successfully selling condominiums  inland  aimed  at  local  Phuket  residents  mainly  studio  units, sized 29-37 square metres with average prices at THB 1.5 million.  It remains to be seen how deep market demand is in this sector and what else may come to the market.

Based on the CBRE Research’s survey in Q1 2012, 60 resort villas were sold.  Sales were spread across all price ranges.  CBRE segments the villa market into below THB 15 million, THB 15-35 million, THB 36-90 million, and over THB 90 million.  Villas below THB 15 million made up 50% of the sales, but at the top of the market, two sales were recorded in excess of THB 120 million.

The Sava located across the Sarasin Bridge in the Phang Nga province has reportedly sold all seven villas at prices ranging from THB 62-180 million, three of which were sold this quarter.

In the resort condominium market, the report shows that 84 units were sold in Q1 2012.  Sales were concentrated in five projects where the main sales were one bedroom units with average prices of THB 5.9 million.  There are about 3,700 completed resort condominium units in Phuket.  By comparison to Pattaya, there are 22,000 completed condominiums and a further 21,500 under construction.  The main product in Pattaya is a THB 2-3 million one-bedroom condominium.

“Despite healthy increases in tourism arrivals, CBRE is not, for now, seeing proportional increase in sales in the resort property market.  The rising tourism numbers are mainly from Asia whose tourists have yet to become resort property buyers,” said Mr. Simister.   “Over time repeat tourists will create fresh buying demand and new product will emerge to match their requirements.  The quarterly report is essential reading for anyone involved in hotel and residential developments in Phuket,” he added.

For more information, visit the company’s website at www.cbre.co.th.