Russian buyers fuelling expansion in Phuket property market

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The Phuket property market is expected to expand by 15-20% annually over the next 3 years, driven by demand from new Russian buyers and returning European customers, who have traditionally been the main buyers of Phuket real estate, says Piya Sosothikul, Executive Director of Seacon Group.

“The Phuket foreign property market is recovering very nicely since its low in 2008,” says the Seacon chief.  “The main push in the last few years comes from Russian buyers who make up about 50% of total sales.  Last year, the market began to see a significant return of traditional European buyers, especially the British, who practically stopped buying during the peak of the European financial crisis, which started in 2010.

Piya Sosothikul, Executive Director of Seacon Group.Piya Sosothikul, Executive Director of Seacon Group.

“This year, we expect total revenues for foreign market properties to be around THB 8 billion.  The new condominium supplies in Bang Tao, Patong, Kata, Karon and along the eastern coast of the Island are also attracting a lot of interest.”

Seacon Group, owned by the Sosothikul family, has been established for over 60 years and has developed many landmark properties in Thailand such as Siam Square Center, Siam Intercontinental Hotel, and Seacon Square Shopping Complex, which was the world’s 7th and Asia’s largest shopping center at the time.  It also owns many consumer brands that are household names both for domestic and neighboring countries’ markets.

Seacon launched its first villa project in 2004 in the southern tip of Phuket through its subsidiary Erawana Co. Ltd.  Since that time Erawana has developed and sold out 12 private pool villa projects around the island with total sales exceeding THB 1.5 billion.  Most recently launched was Tanode 5, a 14 private pool villa project near Layan beach valuing at THB 300 million.

The company’s strategy is quite simple.  Projects are kept small and exclusive, located within 5 minutes from the beach, with all units being private pool villas sized between 250-600 square meters, comprising 2-5 bedrooms.  The design philosophy is based on functional usage with a touch of a resort environment, targeting buyers who plan to use the villa rather than renting it out.  Prices vary from THB 15-30 million.

“We try to maintain an excellent reputation, which is important in cases where foreign buyers are not familiar with the developer.  We complete the construction of the villa before putting it on the market so the customers know exactly what they are buying and that the project as a whole will be completed,” says Piya.

Erawana has just secured an additional 2 plots of land, also located in the Layan area.  It plans to begin the construction in Q4 this year and within mid-2015 launch both projects, with a combined project value of THB 500 million.

“Russian and European buyers will continue to be our main customer base and the political situation in Bangkok has had very little impact on our sales, Piya adds.  “Most of the customers fly directly to Phuket by either scheduled or charter flights and many do understand Thailand’s frequent but non-violent protests, which are mostly confined to Bangkok.

“My major concern is, however, the situation in Ukraine,” he continued, “although the majority of the affluent Russian buyers here are from the eastern part of the country and not from Moscow or the west.  Still, I foresee the market expanding at a healthy rate of 15-20% over the next 3 years.”

Piya also expects to see an increase of buyers from other Asian countries in Phuket over the next few years.

Tanode 5, a 14 private pool villa project near Layan beach in Phuket, is the latest project from Erawana Co. Ltd.Tanode 5, a 14 private pool villa project near Layan beach in Phuket, is the latest project from Erawana Co. Ltd.

“The Chinese are currently the world’s largest international property buyers in markets ranging from Hong Kong, Singapore, Penang to, most recently, Dubai, so we can possibly see them increasing their property interests in Phuket in the near future.  Phuket is already amongst the top 15 locations that Chinese tourists visit and we can expect to see even more Chinese visitors after the completion of the airport expansion.  If the Chinese begin to take an interest in Phuket property market, the market size could easily double,” concluded the Seacon chief.