Destination Overview:

Phuket is one of Asia’s premier destinations and is well regarded among villa purchasers.The market has shown steady growth in visitor arrivals and real estate values over the past decade and this is expected to continue over the upcoming decade as accessibility and hospitality offerings continue to improve.

In recent months, Thailand has been buffeted by the combination of global financial turmoil and local political upheaval, both of which have shaken confidence in the Phuket property market. No market has immunity from such events and it is likely that we will see some short-term effects in terms of on-going development progress and new launches, as well as a slowdown in sales pace.

Phuket is a destination in its own right and arguably, a very distinct residential market in the Thai context as well. During the recent closure of the two Bangkok airports, Phuket remained open for business and was available as an alternative transportation hub.

This shows the growing significance of the island and in many ways is a point of separation from the issues faced in many other parts of the country.

In terms of economic issues, we expect Phuket to continue to show healthy transaction rates in the THB 65 million plus range, as the island has the advantage of attracting a higher quality of buyer. The vast majority of these villa purchases are cash based so access to credit or debt servicing are not issues among this group. Furthermore, current and upcoming supply in the luxury segment is limited and few undeveloped prime ocean front sites remain; factors which will continue to stimulate demand among potential purchasers. As such, our medium term outlook on the Phuket market remains positive.

PHUKET LUXURY VILLA MARKET SUPPLY (>65M THB)
	Luxury Villa Market 2008	Luxury Villa Market 2009 onward
Phang Nga	5	33
West Coast	172	184
East Coast	127	146
Total	304	367
Note: The existing luxury villa market is assumed to be the luxury villa inventory at projects selling. Planned luxury villas include announced products. Includes existing projects and upcoming supply.

Areas To Watch:

The lack of beach front real estate on Phuket itself as well as the availability of larger land parcels for high end resort development and large mixed use projects in Thai Muang, Natai Beach and Koh Kloy has resulted in a trend towards high end development and premium hotels in Southern Phang Nga. Examples of this include Aleenta and Sava Natai, while the announcement of the Raffles villa project, has also cemented this area as one to watch.

As beachfront land has become scarce elsewhere on Phuket, Mai Khao has become an attractive proposition for developers. The Anantara Phuket has recently opened on Mai Khao beach, joining the established JW Marriott and Sala properties. This area is poised to be a significant destination with critical mass based on additions to the hotel pipeline including properties from Holiday Inn, Outrigger and Renaissance.

Developers seeking out new areas have also moved into locations such as Eastern Phuket. With high profile projects such as Jumeirah Private Island, Taj Exotica and the The Yamu - the East Coast is a developing story in the Phuket property market.