Patong Condo Surge Reaches Sky High
Looking at condominium market absorption rates for the past 12 months, along with the number of new projects in the pipeline in Phuket, there some fundamental concerns regarding the possibility of oversupply. There has been a marked slowdown in overall sales while a considerable number of new projects are on the drawing boards.
Looking at the various projects dotted around the island, there are currently more than 1,500 condominium units under development in Patong alone. The second most densely developing area is Kathu, including parts of the bypass road and the areas next to Central Festival Phuket and the Tesco-Lotus mall. Most of the new building developments in Phuket are condominiums, which are being offered freehold, with a large number of Bangkok-based developers now entering the fray.
During Phuket's recent boom years, Patong lagged behind in terms of the products on offer, with early developments aimed at the low-cost condo market, along with a few high-end villas and freestanding properties on fringe areas. But now developers are now working on higher-caliber projects, such as the Bay Cliff, Patong Harbour and The Crest.
The current sweet spot in the market is in the 3-to-6-million-baht condo range, which is where most sales are being generated. The projects that are selling fastest are units of 40 square meters to 60sqm, with a surprising number of Thais buying on speculation. The shift from leasehold sales to condos is aided by the ease with which Thai buyers can obtain bank financing, leading to a market that is decreasingly dominated by foreign buyers.Land prices in commercial areas, such as Patong, continue to rise, where premium sites are selling for upwards of 10 million baht.
Tourism in Patong has received a boost from more than 1,000 new hotel rooms, thanks to chains such as Millennium, Mercure and Ibis.High-end Patong products, such as Bluepoint's luxury apartments, have set the bar for residential projects and forthcoming mixed-use projects, such as in Emerald Bay and Kalim. Large-scale development is already underway along the new north-south road currently under construction in between Rat-U-Thit 200 Pi Rd and Nanai Rd. This road is destined to become a major north-south traffic artery. To speed up the flow of traffic, tunnel access from Kathu may become a reality.
With Patong represented over 50% of 33,000 registered tourism establishments and attracting regular visitors from across half the island, it's difficult to understand why Patong is not the government's choice for the location of a convention center.However, although Patong is bursting at the seems with new projects, there is still inadequate parking, poor traffic management, inefficient power infrastructure and an inability to control public-transport operators.
Patong, which remains an integral part of Phuket's tourism economy, should be zoned as a part of the island dedicated to high-rise developments, which would allow the incorporation of efficient services and allow the redevelopment of many low-end shophouses. With all this in mind, the surge in condos is definitely worth keeping an eye on.