Phuket Luxury Villa Market. What’s Wrong, What’s Right?

For the most part, the booming tourist high season at the start of 2016 was a challenge for the island’s luxury real estate sector as it there was no domino effect. It was almost a throwback to the age of Christopher Columbus where the common thought was the world is flat, but in this case the villa market went stone cold.

Today as we edge towards yet another winter peak high season, the question for the property market is what does the future hold? We have just released the new C9 Hotelworks Phuket Luxury Villa Market Update 2016 (click to download).

Based on our analysis the prevailing market has seen a sharp rise of secondary sales versus primary market transactions. At the same time Bangkok and other Asian CBD urban offerings are now seeing a surge in overseas buyers at the top end of the market. Take note of the hotel branded residences on the river such as the Four Seasons and Mandarin Oriental offerings. Hence competition is heating up.

You can also factor in the global economic slowdown and volatile currency, yet if we turn back the clock and look Asia’s real estate post the Global Financial Crisis, the ultra-luxury segment was one of the first markets to pick up and showed sustained traction during that time period.

Back of the island’s push in secondary sales, the reality is that many of these villas are prime properties and there continues to be limited choices and high barriers to entry so the fact that some early buyers are exiting is simply a fact of a recurring market cycle and not of over-supply.

Getting inside the numbers I find comfort knowing the existing luxury real estate market of properties has a current value well in excess of USD1 billion. In Asia, it remains the most demonstrated top end resort property segment in the region. Do the math, drive around the island and start adding up the existing values on Kamala’s Millionaires Mile, Nai Thon, Bangtao, Surin, Cape Yamu or Cape Panwa.

 Looking forward to the end of 2016 and on into 2017, the pick-up of sales at Bill Heinecke’s The Residences by Anantara in Layan is signaling the start of a new cycle. Strong interest at The Estates at MontAzure with their large land plots and signature design by celebrity designers Lek Bunnag and Jaya Ibrahim bodes well.

While in the wings is the banner Rosewood resort with its multimillion dollar villas that are currently under development will see estate villas come into the market. Hong Kong’s New World Development chose Phuket for their luxury brand’s Asian flagship for a reason.

Again and again we have learned the cyclical nature of the market. And while our new report spells out current trading challenges our forecast is that we are about to enter a new cycle and this will likely see a spur in renewed interest back of impressive new products in the luxury real estate segment.