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Property High Stakes

Category: , Posted:03 Sep 2011 | 06:00 am

"Selling out" is one of those terms with an edge-like quality that tends to cut both ways. Be the subject line in black or white, or beaten into a compromising color of gray, there is no right or wrong answer. It's all multiple choice answers.
One of my favorite movie exchanges in the Vince Vaughn flick "Swingers" has him debating over the prospects of "doubling down" (a blackjack term for when you are allowed to double your bet after receiving your first two cards). His dilemma is slamming into a crossroads with a choice of casino jackpot or taking the money and running.
For real estate owners or investors, the crisis of when to sell is one of the most critical decisions they face. It's a daunting task of balancing risk and reward, the downsides or unrealized upside gain.
Traditionally in the days of old or the legacy property market you had some fairly well defined resources and structured cycles that, while not exact, were as close to a science as possible.
Next came the Asian contagion of 1997 and sub-prime became a death knell for common wisdom. Property investors who relied on what now equates to the urban myth that prices never fall in a significant way are now looking at a lifetime of working into their twilight years.
What was once considered a sure thing, that equity and rising capital appreciation of homes would soar indefinitely, has created a new generation of skeptics.
For Phuket buyers and sellers, perhaps the most prolific questions in the coming decade will come from the great debate of market growth.
Yes in some camps, small tribes of survivor-like "recoveryites" are waiting on the beach for the return of the European investment buyers. It's nearly a Lord of the Flies scenario though, with reality and a dreamlike state intermixed.
What most people ignore is that the island's resort grade real estate – the villas, condos and town houses – which tend be located away from the island area, remains the domain of foreign buyers.
What mostly affects the return of these buyers has nothing to do with Phuket but the greater world of economic turmoil, currency machinations and political change.
When folks walk up to me and ask in hushed tones when things are going to be the same – my current response is, when the world gets better. Anyone who knows a more complete answer please let us in on this evasive secret.
For owners looking to transact there simply are no rules. We live in irrational times. Transactions simply need one buyer and one seller to hook up. It's not a complete mess but it's no sure thing either.
Pricing remains under attack on the larger scale. As resale listings surge, conditions that favor buyers will prevail at least for the short to medium term.
Premium properties are trading though, be it oceanfront, ocean view, or dynamic in design or location. Cream will always rise to the top. What concerns many is what lies below in the dense dark depths of the larger mass market.
While strategy comes into action, in many situations the accidental trade or sale is increasingly the norm. Go back to the concept of doubling down and welcome to the casino of luck. Knowing when to list a property and promote it remains confusing and there is no right or wrong way.
Globally, expectations in most developed markets are not in survival mode. A blessing for Phuket is the absolute lack of leveraging or debt by the foreign property buyers in their local assets. In the worst case for most, the horizon may be flat but at least there is no immediate danger of falling off the edge of a cliff.
All we can say at the moment is that there is a form of stability in fundamentals here which is absent in other regions. For sellers and buyers – yes, no and maybe continues to be the play of the day.

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