Rental Market Comes of Age
A few years ago, you could count on two hands the number of rental villas and resort condominiums-cum-resorts in Phuket. Coming into 2008, the market has developed into a significant market force and guests are benefiting from the variety of options. The expectation for the short- to medium-term future is that this type of accommodation will eat into the market share of traditional hotels.
The Phuket market has historically lagged behind Bali, its key competitor, for a number of years in terms of product offerings for short- and long-term villa rentals. While the emergence of alternative accommodation products has been a shot heard around the world in most markets, only now in Asia is this type of product becoming a force to be reckoned with.
Looking at the Bangkok hotel market, there has been a huge shift in serviced-apartment projects in the past few years. Properties that were once catering mainly to long-term travelers are now competing with hotels for leisure and business guests.
International chains such as Ascott (along with its Citadines brand), Oakwood and Marriott have multiple properties in the city. Local products including Centrepoint, Emporium Suites and Lebua have created strong followings in an increasingly crowded playing field.The trend towards lifestyle investment, along with real-estate speculators looking for ongoing rental yields and usage rights, has driven the movement towards the villa and resort-apartment rental market.
Branded residences at the Banyan Tree, Sheraton and Movenpick, together with new products including The Yamu, Jumeirah, Shangri-La and Taj offer villas and resort apartments for sale which will in turn be rented out to guests. This trend does not stop at hotel projects. The successes of BYD Lofts, Aspasia, Lersuang Club, Baan Chai Nam, Sri Panwa and Katamanda provide a strong case for this type of product shift.A number of local agents are focusing on this trend with PIP's Phuketvillarentals.com one of the pioneers. Newcomers Phuket Villas & Homes, Phuket Marbella and Shibumi all offer niche rental operations for those looking to rent private villas and condos.
As a selling point for holidaymakers, in many cases it's a great value proposition trading up to a private pool villa or serviced condo, which has greater facilities, privacy and amenities, such as kitchens, as well as space versus the relative confinement of a single hotel room. In an age of customization in all consumer segments, this is certainly going to be one that will continue to refine and grow in the coming years.In terms of long-term rentals, the resale and rental markets have not displaced new products in the past but, given the development of critical mass in the marketplace, this is bound to change. The increased supply of rental products will make rental rates more standardized in the market and easier to for potential occupants to compare.
The same can be said for the resale market, which up until now has not had a large market presence because buyers have tended to favor new properties. As more products enter the fray, this will no doubt change. In the future, long-term rentals will account for a sizable presence of housing consumers.
Freedom of choice is a great thing and a more developed market means greater options for more people. It will be interesting to see how the holiday rentals affect the hotel products out there in the coming year and if they enhance or displace existing business. For those visiting Phuket, this certainly signals some new and exciting options, which can only make the destination a better place.