Toto's Magical Mystery Tour
Our dog Toto – fresh off the bus from Kansas – struck up an odd conversation with a local real estate broker just the other day. Despite our canine friend being hampered by a bad case of bus lag, talk soon turned to the magical-mystery tour of present-day luxury property.
Indeed, it's hard not to wax poetic about days past and strawberry fields forever, but the sudden appearance of a walrus lurching down the street brought us all back to the stark reality of 2011.
Looking at last year's annualised performance at the top end of the Phuket villa market (Bt65 million and above), trading volume came in at Bt2.84 billion for the sector.
Resales again dominated the transaction marketplace, commanding more than 62 per cent of the activity. For off-plan sales, the key beneficiaries were developers with strong track records. Hospitality-led residential projects also added traction.
The main sales activity was in beach or ocean-front locations, or in prestigious projects developed by established firms.
While the hangover of recent years continues, the fact that there was growth in 2010, compared to the bottoming out in 2009, was encouraging. Even Toto could bark up a storm over that one.
However, inside the numbers, dynamic shifts are taking place, mainly in the geographic origins of buyers. What was once a market dominated by Hong Kong, Singapore and the UK is now turning to the East.
Russia is now a headliner and growth spurts are coming from India, China, Australia and Thailand. As in tourism, the "New World Order" has fired warning shots across the bow of the property market over the past 12 months.
Strangely enough, the turning of the tables in property still has agents and developers second guessing whether to hedge their bets on a return of the old market or shift to new ones. The end result is inactivity and a failure to position luxury property in Phuket in wider international circles.
At present only 15 luxury projects have products for sale, totalling fewer than 100 units. This, to the Tin Man's way of thinking, remains a strong supply-demand fundamental. Improved market absorption last year, with demand bottoming out and beginning the climb back, remain key indicators.
On the other side of the argument is inactive presales. In the wake of global U-shaped economic recovery, investors continue to be more risk-averse to unfinished villas. Hence, new projects remain sidelined.
Inducing new demand to the island is critical to bringing a breath of fresh air and excitement. Brands and personalities are strong generators of media and buyer interest, but for the moment the casting couch seems to have been sent out for dry cleaning.
The buyer-favoured market conditions and a number of early investors now exiting prime properties will keep transaction levels going forward through this year. There are whispers of new projects rolling out in the months ahead on Kamala's Millionaire's Mile and also on the East Coast's Cape Yamu.
So while Dorothy, John, Paul, Ringo and George are all out of the office for some group therapy, I settle back in my chair and ask Toto "What's next for luxury property in Phuket?" All I get is a wag of the tail and a sloppy lick on my hand.