Post-high-season autopsy on Phuket’s luxury property market
PHUKET: As I sit in my office on a faceless Saturday afternoon heading into low season, a song that flips up on Spotify grabs my attention – Ike and Tina Turner’s ‘River Deep, Mountain High’.
My heart nearly skips a beat as Tina grittily sings the lines “And it gets stronger, in every way. And it gets deeper, let me say. And it gets higher, day by day.”
Sadly, the same can not be said about the state of Phuket’s luxury real estate market.
Welcome to the post-high season autopsy on Phuket’s pish posh uber luxury property market. The hills are not exactly ‘alive with music’ these days. Land issues, a crush of resale units on the market and heavy discounting is the current trend making the outlook somewhat gloomy. Predicting when that trend will end is hard to say.
Speaking to developers and real estate brokers in the luxury property sector, this year’s high season was as flat as a pancake.
One key indicator of sentiment is that a number of villas in famed hospitality-led residential projects on the west coast are up for sale.
At one iconic hotel in particular, property resales have been few and far between, putting more villas back into the market. Turn back the pages a few years and it was a different story. Anxious investors were lining up just to get on the waiting list.
There is little doubt that a double negative has been the on-and-off saga over Sirinath National Park, which has affected a number of ultra villa estates and played out prominently in the press. It’s been a public relations nightmare with the end result remaining unclear.
While Phuket arguably has the highest valued resort property market of any resort destination in Southeast Asia, ongoing land issues are having a certain impact on sentiment.
Another key rallying call has been Surin Beach and the swank strip of clubs and outlets that became social houses for the wealthy. The strip was undoubtedly a key demand driver for upscale properties in the area. Today though, the beach lies in ruins, as does much of Layan and Bang Tao. Half-tumbled fences, rubble and the skeletal remains of buildings make the place look like the scene of a bomb blast.
Although the government has acted in good faith to get rid of the illegal structures, one has to ask, ‘where is Plan B?’
What about the restoration and promotion of quality versus quantity?
Will Surin Beach end up the same as Nai Thon with paved public parking that is tented by vendors and become a public market place instead of a haven for beach-goers?
There is little doubt that Surin’s strip of trendy clubs added value to nearby properties, such as Surin Hill, Ayara Surin and Surin Heights, as well as other stand-alone properties.
For buyers of ultra villas, the incline of the property, elevated views and exclusive privacy win over flat, seafront land any day. However, with the Surin Beach strip now gone, the game has changed.
As we move through 2016 and look at the mounting million-dollar offerings at Anantara Layan, Avadina Hills, Point Yamu by Como and MontAzure, it may appear impressive but the competitive landscape has not changed.
As well as fewer buyers making fiercer competition, owners are now willing to negotiate back to favorable currency appreciation.
Luxury pipeline projects, such as Rosewood and a few other hotel-led offerings, are still in the planning stages so the outlook for the year remains largely unclear.
Getting to the gist of things, Phuket’s luxury property stable remains strong and contains some of the most beautiful properties on earth. But, like a garden that goes untended, external factors are weighing in heavily and in the day and age of disruption, the sector has dwindled to a crawl instead of a sprint.
Yes, the determined crawl is taking the market forward at a much slower pace, but one can’t help but wonder how sentiment will be regained in the present. For now, the industry needs to somehow come together, address the negative impact of the disruptions and hopefully restore confidence a little better than the sight of rubble littering many of Phuket’s famed west coast beaches.
Bill Barnett is the founder and managing director of C9 Hotelworks (C9Hotelworks.com), a leading Thailand-based hospitality and real estate consulting firm.
Photo: Rosewood Hotels & Resorts