market which has capitalized on an under supply of product and the lower end condo market within the 2-4 million baht range, which has seen an influx of Thai speculative buyers who can leverage units with banks. Mid range condos, townhouses, apartments and the recent rash of smallish pool villas all within the 7-12 million baht band in tertiary locations have continued to come at rates far faster than they can be sold.
Arguably, there currently exists a robust supply of mid range product at a time where demand is flat, thus making speculators and industry firms, such as brokers, wonder how to spur an increase in transactions. Unfortunately this comes at a time where every corner of the globe is facing severe crises that many experts
are saying will continue to sway for at least 12-24 months. There is no easy quick fix.
Talking to developers and agents, prices, for the most part, are holding on property; although many buyers
who are actually purchasing stand alone units and smaller developments have received some discounts. For
the most part these are completed inventory where only a few units are remaining and it’s more a matter of
businessmen who want to exit an investment and cash out.
It's a questionable strategy in this type of market to advocate large scale devaluation of property in order to attract new market share, as, currently, there isn't a wider overseas market in existence. The effects on
existing purchasers of property, who's value has held against other diminishing assets, would create possible challenges in attracting new buyers in the future. Its easy to sell cheap, but at the end of the day whether Phuket wants to go the way of Spain or other mass housing markets remains a key question.
A overlooked key factor is currency, which remains important when many buyers bring funds from overseas.
Over the past year the Thai baht has depreciated 15% against major currencies and the current forecast is
for a further five. This presents a 20% decrease for overseas buyers on property in Phuket. New property
launches are declining and the construction pipeline looks to be constrained for a sustained period. While some discounting may take place on existing products, the market absorption of these excess units will be accelerated and see a more balanced demand supply ratio going forward.
As pointed out in this column, many times in the past, the key to growing Phuket's market remains in the
availability of financing which allows it to compete with developed markets, along with greater foreign ownership rules. While many may argue that lowering prices may benefit short term growth; long-term can
success and this market's sustained viability can only be achieved if stability and investor confidence are maintained without a knee jerk reaction to the world around us.