Nick Anthony, Indigo Real Estate’s Managing Partner, discusses the real estate market in Phuket and its position as a safe haven.
Two years ago I wrote an article in the Indigo Magazine about buying international property and seeking value. At the time we traveled extensively around the globe looking for a new market to pick up outside Phuket and saw over priced real estate across the globe. After a great deal of research we chose Argentina and are today busy launching the new Jumeirah Culu Culu Polo Resort with 170 residences set around 1,000 acres. A stunning property and still in our minds the best investment in Latin America that will provide long term capital gains, 5 star management and a country that offers a lifestyle unlike anything else on the planet: A Parisian style, Latino passions, the big sky pampas, soaring mountains, the worlds best polo and a healthy family environment.
Closer to home, here in Phuket our small Island that has undergone a dramatic transformation in the 7 years that we have been here… a transformation that for many reasons makes Phuket a safe haven and likely one of the only places on the planet that will continue attract positive capital flows and importantly show firm capital appreciation over the next few years.
Step back to 1988, when the Amanpuri was developed, Asia’s first true luxury 5 star resort and residences. You connect from Hong Kong through Bangkok and it ends up being a 10 hour trip door to door, not far off what it took from Europe. There was limited building talent, limited supplies and it was truly at the end of the world. Virtually no TV, newspapers delivered a day or two late and an island that survived on a few tourists and local produce.
An idyll, an escape, a cultural haven and a tropical paradise that quietly attracted a glamorous but low key International jet set and hardy back-packers who came down by bus.
Twenty years later, 2008 the Aman remains a bastion of hedonistic luxurious simplicity, strewn with coconut trees, separated from the rest of the world by a non-descript entry with no name and a tough security detail it remains truly at the end of the world. The difference today is that in that short period of time the island has developed into a hot-bed of high end property, new 5 star hotels, 4 thriving marinas and an eclectic permanent and growing base of International residents.
Phuket lacks the rah rah of Ibiza (not counting Soi Bangla), the outspoken hoi polloi and snobbishness of Bridgehampton, the paparazzi of St Barts and the wild aspects of Bali’s party life but therein also lies its charm and appeal.
She remains generally understated at the high end without ostentatious fast money fat cats. Phuket is an island that retains the charm of being isolated from the world in many ways and also, positively, isolated from Bangkok’s general political situation. I have been coming to Phuket and Bangkok since 1991 and have always been struck by Phuket’s ability to sing its own tune. The tsunami, bird flu and military coup in Bangkok confirmed this.
That tune today is one of strength in the face of a global shakedown. Our arrivals for October are higher than 2008, around 400 private planes arrived this year to date and there will be a marked increase in Asian regional travel next year, which will see Phuket as the hotspot for Singapore and HK based travelers who are also our main property buyers.
There is almost no land available and we have very limited supply of new projects and luxury homes into 2009. Jumeirah private island is almost sold out, The Taj on the island of Koh Lon is under construction and due for launch in 2009 with a handful of exquisite residences. Park Hyatt has cancelled their development plans on the west coast, as have Raffles up at Natai Beach. A new W hotel (Natai Beach area) and imminent announcement of another 5 star also at Natai Beach area is good news for the Northern beaches, plus Bill Heineke is completing Turtle village outside the JW Marriott by christmas which has retail shops and a deli/café. Langham Hotels are also on track to start construction in 2009.
We had a high profile and very wealthy banker here in Phuket last week looking to invest in developments where there is a squeeze on cash flow, and after reviewing all of the luxury projects we work with, gave him the bad news that none of our teams needed finance… he left quite shocked, but interested in buying a beach house!
The market has been slow but steady for the last 3 years do to the political wrangling in Bangkok, which now has its positive side because it has kept the lid on the real estate market and there isn't a bubble to burst. This combined with the lack of financing for foreigners, (even for Thai's, the banks generally would not finance more then 70%) which means the vast majority of buyers are long term players not short term speculators.
There will be stress on the mid end and secondary locations, and we will see the froth come off the ultra high end completed homes where owners try to sell at prices that have never been achieved. Luxury remains in good demand, but at fair price. With low cost of living, all the benefits of a Phuket lifestyle and a destination that is now easily accessible from almost anywhere in the world, its then no surprise that Phuket is isolated in many ways from the troubles prevailing in most developed countries and is set for a solid, albeit a bit quieter 2009, that being said, we have had more enquiries over the last week then the proceeding month and as we head into high season the hotel occupancies are looking very good.