What is the current state of the property market in Phuket following the COVID-19 situation?
Following the commencement of the Phuket Sandbox program four months ago, it appears to have rejuvenated the island’s stagnated economy after almost two years. According to the Tourism Authority of Thailand, a total of 59,689 international tourists visited the Andaman Sea vacation island under the Sandbox program between July 1 and October 30.
Although this number did not meet expectations, it signals a glimmer of hope for reopening the country in time for the high season. Additionally, the residential property market has shown increased activity. The overall Phuket residential market showed positive movement after the “reopening” under the Phuket Sandbox scheme.
During the lockdown period, most inquiries came from local buyers seeking vacation or second-home properties. After the Sandbox model was opened, inquiries expanded to foreign residents, expatriates, and some international tourists.
This suggests the scheme helped bring back returning clients who had been eying properties for years but could not travel due to border restrictions. However, investors remain uncertain about the global economic outlook and the rental market.
Once perceived as a market for foreign buyers, the Phuket residential market now caters to a broader range of expats and local residents due to COVID-19. The market seems to have reset to become more of a buyer’s market with more negotiation and opportunity options. Some developers have been waiting to clear their unsold property supply on the island, indicating that the buyer’s market will continue to soar until the supply-demand balance becomes more stable.
The ultra-luxury market has seen activity in both its resale and the number of remaining units from developers due to the scarcity of prime beachfront lands that boast spectacular sea views. buyers seem to prefer ready-to-move-in properties as it makes them feel more secure seeing their potential property completed. Such properties are also being viewed as safe havens during the COVID-19 epidemic.
With the hybrid work model making it easier to move between city and beach life, vacation homes are rising in demand. Modern properties with sea views and/or beachfronts are the most sought-after by present buyers.
Due to the pandemic, only a few new projects were launched in the past two years, and the effects are visible. The total number of newly launched units for condominiums and villas has decreased by 98% YoY in 2020 and 34% in H1 2021.
However, the demand for some premium projects in Phuket’s prime locations remains, leading developers to decide not to offer significant COVID discounts. This situation is one reason why ultra-luxury prices have recovered fast after initially falling in the early stages of the pandemic.