Phuket Market Rebound

Timing in life is everything but timing markets is always difficult. Buy low and sell high is easier said than done, at the top of the market is when most are buying, media news is positive and the consensus is cheery and at the bottom people are fearful the market will go lower still. For some time now many of our articles have talked about the market reaching a bottom and that buyers should now be looking to buy back in, this is of course viewed with some skepticism of trying to talk up the market. However during the past months of April and May SRE has experienced a marked increase in buying activity, mostly in the resale markets where price reductions have reached a level where buyers are buying back in. We have also started to see more enquiries from developers who are looking to buy new land plots for future development or looking for market information to judge when and what to build.

Why has the market been soft? There are several reasons: 2014 was a peak year in terms of prices, the Russian economic crisis – at this time there were a lot of Russian buyers in Phuket and when their currency lost half of its value they dried up, oil prices went from 200 USD a barrel down to 30 USD a barrel – a lot of people employed in the oil industry live in Phuket and buy and rent properties here, the oil industry slowed down on the back of this drop in oil prices. Brexit caused ructions for many British buyers looking to invest in the market here. Lastly of course Thailand itself has had an eventful few years.

So what has changed? The world economy is gaining strength, interest rates remain at record lows, people are looking to put their cash to work and Phuket real estate has attractive rental returns and despite negative media in the past couple of years Thailand has proved itself to once again be resilient and is currently very stable with elections due next year.

Right now real estate in Phuket looks good value, especially in the resale market. Compared to many real estate markets internationally which are reaching heady heights and look toppy to say the least. Phuket real estate prices have spent the last 2 years correcting and with the market soft here for a while there has been a slowdown in new developments / supply.

Rental rates – Phuket properties produce attractive rental returns, owners should be able to achieve between 4% and 7% gross returns on their investment. With the long term upward trend of increasing real estate prices in Phuket this makes for a very good investment.

Should the trend of recent months continue then we are will be able to look back and say that Q1 2017 was the bottom of the market by which time deals in the resale market will start to dry up as properties are sold and sellers begin to increase asking prices.

For more information about this article contact Kevin Hodges, Siam Real Estate (SRE) Tel: (0)76 383-646 Email: kevin@siamrealestate.com ; www.siamrealestate.com