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Is it time for a Correction in the Phuket Property Market?

Rebecca Smith Propertyreport
Is it time for a Correction in the Phuket Property Market? - Property - Phuket Property

Should property prices in Phuket come down? Phuket property professionals, Phuket Ocean Villas ask the experts.

On 3rd February 2009 an article appeared in Property Report Asia which claimed Phuket property experts were saying that Phuket residential real estate is overpriced.

It transpired, on reading the article, that there was little substance for this apart from the comments made by one estate agent. As it was obvious that this article had been badly researched and lacked any substantial evidence we decided to launch our own investigation into the status of the Phuket property market.

We were originally asked to comment for the article, but as our comments were contrary to the article´s premise, they were not included. We felt compelled to write this in depth article in response.

´We need a visible display of reality,´ the article quotes the estate agent as saying. ´Prices have to adjust to invite people back in."

´If some developers do not grasp this nettle quickly, then they will not be around to cross the finish line," it continued.

(People who have not recently visited, or have never been to Phuket, could be forgiven from the tone of the article that the real estate market was in crisis, there was mad panic by developers, projects were lying in tatters, no construction was going ahead and certainly no interested clients.)

But what do the experts say?

I interviewed a number of well respected Phuket property developers and real estate professionals for their responses. The majority have been constructing, selling and providing legal services for property transactions on the island for many years, surviving the ´97 Asian Financial Crisis, the 2004 tsunami and more recently the 2006 military coup.

John Howard, Managing Director of Tilleke and Gibbins International Law Firm in Phuket, had this to say in response to the article,

"Interesting, but I do not agree - and the history of property prices in Phuket supports me. Even when there were "bodies in the streets" after the tsunami, prices did not drop. Water will find its own level, and what we are seeing is incentives offered - include the furniture etc etc - again because most owners are not leveraged, there is no pressure on prices - or evidence to suggest that lowering prices will translate into a sale. The problem now is a shortage of buyers ready to commit - they are nervous about the future and holding back (often to their disadvantage given the daily lowering of value of their home currency).´

"In the last week of January and the first week of February we have received new instructions on a daily basis from purchasers of property in the 25 to 35 m baht range, which indicates the strength of the Phuket property market." John also commented.

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Disclaimer: The information presented and opinions expressed herein are those of the authors and do not necessarily represent the views of Estates Report and/or its partners.