Phuket PLC SWOT Analysis: Not all doom and gloom!

Phuket PLC SWOT Analysis: Not all doom and gloom!

People who spend time in Phuket or reside here will surely have heard Expat’s grumbling on about the property market here. Sure there are some nagging issues: there is a lack of easily accessible information to buyers, there is certainly a lack of regulation and there is no Multiple Listing Service (MLS). Currently the market here is a little soft and the resale / secondary market is yet to get into full swing but, we believe it is not all doom and gloom and Phuket’s property market has a bright future ahead of it.

Phuket’s property market already has many strengths and there are many more opportunities on the horizon.

Property prices in Phuket have been very stable: for foreigners buying property in Thailand it is impossible to get a mortgage, therefore nearly all foreigners are cash buyers. This greatly reduces the amount of debt in the market. A large segment of foreign owned property is made up of retirees and these buyers will not slash prices to sell as the property is part of their retirement plan, they will instead wait for the market to recover. The upshot of this is more stable pricing than in other property markets.

The build quality and standard of materials used has improved considerably over the past decade and now Thailand is producing quality properties to international standards. There is a huge amount of choice on offer for buyers in Phuket: there are many different property types, locations and price ranges for buyers to choose from.

Compared internationally Thailand’s property transaction taxes are relatively low and there are no municipal taxes (see link for more details http://www.siamrealestate.com/info/buy-thailand-property/siamlegal_tax/)

Compared with other Greater Mekong Sub-region countries Thailand has excellent infrastructure: Phuket has good roads, first class hospitals and international schools and the infrastructure on the island is improving all the time. Phuket is becoming more and more accessible with the expansion of Phuket’s International Airport. Direct flights to Phuket are now available from Europe, the Middle East, Russia, Australia and many other countries within SE Asia. More arrivals to Phuket will surely mean more potential property buyers.

An improved lifestyle offered by living in Phuket is a major attraction for many Expats. The weather, Thai culture, Thai & International cuisine, beaches, established Expat community and sporting activities are some of the main advantages of living in Phuket.

“The jewel of the Andaman” Phuket is one of Thailand’s top tourist destinations. Tourism in Phuket has been booming here for a while now with tourist numbers growing year upon year. This is supported by a first class hotel industry which provides huge economic benefits for Phuket, with more luxury hotel brands coming online the industry looks set to prosper well into the future.

For those looking to purchase or develop property here in Phuket or a related business there are many opportunities.

Good value resale options: As found in Siam Real Estates Residential Market Report resale properties in Phuket are on average priced lower than new properties. This provides opportunities for above average ROI through rental returns and capital gains.

New Off Plan condos and villa developments offering great deals for those whom buy early.

There is a growing trend of more families using Phuket as a hub to do business throughout the SE Asian region. This is supported by the strong infrastructure here, as mentioned in a recent PG article Phuket is becoming a destination for international level education, a trend which sees no signs of abating.

Neighbouring Markets: Property markets in Singapore and Hong Kong are now extremely expensive in comparison to Phuket, a lot of property investors in these locations are now looking to invest in Phuket as they see more opportunity here and/or have been priced out of the market in HK and Singapore.

Despite what you might hear Phuket is not yet over developed and there is continuing market demand for new property developments.

Phuket already has a well-established and successful Marine Industry and with support from the government Phuket’s marine industry is aiming to keep expanding. Much publicised in the press recently has been Phuket’s plans to attract more super yachts to the island’s marinas (Phuket Poised for Superyacht Glory)

As with any business/investment there are always threats which could derail the best laid plans. It is nearly impossible to predict the next black swan event even though in hind sight some will tell you “I told you so” but here are some potential threats to the market.

Other destinations in the SE Asian region: Growth in popularity from neighbouring and competing tourist destinations inside Thailand and within the SE Asian region could attract tourists at the expense of Phuket. However they have a lot of catching up to do.

Further Strengthening of the Thai Baht. This is unlikely as the US has ended its QE program and is very likely to start increasing interest rates later this year next year whilst Thailand seems set on keeping rates low. This will see funds follow out of Thailand and back to the west which in turn will see the Baht weaken against the USD and other major currencies.

Renewal of political instability: currently this is not an issue as the military government has provided much stability to the Thai economy and political environment. Prior to returning power to the electorate the NCPO plans political reforms which will provide a stable base for future Thai politics.

Having analysed the market here we believe that the strengths and opportunities Phuket offers far outweigh the weaknesses and potential threats. Although the market is currently soft we expect this to be nothing more than the usual economic trends which affect property markets all over the world. Phuket brightest days lie ahead of us.