High Season will soon be upon us and we are already seeing more enquiries than in previous years, post 2008 .  Since the onset of global recession in 2008 we have seen a gradual change in customer habits.  Prior to the recession a higher number  of our sales were made within high season,  particularly between January and April, but as the recession took hold we noticed more clients buying property prior to high season, October to December, and sales falling away as high season progressed.  There are multiple reasons and theories for this.  Firstly buyers began purchasing prior to high season so they could use their newly acquired property immediately and throughout the high season thereby maximizing their usage whether entirely for their own use or to rent out and thereby receive income from the outset.  Secondly as offplan sales lost impetus and fewer new developments came online the resale market took prominence.  New and offplan sales were typically made during high season with the intention that the buyer would use the completed property during a future high season and the main reason developers aimed to complete new developments in the latter months of the year whereas this did not apply to resale’s which are usually ready to occupy immediately.

Now as the global recession fades into history, though the Euro zone is obviously not out of trouble yet, and the Thai property market reveals a steady improvement, bolstered no doubt by the region’s overall excellent performance and a slight decline in the value of the Thai baht against some of the world’s major currencies, we see a significant rise in prospective buyer interest and a resultant increase in the number of sales we are securing.  Admittedly the buyers are still very cautious and the era of same day sales is still mostly a memory but nevertheless it is very promising for the future.  It may still be a buyers’ market and as a result few buyers see the need to rush into things but when real bargains do come around it is still surprising how quickly they get snapped up.  A recent case we featured, the sale of 16 condos in Cape Panwa, is a case in point.  Not only were they all sold within one month but we had clients on a waiting list hoping one of the sales would fall through, only two such sales did and were immediately snapped up by waiting clients, while some of the buyers have since resold their units at a premium.  This does not herald a return to the boom days and I hope those days never return though I wouldn’t bet on it, booms are inevitably followed by busts and likewise the reverse, and a boom and bust culture favors stock market traders and the like but hurts the general public, but it does indicate a renewed confidence in the property market in Thailand.  The fact is Thailand looks cheap again, perhaps not as cheap as it did to an Englishman seven years ago when the Thai baht was trading at 75 to the Pound, but by comparison with the region, compare Bangkok with Singapore or Hong Kong, and even in the Eurozone, compare Phuket with comparable luxury destinations like Majorca or the Cote d’Azure, the fact is Thai property now looks exceptional value for money.  The property market in Phuket has adjusted and it is fair to say many properties are being offered for sale 20-25% less than they were 5 years ago, in some cases reduced by even more so. This combined with a slight depreciation in the Thai baht means that property sales are now taking place at significantly lower “real” prices than they were 5 years ago and at a time when some of the region’s property values have gone through the roof.  If we were to include China’s property values over the same period it is hard to believe anyone would want to put their money into Chinese property anymore.  It is true that the bulk of China’s new billionaires have made or increased their fortunes on the back of the property market but if there is likelihood a bubble is forming anywhere one has to assume it is in China.  The reasons for Chinese property values increasing so dramatically may be very different from those that created the Dubai property bubble, there is a real demand for property in China and not fuelled purely by speculators with no end users as happened in Dubai, but such huge increases in property values cannot be sustained and best way we see a leveling off of values and worst way we witness another crash though to be frank I cannot see that happening as yet. Will the Chinese ever become serious investors in Thai property?  Perhaps in time.  They are already impacting upon the fractional ownership market and to some extent the freehold condominium market in Bangkok but we have yet to see them enter the mainstream property market in Phuket.  If only a small fraction of the visitors from the mainland could be converted into buyers we would already be witnessing a boom on a previously unprecedented level but as yet they remain largely short term visitors on vacation herded about via various tour operators from one store and restaurant to another without ever making much contact with anyone other than those they have been organised to do so.  In future this will change, these people will become more sophisticated and savvy on a scale and at a speed which is difficult to imagine and then we may see a significant percentage of properties being bought by them.  After all how many people would have envisaged the Russian people becoming a large target for the Phuket property market not that many years ago.  Even without these two mega groups we are likely to see a big increase in sales within the coming year, the usual suspects are still buying , the ex-pats, but they are now being bolstered by the region’s investors themselves, the Singaporeans in particular.  The cooling measures taken in recent months in Singapore and Hong Kong have severely impacted upon their already overpriced markets and their residents are looking to put their money elsewhere.  Some have purchased chunks of property just over the border but this has become overheated and promised return are looking less optimistic.  Phuket is only an hour away and offers not only comparably cheap property but a lifestyle and they are finally beginning to “get it”.  I think Phuket property might be in for a bumper year in 2014, the Year of the Horse, but if nothing else it promises to be a good year for the writer who was himself born in the year of the horse!

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