Thailand’s hotel industry pushing ahead with recovery


Optimism is building in some corners of the hospitality industry as Thailand pushes ahead with it Covid-19 recovery phases. Occupancy rates in at least Bangkok and Phuket are likely to bottom out soon with the lifting of travel restrictions, according to JLL Hotels & Hospitality Group.

Thailand’s hotel industry is now entering a recovery phase following the country’s decision to issue a partial easing of lockdown measures, including inter-provincial travel restrictions. There is an expected surge in domestic travel and tourism with the reintroduction of domestic flights, and the slow opening of international borders in the coming months.

The country’s tourism and hotels sector has been significantly impacted since the first reported case of Covid-19 in Thailand on January 13, 2020.

“With the country introducing a government-directed lockdown and placing strict limitations on domestic and international mobility, revenue per available room trended downward during the first four months of 2020, led by declines in occupancy.”

However, optimism of a gradual recovery remains high for both markets, given strong domestic and global brand recognition and a mature hospitality sector well-prepared to align with stringent health and safety guidelines introduced by The Tourism Authority of Thailand ‘s “Amazing Thailand Safety and Health Administration program.

“In 2019, Bangkok was named, for the fourth consecutive year, as the most popular travel destination in Mastercard’s Global Destinations Cities Index, while Phuket was rated the #2 Most Popular Asia Destination by TripAdvisor.”

Chakkrit Chakrabandhu Na Ayudhya, Executive VP, Investment Sales, Asia Pacific, JLL Hotels & Hospitality Group says that Thailand’s hotel industry is a bellwether market in global and regional hospitality circles.

“Its Covid-19 recovery will be closely observed by operators and investors. With both government and bank support, we’re optimistic a market like Bangkok, with its well-balanced offering to business and leisure demand, will be amongst the first hotel sectors regionally to display meaningful recovery, whilst Phuket will take relatively longer as it relies more on international and leisure demand.”

The maturity of Thailand’s hotel space, as well as bank and government support so far, have helped the industry alleviate the full impact of Covid-19, despite wide-spread issues with cash flows and fixed operational overheads. JLL expects fewer distressed asset sales in Bangkok compared to other markets in Thailand due to robust balance sheets held by many owners. Investors have been looking for opportunities in Thailand, with greater interest expected initially from developers and private equity firms who tend to be less risk-averse as the recovery gains momentum.

According to JLL’s Hotels & Hospitality, operators and investors in Thailand’s hotel industry should also consider several factors to optimise their recovery strategies:

  • Critically evaluate hotel positioning and segmentation mix in light of extensive current supply and future pipeline.
  • Calculate breakeven occupancy and factor in gradual demand ramp up, taking into consideration potential travel bubbles being considered by the Thai government.
  • Focus on brand, operating and distribution partners when setting out a differentiating strategy to the local market, whilst following the opening of borders carefully.
  • Take advantage of the government’s domestic tourism promotion to help restart operations and build local customer loyalty; launch staycation packages to take advantage of pent up domestic demand
  • Look for every opportunity to get guests ready for post-Covid-19 travel, embrace the restrictions and set up health and safety protocols for the reopening.

Courtesy: Published at The Thaiger on June 30, 2020 by JLL

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Phuket Hotels Association looks to reboot island tourism with ‘Imagine Phuket’ campaign


PHUKET: In Asia’s first international destination recovery initiative post-COVID-19, the Phuket Hotels Association and global hospitality branding agency QUO have joined forces to craft an aspirational relaunch campaign aimed at reviving travel to Phuket.

The Imagine Phuket campaign focuses on the sights, sounds, feelings, tastes and – most importantly – emotions that Phuket evokes in fans around the world, making them yearn for all they have missed during the global pandemic.

Motivated by a desire to restore the island’s tourism industry and save jobs, Phuket Hotels Association kicks off the campaign with a fresh logo and video, designed to evoke in travellers how incredible it will feel when they can share a perfect vacation with loved ones again.

The initiative enables island hotels to come together with one voice and one message. Each property will be given the creative resources to personalize videos, images and logos with their own branding, creating bespoke versions of the campaign’s inspiring message. By reaching the combined audiences of 75 participating hotels in the private sector, there is the rare opportunity for authentic, large-scale virality.

Phuket has been one of the hardest-hit destinations in Thailand, and hotels have struggled to reopen.

In a press conference on June 10, Phuket Chamber of Commerce President Thanusak Phungdet told reporters that COVID-19 had already cost the island over B120 billion (US$3.88bn) in lost income, with losses expected by to reach B280bn (US$9.055bn) by the end of the year if the situation doesn’t improve. But despite unemployment increasing by over 34% YoY, according to local reports, island residents remain resilient. This campaign seeks to be the first small step toward recovery.

With Phuket Airport open, and Thailand poised to reopen to international travel this summer, Imagine Phuket reminds viewers of the flavours of Thai food, the dreamlike limestone karsts of the landscape, the beguiling smiles and the feeling of freedom that comes with every visit to Phuket.

“Phuket is the leading resort destination in Asia and one of the most loved resort destinations anywhere in the world,” says Anthony Lark, president of Phuket Hotels Association. “Our members have come together with QUO to create a campaign, in both English and Thai, to evoke the soul of the destination,” said Lark.

As Asia’s most-visited island destination, with over 10 million arrivals last year, Phuket is among the first to embark on a significant relaunch. In the months after reopening, Phuket’s hotel industry is hoping that it will be able to attract many of Thailand’s 20 million domestic travellers.

“The Imagine Phuket video, and integrated social media campaign, are designed to drive emotion,” said QUO CEO David Keen. “We know that there is a massive desire to travel again, both locally and internationally. Our intent is to bring the story back to Phuket.”

Aimed at the international market, the campaign will reach the audiences of the best-known hotels in Phuket. From signage to buttons to long and short videos, each hotel will invite the world to dream, plan, envision and – above all – to Imagine Phuket with hope and anticipation.

Courtesy: Published at The Phuket News on June 25, 2020 by PR

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Resorts lower prices, offer promos for post-pandemic holidays


Hotels are ready to face off. After months of vacant rooms, prices are being cut to entice domestic tourists to book a post-pandemic holiday. Now provincial restrictions have been mostly removed

Depending on the province and risk of coronavirus transmissions, some hotels were ordered to close their doors completely. Now restrictions are being lifted and domestic travel is picking up again. The government just passed a 22.4 billion baht in stimulus packages to help out hotels many resorts and tour companies. On top of the boost from the government, hotels are slashing nightly rates and offering promotions.

It already looks like business is starting to boom. The Centara Grand Mirage in Pattaya has now been open for 2 weeks. Last weekend, their occupancy rate was at 70% – 80%. The rate for this weekend is expected to reach 90%. While weekends have been good, the days are at a 20% to 30% occupancy rate.

Courtesy: Published at The Thaiger on June 18, 2020 by Bangkok Post

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Phuket Hotels Association, Hotel Resilient to launch COVID-READY Certification in Phuket


PHUKET: The Phuket Hotels Association has joined forces with Hotel Resilient to launch the COVID-READY Certification scheme, a new initiative to provide guidance, resources and tools to support the safe reopening of hotels and to help restore confidence in the island’s hotel industry following COVID-19.

“Hotel Resilient is the world’s only scientific benchmarking and certification body for disaster-risk management and climate change adaptation in the hospitality industry. It provides hotels and resorts with risk analytics, digital platforms and pragmatic tools for disaster and climate resilient planning, design and operations, noted a release announcing the launch today (June 15).

Even before the Covid-19 pandemic, Hotel Resilient highlighted disease outbreak as one of multiple hazards potentially impacting hotels. In the wake of the pandemic, Dr Trevor Girard, Director of Standards and Accreditation at Hotel Resilient, and his team of risk specialists have evaluated the scientific evidence, international guidelines and industry best practices to set new standards that cover all aspects of a hotel’s COVID-19 prevention and response strategy, the release added.

Travelers demand safety above all

The COVID-19 pandemic has spread to almost every country in the world, and its impact on the tourism industry has been tremendous. Due to travel bans and nation-wide shutdowns, hotel bookings have decreased drastically and many hotels have temporarily closed. Even when restrictions ease and travel bans are lifted, it will be some time before it is business as usual, noted the release.

For months if not years, travellers will be extra cautious with their travel plans, most likely preferring destinations with little to no COVID-19 cases. In terms of accommodation, hotels that can provide an extra level of protection against the virus will be in high demand, it added.

“The new COVID-READY Certification scheme will provide assessment, guidance and support to our Phuket hotels as they prepare to reopen,” commented Anthony Lark, President of the Phuket Hotels Association.

“Member hotels can obtain this internationally recognised certification, which will showcase Phuket as a safe destination and provide reassurance that hotels are working together to ensure the protection of their guests, staff and the community. Health and safety has never been more important than now, as we prepare to reopen our doors,” Mr Lark said.

Teaming up with Hotel Resilient marks the next major step in the association’s efforts to work together in restoring confidence in Phuket, and helping hotels prepare to resume operations with enhanced hygiene practices. Dr Bijan Khazai, CEO of Hotel Resilient, and the Hotel Resilient team will work alongside the Phuket Hotels Association, member hotels, and local authorities to develop supporting tools and support hotels obtain international certification, the release explained.

The Hotel Resilient COVID-READY Certification scheme is aligned with the internationally recognised Hotel Resilient global standards on disaster risk management. It goes beyond hygiene and safety, addressing systemic and  procedural changes to minimise risk and address various crisis management aspects, such as response planning, business continuity, and crisis communication with regard to COVID-19.

“These new standards are supported by a user-friendly audit and task management software that allows hotels to prioritise areas where action is needed  to improve their level of Covid-19 preparedness. In addition, interactive and engaging e-Learning courses are available on the platform, helping to bring hotel staff up-to-speed on the current COVID-19 pandemic threat and describing their roles in the COVID-READY standards, such as preventing transmission or responding to an infection,” said the release.

“The COVID-READY Certification scheme will make Phuket one of the first tourism destinations in the world to take a proactive approach to safety and hygiene preparedness, based on world-class standards. Once all 70+ Phuket Hotels Association’s member properties are audited and certified, it will provide a safer environment for visitors, hotel staff and the Phuket community,” explained Hotel Resilient CEO Dr Khazai.

Courtesy: Published at The Phuket News on June 15, 2020

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Property in Phuket awaits slow recovery


PHUKET: Phuket’s property market will take at least two years to recover because the fallout from the coronavirus is hitting one of the world’s top tourist destinations harshly, says the Phuket Real Estate Association.

Boon Yongsakul, the association’s vice-president, said the Phuket property market has suffered a severe impact from the pandemic because the local economy relies heavily on tourism, reports the Bangkok Post.

“Since I have been in the property business, I’ve never experienced anything worse than this crisis,” Mr Boon said. “Even SARS, avian flu and the tsunami were incomparable with the coronavirus.”

In the past, 70-80% of Phuket’s economic growth was driven by the tourism sector.

At present, the influence of the hospitality industry is more than 90%, resulting in a heavier impact than in other parts of the country.

To reduce dependency on tourism and avoid future risk, Mr Boon suggested Phuket reposition as a medical and educational hub supported by government policy.

The declining tourism market also caused many banks to tighten mortgage loan criteria for those working in the industry, he said, and a high rejection rate is noticeable.

Meanwhile, foreigners have delayed residential unit transfers because they are unable to travel and face a stronger baht.

The impact on these buyers could lead to a significant drop in developer revenue in the second quarter.

“It is a very challenging year for developers in Phuket,” Mr Boon said. “They should monitor financial liquidity. Some of them have shifted to smaller projects with less than 10 units a site.”

Some local and foreign investors are acquiring land plots in Phuket to develop projects to prepare for the future comeback, he said.

The market will likely be driven by new demand from expats from Singapore and Hong Kong who will relocate because of the high cost of living and social unrest, respectively.

To attract foreign investors, leasehold should be extended from the current 30 years to 50 because the latter is more secure for property buyers, Mr Boon said.

Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the monthly absorption rate of residential units in Phuket has dropped for two straight years amid the economic slowdown.

In the second half of last year, the number of residential units sold in Phuket was 1,550, down 32% from 2,274 units in the first half.

Of the number, 68% or 1,060 units worth a combined 5.32 billion baht were condos.

The five best-selling locations were Bang Tao-Surin (34%), Rawai (17%), Kamala (16%), Nai Yang-Mai Khao (11%) and Patong (9%), as they were popular among foreigners and investors.

With the sluggish economy expected to linger and the coronavirus taking a toll on the island tourism market, the absorption rate of residential units will drop to 1.1-1.6% in 2020 from 1.8-3% in 2019, the REIC said.

Courtesy: Published at The Phuket News on June 12, 2020 by Bangkok Post

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Thai hotels on the chopping block


BANGKOK: Hundreds of hotels at beach resorts in Thailand are up for sale according to a report in the Thai language news service, reports TTR Weekly.

Claiming the country’s hotel business is now in free-fall due to the COVID-19 lockdown it reported that a slew of three to four-star hotels are on the chopping block as property owners run short of financial resources to service bank debts, said the report.

Most of the properties up for sale are in three main tourist provinces Phuket, Krabi and Samui.

The report claims opportunist buyers from Singapore and China lead the list of foreigners who are ready to snatch up property bargains at prices that have dropped by around 50% of their pre-COVID-19 value.

A source in the hotel industry told “Prachachat Business” that hundreds of hotels are now the targets of property funds that have the resources to buy during the crisis when prices are impacted.

But most of the property raiders are only prepared to buy at basement prices well below the evaluation before COVID-19 stalled travel in its tracks. Property websites listed hotel properties in  Phuket, Samui, Surat Thani, Krabi and even Pattaya with list prices of B1,000 to 10,000 million, medium-sized three-star properties were selling at B500-1,000 million and small hotels with prices of B50-100 million.

The fire sale will continue unabated as most resorts in southern Thailand cannot rely on the domestic market that at present is the sole saviour for resorts that are close to Bangkok such as Hua Hin and Pattaya.

A property expert warned that cheap sale of hotel real estate would eventually extend to Chiang Mai, Lamphun and Chiang Rai in North Thailand.

In many instances, prices will fall by 20 to 30% lower than the market price, and cashed-up foreign investors are ready to swoop in and snatch up bargains.

As long as lockdown measures and flight bans continue, Thailand’s hotel industry will remain vulnerable to hostile takeovers. If hotels cannot reboot operations soon, they will lack resources to weather the storm until the European leisure travel market gains traction possibly not until 2021.

Courtesy: Published at The Phuket News on June 2, 2020 by TTR Weekly

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Phuket Property Guide: What constitutes a bargain?


Sometimes bargains, like beauty, can be in the eye of the beholder, so we have decided to explore what constitutes a bargain.

“Bargain” means different things to different people. If the buyer is looking for an idyllic home in the jungle, away from life’s hustle and bustle, an attractively priced condo or villa in Patong – with its long sweeping beach, shops, restaurants, and famous nightlife – would be lost on them at any price.

Foreign buyers are sometimes guilty overpaying for Phuket real estate, which is somewhat understandable if they are buying as a long-term home because first and foremost a home should be comfortable.

That said, you still want to get what you’re paying for. If you’re considering buying a villa, you can add up the cost of the land, construction, fixtures and finishings, and compare that to the selling price. That way you’ll get a better idea what the fair value of the property should be. This is not difficult to calculate, although you may need the help of someone with local knowledge of the Phuket property market.

Land values can be somewhat subjective, but finding out what comparable plots in the area recently sold for is relatively easy. The build cost of a villa generally ranges from around B20,000 per square metre at the low end, up to B45,000 per sqm for higher build quality. However, it is not unheard of for super luxury villas to run as high as B60,000 per sqm, or more. This should give you an idea of whether you’ve found a bargain or a grossly inflated property.

You can also take into consideration any ancillary buildings, perimeter walls, swimming pool/patio area, or even decorative features (e.g. a waterfall or a koi carp pond), mature trees and even roofing and guttering. All this helps you to guesstimate what it might cost to build this property from scratch.

While this is obviously more applicable to villas, applying even a rudimentary version of this checklist to a luxury condo can tell you if the price reflects the build quality, or if corners were cut to increase profits. After all, if you are paying B180,000 per sqm for your condo unit, you want to ensure you are getting something pretty special.

If you are buying as a rental property, getting the best deal possible is essential because you want to ensure that the income generated from the property makes the purchase price reasonable. The Price/Rental Income Ratio (or P/R Ratio) is the most common method of valuing a rental property. Calculated by dividing the purchase price by the annual rental income, a discounted selling price obviously increases the rental yield and lowers the P/R Ratio.

For example, a B5 million condo bringing in B25,000 per month in rental income would have a rental yield of 6% and a P/R Ratio of 16.7. If you managed to buy that condo for B4mn, the rental yield would jump to 7.5% and the P/R ratio would fall to 13.3. (The P/R ratio essentially reflects the number of years required to pay back the purchase price of the property. In this example, the property could be paid back 3.4 years faster at the discounted price.)

A savvy buyer typically finds the best bargain when external forces, either financial or emotional, are driving the owner to sell. Let us now offer a scenario whereby both parties feel they got a good deal.

Take two different owners, for example, both from Sweden and both invested when the project was built 15 years ago. One lives in Thailand, and is unconcerned with the price paid in krona (SEK). They “think in baht” and will want to make a profit on the original baht purchase price. It may be more difficult to negotiate with this seller.

The other owner still lives in Sweden, and bought when the exchange rate was 1 SEK = B5.5. Today, B3.25 buys one krona, so the owner could sell at the original price in baht, pocketing a 40% profit on the currency. With the money being sent home to Sweden, the second owner may be motivated to sell below market value, as they are already well in the black in exchange rate adjusted terms.

Depending on their need to sell, the second owner may be willing to reduce the price so that they only recuperate the original purchase cost. Having lived in Sweden and rented the property for 15 years this individual will have profited from their investment already, and would not view such a price reduction as a loss. The lucky buyer who stumbles across the unit, however, would definitely view it as a bargain.

This article was provided by Thai Residential, creators of the 2018/2019 Phuket Property Guide. The 2019/2020 is available free online and is a comprehensive guide for anyone looking to buy real estate in Phuket safely. You can also contact Thai Residential directly at Email: or Tel: +66 9484 11918.

Courtesy: Published at The Phuket News on May 30, 2020

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Phuket Property Guide: COVID impact and bargain hunters


So far we have examined the resale market in depth, pointing out that the market in Phuket is driven by sales to foreigners. Since these sales are predominantly cash only, a liquidity/banking crisis will not affect Phuket’s foreign owners because there won’t be loans or mortgages on which to foreclose.

Similarly, many Phuket developers finance their projects with advance sales of units (off plan), so these developers will not be pressured into a “fire sale” by bankers calling in their loans. That said, we have concurred that bargain hunters will find the odd good deal throughout the island on both condominiums and villas. However, bargains are more likely to be found in the budget condominium sector where some owners, struggling to pay for an entry-level condo, will be the most susceptible to the economic pressures of COVID-19.

It is crucial to remember that Phuket is not a homogenous real-estate market. This applies to the island as a whole, to the market for units in similar developments, or even within a single project. For condominiums, the two different legal structures – foreign freehold and Thai freehold – represent one reason why these price disparities can exist, but this dynamic should not be misconstrued as a potential source of discounts. Some seemingly low prices may simply be units being offered as leaseholds, rather than the superior freehold.

Only 49% of any condominium complex may be titled in the names of foreign buyers, so the availability of freehold units is already limited to less than half of the total market. The notion of finding a plethora of luxury condominiums at massively discounted prices is therefore a fanciful one.

The legal nature of every condominium project means the majority of the unit area (51%) must be Thai owned, and unlike foreigners, a Thai national is able to finance their purchase with a mortgage. However, a Thai property investor is more likely to be taking out a mortgage on a villa than a condo (more on this below). In fact, unlike Bangkok, very few Thais own west coast Phuket condos (with or without a mortgage). The condo market is instead driven almost exclusively by foreigners, either buying leaseholds or occasionally buying freeholds through a Thai company.

Many of the Thai freehold (foreign leasehold) units are held by the developer or management company (themselves Thai entities) who generate extra income from the rental. Even if they were forced to sell a few condos due to financial pressure, the strict 51:49 ownership dynamic to which all developments must adhere means any foreign bargain hunters would be limited to buying a leasehold, or setting up their own Thai company to purchase freehold units.

But such ownership can be fraught with problems down the line. For starters, the expense of setting up and operating a Thai company can quickly erode any cost savings one of the 51% might offer. Furthermore, if the company is not set up correctly (e.g. by using actual shareholders, as opposed to nominees), the company and with it the ownership could violate the law.

The company must also file and pay income tax and property tax. And if, as a director of the company, you are living in the unit, you will be subject to income tax because the accommodation is legally viewed as a benefit in kind paid to you by the company. This is not only an expense but also an inconvenience.

The fact that doing things properly is not easy can create an opportunity for a savvy investor with an entrepreneurial streak. Thai freehold condos are already less expensive than foreign freehold units, but if additional units become available because desperate owners, management companies, or developers were forced to sell, then those units could possibly be found at bargain basement prices.

We have explained in depth why foreign owners are unlikely to be forced into the sale of their luxury condo, and the same would apply to a villa (i.e. there is no borrowing, so the only pressure to sell would come from personal finances). It is highly debatable that throngs of people who laid out US$500,000 – 1 million in cash for villas in Thailand will be brought to their knees financially by the current downturn.

But what about the Thai national and their mortgaged villa (mentioned above)? If the current financial crisis leaves that individual unable to pay their mortgage, out of financial necessity they may have to put that villa on the market at a discounted price. However, at present, only a small percentage of Thai nationals own villas in tourist areas with a mortgage attached to the property.

There are bargain hunters out there who are convinced that cut-price Phuket properties are just around the corner. They may be right, but if buying that property requires the creation of a Thai company and all of its concomitant responsibilities, it may not be worth it.

This article was provided by Thai Residential, creators of the 2018/2019 Phuket Property Guide. The 2019/2020 is available free online and is a comprehensive guide for anyone looking to buy real estate in Phuket safely. You can also contact Thai Residential directly at Email: or Tel: +66 9484 11918.

Courtesy: Published at The Phuket News on May 23, 2020 by Thai Residential

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Thailand’s property market set to experience brokerage megashift


It’s clear that Thailand’s real estate sector is expected to undergo a megashift as a result of the Covid-19 pandemic and search for a ‘new normal’, if that’s even possible. That said, one of the country’s leading PropTech groups FazWaz says the crisis has only accelerated dynamic charges to the sector that have been bubbling to the surface over the past two years.

“Big data and virtual seamless transactions are recurring trends whose time has come”, according to FazWaz CEO Brennan Campbell.

“The current crisis has created a great wall between property buyers and sellers can easily be demolished through a complete overhaul of the legacy brokerage transaction process. “

FazWaz, who are a PropTech start-up under Thailand’s BOI (Board of Investment) technology development platform has methodically pursued an enhanced big data platform by focusing on creating a forward-looking property transaction model.

Over the next few months the next domino to fall is a new FazWaz product using online data to create dynamic property valuation, which can be used by financial institutions, developers and prospective buyers in obtaining real-time appraisals.

Commenting on the new business model Campbell says that it’s time for reality to bite.

“The old method of real estate valuation in Thailand, that requires an arduous paper chase, walking around neighbourhoods, staring at ‘for sale signs’, and looking back versus looking forward, makes zero sense.”

Big data allows FazWaz to understand dynamic demonstrated trends 24/7 and uses algorithms that can predict future values. Thailand’s shifting property landscape is seeing lines blur between primary and secondary sales. This is magnified even more, given both rely on market valuations as a lever for transactions. A recent FazWaz deep dive into the Phuket real estate sector showed a market value of properties for sale in excess of 100 billion baht.

Lessons learned in the current crisis, that is moving away from traditional brokerage, has prospective buyers taking virtual tours of property (VR) instead of going to show units. VDR (virtual data room) is also becoming a new standard in the transaction process. It has been accelerated into the due diligence process by sheer necessity. Add in the use of big data for AVM (automated valuation model) property valuations is clearly a more accurate methodology given emerging market volatility.

As Thailand’s property sector goes into reopening mode, and the long journey towards recovery, Campbell weighs in with “the new path is one that the industry has not been on before, big data doesn’t sleep, nor do disruptors to the sector. Ultimately PropTech will change the sector in ways you cannot even imagine today.”

Courtesy: Published at The Thaiger on May 22, 2020 by Bill Barnett

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What’s stopping a COVID property crash in Phuket?


A number of potential buyers (as well as people who simply want to share their thoughts) have expressed the opinion that the current economic upheaval will lead to a dramatic fall in Phuket real estate prices. But the kind of “property crash” these bargain hunters are expecting is more typically caused by a liquidity crisis impacting the mortgage sector.

Such a collapse is inextricably linked to people’s ability to afford the loan payments on which their ownership depends. While this is clearly a possibility in a market where money is borrowed to purchase properties, it is highly unlikely in a market like Phuket where foreigners buy condominiums for cash.

We freely admit that some foreign freehold condominiums will be sold by owners who are desperate to raise the cash. What we dispute is the notion that there will be so many people selling that it will cause the bottom to fall out of the market in Phuket.

Our articles thus far have focused on the resale market, which is actually the smallest slice of the Phuket property pie. The vast majority of properties being purchased here in any given year are new builds – condos bought either off-plan, or during the early stages of construction – and if there are deals to be found they will probably be in this sector.

At the time of writing, we know of no developers in Phuket currently promoting discounted condo units. We have seen a project in Bangkok advertising discounts of B100,000 to B300,000 on units priced from B5.1 million. As mentioned in a previous article, one international property specialist forecast no more than a 5% drop in Phuket condo prices. If we assume the lowest priced units are receiving the lowest discounts, this particular Bangkok developer is offering a discount of 1.96%.

We expect similar discounting will reach Phuket, possibly more along the lines of indirect incentives. For example, a free furniture package, or an upgrade in the furnishings and appliances in the unit, would enhance the value to buyers. Also, since most condos are listed at the “Thai freehold” price, a complimentary foreign freehold upgrade might be offered. This is either a fixed amount or a percentage of the purchase price.

Another way a lucky buyer may find a good deal is when financial circumstances force the owner to walk away from their purchase. When someone buys a property in Phuket they are often “buying the dream,” and some people will overextend their finances in pursuit of that dream. Even though a condo is paid in cash, it is paid in tranches at different stages of completion, and a loss of income could result in payments being missed and the property sacrificed.

Such units could offer the type of discount bargain hunters are looking for. But these deals are most likely to be found on properties which were already exceptionally cheap to begin with (e.g. budget condominiums) whereby the buyers-turned-sellers had committed a significant percentage of their savings. But even at a 50% discount, it’s hardly the deal of the century when the original purchase price was only B3 million.

As with foreign buyers, very few Phuket developers rely on big bank loans to finance their projects. A new condo is sold off-plan, marketed extensively, and construction tends to commence when sufficient units have been sold to begin construction. Because the cash nature of funding these projects somewhat mirrors the ‘cash only’ purchases by foreign buyers, a developer who has sold out their foreign allocation will not be struggling to complete their development. In fact, we know of Phuket developers who have been given dispensation to complete their projects, provided all their workers test negative for the coronavirus.

Developers who failed to sell enough units to commence construction, and are not capitalised independently of unit sales, will have suspended construction activities and be sitting idle. This will not be an optimal situation for them by any means because their source of income will have dried up, but with no banks haranguing them to repay loans, they are unlikely to be desperate enough to ‘fire sale’ their remaining units for the sake of liquidity.

Even if they have already received deposits or partial payments for developments which are now on hold, the sales contracts almost certainly contain force majeure clauses, indemnifying them against ‘acts of God’. This means they are not forced to return money to buyers if their ability to complete the project is being curtailed by a global pandemic.

Unfortunately for the owners of investment properties on the island, guaranteed return contracts also contain force majeure clauses, and most management companies have already suspended their guaranteed return payments to investors.

None of this means developers are immune to the financial dangers of COVID-19. These companies are clearly far happier and healthier if they building, selling and building some more, but they will not necessarily be forced into steep price discounts.

This article was provided by Thai Residential, creators of the 2018/2019 Phuket Property Guide. To view the 2019/2020 Thai Residential Phuket Property Guide online, visit You can also contact Thai Residential directly at Email: or Tel: +66 9484 11918.

Courtesy: Published at The Phuket News on May 2, 2020 by Thai Residential

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