Rental returns drive Phuket market

Galvanised by the prospect of rental returns, investors in the Phuket residential market renewed focus on income-producing villas last year, CBRE Thailand reported in a new semi-annual report.

The touristy Thai province saw a total of 63 villas sold in the first half of 2018, up 21 percent year-on-year, although only 546 condominium units were sold, down 13 percent year-on-year.

Investors seeking rental income dominated villa sales in H2 2018, the consultancy noted. They commonly sought lower-end units priced below THB35 million (USD1.09 million), which accounted for 92 percent of total villa sales during the second half.

Investors have also exhibited preference for resort condominiums, with buyers citing their relatively affordable price points and rental management schemes. At least 80 percent of condominium units sold were in projects with total prices of less than THB8 million (USD241,000) and rental guarantees.

CBRE predicts purchasers will continue to opt for hotel-branded residential developments with professional property managers overseeing rental guarantee schemes.

Overall, buyers expect to derive rental income from properties that they use only less than 60 days a year, the consultancy noted.

Most condominium buyers have historically originated from China, Hong Kong, Singapore and Russia. Arrivals from China rose 2.8 percent in the year to December, ending four months of declining year-on-year arrivals.

“The decline of Chinese tourist arrivals had not yet significantly impacted condominium sales as of H2 2018,” CBRE reported.