COVID-19 slams Phuket property market, highest unsold units in Southern Thailand

Construction News
Kata Beach, Phuket

COVID-19 slams Phuket property market, highest unsold units in Southern Thailand

The top five areas in Southern Thailand with the most unsold property units are all located in Phuket, the national Real Estate Information Center (REIC) has revealed.

REIC Acting Director Wichai Wiratkaphan revealed in report released yesterday (Nov 16) that in the first half of 2020, Phuket had the highest number of unsold accommodation units in the South with 8,984 units, while the total number of unsold units throughout Southern Thailand was 17,087.

The combined area of Bang Tao and Surin, on Phuket’s central west coast, has the highest number of unsold properties in all 14 provinces in the South with 1,886 unsold units.

The second-worst in the South was the combined area of Thepkrasattri and Srisoonthorn, with 1,461 unsold units.

The combined area of Nai Yang and Mai Khao placed third with 1,362 unsold units, followed by Koh Kaew and Rassada with 1,042 unsold units, and Kamala with 858 unsold units.

The report gave the average estimated value for each unit as B3-5 million.

The number of unsold accommodation units available throughout Southern Thailand for the second half of 2020 was likely to increase to 17,688 units, valued in total at about B84 billion, said the report.

Southern Thailand has suffered the worst impact from the COVID-19 pandemic, as the economy in the area is mainly dependent on tourism, the report noted.

“Real estate business goes together with the tourism industry, and the Phuket economy is 90% dependent on tourism,” the report said.

In the REIC report, Boon Yongsakul, Chairman of Boat Pattana Co Ltd and who also served as Chairman of the Phuket Real Estate Association (P-REA) from 2017-2019, explained that the real estate business had been badly affected since the island was locked down due to the virus pandemic.

“This crisis is the worst in many years for the Phuket economy, as the gross provincial product (GPP) of Phuket is about B400 billion, which is mostly from tourism,” Mr Boon said.

Home buyers had to abandon their down payments on properties, while the rejection rate for credit was high, he said.

People applying for mortgages often were being asked to not just provide one guarantor, but two to three guarantors to ensure payments would be made, he added.

“Phuket has been suffering since the lockdown and no helping measures have come out. We have only the news to open the island to foreign tourists, but I have not seen any concrete results on that,” he said.

“We should use this crisis to develop Phuket in terms of infrastructures to welcome tourists. Phuket must be re-positioned to not only be a tourist destination, but also a medical hub in order to welcome health tourists who are likely to stay for a long time. PSU [Prince of Songkla University] will take the main role of producing medical staff [to develop the medical tourism industry in Phuket].” Mr Boon noted in the REIC report.

Issara Boonyong, Chairman of Kanda Property Co Ltd, as a Bangkok property business operator who had invested in Phuket, also noted, “After the pandemic began, the Phuket property market was severely affected as the number of domestic tourists is not enough to support [the economy].

“A weakness of Phuket [in attracting domestic tourists] is the distance from Bangkok, which takes about eight hours to drive to [from Bangkok], unlike Pattaya, Hua Hin or Khao Yai, which take much less time [to reach],” he added.

“Phuket tourism may gradually improve, as officials and private companies are coming to have seminars on the island instead of going abroad. This will help Phuket in the short term,” he said.

However, Mr Issara added, “Tourism business operators must reduce their prices by more than 50% to attract Thai tourists, but the weakness of the distance [from Bangkok] is still a big factor to take into account.”

Mr Issara also supported the concept of developing medical tourism on the island.

“The medical hub to be built in Phuket is a government public-private partnership (PPP) project by having the Ministry of Public Health as the main project host.

“The project will cost about B1.3 billion. PSU will produce more doctors and nurses to support this medical hub project,” he said.