Phuket’s Real Estate World’s Collide. Off-Plan Sales Flatten in Wake of Growing Resales

Phuket’s massive influx of new real estate development is witnessing rising competition from the secondary marketplace. The collision between off-plan property sales and resales is inevitable given the sheer number of units being completed and a growing critical mass of older properties.

Comparing primary and re-sale transactions on the island from the first four months of the year compared to the same period last year is a substantial shift in buyer preference. Newly released data by Thailand’s leading property portal FazWaz.com shows that from January through April 2023, primary and secondary home and condominium sales were evenly balanced. But moving forward to the same period this year, resales now account for 68% of transactions. This dynamic change is even more for single-family homes, where the number is 70%.

Going deeper into the data reflects that while condominium sales have continued to be robust, transaction values are nearly down by a third, highlighting that entry-level unit types and midscale developments are experiencing the highest demand. Brennan Campbell who leads brokerage at FazWaz says “our data is pointing to an even larger disparity in single-family home transactions where the secondary market is surging, but with considerably lower sales values as a result of lower-priced resales. We expect pricing to be the talking point going forward and increased pressure on developers to compete with resales.”

Moving on to the nationality mix of buyers of Phuket real estate the top international source markets for condominiums in the first part of 2024 were Russia, UK, US, France, and clustered together Australia and Italy. For single-detached homes, the leaders are the US, the UK, and bundled fairly close together Russia. Australia, Italy, Netherlands, France, and other Eastern European countries. A notable growth market is India. Speaking to the domestic side of transactions the Thai domestic segment has continued to post gains in all types of property classes this year.

One of the leading concerns of property developers is the potential slower demand by Russian buyers as the island moves out of the peak winter snowbird holiday period. Another factor has been a highly publicized crackdown on Thai nominees fronting for foreigners purchasing real estate under companies. This has effectively moved the needle for Eastern European purchasers to a preference for leasehold single-family homes versus the earlier trend toward freehold. It’s yet to be seen if there is a capital flight from houses to condominiums where there is ability for overseas investors to own on a freehold basis.

With a mounting number of new properties completed during the remainder of the year, and in most cases, these being premium pricing points, there is a widening gap in values over older condominiums and villas. I’d expect this to create strong upward pressure on the pricing of new developments and a broader more competitive playing field driven by a growing secondary sales landscape.