READERS OPINION Nick Anthony's Mexican Standoff

As we continue to post from time to time reader's opinions, here is a note in from luxury specialist Nick Anthony and his views on the market for the coming high season:
PHUKET: AN END TO THE MEXICAN STANDOFF
After an eerily quiet 9 months in actual deals, despite a busy constant stream of interested surprisingly very wealthy clients visiting Phuket throughout the GFC, we see a thawing in negotiations.
There was a “Mexican standoff” for most of 2009 in Phuket, as sellers reduced prices back to a long term “fair valuation” a reduction of around 30% from the peak highs however flush buyers have been seeking distress pricing and a further 30% discount!
The result was virtually no transactions.
THE DEVELEPORS
Developers are still paying virtually the same price for construction materials, project managers and labor. Quality sea view land is only getting scarcer in Phuket and there is no increase in our availability long term. Also most projects went into the GFC under duress from 2 years of political storms and Thailand issues, so had escaped the worst of the speculative excess.
THE SELLERS
Tough lending requirements (read virtually zero financing) meant owners saw little need to panic and lose a prime asset at a time of low liquidity. Tourism is off some 20% over 2008 but there has been a steady slew of renters and we know of one 6BR villa that has maintained 85% occupancy all year at USD800 – 4,000 a night so it's not all bad. As many of you will be aware we cancelled low season this year and have been blessed with true summer weather all year. We have had about 5 storms, and rarely rains for more than a half an hour. Today, as the Philippine storm blows through it's a spectacular blue sky October day, and I am battling to get this out so I can go to the beach!
THE BUYERS
Phuket was fortunate in that the market, as an all cash one is made principally of end users and an increasing number of permanent residents still escaping capital cities. Solid Global entrepreneurs and retirees continue to choose Phuket over other destinations as their Asian base. There have always been very few banker type buyers, as their vacation times are too precious, so the meltdown of investment banks and their workforce/bonuses have had little impact.
Q4 OUTLOOK
As we enter the fourth quarter there has been a marked thawing in the frost and intransigent negotiations that have frustrated all parties throughout 2009 are now going through. Buyers, with bullish regional equity rebounds, a relaxation in general global business and a back to R&R mentality for the well healed has meant buyers have started writing cheques again.
Developers, despite not being able to reduce prices dramatically are being realistic, sellers of luxury homes are getting fair value prices, leaving buyers with a great long term asset, yield possibility and medium term capital appreciation of 20-40%. Competition of services offered continues to be the buzzword from buyers, with rental programs, solid property management and access to boats and beach clubs all being offered.
GOOD ADVICE
Today's buyer is savvy, seeks value, is well informed on the range of property and is looking for representation from an agent that vets properties and developers carefully, represents quality developers with experience and balance sheets to match their bravado and require an agent prepared to do battle on their behalf with their interests at heart.
Agencies that are seen as a “sellers” agency listing all properties at the highest possible price and are not tough on ensuring that the stories told are the same as the plans being built will lose customers trust and find the Mexican standoff continuing into 2010.
Developers who have shown financial strength this year and have made solid construction progress will be signing deals this quarter and we may well find that the luxury market in Phuket, by end of Q1 2010, moves to an UNDER SUPPLY of new quality developments. This could well surprise many people.
I recommend buyers take advantage of this fluidity to lock in deals and negotiate payment terms and interior packages. The GFC has been the background of Phukets' musical chairs in 2009… as that song ceases into 2010 buyers will have to move quickly to make sure they are not left standing, or in this case, without a long term value priced roof over their head.
Any fool can buy expensive real estate (with a good bank manager); the smart money is well advised and is backing Phuket.