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Property in Phuket: An opportunity?

Monday 1st August 2016

Written by Roy Weatherby, The Overseas Investor

There is no denying that the situation in the once-prime property market of Phuket is not looking great at the moment. 
Turmoil in Europe and a number of problem factors for the global economy have led the property market in this region, which is heavily driven by international buyers, to slow down a great deal. 
Phuket's rental market has also been weakened. Russians were once a key source of rental demand in Phuket, but their numbers in the region are dwindling. Oil-fuelled rentals – demand from figures in the oil industry – have also slowed as a result of low global oil prices.
So all in all, the situation does not look positive and the consensus among many investors is to wait out the situation and see what happens before deciding on any action in this market. 
But just because the present is a rocky patch for property in Phuket, are there really grounds to write off the future of what has so far been such a promising market, and continues to have so much going for it? Or is this simply one of the dips that all markets experience now and again?
It seems quite likely that the latter is the correct hypothesis. Indicators suggest that, that once the current storm has passed, Phuket may have a much more positive future ahead of it. 
Foreign arrivals in Phuket continue to be strong, and are likely to be strengthened very soon as this month is set to see the opening of a new international airport. 
Meanwhile, continuous development of the region's infrastructure and the addition of new and better amenities such as leisure facilities mean that Phuket is becoming more and more attractive as a place to stay, live, or invest.
Furthermore, Thailand still offers strong rental returns compared to much of Asia. On average, even during this slow period gross yields for Thai rentals remain at a very respectable 5.13%. 
This compares favourably to some of East Asia's most popular investment markets, with Hong Kong and Singapore both languishing below the 3% level. 
If the current slowdown is indeed, as indications seem to suggest and many experts are predicting, just a temporary affair then rental yields in Phuket may well pick up further when the situation turns around.
In the end, no market booms continuously. All markets must experience bust cycles and corrections and, when this happens, investors who are willing to wait for it to come around again often see it as an opportunity. 
This is especially true if the investor in question is reasonably confident that the market is going to turn around soon, which seems to be what indications in Phuket are pointing to.
Quite simply, a slowdown in a property market means lower prices. When prices are still falling this is naturally a bad thing, but if they don't have much further to go down and are expected to pick up soon then this situation becomes a great chance to pick up property at a bargain price and then make capital gains from the next boom cycle. 
In Phuket, even prime properties are now being sold at heavily discounted prices, so investors who are willing to place their money on the next boom cycle might want to look at whether this is the best opportunity to buy.
For more information on investing in Phuket, please contact Hopwood House.

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Editorial Contact Details - Conor Shilling
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