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Condominiums and apartments are rapidly appearing on the island's skyline, mid and lower end villas are being built further inland and marinas are becoming a new focus for property development. In addition, the east coast is now being exploited for its land availability as the last areas of beachfront land on the west coast are acquired.
Condominium building in Phuket is a relatively new trend. Ten years ago, a few ugly high-rises were erected on the west coast, around the Patong area but then the condo market lay dormant. Now though, good quality, well-finished apartments are being constructed all over the island, filling a large gap in the market - the five tofifteen million Baht price range.
Historically, expatriates from Hong Kong and to some extent Singapore have been the dominant group of property buyers in Phuket. While interest from these regions remains relatively strong, Hong Kong's recent rise from the financial doldrums has meant that its residents have been gearing up to re-bolster the economy there, rather than investing overseas. In the meantime, there has been a great deal of interest from elsewhere.
"Expatriates from Hong Kong, Singapore, Shanghai, Tokyo and Dubai are still 60 to 70% of the buyers", Paul Moorhouse, managing director of Andaman Tropical Development Company Ltd says, "but an increasing number of Europeans that would have traditionally bought in Europe are now buying here."
Wayne 'Red' Graham of East West Properties says, "There is also interest from America, Canada, India, and Malaysian Singaporeans. Thais from Bangkok are also purchasing land in Phuket, either to develop or to buy and sit on. There is a lot of activity inland - the last of the beachfront land is being bought and hotel chains are actively looking for the best land and finding themselves having to compromise."
There is a considerable amount of interest from the large hotel chains that have not already invested in Phuket - The Four Seasons and the Peninsula hotels are both making enquiries. With suitable land increasingly hard to find, some hotel chains are buying/managing older properties and refurbishing them, such as The Hilton in Karon, and the Conrad Hotel in Cape Panwa which refurbished a property that was only three years old.
Phuket is not a vast island and it has a finite amount of land for development. As a consequence, there has been a flurry of activity on Phuket's east coast.
Traditionally Phuket's east coast was deemed unfashionable for development but now things are beginning to change. "Developers on the east coast have learned from the mistakes of the west coast - rapid development occurred on the west coast but with a lack of infrastructure. Development is occurring more diligently on the east coast," Sean Power of Power Pacific Consultants says.
Projects are already under construction around Cape Yamu, Ao Por and Cape Panwa and while the east coast does not offer the sandy beaches of the west, it offers stunning views of the topographically dramatic Phang Nga Bay and there is good access to the centre of the island and its amenities - supermarkets, shopping centres and schools.
The east coast also offers an opportunity for marina development, a growth area that the Governor of Phuket is keen to promote. The Boat Lagoon and Yacht Haven are already well established, and the Royal Phuket Marina is under construction. Its accompanying waterside residential properties have sold fast.
At Ao Por, another marina project has recently been announced with space for 100 yachts that would coincide with Government plans to build a 500 metre long pier there, enabling greater access to Phang Nga bay, the surrounding islands and the Krabi region. Gulu Lalvani, Chairman of the Royal Phuket Marina development has allegedly purchased another plot of land for marina development on the island and there are plans for another new marina at Chalong, in the south.
With enough suitable space on the island for more marina development, coupled with the sheltered sailing conditions and stunning sailing area offered by Phang Nga Bay, Phuket is becoming Asia's premier marine centre, and as more marinas are constructed, so too is more property.
Eighteen months ago questions were raised about the validity of investing in Phuket when the Samsara property scandal hit the headlines. Samsara, a luxury villadevelopment being constructed on Phuket's west coast, came under scrutiny when an investigation was launched into the authenticity of the land title. Theinvestigation was part of a government probe into the falsification of land documents throughout the region.
Rather than having a negative effect on investment in Phuket however, the scandal and the corruption allegations surrounding the Land Office has only made potential investors more vigilant. Since then, development on Phuket has occurred with a much greater degree of caution. Developers and buyers are delving deeper into the background of their potential property and are conducting more research. Government investigation into the land scandal was thorough, and suspicions regarding forged documents throughout the region were dealt with effectively.
"Knight Frank certainly hasn't lost a deal as a result of the Samsara scandal. In fact it has educated the market," Stephen O'Brien, Managing Director of Knight Frank Phuket says. "Investors are more aware of what the implications are of investing in property here. Buyers now want a more thorough background search on the property; they want the proper documentation from the beginning. The industry is not denying that Samsara happened - instead it is encouraging investors to research their investment properly. There is a more diligent process occurring."
Government plans to invest heavily in Phuket are welcomed by the developers. "The by-pass road is being widened all the way to the airport and, although a little late, it is being done quickly and without causing congestion," Red Graham says. "The airport runway is being extended in 2005 and the Ao Por Pier project all show that the government is supporting development".
Their encouragement and cooperation is also evident in new measures to ease work permit restrictions for people involved in tech industries - a major step forward in recognition of development in Phuket.
The government's involvement is also noticeable in the precautions implemented to deal with the environmental impact of the property boom. "It is stringent aboutenvironmental impact studies being carried out and there are strict building codes and practices that are well governed," says Red Graham.
Certainly the standard of construction for both residential and commercial projects has reached a high level. For commercial projects, strict regulations encourage a strong move away from the chaos and disorder of central Patong. Instead, shopping centres like Central Festival are now the benchmark, representing international standards. In Patong too, a new commercial shopping centre on a 40-acre plot, Jungceylon, looks set to give the area a much-needed facelift. For residential properties, developments with over nine units are required to carry out an environmental impact study, whilst those with over ninety units are obliged to do two studies. Ultimately, design and construction have to be of a high enough standard to satisfy the demands and desires of the European and expatriate buyers.
With the amount of property development on the island, there is the question of Phuket reaching a state of over-supply: more new homes than buyers to fill them. Stephen O'Brien does not believe Phuket has reached that point. If properties are bought off plan then there is a much lower risk of oversupply for the developer. "In many cases, less money is being invested at the beginning of a project - properties aren't constructed until there are buyers. There is healthy supply and demand," he says.
Oversupply could also be avoided if property is of a high standard. "If there is quality in the product there will always be buyers. Mass produced, generic villas that are not of excellent quality could well be over supplied as buyers want high standards, some open space and some individuality," Sean Power of Power PacificConsultants says.
"The cross section of property available on Phuket means there is now something for everyone", Paul Moorhouse says. There are different tiers and styles available in a range of locations and an increasing international awareness of Phuket has raised the island's profile and encouraged new buyers from Europe, Russia and the US. With high standards of construction and government backing, Phuket is still developing at an extraordinary rate. Indeed as far as many developers are concerned, the boom is only just beginning.
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