A condo project in Phuket. Demand for luxury units has been tipped to grow. TAWATCHAI KEMGUMNERD

The Phuket condominium market is expected to rise in line with a recovering economy and the growing population of the island.

Increasing supply and higher selling prices will be the key drivers, while demand is forecast to improve slightly. Local developers and joint ventures will be key players in the market, said property consultant Knight Frank Thailand.

Demand will continue to be driven by international buyers and investors from China, Russia, and Australia. Knight Frank expects a larger portion of South Korean buyers in the following years. Average asking prices per square metre are anticipated to rise in all areas, while increasing demand for luxury condominium units may see prices approaching a new high in 2018, especially for properties located by the sea.

Luxury buyers tend to buy them for their own residence or long-term capital appreciation.

Phuket's Smart City is also expected to stimulate demand in the city. The initiative aims to transform the province into a "smart economy and smart living community" and establish the city as a hub of digital industry that will attract investors and tourists alike. The project is scheduled to be completed in 2020.

Phuket's condominium market took a fall in 2017. The total number of units launched last year decreased 29% to 1,736 from 2,478 in 2016. On the demand front, there were 1,147 condos sold in 2017, down 36% year-on-year.

Newly launched supply with a sea view, partial sea view, or no sea view accounted for 44%, 54%, and 2%, respectively. The majority of the developments are in the high-end segment, principally located in Karon, Naiharn, and Bangtao.

Condominium projects launched in 2017 recorded an average take-up rate of 66%, down 6% year-on-year. However, projects with affordable pricing, attractive down payment packages, exceptional amenities, and convenient locations achieved higher sales within weeks of their launch.

The average asking price per square metre for all new condominium projects launched in the Phuket market last year surged to 135,719 baht, up by 2.5% year-on-year.

SUPPLY

An estimated 1,736 units were launched in 2017, raising accumulated condominium stock in Phuket to 14,266 units, an increase of 14% year-on-year.

The 29% decrease in new units offered was attributed to developers becoming more selective and exercising greater caution in their investments, said Knight Frank.

DEMAND

The absorption rate in 2017 dropped 35.8% year-on-year. The average take-up rate for new partial sea view developments plunged to 65%, representing a decrease of 16.7% year-on-year.

Over the same period, the take-up rate for new sea view and non-sea view units saw moderate declines of 3.4% and 2.5%, respectively, reported Knight Frank.

SELLING PRICE

The average asking price for sea view units last year was 181,522 baht per sq m, up 1.5% year-on-year.

Driven by increasing sales prices of new additions to the market, the average asking price for partial sea view units in 2017 reached 115,828 baht per sq m, up 5% from 2016. Over the same period, the average asking price of non-sea view condominiums tallied 103,927 baht per sq m, up from 102,583 baht per sq m in 2016.