Published on January 31, 2005

For many real-estate agencies in Phuket, its never been this quiet.

“It is quieter now than during Sars two years ago,” said Warwick Barnes, marketing manager of Royal Phuket Marina, a Bt7-billion project on the eastern side of the island.

Rentals for accommodation have fallen way down, said other developers. Most hotels are offering extremely attractive rates to entice visitors.

But so far, the ploy has not worked wonders.

For resort homes, the pace is a little better, said Barnes. “We sold two units last week, one to a Canadian and the other to a Hong Kong buyer.”

Condominium units at the marina are selling at a starting price of Bt10 million. Barnes said the company is not offering any discount.

Bill Barnett, another developer, who has a number of projects on both sides of the island, said he was upbeat despite the lull.

“Actually business is not that bad,” said Barnett. “We’ve had two sales in East Coast Villas this month and one in the new Ocean Breeze condominium project on Layman Beach, in the west coast.

“We’ve brought people to see a number of properties and the middle market seems fairly stable,” added Barnett who previously headed the housing arm of Laguna Resort and Hotels.

“It’s not all doom and gloom. Corporate investors such as the owners at the Crown Plaza in Akron are proceeding with their residential component,” he said. “We’re aware of a number of hotel groups close to finalising projects so international investment is there.”

One investor noted tourism is the worst-hit, followed by tourism-related businesses such as restaurants and shops.

The tsunami may well turn out to be the biggest challenge the island has ever faced. “After the Sars scare, many operators were counting on this quarter to reap a windfall,” said the investor. “After the tsunami, they are writing off the entire year.”

Knight Frank, a property agency that manages half a dozen projects on the island, blames some of the drop in tourism to television news programmes playing up the tsunami disaster.

The perception among people abroad is that Phuket has been badly damaged. They cannot distinguish between the mass destruction at Khao Lak in Phang Nga and Phuket.

For the moment, Knight Frank said the housing market in Phuket has been shielded from a severe downfall because there are not that many available units on the market.

“If there are no buyers, homes don’t get built,” explains Stephen O’Brien, managing director of Knight Frank in Phuket. “The bubble has been kept in check.”

His firm estimates there are less than 1,000 luxury projects available to the market right now.

But the picture for small operators is not good. “Shopkeepers are paying between Bt60,000 to Bt100,00 a month for small cubicles or small restaurant outlets at Patong Beach,” said Barnes.

“There are not many customers around and if this goes on for awhile, they are not going to survive,” he said.

Such operators don’t save for a rainy day. When times are good they don’t tuck away money for emergencies. Waiting for government bail-outs is not going to be an easy option either, considering the slow pace at which financial aid is disbursed.

“About 4,000 people are out of work,” noted Barnes, “and a number of hotels have shut down because of damages and lack of business.”

Barnes said some landlords have been understanding and have waived rents for this month. “The hope now is for the Chinese New Year to fly in tourists from Singapore and Hong Kong next month.”

Itthi C Tan

The Nation

Post your comment to this story here