Further Reading:
Breakdown of Sales
William, I am a property investor and would like to have a statistical breakdown of sales conducted in the last five months, a comparison to sales take up in 2004 and 2003 and a breakdown of buyers by age, nationality, place of residence and employment status. Please help.
Unfortunately there is no publicly available government record of property sales in Phuket. Most information is distilled by market watchers basing their assessments on talking with real estate agents and developers. Certain real estate agents have the capacity to offer market research as a service. In general, our subjective opinion which seems to be shared by a number of our competitors, is that whist the number of enquiries is down, the quality of the enquires in the sense of the ratio of enquires to serious intent and closing is high. We will not be surprised if 2005 is the equal or surpasses 2004 in terms of sales. The demographic of clients remains biased in favour of expats coming out of Hong Kong followed by expats in the regional capitals. European buyers have been significant and this market area seems set to continue to be important as long as the Euro is so strong. Exact client details are of course guarded by developers and agents in line with respect of privacy. In general however, often both developers and existing buyers in developments are enthusiastic that buyers and potential buyers get to know their future neighbours and so both will often be happy to make introductions. One of our developers has regular barbecues for all involved in their project while another has a webboard for owners to post questions and exchange views.
William, why are the completion times of real estate projects always late?
First off a defense. Not all are late! Many which we favour come in on time. Coincidentally, the developers behind two of the listed projects above, have an enviable reputation for bring developments to completion according to their promised schedules. Previous track records, examination of the product and site, and common sense should allow a client to adjudge completion times critically.
A commonplace in real estate the world over, is that developers will be overly optimistic is saying how soon their particular development will be built out. From a developers's perspective these time frames are realistic at the time they are given. However, many are relying on a range of conditions being met all according to schedule and supporting/influencing one another. These include that permits and designs are issued and completed in timely fashion and that designs do not significantly change through construction. (buyers themselves often slow things immensely when they ask for variations and redesigns midway through construction)
That sales are brisk. That the weather and general environmental conditions allow speedy progress. That contractors and subcontractors can mobilise efficiently and carry out works to schedule and to agreed quality standards. More experienced or sometimes lucky developers base their calculations on safe assumptions and after having taken into account many of the variables in these calculations. However, at the end of the day, optimism is part of real estate and optimism is what sells.
In the Phuket market, many developments are launched or more correctly revealed, before full marketing strategies are completed or full site /project evaluation takes place. Some of this ties into developers being keen to test the market and if possible generate early sales to ease cash flow. However, this can be frustrating for buyers when they find designs changing and deadlines being set back especially if this involves price increases. The upside for a client with a good developer who does follow through, is that they can reap significant capital upside for being an early buyer. They just need to take times frames with a pinch of salt.
Likewise in Phuket we have specific factors which really do (or give developers the excuse!) push back completion times. One significant factor is the success of the market. This has led to many contractors being short staffed. Whilst some major contractors are able to mobilise enough workers smaller operations sometimes struggle which slows things down. The weather and environmental factors play a big part, although one would have thought that by now developers know there is a rainy season so their time frame should accommodate this. In their defense, as the timing and intensity varies form year to year they should be forgiven for taking a best case scenario. However, steep sites which form the basis of perhaps the majority of quality development, certainly on the west coast, are difficult to protect from erosion and work on when the monsoon hits. Likewise, while certain parts of Phuket allow easy excavation to solid granite bedrock, other west coast developments encounter significantly more difficult geological conditions even after initial geophysical investigation. Whilst this really just means a reassessment of the engineering solutions to meet such conditions, it does have significant impact on schedules.
Sales progress is of course often key to construction progress especially in developments begun by smaller less well funded developers. Sales generate cash flow. Buy into a marginal development as an early buyer in a less than stellar site or project and whilst your home may be finished in reasonable time, the development may lag for years. There are enough unfinished developments especially in the centre of the island which bear testament to overenthusiasm. Fortunately foreign buyers basing their purchase decisions on sound premises can be reasonably assured that as market is so healthy, that for the forseeable future even if developers are overly optimistic on completion dates, developments will be finished and not left Greek style as eternal blots on the landscape.