Vaccines Key To Revive Struggling Property Market In Tourism-Reliant Provinces

Property Phuket

Economic and tourism recovery driven by vaccinations will help revive the struggling property market in tourism-reliant provinces which have been hit hard since the spread of COVID-19.

Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the property market of provincial economies that rely on tourism felt a severe impact from the pandemic last year.

“Tourism destinations like Phuket, Hua Hin in Prachuap Khiri Khan and Cha-am in Phetchaburi saw a sharp contraction in the residential market in the second half of 2020 as the pandemic ravaged the tourism industry,” he said.

In Phuket, residential demand sharply declined with only 443 units sold in the second half of 2020, down from a peak of nearly 3,800 units in 2018 as people felt insecure about their jobs after the pandemic hit.

It was also a consecutive drop from 741 units in the first half of 2020, 1,118 units in the second half of 2019, 2,296 units in the first half of 2019, 3,140 units in the second half of 2018 and 3,788 units in the first half of 2018.

New residential supply in Phuket faced a similar downward trend with only 423 units launched in the second half of 2020, compared with a high of 3,900 units in the first half of 2018.

Phattanan Phisutvimol, president of the Phuket Real Estate Association, said residential sales in Phuket last year were also poor, particularly of townhouses, as incomes have disappeared with the pandemic.

“Most people in Phuket had lower incomes, while banks took a cautious approach to approving loans for mortgages,” he said. “This led to a phenomenon of a scramble for customers.”

Some agents used strong connections with banks to get the names and contact information of homebuyers who already had a mortgage loan with other residential projects and approached them with attractive deals in other residential projects instead.

Many homebuyers changed their mind and went with the new offer.

“As there are fewer buyers getting approvals, many of them changed their minds due to these tactics. Some projects saw up to three customers switching,” Mr Phisutvimol said.

However, anticipation of economic recovery from Phuket’s sandbox model might not happen as expected because of two factors, he said.

The first is a possible trade-off for Thais who can visit now versus foreigners who will visit after reopening.

“When Phuket welcomes foreign tourists, we are not confident that Thai travellers will remain as everybody knows that vaccinated people can still get infected,” he said.

Moreover, Thailand is considered an at-risk country due to a high number of infections, so the demand from foreign tourists and international flights to Phuket remains uncertain.