There has been some great news for tenants across Phuket as market forces confirm what I have thought for some time - rents have fallen in some parts of Phuket in the latter half of 2009. There is of course a tipping point that is reached where the simple equation of wages growth or Company income becomes a major contributor to slowing down rental price growth.
Phuket monthly house rents have fallen by around 3.5% although apartments have fallen by much less or remained stable. It must be stressed that luxury, high quality residences do not usually reflect a downturn.
Rental yields have dropped across Phuket as property sales have slowed. I urge all owners again to remember that real estate pricing is cyclical and local and small fluctuations can occur constantly depending on sample size, number or sales, type of properties, season and of course statistical error.
Overall apartment yields have held up a little better than houses, but apartments generally have appreciated in value by less than houses. Without question rental prices are under pressure to move upward due to the upcoming high season and additional building will meet & satisfy demand.
It should be noted by investors, home owners & those that invest capital in property with a view to rental returns as well as capital appreciation, that even with a global downturn (that Phuket has not been completely protected against), rental returns in Phuket Property perform much better than rates of interest received via bank deposits.
There are many who cannot afford to enter the sale market due to factors including lack of deposit, unemployment, underemployment and choice. Wages will always be a major factor in limiting rental values and despite the current economic climate property still represents a very valuable long term investment.
There is another group of investors that believe the adage "cash is King" which is often the case. However, it should be recognized that Phuket has consistently and over many years delivered strong capital growth in property investment. This is unlikely to change in a market that does not depend on mortgage driven entries.
In Phuket as elsewhere, the catch cry "position, position, position" holds true. Canny investment in luxury Phuket Property be it Houses, Villas, Apartments or Condominiums bodes well for the future on a capital growth level. Rental streams from well selected properties easily out perform bank interest rates & Phuket should be considered as an excellent locale to invest in for the future.
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1. Investing In Commercial Real Estate
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