PHUKET ISLAND OVERVIEW
Ten years ago Phuket was essentially a back-packer’s destination with no sophisticated accommodation or tourism infrastructure. Beaches were only accessible via a radiated road system with no inter-beach access.
In 1999, the international airport is being doubled in capacity to handle 5 million movements a year. It is second in terms of air handling capacity only to Bangkok and can accommodate up to 19 aircraft. The 3,000 metre runway is sufficient for all wide-bodied aircraft and Phuket is serviced by some 23 international airlines and charter operators.
The beach ring-road has been completed and there are 19,000 hotel rooms ranging from a few dollars a night to some of the most sophisticated and exclusive resort hotels in the world. It has international hospitals, schools and colleges, 5 golf courses, a modern marina with another under construction, and a wealth of restaurants, shopping and entertainment activities.
Phuket is not reliant on any particular visitor source area or market segment and is well positioned to withstand world regional cyclic recessions. It enjoys a strong and growing domestic market, with substantial traffic from other Asian sources, a well spread (40%) market from Europe, with the balance from northern and southern hemispheres also well spread.
The market segmentation is quite distinct, with cheaper Asian and European tours concentrating in Phuket Town and Patong Beach respectively, family business concentrated in the better hotels and beach areas in and around Patong and in the more isolated beach locations, and with the up-market FIT traffic at more exclusive hotels primarily at the southern and northern beach areas of Kata/Nai Harn and Surin/Bang Tao respectively.
The overall highest density area is the contiguous bays of Kata – Karon – Patong, with the highest hotel occupancies and some 60% of all rooms in Phuket.
With the devaluation of Thai Baht in mid-1997, demand for accommodation in Phuket has soared and room rates have risen substantially, Demand in peak and high seasons far outstrips supply. The traditional drop in low season occupancy has almost disappeared.
LOCATION AND ACCESS
Phuket is an island province of Thailand of some 550 sq. kms. (slightly smaller than Singapore) with 30 smaller islands totaling 40 sq. kms. The main island is 49 kms. long x 20.4 kms. at the widest point. It lies north of the Equator in the Tropic of Cancer. Phuket is accessed from the mainland by a modern road bridge.
The island is 862 kms. or 60 mins. flying time from Bangkok and is strategically located almost equidistant between Singapore and Bangkok.
POPULATION
Official estimate for 1995 was 190,900 persons of mixed ethnic and religious background – Thai, Chinese, Muslim, Buddhist, Christian. Phuket Town in the south of the island accounts for 60,000 of the population.
These numbers do not take account of the huge but uncounted transient populations of Thais and foreigners servicing the island’s tourism, service and infrastructure industries.
CLIMATE
Tropical monsoon. Rainy June – October during south-west monsoon, with rough seas and unsafe swimming conditions at the west coast, Andaman Sea beaches. Dry December – April with cooler, calm weather conditions. May and November are transition months.
1951 – 1991 Average rainfall 2,200 – 2,500 mm. per annum (mostly May thru November).
1951 – 1991 Average temperatures vary 26.5 degrees celcius to 29.5 degrees celcius, with mid-day highest temperatures Mar/Apr reaching around 33 degrees celcius. High level of sunshine all year around, including monsoon period.
TOPOGRAPHY AND HOTEL DISTRIBUTION
North of the airport and much of the centre of the island is flat or has rolling hills. The north-east generally has rain-forest clad hills overlooking spectacular Phang Nga Bay with its famous limestone karst islands rising vertically from the sea, often shrouded in light mist. Sheltered coastal area with many mangroves and no true beaches.
The west coast south of the airport is spectacularly hilly, with inland peaks over 500 metres and dramatic drops to clean, sandy bays and the clear blue water of the Andaman sea, with offshore coral reefs and islands.
There are 6 major bays. To the north (south of the airport) is Bang Tao Bay with some 8% of Phuket’s hotel accommodation, primarily in the integrated Laguna Beach Resort. South of BangTao are Surin / Kamala Bays, with 1% of accommodation, followed by Kalim/Patong which is the main shopping, entertainment and restaurant centre with 32% of hotel rooms. South of Patong is Karon Bay with 18% of rooms then Kata and Nai Harn, at the southern tip, with 18% and 1.3% respectively.
Inland from Patong/Karon/Kata is Phuket Town, which has 23% of the island’s hotel rooms. To the south of the town is Chalong Bay, a large sheltered bay occupying the south-central coast, with fishing fleets, piers and some hotel accommodation, especially at Rawai on the western side of the bay and Cape Panwa to the east. There are islands in Chalong Bay and extensive reefs around islands south of the bay.
TOURISM AND SUPPLY DEMAND
Phuket is the premier international resort destination is South East Asia.
Key statistics are:
1996 International arrivals – 1.617.538 (Bali, by comparison, 1,500,000). In 1997 International arrivals totaled 1,653,913.
Domestic (Thai) arrivals – 1996 673,197 and in 1997 747,718.
Total visitor arrivals – 1996 2,290,735 and in 1997 2,401,631.
Average stay
international 5 days approx. (total visitor nights 8,000,000.) Domestic 3 days approx. (total visitor nights 2,000,000).
Average daily spend - international Baht 3,254 and domestic Baht 2,002.
Visitor sources (1996) The Americas 219,000, Europe 906,000, Australasia 149,000, Asia (excl. Thailand)338,000, Middle East & Africa 6,000, Thailand 673,000
Europe provides 40% (56% of international arrivals)
Asia provides 44% (21% of international arrivals)
Others provides 16% (23% of international arrivals)
Visitor source arrivals at hotels are:
Thailand 21.8%
Germany 9.9%
Taiwan 9.7%
UK 7.3%
Japan 5.6%
Switzerland 5.5%
Hong Kong 5.3%
Malaysia 4.0%
Italy 3.6%
Sweden 3.0%
Singapore 2.8%
Australia / NZ 2.8%
France 2.4%
USA / Canada 2.4%
All others 13.9%
PROPERTY SUPPLY AND DEMAND
1. Historic
Phuket Island has lagged behind other major resort island groups in the world in development of real estate for international investment, leisure and retirement. There are logical reasons for this. When the Caribbean, Spanish and Pacific islands were developing sophisticated residential resorts for the international market, Phuket was unknown; remote from major wealthy population bases and without an international airport and infrastructure. When residential estates were being successfully developed and sold on Bali, Thailand still had restrictive exchange control regulations, no foreign ownership structures and a political and social structure which was historically isolationist without colonial and international traditions.
With the dramatic development of the Thai economy and tourism over the past decade, and equally dramatic advances in internationalisation and infrastructure development, Phuket has now been through the early pioneering stages of international residential resort development with successful projects such as the mid-market Kamala Beach Estate and top end Aman Puri Villas. The only large-scale project, Allamanda condominiums at the Laguna Resort, is also virtually sold out.
2. Current
There is currently very little available quality product in Phuket. Some small up-market international projects have been or are being totally pre-sold prior to development. Some planned projects are on hold due to lack of availability of finance, creating pent-up demand.
With the devaluation of the Thai Baht, Phuket property prices are becoming highly competitive in the international market and all projects are reporting increasing levels of enquiries. Government initiatives to enhance Phuket as the major resort destination in South-East Asia and to introduce more liberal foreign ownership policies will support and encourage the development and sale of Phuket residential property.
It is consequently anticipated that demand will intensify over the next few years and that well structured, internationally orientated and environmentally sensitive projects in Phuket will be successful and probably represent the most successful property development investment opportunities in Thailand and possibly the South-East Asian region.