More than 10 residential projects with a combined market value of nearly Bt10 billion remain "on hold" in Phuket, because demand from both domestic and foreign buyers - especially for luxury homes - has fallen to less than half of last year's level.
Wanwipa Horbut, deputy managing director of luxury property developer Surin Hill Development, said demand for luxury residences in Phuket had continued to fall since the onset of the global economic crisis last year. Both domestic and foreign buyers have fled the market, leaving the company unable to sell its most recent condominium project, Baan Thai Layan in Phuket. The condominium, which was launched last year, is worth Bt1 billion.
"We launched this project with a focus on buyers interested in investing in Phuket. When the global recession hit last year, most investors delayed or suspended their plans. As a result we cannot sell our project," she said.
Surin Hill Development is trying to find new distribution channels to sell the condominium units completed so far, and is revising plans for a third phase of the development to meet changes in demand from home-buyers.
Wanwipa said although the company had "missed its target", it was continuing with construction. Fourteen units have been completed in the first phase and construction is continuing on 16 units in the second phase.
Pisarn Tangkasombat, president of the Arayaburi Group, which owns hotels and resorts and develops residential projects on Koh Samui and in Phuket and Krabi, said domestic and foreign demand for residences in Phuket was continuing to fall against figures from last year.
"Some Thai investors are interested in buying our residential projects, but the banks reject their loan applications. This is the main problem for local investors," he said.
Pisarn said a friend of his who planned to launch a residential project in Phuket worth nearly Bt1 billion suspended his project when he saw diminishing demand for residences in the area.
"We cannot say how many property projects have been suspended in Phuket, but we know of more than 10 projects worth nearly Bt10 billion," he said.
Phanom Kanjanathiemthao, managing director of property agency Knight Frank Charter (Thailand), said foreign investors continued to delay their investments in property projects in Thailand, especially in Phuket, where mainly luxury residences carried high prices.
"We believe the Phuket property market may recover in the final quarter of this year or next year because most of the property projects in this area focus on the luxury market," he said.
A survey by the Real Estate Information Centre earlier this year found there were 139 residential projects in Phuket offering a total of 12,334 units. Half of these have now been sold.
Phuket's main residential market focuses on upper-income earners. Most home prices range from Bt5 million to Bt12 million.