Property comes in all shapes and sizes with prices to suit the most moderate to the most extravagant of budgets. However, when operating at the very high end of the property market, whilst it is true to say that one the one hand good location is not always synonymous with luxury property; it is equally true that luxury property is very nearly always synonymous with good location.
In recent times Phuket has made significant strides in establishing itself as a luxury 5 star destination for property. Increasing globalization means the island is no longer dependent on a single market in order to prosper, such as its traditional tourism base of Hong Kong and Japan for example. This increase in diversity and influx of ‘new wealth’ have fuelled Phuket’s rise to prominence and led to many new ultra luxury developments; a significant number of which are in the USD 10 million dollar price range and above (a figure which would have been unheard of just a few short years ago).
The secret of Phuket’s 5 star property boom lies not only in globalization but also in the time honoured adage; location is everything. Phuket has nature on its side; surrounded by the warm waters of the Andaman sea, with pristine beaches, a favourable climate, stunning scenery and a varied coastline, it also offers some of best sailing conditions to be found anywhere in Asia (if not the world) and is close to many of the continents best renowned dive sites. It is little wonder then, that with such a natural abundance of charms, a booming market in luxury property has been swift to follow.
However, when it comes to developing luxury property, one has to look more into the specifics of the location. Perhaps an appropriate analogy would be to view Phuket as an un-cut gem; polished in places but still a little rough around the edges. By no mean every area of Phuket can be considered a ‘luxury location’ for property.
Almost every developer and certainly the majority of sales agents will tell you that the location of ‘their’ property is fantastic, irrespective of where it actually is. However, it not wise to always take this sentiment at face value. One should take an in-depth look at the area in question to determine; does this location have the dynamics necessary to support a luxury lifestyle?
Many developers have sought to maximise profitability by developing and marketing a luxury product in a low/mid-end area in order to benefit from cost savings in terms of land prices.
Repeatedly this has proven to be unsuccessful as your product must fit with the dynamic of the location. You will likely not be successful trying to develop a luxury product in a mass market location and conversely a mass market (mid-price range) project will struggle to be successful in a luxury area.
This is not to say that property developments have no scope for success outside of the high-end locations. There are numerous examples of highly successful projects in less developed areas of Phuket such as Nai Harn and Chalong for example. However, in these locations other variables such as price and value for money become primary factors and location is therefore no longer the paramount consideration.
As a developer of high-end resort style condominiums I am willing to pay a premium for the right land in the right location; indeed identifying and securing the right location is my single most important consideration before commencing development. Condos have moved away from simply being mid-range market products with a select number of developments at the high-end creating a new luxury niche in the market for those seeking an alternative to the villa lifestyle. With luxury villas traditionally dominating the top-end of the market price wise, it is therefore essential for any truly high-end condo project to occupy a truly high-end location.
For me as a developer, having decided to focus my product at the luxury sector of the market, I then set out to determine what my customer wants and to find a location to meet these criteria. The first thing I do is to look at the surrounding area; is it already established as a luxury area?, what is the proximity the beach, the availability of sea views?, what infrastructure is already in place?, for example; 5 star hotels, fine dining, shopping and transport access.
For me, it is essential that all the above criteria are in place. There is no point in investing in building a quality product if the location is wrong. In luxury property, absolutely nothing corrects location. You cannot subsidize location by building a bigger swimming pool or improving your clubhouse facilities. A true luxury high end condo requires sea views, proximity to the beach and services; no other single factor can supersede this.
It would be difficult for me to convince my customers that they are buying into a high-end condo unless the area in which it is situated reflects this status. High-end condo’s command a premium in price and therefore the customer expects a premium in return in terms of quality, services and location. This is why areas such as Surin and Bangtao on the west coast for example, tick all the boxes in terms of luxury location. They have all the essential ingredients of proximity to the beach, sea views and an established luxury infrastructure.
One cannot simply manufacture a luxury area by doing it alone. The basic structure must already be in place. This happens over time and as the result of many external factors over which a single developer cannot exert a definitive influence.
Every luxury area of today had to start from somewhere and therefore it is a universal past-time of developers and buyers alike to seek to identify the next ‘up and coming area’. A correct prediction can of course prove to be exceptionally lucrative in the future but as is always the case with speculation; it is not without risk. Your chosen area may remain ‘up and coming’ for the next 20 years. Overall, when you are looking for luxury, it is safer to buy into an established area, which provides you with a safe and secure investment whilst also maximizing your rental income and your capital gains.
Tero_Borvornpotsakul
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