Phuket Property And The Sub Prime Crisis

So has Phuket been affected by the recent sub-prime crisis in the US and Europe?

Apparently many regions around Britain and Europe that were popular with property buyers have since cooled off significantly, resulting in falling prices and increased numbers of foreclosures. So is the same effect being noticed in Phuket? Seems the Phuket real estate market is unaffected overall according to several leading real estate professionals.

Although there is a slowing down in the under 20 million baht end of the market, this seems to be balanced by the upper end of the market. So how is this possible in the face of world events?

Well it seems that most Phuket property is not financed to the same degree as those markets affected the most. Foreign property owners can’t borrow from Thai banks unless married to a Thai. Obviously there must be some effect because some Phuket property owners borrow on assets they own offshore to finance their investment here. The remainder are usually reasonably cash rich and are not affected to the same degree.

There are also reports of more buyers coming from the Middle East, Russia and India. This had also dampened any potential effect that may have been caused by the sub prime crisis as compared to other areas of the world such as Spain.

Another factor is that most of the Thai banks are backed up locally by strong assets and generally don’t hedge to the degree that US and European financial institutions have done. They are not as exposed to mortgage debt to the same extent and tend to be more risk averse than their international counterparts.