Bangkok Bank plans to increase its focus on the foreign property market in Phuket, a market worth 20 billion baht per year and expected to grow by 20% to 30% annually over the next three to four years.

Piya Sosothikul, a BBL executive vice-president, noted that about 250 condominium, detached home and vacation villa projects were under way in Phuket, with a market size of around 85 billion baht.

”Of this, around 80% are villas or vacation homes that typically are sold under 30-year leases. The remainder are condominiums that are usually sold on a free-hold basis,” he said.

Foreign buyers are estimated to outstrip Thai investors in Phuket by four to one, Mr Piya said, with unit sales priced from 20 million to 200 million baht.

Sales this year are estimated at around 20 billion baht, or nearly triple the turnover recorded just three years ago.

”The Phuket property market has exploded over the past five years. Previously, sales were mostly to expatriates working in Hong Kong or Singapore. Now over 70% of sales are to European customers, particularly those from England, Germany, Italy and Scandanavia,” Mr Piya said.

Restrictions by the Bank of Thailand on local bank lending to foreigners has helped restrain speculation in the Phuket market. Most transactions are generally by wealthy businessmen seeking vacation homes, or by retirees.

Bangkok Bank is a leading lender in the Phuket market, with approved credit lines of 10 billion baht in project financing to 40 developments on the island.

”We saw some declines in transactions in January and February, which typically mark the high point of the season, due to concerns about reforms of the Foreign Business Act and nominee shareholdings,” Mr Piya said.

”But after April, we saw transactions pick up again after there was greater clarity about the legal situation.”

He said the government should enlarge the Phuket International Airport to facilitate long-haul flights to Europe without stopping over in Bangkok.

An international convention centre and marina should also be built on the island to attract wealthy tourists and boost the Mice (meetings, incentives, conventions and exhibitions) market, he said.

”Yacht owners are typically high net-worth individuals that are prepared to pay a premium price for good service. We have only three marinas in Phuket now, which is hardly sufficient for demand, and none is able to service larger vessels,” Mr Piya said.

He said Bangkok Bank planned to extend another five billion baht worth loans to 20 other property projects on the island, and added that Pattaya, Samui, Hua Hin and Pran Buri were also attracting considerable interest from foreign buyers.