in spite of recent political issues in Bangkok and a worsening global financial downturn, according to the Phuket Luxury Villa Market Report recently released by consulting firm C9 Hotelworks.

C9's Managing Director Bill Barnett said that "while take up rates are expected to soften for 2009 with the 'wait and see' attitude of buyers, supply and demand still remains favorable".

Key fundamentals at play in the market are the absence of purchaser debt which has stabilised capital values, a slowdown in new product launches that will build marketplace traction while the availability of premium land continues to shrink creating substantial barriers to entry. One emerging benefit of the crisis is the sharp reduction in construction costs in the region by 20-30%, although this is being offset by limited availability of developer debt in the Thai financial markets."

According to C9's report, a total of 304 properties priced from THB65 million (USD2 million) and above located within estate developments were for sale at the close of 2008 with projected increases to see this number rise to 367 moving into 2009 and beyond.

"Given the limited market size, re-sales of existing units will become more predominant as buyers shy away from taking development risk on off plan purchases," Mr Barnett added.

Geographical diversification is another key trend. Limited prime oceanfront land within the traditional West Coast areas is pushing development into southern Phang Nga province, just over the Sarasin bridge, Phang Nga Bay and into the East Coast of Phuket island. Hotel developments in these areas are rapidly influencing buyer sentiment on the back of international brands such as Jumeirah, Taj and the design team of Philippe Starck/Jean Michel Gathy's The Yamu.

Based in overall pricing parity comparisons the East Coast has now edged ahead with an average of THB128.2 million versus the West Coast at THB127.1 million, for units currently on sale.