The limited number of new luxury villas in Phuket has doubled the price of resale units, as demand is relatively strong in this niche market.
Aliwassa Pathnadabutr, managing director of property consultant CB Richard Ellis (Thailand), said top-end villas on the island were part of an exclusive market characterised by a limited number of high-value transactions.
Major players used to be small foreign developers with limited financial backing, but they have been replaced by large operators.
This is positive for the market in terms of reduced risks for buyers and an improvement in the quality of villas and designs.
Most villa sales are in the entry-level segment with prices below 15 million baht. Despite ongoing demand in the luxury segment, buyers face a limited supply.
"In recent years, buyers' preferences in the luxury sector have shifted towards hotel-branded products that offer quality management, five-star services and facilities as well as the ability to generate rental income," Ms Aliwassa said.
However, the proportion of completed luxury villas priced above 35 million baht with hotel branding remains limited and accounts for less than 10% of the villa market.
"We're now beginning to see Western expat groups working in Asia who bought prior to the 2008 financial crisis starting to re-enter the market," Ms Aliwassa said.
With the completion of Phuket airport's expansion next year, CBRE expects to see further growth in tourist arrivals having a positive effect on resort property sales.
Price points have clearly shifted in the past 10 years for successful developments.
In 2005, the first phase of Andara Resort & Villas was launched with units priced at US$3-4 million.
Today, resales at Andara are fetching $6-8 million, with some transactions achieving a 100% capital gain.
Launch prices of some luxury projects have also hit the $10-million mark.
Andy Kunz, general manager of luxury villa and hotel project Point Yamu by Como, said 2015 was not proving a good year for Phuket, as the number of Russian and other Western tourists had decreased.
"Tourism in Phuket has been unfavourable since the coup last year, because Phuket was mentioned in negative ways," he said.
Some four- and five-star and big-chain hoteliers late last year banded together to set up the Phuket Hotels Association.
They held meetings to try to figure out how to restore the tourism market and create a Phuket brand.
The association tried to persuade budget hoteliers to join, but that segment had no problem with their target groups.
Starting operations in late 2013, Point Yamu by Como is is located on Cape Yamu on the eastern side of the island.
The hotel comprises 79 hotel rooms and 27 villas, with rates ranging from 40,000 and 100,000 baht a night.
Of the 27 villas, 20 are offered for sale at prices ranging from 61-175 million baht.
Total sales value of the 20 villas is 1.7 billion baht, with three units sold to Singaporeans after a soft launch early last year.
All villas for sale are required to enter a rental programme in which owners can stay 60 days a year and receive a rental yield.