Savills Adapts Strategy Amidst Phuket's Slowing Property Market

New Strategic Focus for Savills

In response to a decelerating residential property market, Savills (Thailand) is shifting its business strategy significantly. The consultancy is now prioritizing property management to generate steady income, while also re-entering the international marketing scene for Thai luxury homes. This pivot marks a return to overseas marketing efforts that had been on hold for six years, targeting high-end buyers interested in Thailand's premium real estate offerings.

According to Prapaporn Boonkajornkul, deputy managing director, Savills has become more selective in its residential brokerage due to a dip in domestic demand. In contrast, its industrial and property management sectors have seen expansion, showing a broader industry trend where firms are diversifying income streams to mitigate market volatility.

Reviving International Interest

Before the pandemic, Savills actively promoted Thai residential projects in international markets such as Singapore, Hong Kong, and Shanghai. These efforts were particularly concentrated on high-demand areas like Phuket and Krabi. The company now plans to revive this strategy by organizing roadshows in Singapore and Dubai. These events will focus on Bangkok's branded residences, with units priced over 20 million baht, aiming to attract overseas buyers as international interest begins to recover.

This renewed focus on international markets is a strategic move to tap into the returning demand from foreign investors, which had been a significant driver of the Thai real estate boom in 2017-18. The global marketing push is seen as a way to bolster the visibility of Thai luxury properties in key international markets, thereby potentially stimulating foreign investment in the region.

Shifting Preferences of Thai Investors

Thai investors' interest in overseas properties has evolved over the past decade. Previously, London was a favored destination alongside Japan's Niseko. However, market conditions have changed, leading to a shift in preferences. Budgets have become more conservative, with interest turning towards properties in Zones 2 and 3 of London, where prices are more affordable. Additionally, some Thai families are opting to lease properties for their children's education rather than committing to purchases.

This trend reflects a broader caution among investors, who are now more price-conscious and selective in their acquisitions. The shift also underscores the importance of understanding changing market dynamics and adapting investment strategies accordingly, a sentiment echoed by Savills as it diversifies its service offerings.

Expansion in Property Management

Property management has emerged as a cornerstone of Savills' business, contributing about 65% of its total revenue. The firm currently manages 38 buildings in Bangkok, primarily in the high-end and luxury segments, and aims to increase this portfolio to at least 40 by the end of the year. This focus on property management provides a stable income stream that is less reliant on fluctuating residential transaction volumes.

The strategic shift towards property management and industrial services reflects Savills' proactive approach to working through the challenges of Thailand's changing property market. By diversifying its revenue streams, the company is better positioned to withstand market uncertainties while continuing to deliver value to its clients.

Global Expansion and Investment Advisory

Further strengthening its global presence, Savills has completed the acquisition of Eastdil Secured, a leading US real estate investment bank. This acquisition, valued at US$1.11 billion, significantly enhances Savills' real estate investment banking capabilities, particularly in North America. It also reinforces its leadership in capital markets across Europe and Asia-Pacific, providing clients with enhanced expertise to navigate complex investment decisions.

This expansion shows Savills' commitment to broadening its service offerings and capitalizing on global market opportunities. As the firm continues to adapt to changing market conditions, its expanded capabilities in investment advisory are expected to play a crucial role in supporting investors facing increasingly sophisticated real estate landscapes. Savills' acquisition of Eastdil Secured was finalized in 2023.