Like Phuket, Bali’s biggest money earner by far is tourism. But anxious about runaway tourism, local residents are calling for a slowdown in new construction projects. In response, Indonesian authorities recently announced plans for a two-year moratorium on building hotels, villas and nightclubs.
While the ban was supposed to come into effect in early October, the ban remains in hiatus and has yet to be confirmed by the new Indonesian government.
BOOM
Similar to Bali, Phuket’s construction boom over the past 12 months has been staggering, and nowhere else has the boom been more evident than in Bang Tao, Cherng Talay, where The Phuket News continues to receive constant reports of green areas being cleared to make way for new construction.
In November last year, Bill Barnett, Managing Director of hospitality consultancy C9 Hotelworks, noted that Phuket’s once-quiet beachside west coast community of Bang Tao was experiencing an “unparalleled surge in real estate development”.
According to research by C9 Hotelworks at the time, there were 7,842 condominium units in the “supply pipeline”. Added to the supply influx were just over 2,400 upscale and luxury homes, which equated to a pipeline of more than 10,000 residential units in the market.
Those new units started coming onstream this year, marking a record-breaking year for new units, especially villa sales.
According to the Real Estate Information Center (REIC), villas, mostly purchased by foreigners, reached record highs across all metrics, with significant half-on-half increases in every category,
In the first half of 2024, the number of villas surged to 1,175 units, rising 383% from the second half of last year. Similarly, the value of new supply climbed to B38.3 billion, up 272% from the previous period, REIC reported earlier this month.
As new supply expanded, the total supply of villas surged to 2,261 units worth B84.5bn in the first half of 2024, compared with 1,288 units valued at B58.6bn in the second half of 2023 ‒ the first time supply exceeded 1,000 units.
‘TOO DIFFICULT’
Yet, despite growing concern that the explosive growth in construction in popular areas such as Bang Tao will only diminish the island’s attractiveness to tourists, and eventually drag down the values of the new properties being sold, local leading figures say that any attempt to slow construction would be “too difficult”.
Phuket Governor Sophon Suwannarat simply declined to comment on the issue.
Natthakrit Phonphet, Deputy Director of the Ministry of Natural Resources and Environment Phuket office (MNRE Phuket), which is the government office responsible for protecting Phuket’s environment, said the matter was “out of our hands”.
“To freeze construction and development in Phuket... is beyond the province’s authority,” Mr Natthakrit said.
“To make a law like [the one proposed] in Bali, we need to consider the government first. Right now, our government is focused on boosting the economy. Phuket generates hundreds of billions of baht in income for the country. They probably wouldn’t do the same thing as Bali.
“Tourism is Thailand’s main source of income. If we were to limit construction or temporarily stop construction, especially in a world-class tourist city like Phuket [sic], I think it would be very difficult for the government to do.” he added.
Thaneth Tantipiriyakij, President of the Phuket Tourist Association, who agreed that Phuket needed a balance between construction growth and environmental protection, noted that Phuket provincial officials do not have the authority to issue a ‘freeze’ on any new construction.
“Phuket must rely on central power for everything… We cannot make local laws to enforce in our own areas,” he said.
“For instance, even trying to adjust common areas or change building height and slope can get complicated. Plus, the real estate sector may not support changes inspired by Bali,” he added.
“There are many things we’d like to do and agree on that way, but some aren’t possible because of central government restrictions,” Mr Thaneth said.
Mr Thaneth also underscored the region’s sustainability efforts, including the goal to become a certified Green Destination by 2026 under the Global Sustainable Tourism Council (GSTC).
“I think Phuket has tried to amend some laws, such as increasing the height of buildings and reducing the horizontal area,” Mr Thaneth continued.
“But when there was a flood and landslide a few months ago, the private sector discussed adjusting the law on slope,” he explained.
Among the notable problems Phuket is experiencing with the expansion of construction is that Phuket is developing “horizontally, not vertically”, Mr Thaneth said.
“Especially in areas with scenic sea views,” he noted. “From this problem, local people see that Phuket has limited space. And after the incident in Karon that resulted in deaths, Phuket has started to have wake-up calls,” he added.
TALK TALK
Manoch Phanchalard, Chief of Cherng Talay Tambon Administrative Organisation (OrBorTor), which is responsible for the area covering Bang Tao, plainly admits many construction projects are underway in his area.
“Currently, there are many commercial projects being built in coastal areas. There are more than 10 projects such as condominiums, villas and hotels in Cherng Talay,” Mr Manoch said.
“To truly implement sustainable development, we need multi-sector discussions to balance residential, commercial and environmental needs,” he noted.
“I think it can be viewed from two perspectives: a perspective studying the law of Bali, and another perspective is the perspective of businessmen, developers, real estate businesses who have invested or have land in their hands and want to develop,” he added.
“In Thailand it is difficult to freeze construction because there needs to be discussions among many sectors to find a balance. Because there are currently two types of construction in the coastal area: one is residential construction and the other is commercial construction and services such as condominiums, villas, inviting tourists to live there,” he said.
USE THE LAW
To Mr Natthakrit, Deputy Director of the MNRE Phuket office, the one thing officials can do right now is simply enforce the existing law.
“Rather than seeking new laws, we should focus on strictly enforcing the rules we already have,” he said.
“Currently, based on my inspections and those of the Phuket MNRE Office, 90% of projects are not complying with these regulations and laws.
“Every measure, law or issue related to construction is overseen by local government agencies responsible for different areas… We have to ask ourselves: is the issue with the law itself, or with the people? Right now, the problem lies with human error and non-compliance with the law,” Mr Natthakrit added.
“Saying we need to freeze or stop construction won’t solve other problems. Instead, we need people and local governments to strictly enforce the current laws, with local governments playing a key role in inspecting every stage of construction and development.
“Right now, if nothing is done, no one will inspect. Sometimes, we only inspect when a problem has already happened,” Mr Natthakrit explained.
“I think we need to start by strictly enforcing existing regulations. If we don’t, nature will continue to deteriorate, and in a few years, the situation could be much worse,” he concluded.