Phuket real estate is suffering a dramatic slowdown because of the global economy and the falloff in tourism, says Tanan Tonpiboon, President of the Phuket Real Estate Association. Up to 30 percent of construction has ceased, he said. Of developments where construction is complete, sales are running at 20 percent to 40 percent.

Banks are not lending money to potential buyers, he said. ”The wheels are not turning for real estate on Phuket,” he said. ”Most of the problems rest with the banks, who are being very strict with loans.”

Many developers will be hoping the market picks up, along with tourism, in the 2009-2010 high season. He expects the hiatus in sales to last for at least six months and perhaps up to a year. If tourists do not return in the high season, the outlook for property on Phuket will be dour, he said.

However, many projects with in-house funding, especially those aimed at the Thai residential market, appear confident of the future and are going ahead with construction. It’s a critical juncture for those who think the island property business needs to slow down anyway.

This week, the Governor, Wichai Praisa-nob, told the visiting British Ambassador, Quinton Quayle, that he thought Phuket has enough development. Khun Wichai, whose background expertise is in land titles, has previously said that he prefers Phang Nga province’s balance with nature to the more developed Phuket model.

Projects aimed at expat buyers are suffering to the same extent, if not worse, than developments aimed at Thai buyers. One expat property expert told Phuketwan this week that cash flow problems were even forcing developers to sell their show homes, in some cases at a vast discount. ”This is a no-win situation for the show house buyer,” he said. ”They may have picked it up at a reduced price. But if the lack of other sales continues, they will be left as the only house on the development. If sales pick up slowly, they may end up being surrounded by houses under construction for perhaps the next decade”.