In the novel Life of Pi by Yann Martel, what name is

TOURISM

THE NUMBER OF HOtels in Phuket intending to temporarily close in April to comply with the one-month lockdown has risen to some 87%, reports Kongsak Khoopongsakorn, President of Thai Hotels Association (THA) southern chapter.

Mr Kongsak said there are no tourists in the province at this point. It is possible the closure could extend beyond April if the outbreak remains uncontrollable, he told the Bangkok Post on Monday (Mar 30).

Phuket Tourist Association President Bhummikitti Ruktaengam said he agrees with the lockdown. The association has suggested the measure to Phuket Governor Phakaphong Tavipatana since Mar 15, and suggested to Governor Phakaphong on Monday to issue an order for hotels on the island to close. Phuket has around 400 registered hotels.

Mr Bhummikitti said most of the 3,000 foreign tourists now in Phuket are expected to leave before the

Bangla Rd in Patong remains closed. Photo: Patong Municipality

airport is sealed under the full lockdown from April 10-30.

Over 30,000 hotels are set to lose all revenue in April as the lockdown intensifies in provincial areas, while hoteliers in Phuket are bracing for the greatest losses, said the Bangkok Post report.

Of the 32,564 hotels registered in Thailand, some 95% or 30,936 expect to have zero income in April when they temporarily stop operations, said the THA.

Surapong Techaruvichit, an adviser to THA, said the number of hotel closures is growing every day as more provinces have imposed stricter lockdown policies. The Phuket News

THEPHUKETNEWS.COM FRIDAY, APRIL 3, 2020 Return of the Black Swan

THE PHUKET PROPERTY GUIDE

Thai Residential phuket@thairesidential.com

November 17, 2019 – the date may never make it into history books alongside the Fourth of July or the year 1066, but given what the world is currently going through, its significance cannot be understated. It was on this day in the Wuhan Province of China that the first case of COVID-19 was identified.

COVID-19 is a novel coronavirus, which belongs to a family of zoonotic viruses. Zoonotic means it is transmitted to humans from animals, and while health experts suspect the virus originated with bats, it is highly unlikely that the virus would have been transmitted to humans directly from bats. Scientists are still unsure which animal was directly responsible for the first transmission to humans.

The current siege on Phuket’s property market is just yet another ‘black swan’ passing by. Image: Holger Detje / Pixabay

By January 2020 the health concerns had already made the front pages, and the global economy and stock markets were suffering on news of the spreading virus. The World Health Organization (WHO) would only give it the name “COVID-19” in February, and on March 11 the same organization would officially designate the virus a pandemic.

This pronouncement sent investment markets into turmoil.

So what, you may ask, has any of this got to do with Phuket property?

The COVID-19 Pandemic is an example of a Black Swan Event. The term “Black Swan” was coined by author Nicholas Taleb in Fooled by Randomness. This best-selling book explains that we often attempt to assign logical origins to what are unforeseeable, and sometimes calamitous events. Far from being predictable, these are random occurrences.

You’ve probably seen Taleb’s extremely academic premise summed up on internet memes or bumper stickers (rather less eloquently) as: “S ** t Happens”.

Over the past two-anda-half decades, Phuket has certainly seen its fair share of sh ** , err… black swans, and each one brought with it financial challenges for the island’s economy and its property market to overcome.

In 1997 there was the Asian Crisis. Phuket’s tourist economy was not nearly as developed as it is now, but the impact on the island was still felt. The terrorist attacks on 9-11 were just four years later, and that was roughly the same time as the dot-com bubble burst on the stock markets. The year 2002 brought bird flu, followed by SARS (also a coronavirus) in 2003.

On Boxing Day, 2004, the Indian Ocean Tsunami decimated the Andaman Coast, and in addition to the cost in human lives, left Phuket’s tourist sector in tatters. Four years later, in 2008, it was the global financial crisis which brought tourism to a grinding halt in Thailand.

A Black Swan specific to Phuket, was the tragic sinking of the Phoenix tour boat in July, 2018. A storm unleashed five-meter high waves, which capsized and sank the Phoenix, and also sank another boat, the Serenita. All 42 people aboard the Serenita were rescued, but 47 Chinese tourists from the Phoenix were killed.

Tours from China were cancelled almost immediately, the market already felt the pinch by early August, and it took diplomatic effort on the part of the tourism ministry and national government to woo Chinese tourists back to Phuket. By the time highseason wound down in March 2019, Chinese tourists had returned, and sales of properties to Chinese buyers were back to normal.

It is no secret that the growth or contraction of the Phuket property market is inextricably linked to tourism. The vast majority of people who buy condos or villas in Phuket do so because they came here as tourists, and loved it – not because they randomly selected Phuket from a map and decided to invest here. It should also come as no surprise that each of the Black Swan events mentioned above had negative repercussions for property sales and rentals.

What may come as a surprise, however, is how quickly Phuket recovered from each of these events. This has actually been a feature of most Black Swans to affect Phuket – they have been a mere blip, not a long-term trend.

And even where the broader economy was a factor, there were no widespread foreclosures or “fire sales”. In fact, if you look at the Asian Crisis or global financial crisis (the most analogous events to what we are seeing today in terms of financial impact), the weakening of the Thai baht against most major Western currencies actually made property purchases in Thailand more attractive.

Phuket is a rather unique property market, different even from that in Bangkok, a topic we have discussed previously on these pages. There are different scenarios which could play out, and we will expand on these in a future article.

But for now, using history as our guide, this is a consolidation period for Phuket property, not the beginning of a massively discounted market. If you want a discount, the currency markets are already doing that for you. The baht is down 10% against the US dollar since Christmas, which already represents a sizable discount for anyone contemplating a property purchase in Phuket.