Jan. 5--The tsunami tragedy will undoubtedly have an immediate impact on tourism and property sales in Phuket, expected to last around 12 months, according to Stephen O'Brien, managing director of the property agency Knight Frank Phuket.

But the outlook is not all gloomy as a number of the real estate agency's clients are proceeding with property contracts in the due diligence stage, he said.

"All buyers remain eager to settle. I think most buyers see this as a one-off event, an act of God, and not a callous act of planned terrorism," he said. "Some of the other developers I have spoken to immediately after the incident have also received actual sales and reservation deposits paid in the aftermath. We will recover, but it will take time."

The long-term rental market may feel the first impact as those who were considering settling or retiring in Phuket may reconsider their options or hold back. "However, I would expect that the effect would only be short-term and we expect swift recovery in the first quarter of 2006," Mr O'Brien said.

All the villas and estates managed by Knight Frank Phuket remain safe, structurally sound and functional. The biggest problem is the lack of utilities such as water, electricity and telephones, which is being addressed by the authorities.

"Many of our owners live overseas and are quite worried about their villas whether any structural damage was sustained," he said.

Phuket is quite resilient and will pull through to go by global events that have had little impact on the island. Mr O'Brien gave the following examples:

--Despite periodic travel warnings published by American, British and Australian governments in the past three years about possible terrorist attacks in southern Thailand, tourism numbers continue to climb in Phuket.

--Immediately after the Bali bombing, tourism numbers in Phuket actually increased by 90,000 as the resort island picked up most of Bali's cancellations.

--During the height of both Iraq wars, tourism numbers only dipped slightly compared with other regional resorts.

--During the 2003 Sars outbreak, rentals and holiday leases of villas and townhomes in Phuket were at their highest as many fearful Hong Kong and Singapore residents fled their countries to the safety of Phuket.

--The bird flu outbreak had little effect on tourism numbers or property sales on the island.

--During the 1997 Asian financial crisis, Phuket hotel occupancies were at their highest ever due to the weak baht.

--The persistent unrest in the three southernmost provinces has not been felt in Phuket.

Mr O'Brien has seen the way communities can bounce back in his native Australia.

"Over 40 years ago the worst flood to ever to hit Australia occurred in Brisbane and the worst affected area was properties on the river. Today riverfront properties cost on average $2 million and are the most sought after real estate in the city," he said.

"What this proves is that despite Mother Nature's fury, communities rebuild and put the past behind them. I am not saying that it will take 20 to 40 years for Phuket to recover; far from it, there will always be demand for both affordable or luxury properties on the island.

"Bali is a good proof of this. It recovered quickly, tourism numbers are back on the rise, hotel rates remain strong, occupancies high and luxury properties are in strong demand."

Knight Frank Phuket has been advising a prominent international development company that is in the process of setting up operations in Phuket with an eye on investing significant capital in a number of high-end projects. This company also remains very bullish about the market and the long-term opportunities.

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