After the COVID-19 pandemic, Phuket changed from a tourist spot to a world-class residential city. It now has great healthcare and wellness facilities. The "Phuket Sandbox" initiative helped make this happen during the pandemic.
This trend has resulted in a bustling real estate market with changes and transformations, especially in the post-COVID era when this tourist destination is becoming a top investment target due to high returns and the golden location that cannot be found elsewhere. Consequently, land prices in Phuket are strongly increasing.
The real estate market in Phuket is witnessing a significant increase in demand. One particular area of interest is Pa Sak-Kok Tanot Road, Thalang where lands are being sold at a premium price of at least 14 million baht per rai (approximately $448,000 USD), with a price increase of 20-30%. These lands are being developed into luxurious pool villas, which have been increasingly in demand among tourists and foreign investors.
Although the COVID-19 pandemic has greatly impacted the tourism industry, it has also presented opportunities for the real estate market in Phuket. Russians, in particular, have been flocking to buy properties in Phuket after the pandemic, and Chinese agents starting to move as well.
Foreign buyers, mainly Russians, drove the Phuket property market's recovery by showing strong demand in the luxury villa market. This was evident from 2020 to 2022, during the COVID-19 period, when both demand and supply significantly increased. Last year in 2022, out of 4,375 luxurious villas, 3,595 units were sold. achieving a sales rate of 82.1%, which is the highest we've seen in the last 10 years since 2013.
Russians are now rising to be the number one buyers in Phuket's real estate market, accounting for 50-60% of the market share, which used to be only 15-20%. These buyers make transactions in USD and EUR as a way to hedge against the risks of war and conflicts, particularly since the Russia-Ukraine conflict. The majority of buyers intend to move to improve the quality of life for their families and children in the long term. Others have been traveling to Phuket during the high season and showing interest in purchasing properties. Combined with concerns about frozen bank account policies, which may restrict them from using debit transactions in the future, many people are fleeing and investing in Phuket villas, which can generate rental returns of 8-10% per year.
As a result of the strong demand, villa prices increase by 15-20%. There has also been a change in land prices, particularly in desired locations on the west coast, such as Kata Beach, Karon Beach, Patong Beach, Kamala Beach, Bang Tao Beach, Laem Ka Beach, and Nai Thon Beach.
However, the area with the highest increase in land prices is located along the Pa Sak-Kok Tanot Road since the post COVID-19 pandemic, many plots of land have been sold and developed into the pool villa projects, resulting in a 20-30% increase in land prices. Previously, the selling price was 10 million baht per rai, but now it has increased to more than 14 million baht per rai. Overall, Phuket's property market has increased by 3-5% per year.
Land plots along the beachfront are relatively scarce and very expensive. Another interesting area is around the Central Phuket Shopping Mall, where both Central Group and Asset Wise Co., Ltd. have purchased land for development. Phuket City, Kathu and Bypass areas are also the sought-after locations.
In addition to Russian buyers, there is still demand from Chineses. While Russian customers buy property as a second home primarily, Chinese customers buy for investment and rental purposes. They will buy when they see opportunities from Chinese tourists traveling to Phuket. However, the number of Chinese tourists in Phuket today is still very few, compared to the past when there were about 10-12 million people per year, averaging 1 million people per month. Due to travel restrictions and the lack of direct flights to Phuket, it may take 7-8 months to wait for more relaxed entry regulations. It is believed that lots of Chinese buyers will certainly return to invest in Phuket's real estate.
Chinese agents are now researching information to connect tourism plans with business investments. However, the majority of Chinese investors prioritize finding a "residence" before considering business opportunities. Some investors solely invest in villas for rental purposes, catering only to Chinese customers. Yet, some Chinese investors seek more diverse opportunities, investing in businesses that cater to Chinese tourists, such as elephant farms for trekking, speedboat businesses, or restaurants.
The strong demand in the villa market has altered the proportion of Phuket property developers. Previously, foreign investors were the primary developers, but after the COVID-19 pandemic, major local developers, including Botanica Group, Trichada Group, and Anchan Villa Group, have started investing in the market. These successful developers have long catered to foreign customers and have a greater understanding of Thailand's long-term leasehold rights (30 years) of real estate. Typically, developments consist of 20-30 units per phase, with a popular price range of 17-35 million baht (the highest ever sold was over 40 million US dollars). Upon resale, profits can exceed 20-35%.
Additionally, major developers from Bangkok are investing heavily in Phuket, with companies such as Origin Property Public Company Limited purchasing land worth over 1 billion baht for a condominium project. Asset Wise Pub Co., Ltd. has partnered with Botanica Luxury Phuket Co., Ltd. for the BOTANICA Grand Avenue project. Furthermore, Land and Houses Pub Co., Ltd., Supalai Pub Co., Ltd., and Sansiri Pub Co., Ltd. have also entered the market, with a focus on developing condominium projects.
The condominium market in Phuket has slowed down since the COVID-19 pandemic, and there are still many old stock units remaining. Currently, developers are rebranding old projects and there are some new projects, but the market does not seem as active as the villa market.
In conclusion, this year 2023 is an ideal time to contemplate investing in Phuket's real estate if you're seeking profitable opportunities. Phuket's property market is currently thriving due to a surge in demand from foreign buyers, and developers competing to create high-end properties. Whatever your goal is, whether it's a vacation home, rental property, or long-term investment, Phuket offers various options that will cater to your needs. Browse our "property for sale in Phuket" to see the latest listings and start exploring the opportunities that this thriving market presents.
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