The Critical Role of Infrastructure in Phuket’s Luxury Real Estate Market
Phuket has evolved from a tranquil beach getaway to a premier destination for luxury real estate investment. Tourism is often given as a key driver for the success of Phuket’s property market, but this transformation into one of Asia’s leading investment destinations would not have been possible without continuous improvements in infrastructure.
From the construction of the Sarasin Bridge in 1967, linking Phuket to mainland Thailand, to the expansion of Phuket International Airport in 1984, infrastructure has played a crucial role in attracting both tourists and high-net-worth investors. Today, the island’s modern road networks, international schools, healthcare facilities, and commercial developments reinforce its status as a world-class luxury real estate hub.
Infrastructure and Market Resilience
The island’s real estate market, and particularly the luxury Phuket property sector, is largely insulated from global economic fluctuations, due in part to Thailand’s cash-based property market and the ability of high-net-worth individuals to be less affected by economic downturns. Unlike major cities where mortgage lending plays a significant role, the market in Phuket is driven by direct investment from international buyers, making it resilient to interest rate hikes and financial downturns.
The return of record-breaking tourism numbers in 2023 and 2024 has further fueled property demand, with condominium sales exceeding 3,000 apartments in 2023 alone, according to CBRE. The high-end villa market has also experienced significant growth, particularly in branded residences, attracting wealthy investors from Thailand and abroad. When compared to the period before the pandemic, the post-pandemic era indicates a marked shift towards the luxury villa sector, with high-end villas accounting for a higher percentage of transactions. Two notable reasons behind this shift are the surge of investment from high-wealth Russian investors following tensions regarding the war with Ukraine and an increase in buyers from high-net-worth Thai investors.
Phuket vs. Koh Samui: How Infrastructure Defines Investment Value
When comparing Phuket and Koh Samui, one of the key differentiators is infrastructure development. This is a natural consequence of Phuket being a much more mature market, and consequently, it has been prioritized by the Thai government for infrastructure investment. While both islands offer stunning landscapes and attractive investment opportunities, Phuket’s superior infrastructure makes it a more secure choice for buyers seeking long-term appreciation and lifestyle benefits.
- Accessibility: Phuket’s international airport offers direct connections to Europe, Asia, and Australia, while Koh Samui’s airport is limited to select regional flights. Phuket’s road network is also more developed, providing better connectivity across the island.
- Real Estate Options: Phuket offers a wide range of freehold condominiums and branded residences, whereas Koh Samui primarily consists of leasehold villas, limiting foreign ownership flexibility.
- Amenities & Services: Phuket boasts 16 international schools, multiple world-class hospitals, shopping centers, and entertainment hubs, making it an ideal location for families and long-term residents. Koh Samui, while improving, remains less developed in these areas.
- Luxury Property Pricing: Phuket’s luxury properties command higher prices due to demand and infrastructure quality. While Koh Samui’s most exclusive villas have never commanded a price tag of over $10 million USD, Phuket’s top-tier estates exceed $20 million USD, reflecting its higher land values, market maturity, and prevalence of luxury branded real estate.
Ownership Considerations for Luxury Villas in Phuket
Due to Thailand’s foreign land ownership restrictions, buyers interested in Phuket’s luxury villas typically acquire property through two main methods:
- Freehold Ownership via Thai Corporate Structures
- Foreign buyers set up a Thai limited company, where they act as the controlling director.
- Compliance with Thai corporate laws is necessary: the foreign shareholding cannot exceed 49%; submission of annual accounts is required, similar to requirements in any developed country; two shareholders are required for every foreign director. The Thai shareholders also need to have a genuine interest in the company and cannot be just nominees; the company must be set up with the general intent of creating profit as opposed to being purely a holding vehicle for freehold land.
- Stricter enforcement since 2024 has required full compliance to avoid legal risks.
- Renewable Lease Agreements
- Foreign investors, or even Thai buyers, may lease land for 30 years, which is the longest lease period allowed for residential property in Thailand.
- While some developments offer additional lease periods built into the sales price, investors should ensure that the lease renewals will be honored. The likelihood of lease extensions being delivered is higher when buying into branded residences, as these companies need to maintain the long-term reputation of their brand.
The Future of Infrastructure Investment in Phuket
Looking ahead, continued investment in infrastructure will be vital in maintaining Phuket’s competitive edge. Key projects include:
- Phuket International Airport Expansion: The second phase of development aims to increase passenger capacity from 12.5 million to 18 million.
- New Road Networks: Ongoing efforts to ease congestion and improve transport efficiency.
- Smart City Initiatives: Investment in sustainable development and digital connectivity is expected to enhance Phuket’s appeal to international investors.
Phuket offers a wide range of luxury lifestyle properties with great investment appeal
The combination of world-class infrastructure and amenities, a resilient real estate market driven by a consistently strong tourism sector, makes Phuket one of the most sought-after destinations in Asia for discerning property investors. Buyers seeking long-term capital appreciation, rental yields, and lifestyle benefits will find that Phuket ticks all the boxes.
