Phuket Property market

Overview

Phuket Island is renowned for being the home of Thailand’s most expensive and luxurious resort properties. With an unparalleled selection of high-end villas and condominiums, it’s a prime destination for affluent discerning foreign real estate investors. There are however a broad range of property types available, such as affordable apartments, townhouses and garden view estate villas, appealing to both international and Thai investors. According to Thailand Property, as of 1st March 2023, the mean condominium and villa listing prices on their portal were approx. 14M THB (avg price per sqm of 85K) and 18M THB respectively. Though entry level 2-bed villas in Phuket can be acquired for as little as 4M THB, at the super luxury end of the market, often priced in American dollars for the international market, villas can fetch up to 20M USD and beyond. Referred to as Millionaire’s Mile, the most exclusive area is on the west coast at Kamala Beach. This is generally where Phuket’s most expensive properties are located.

Notable Areas for Luxury Property in Phuket

Phuket has seen a considerable shift in its property market dynamics, especially in the luxury sector. While the allure of the Andaman Sea and the pristine beaches of the West Coast have always held a charm, the evolving preferences of luxury buyers of Phuket property are shaping new hotspots across the island. Proximity to the sea remains a significant factor, but other features, like the development potential and the maturity of projects in an area, also play a crucial role. Here we shine a spotlight on the notable areas that stand out in Phuket’s luxury property landscape.

Kata and Karon: Offering a quieter atmosphere than Patong, Kata and Karon are popular for their scenic beaches and a relaxed lifestyle, appealing to tourists and long-term expats alike. The properties range from luxurious sea-view villas to more affordable apartments and townhouses.

Layan Beach: Layan Beach is a secluded beach located on the northwest coast of Phuket. Known for its white sand beach, crystal-clear waters, and lush green hills, this area has seen a surge in demand, particularly for new projects. The luxury property spectrum here is expansive, ranging from high-end villas to boutique establishments.

Kamala: Known for its impressive upscale homes and Millionaire’s Mile, Kamala, with its premium villas and luxury condos, caters to a more discerning market and commands some of the highest prices on the Phuket property market . Though fairly quiet, it offers ample amenities to its residents… Read More

Natai Beach: picturesque stretch of coastline along the Andaman Sea, offering a tranquil escape from the everyday hustle while remaining a convenient 30-minute drive from Phuket International Airport. This part of Phang Nga Province is a unique blend of accessibility and seclusion, giving it a distinctive edge in the realm of coastal living…Read More

Bang Tao and Laguna: This area, particularly over the last 18 months, has witnessed an extremely high demand. Home to the renowned Laguna Phuket resort complex, it boasts a range of high-end villas, townhouses, and condos. The community feel, comprehensive amenities, and beautiful beach make it a coveted location for luxury property buyers.

Rawai and Nai Harn: Situated in the south, these areas are celebrated for their natural beauty and peaceful surroundings. Rawai has always been a buyer’s favourite, but Nai Harn holds a distinct charm with its more mature property developments and limited new, making it a contrast to many other areas.

Nai Thon: A hidden gem on the northwest coast, Nai Thon is prized for its unspoiled beach and tranquil environment, perfect for those looking to escape the crowds. With a serene setting and natural beauty, it caters mainly to those seeking privacy and exclusivity.

Cape Yamu: Located on Phuket’s east coast, Cape Yamu is a tranquil peninsula known for its breathtaking views. This area remains a favourite for high-end villa buyers valuing privacy and elegance, showcasing properties with modern architecture and luxurious amenities.

Phuket Town: Offering a slice of local Thai culture, Phuket Town attracts those wanting an authentic living experience. Though more affordable, properties here cater mainly to a market looking for residential setups rather than holiday homes.

Surin and Pansea Beach: Synonymous with luxury and exclusivity, these areas host some of Phuket’s most extravagant properties, along with beautiful beaches and upscale beach clubs.

Ao Po and the East Coast: While the West Coast might have its beaches, the East Coast offers stunning vistas over Phang Nga Bay. The slower pace and less developed environment make it increasingly appealing to those looking for serenity.

Patong: Phuket’s most famous beach resort town, Patong, is ever vibrant, known for its nightlife and shopping. Ideal for investments in short-term rentals or holiday homes, properties here remain in high demand.

Cherng Talay and Thalang: Contrary to areas such as Nai Harn, the expansive lands of Cherng Talay and the wider Thalang region hold immense promise for upcoming property developments in Phuket. Their inland growth potential is undeniable, positioning them as key players in Phuket’s future luxury real estate landscape.

Pasak and Bang Jo: Further inland, areas like Pasak are seeing a rise in buyer interest. Bang Jo, due to its proximity to the Blue Tree Recreation Park, is also witnessing burgeoning development, indicating the evolving trends in luxury property preferences.

Kamala Phuket property market
Kamala Beach, Phuket

Legal structures for foreign investors in the Phuket property market

In Phuket, as per Thai laws, foreign property investors are required to adhere to specific legal ownership guidelines. Notably, foreigners are prohibited from owning freehold land directly in their name. As a result, those interested in Phuket villas must approach ownership in one of two ways: either the freehold of the villa is held within a Thai company, where the foreign investor maintains a controlling interest, or the property is acquired on a leasehold basis. On the other hand, the landscape shifts when considering apartments and condos. Uniquely, freehold condominiums in Thailand possess a distinct legal status that permits foreigners to register the freehold directly under their name. However, for apartments that do not carry this freehold condominium status, foreigners can either opt for a leasehold arrangement or acquire ownership through shares in a Thai company. For more details, see Legal & Tax Thailand

Current Trends & Outlook 2023

To grasp the dynamics of the Phuket real estate sector, it’s important to acknowledge its distinct nature compared to the broader Thai market. The driving force behind Phuket’s property market—similar to other resort locales like Koh Samui—is predominantly the international demand, which is intrinsically tied to the tourism industry. Typically, a foreign investor’s purchase of property in Phuket is preceded by a vacation in the region, although there is a time lag between their visit and the investment. While there are instances where an international buyer may acquire property without prior viewing, such occurrences are uncommon.

The strong growth in the tourism is expected to continue driving forward the Phuket property market for both condominiums and luxury villas. The Phuket real estate market has surged for the last two years, the key driver being foreign investors. Along with the general return of post pandemic tourism, further boosted by reopening of Chinese borders in March this year, other key factors behind Phuket’s buoyant property market include Russian investors looking to move their money into safe havens fuelled by war anxiety and the Thai governments’ luring of foreign investors via new longer-term visa programmes (see https://ltr.boi.go.th/).

Source Bangkok Post – According to the Real Estate Information Center (REIC), the number of newly sold villas in Phuket last year increased more than four times, from 34 units in 2021 to 149 units in 2022, and in the second half of 2022, 129 villas were sold, compared with 131 for the whole of 2019.

According to Phattanan Phisutvimol, president of the Phuket Real Estate Association, “The number of condo units transferred in November and December of 2022 was 30% higher than pre-Covid levels,” said Mr Phattanan. ” This momentum is expected to continue over the next two years as the tourism sector makes a powerful comeback.”

Phuket condominium transfers for 2022 surpassed those of pre pandemic sales. The proportion of units transferred to foreigners rose to 32.4% last year from 24% in 2021, 27% in 2020 and 28.6% in 2019. With the Chinese restricted from travel, Russians accounted for the highest proportion of condos transferred to foreigners in 2022.

Source Bangkok Post – According to Nattha Kahapana, managing director of Knight Frank Thailand, the current surge in demand in Phuket’s real estate market is being fuelled by Russian and also Chinese investors. Russians are buying property in Phuket as they want a place to live in immediately. More Chinese investment is anticipated towards the end of this year, as there will be a time lag after the return of Chinese tourists. While Russian investment is focused on luxury pool villas, Chinese investment is more across the board, covering all property types.

Russian Investors: The conflict in Ukraine, coupled with increased travel restrictions in Europe, has led to a significant surge of Russians choosing Phuket as a preferred destination. Last year, villa sales on the island rose by 82%, with half of these bought by Russians, as reported by Knight Frank Thailand. The first half of the year saw over 791,000 Russian nationals in Thailand, a 1,000% rise compared to the previous year, with the majority entering through Phuket airport. This shift made Russians the top source of tourists for the island. Recognising its strategic importance, Russia inaugurated a consulate in Phuket in July. While Europe has traditionally been favoured by Russians, Thailand’s alluring beaches and vibrant nightlife in places like Phuket offer an appealing alternative, especially with eased visa regulations. Additionally, Thailand’s new visa programs attracts specialists and digital nomads, and Phuket has adapted to meet the demands of this influx, with facilities like airport announcements in Russian.

Digital Nomads: Phuket has become a premier destination for affluent digital nomads, thanks to the introduction of extended visa options. The island’s idyllic climate, advanced infrastructure, and top-tier educational institutions make it an attractive locale for professionals free from traditional workspaces. With top-notch co-working facilities, reliable internet, excellent amenities, and a variety of recreational activities, Phuket has seen a surge of interest from this demographic. This has, in turn, positively influenced the Phuket property market. As the global work landscape evolves, Phuket reinforces its position as an ideal balance between work and leisure, becoming a focal point for property transactions.

Rising Phuket Property Market Prices: A significant trend is the escalating prices of properties in Phuket. This has been propelled by various elements, such as a marked increase in land prices, coupled with supply deficits and robust demand. A study by the Real Estate Information Center (REIC) – Source: Thansettakij media company – revealed a 24.5% year-on-year decline in available housing in the latter half of 2022. Additionally, Knight Frank Thailand, as sourced from Thansettakij media company, states that land prices in Phuket now surpass 14M THB per rai, marking a 20-30% hike from the previous 10M THB per rai. Prices of villas have also seen an ascent of 15-20%. While luxury villas in Phuket witness the highest demand, real estate agents have observed substantial price increases for both luxury villas and condominiums. According to Thai Residential, a seasoned Phuket real estate agent, while some new condominiums remain available for 100,000 baht per sqm, others have doubled in price – a phenomenon unimaginable just two years prior. Although part of this surge can be attributed to the market rebound post-Covid, prices have now surpassed pre-pandemic figures. Stakeholders in the Phuket property scene concur that the current spike in demand and pricing, especially for prime new builds, is unprecedented.

Effect of Global Interest Rates: The interplay between global interest rates and the Phuket property market is worth noting. While rising global interest rates often dampen market enthusiasm elsewhere, the property market in Phuket remains robust, buoyed by its distinctive cash transaction model. Foreign investors are basically unable to secure mortgages from Thai lenders, leading to predominantly cash-based acquisitions for overseas buyers within this sector. This is mainly because the intricacies of foreigners securing freehold ownership through Thai companies prohibits them from access to mortgages.
Even with such distinct features, the Phuket property market continues to flourish, particularly as low global interest rates prompt investors to seek better returns. This phenomenon, known as ‘asset switching,’ sees funds being transferred from low-yielding bank deposits to property investments, with Phuket’s allure as a tropical haven further incentivising this trend. This has resulted in a noticeable increased demand for studio and one-bedroom properties, sought after by international buyers for their superior rental yields compared to traditional bank savings. As a consequence, the Phuket property market experiences heightened demand and the potential for an upswing in property valuations, fuelled by the influx of investment. The combination of sustainable rental earnings and the prospect of asset appreciation makes investing in Phuket’s property market an attractive proposition, particularly in an era characterised by low-interest rates worldwide.

Market Demand Shift to Luxury Sector: As highlighted by Business Insider, there’s a pronounced pivot towards the mid to high-end segments of the market. This trend stands in stark contrast to pre-pandemic patterns when the focus was primarily on entry-level price brackets. With the emergence of buyers who are less price-sensitive, the demand is notably shifting towards the luxury sector. In this luxury domain, the dynamics are transitioning to a seller’s advantage, eliminating the need for price reductions. The prevailing trend showcases a reversal from the previously dominant affordable entry-level market to a growing interest in both midscale and upscale luxury segments. In light of the growing demand, developers are now venturing into constructing luxury villas on terrains previously considered unsuitable, thereby expanding the geography of the Phuket property market. Lands that were once dedicated to agriculture are now hosting upscale housing projects. Given Phuket’s compact size, residents are always within a 30-minute drive from the pristine beaches and Andaman coast, making these new luxury establishments highly sought after by prospective buyers.

View our property for sale in Phuket