Investing in Phuket Real Estate

Thailand is known for its dream landscapes and climate, which is what motivates many tourists to visit the Kingdom. This dynamism in the tourism industry is a boon for investors, especially since the taxation is low and the Thai Baht – reflecting a balanced and healthy economy – is a strong currency.

In this context, Phuket is not left behind. As the most visited island in Thailand, the pearl of the Andaman Sea is deeply rooted in tourism activity, from the beginning of hotel development in the 1960s to the present day.

In Phuket, there is real estate for all tastes and budgets. Market players are more experienced and accustomed to the demands of an international clientele than in other destinations. There are new or old residential properties, pure rental properties, and programs combining holiday with profitability.

When discussing real estate, the first type of investment that typically comes to mind is residential purchase. Buyers may use the property all year round or as a second home. This type of investment is often made out of passion or the desire to relocate, rather than purely for financial gain. The added value of such a purchase lies in the high quality of life found on the island. In addition to the favourable climate, buyers are attracted to the welcoming atmosphere, delicious cuisine, and overall comfort that Phuket has to offer.

Phuket is home to over 20,000 expatriates and boasts good infrastructure including hospitals, schools, roads, and an airport – making it an ideal location for year-round living. As for the types of properties available, there are villas and apartments for resale, both new and old. When referring to “new” properties, we are talking about those that are 2 or 3 years old and equipped with the latest amenities, requiring no renovations. However, new properties tend to be more expensive compared to older ones. To find the best deal, it is recommended to visit multiple properties, compare prices, and research developers and sellers.

Pure rental investment involves purchasing a property with the sole intention of renting it out without residing or visiting the location. Some real estate programs in Phuket offer guaranteed rental returns ranging from 7 to 9% of the property value annually. Investors receive a fixed amount regardless of whether the property is occupied or not, known as a rental guarantee.

How does it work?

In this type of program, investors purchase a villa or apartment that is automatically rented out and managed like a hotel. The developer or their partner hotel chain oversees the property’s occupancy and maintenance, similar to a hotel room. The income generated on a nightly basis is then transferred to the investor. The developer also benefits from this arrangement, as properties with rental guarantees typically yield a higher return than the 7 to 9% paid to the investor, providing a win-win situation. The rental real estate market in Phuket benefits from the island’s tourist appeal and healthy hotel occupancy rates.

Some real estate programs offer guaranteed rental returns while also allowing for free personal use of the property for holidays. Depending on the developer, investors may have the opportunity to stay in their property for a specific period, ranging from a week to a month, without incurring any additional costs or penalties on the rental guarantee. This is particularly advantageous for investors looking to enjoy family vacations.

Phuket presents ample investment opportunities, although some may question if the market is becoming oversaturated. While there are significant new project deliveries, the demand from tourists continues to rise, albeit not as robustly as in previous years.

It is important to note that developers who are able to differentiate themselves will succeed in the market. New programs offer modern amenities and services that surpass those of older properties, helping to rejuvenate Phuket’s real estate offerings and attract a broader range of visitors beyond Chinese and Russian tourists. In 2018, these groups accounted for 43% and 11% of total tourist arrivals in Phuket, respectively. According to c9 hotelworks, Indian tourists are now showing the strongest growth rate in Phuket, with 186,360 arrivals from January to June 2019 – a 354% increase compared to the same period in 2018.

For more information, feel free to reach out to the head of Thai Property Group in Phuket, Cyril Raoulx, via phone or What’s App at +66 (0) 988 762 456. You can also send a message on the TPG page.