Phuket’s tourism industry — and as a result, its property values — took a hit in the aftermath of historic floods in southern Thailand in 2016-2017. The past two years have shown signs of recovery, both in the tourism industry and the property market. The island attracts significant interest from foreign buyers, including Russian and Chinese investors, a trend which will form the basis of growth in the Phuket property market into 2019.
Phuket is one of Thailand’s most well-known island destinations, and is a hub for tourism in southern Thailand. Travelers frequently stay in Phuket or transit through to other island destinations, cruises, and adventure tours. Severe floods in the 2016-2017 season had a negative impact on tourism, however the island is recovering with the help of government assistance.
The influx of foreign investors from Asia has shifted the market demand towards small condos and condotels. Chinese investors in particular have shown interest in income from mid-range rental and holiday properties. While upmarket condos and apartments will continue to hold value, the trend towards small condos and mid-market projects is likely to grow into 2019 and beyond.
Investments in Phuket’s infrastructure have already shown yields for the island’s tourism economy: Expansion of the Phuket International Airport led to a 19% increase in new arrivals in the first quarter of 2018, with low-cost carriers supporting an increase regional and international connections through the airport. Upcoming theme park and retail projects promise to diversify the island’s tourist attractions beyond the beachfront.
On the subject of beach property: Phuket’s western beachfront is the main tourist attraction on the island, and the primary location for upmarket apartments, condos, and resorts. While some investments may be found in this highly developed region of the island, developers are limited by the high price of land in choice locations such as Patong. Newer development, including mid-market projects, have focused on areas like Thalang in the northern part of the island.
The overall Thai real estate market has experienced steady growth over the past decade, with a dramatic increase in international tourism focused on the country’s southern islands. Overall, the regulatory environment remains favorable for investors and developers, with low interest rates and relatively uninhibited consumer access to credit. There are no indications of major changes to the regulatory environment, including regulations for foreign ownership of Thai real estate.
Phuket’s property market remains fundamentally one driven by foreign investors and the health of the island as a regional and international tourist destination. Recovery from recent flooding, investment in diversified tourist attractions, and sustained interest from Chinese and Russian buyers support a promising outlook on property values in the coming year. In any case, prospective buyers should remain aware of the risks in short- and medium-term investments in Phuket property, as real estate values are liable to greater fluctuations linked to trends in tourism.