Phuket has the most expensive resort real estate in the region, some of it epitomizing the ultimate luxury property. There is no other place in the region, where a sea view villa in a decent location, often without direct beach access, can fetch many millions of USD
I’m often asked about investing in Phuket property. Unfortunately, there are no clear answers. Phuket’s real estate is in a class of its own and cannot be compared to any other place in Thailand. It may just as well be in a different country.
Over the years, prices of Phuket property have gone up, for a few reasons. For instance, the island’s geography limits the number of plots suitable for sea view villas, limiting their supply. Moreover, there are only a few developers with proven expertise, resulting in few trustworthy projects for demanding clients.
According to Thai law, foreigners cannot purchase freehold land. This hasn’t deterred investors. Some go for 30-year lease extendable by 3 or 4 times to 90 or 120 years. Others set up offshore companies, which own Thai companies, which own their land plots. The latter has been getting some negative attention in the press and from the authorities lately. Future will tell if this structure will be able to safeguard investors’ interests.
Regardless of the structure chosen, there is basically no financing for property in Phuket, which ensures that prospective purchasers are wealthy. But it also means that buying is a lengthy, pricey and timely process. Therefore, Phuket’s market is not as liquid and dynamic as that of Bangkok, Hong Kong or Singapore.
So, is it a good investment? The upward price trend for villas and beachfront properties in good locations is consistent over the last 15 years. Plus, prices are quite resilient when the market turns down, and significant drops are rare.
Phuket’s tourism will continue to grow for many years to come. More wealth will be created and the wealthy will want to stay in luxury resorts and villas. For luxury travelers, checking into hotel rooms is passé́, so the demand and returns on luxury villas will only increase. Phuket is poised to reap the most benefits in the mid to long term, as it’s already an established destination for the world’s rich.