The real estate market in Phuket, Southeast Asia’s top resort destination, is seeing drastic changes due to urban flight and a steady influx of new lifestyle inhabitants. The rising demand for detached houses and more enormous condos has become the island real estate mantra.
Since 2019, when over 9 million sun seekers visited Phuket, the island has seen a dramatic shift. Most of these visitors came from mainland China. At that time, condo developments catering to first-time investors sprung up around Phuket. Many carried hotel chains’ names and assured high rates of return.
However, COVID-19 quickly put a damper on that tendency, and now not even overseas buyers of off-plan houses may travel to receive their keys to their finished flats. Because of the influx of new residents, the island’s real estate agency industry has seen an increase in rental demand for villas and sales of newly constructed properties. Expat families from Hong Kong, Singapore, and further afield were drawn to Phuket by the strong lifestyle community that included international schools, hospitals, marinas, golf courses, and the promise of calmer, outdoor-oriented living.
Greater Cherntalay, on the coast, is a hot new tourist destination that perfectly exemplifies the shift in real estate demand. The construction essentially rewrote the island’s geography, and it is now commonly referred to as Laguna after the island’s most prominent integrated resort.
The most recent market analysis from C9 Hotelworks dove deep into the area’s major companies, burgeoning micro-bedroom community areas, and trends in real estate. New research identifies five significant luxury developers’ villa communities that have amassed substantial portfolios of finished and sold-out projects.
These entities are spearheaded by Phuket Exclusive Development (Wallaya), AAP Architecture Properties and Development (Botanica), Pearl Island Property (Anchan), Attitude Club (Mono), and Bangtao Paradise Construction (Bangtao Paradise Construction) (Trichada). Presently, they have gathered approximately 50 developments totaling over 1,100 apartments. Following the colon is the developer’s most famous product line.
From a purely commercial perspective, it is remarkable how quickly and effectively these groups have been able to innovate and increase their prices. Some players comfortable with the THB15-20 million level are now constructing facilities in the USD30-80 million range. As you may imagine, this will drastically alter the purchasing power of potential customers.
C9 Hotelworks analysis notes a significant shift in real estate investment away from single-family homes and towards commercial assets, including restaurants, offices, and retail stores. Boon Yongsakul, a developer at Boat Pattana, is essential to this process. The company has introduced a new method for improving traditional Thai shophouse strata-titled flats. As a result, they have seen significant price increases after upgrading the buildings and adding community features in the Boat Avenue neighborhood. Buyers in Thailand and abroad are snapping up these rental homes at a rapid pace.
The market for condos in resorts has split in two over the past several years. The high demand for the least expensive homes in developments with a median value of around THB5 million shows that the market for entry-level investment-type apartments is still active.
End-users, on the other hand, occupy one- and two-bedroom flats in the THB9-15 million price range. Empty-nester retirees, who may be trading down as their children leave home, and young families searching for their first house are also included in this group, as are those seeking a second home or vacation retreat. Larger multi-bedroom condos are in high demand, as seen by the success of Laguna Beachside and Skypark.
When looking at the bigger picture of Phuket’s best West Coast real estate, it is evident that there is a shift inwards due to the high entry hurdles associated with the oceanfront and Seaview property. Even though development is ongoing in micro areas, rising land prices indicate that new locations farther inland and north may soon experience an influx of builders. New retail lifestyle malls like the new Robinsons and a new batch of foreign schools on Cherngtaly are paving the way for the urbanization and rehabilitation of mid-rise structures along major thoroughfares.
When asked about the recent uptick in transaction volume and property price increases, Brennan Campbell, CEO of the preeminent Thai brokerage firm FazWaz, said, “The pandemic has disrupted the mass investment property trend, and both domestic and macro-economic and political elements have been the trigger.” In all our years, this is the busiest we’ve ever been.
Based on an analysis of current and historical market conditions, C9 Hotelwork maintains its optimistic outlook on the West Coast real estate market due to the rising number of end users and permanent and seasonal inhabitants. We have witnessed the transformation of the island real estate market from a speculative bubble to one that is more stable and rooted in reality. Inbound solid foreign investment and transaction activity levels are anticipated as the Thai baht is forecast to break the THB38 to USD1 rate in the fourth quarter of the year.
