Property Watch: Impact of tourism on real estate

PHUKET: Statistics are regularly reported by tourism organizations – public and private, which break down the number of visitors arriving in Phuket.

Are Phuket visitors domestic travelers, or business-people commuting? Do we count arrivals and departures, or just arrivals? How do we know the information received is accurate and are people leaving Phuket by other means? Just as this information is difficult to analyze, so is the influence of visitors on the value of Phuket property. However, make no mistake, tourism does affect property values.

The hunger for information on tourism mostly emanates from hoteliers and tourist service providers of which there are many in Phuket. There is absolutely no doubt that many types of businesses in Phuket thrive due to either a direct or indirect effect of tourism.

Even businesses that don’t target tourists can receive a boost when a tourist goes off the beaten path and decides to put their hand in their pocket for something out of the ordinary. Anyone seriously interested in Phuket’s development will be observing and reading reports on the changing dynamics of the island’s tourism.

Much debate over recent years has involved the ‘quality’ of tourists. The very nature of this debate could be considered by some to be a little bit crude, because it puts humans into an economical equation, but actually that is what economists do all the time and it is a worthwhile exercise.

Analyzing which nationality of visitors spend the most money in the local economy when they visit, and then trying to manage that expenditure, benefits the country.

There is also an element in many commentaries on social media, of something I personally detest, racism combined with hypocrisy, which appears when describing the different cultural behaviors of visitors as the litmus test as to whether they are ‘welcome’. Unless your business is absolutely exemplary and perfect in all respects, with the rules clearly explained and enforced, don’t expect your visiting customers to necessarily understand your requirements of behavior, and if you want their expenditure, welcome them.

So, how does tourism impact real estate?

  • Basic infrastructure is upgraded, such as electricity, water and internet; so that Phuket’s standards become higher.
  • Hotel services and choice of amenities, such as hotel restaurants, force independent restaurants to be competitive and this improves standards and choices on the island.
  • The number of tourists who shop means that the choices on offer for residents improves and the furniture and fittings available for property becomes more diverse.
  • The variety of nationalities of tourists that ‘convert’ into part time or full time residents means that when new properties are built, architecture can diversify too.
  • A mixture of visiting nationalities can also create a better attitude in those interacting with them that possess an international mindset.
  • Extra activities taking advantage of the beautiful surroundings of Phuket are created: marinas; sports and recreational facilities as well as international schools with world-class grounds.
  • Private roadways are improved.
  • The area then attracts a general ‘buzz’ that simply means Phuket becomes more of a desirable place to live. Those that moved to Phuket for the quiet life and empty beaches 20 years ago, either adapt or fail to manage the change.
  • When I see a large floating market being erected at the bottom of my road with a car park fit for a hundred or more coaches, I admit there is a part of me that worries I simply won’t be able to drive to my home any more. But then I look at the size of my garden and property, and I realize that at some point, space in Phuket will become a premium, in the same way that once upon a time people only ever wanted to live next to the beach. We only have to look at our Asian neighbors to see what happens to prices when a place becomes crowded.

    If you don’t like tourists, Phuket isn’t the place for you. If you are a property speculator, then I believe tourism brings many positive attributes and long-term potential gains in property, if you are prepared to wait.

    Desmond Hughes has been an owner and operator of his law firm in Thailand for 14 years, and is a Senior Partner at Hughes Krupica law firm.

    — Desmond Hughes


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