The 5 reasons why Phuket remains a hotspot for real estate investment in 2024
Phuket’s charm is undeniable, and it’s easy to see why so many people are drawn to the idea of owning a piece of this paradise island. But is now the right time to invest in property here? The short answer is yes. According to the 2024 market insights by property portal FazWaz.com, the island’s property scene is thriving, with a surge of buyers from countries like China, Russia, Australia, and the United States. These international investors are purchasing homes and condos, often as second residences. Here’s why Phuket continues to be a top destination for real estate investment.
1. Strong growth in property values
The real estate market in Phuket, like many others worldwide, faced significant challenges during the global pandemic. However, it has shown remarkable resilience and an impressive recovery. The turning point came during the Phuket Sandbox initiative in 2021, which attracted high-net-worth foreign travellers, many of whom invested in luxury villas and condos. This surge in demand started a booming residential market that has continued to grow ever since.
By 2023, residential property prices in Phuket had surged by 10% to 15%, far surpassing the typical growth rate of 5% and marking the highest increase on record. Over the past two decades, land prices have also seen robust growth, averaging a 10.7% annual increase.
Looking ahead, the upward trend in Phuket’s residential prices is expected to continue in 2024, with a projected growth of 10% to 15%. This is especially true in high-demand areas, such as Cherng Talay and Layan, where property values and land prices have consistently appreciated.
2. Diverse buyer demographics
Phuket’s real estate market has witnessed a significant shift in buyer demographics, attracting a broad mix of both local and international investors. Traditionally, entry-level buyers dominated the market, but recent years have seen a notable uptick in demand for midscale and upscale luxury properties. This shift is driven by a new type of buyer: those seeking second homes and less sensitive to price fluctuations.
In recent years, the island has seen an influx of investors from China, Russia, Australia, the United States, and more, each bringing their unique motivations and preferences to the market. Buyers from different countries have varying reasons for purchasing Phuket real estate. For instance, Russian investors, representing about 70% of the buyers, are primarily interested in luxury villas, with their purchases almost evenly split between using properties as vacation homes and making investments. Chinese buyers form the second-largest group, similarly focusing on holiday homes or investment properties.
The trends differ further among other nationalities. More than 50% of Thai buyers purchase houses or condos for personal use, while British buyers are nearly evenly split between vacation homes and personal use. American buyers, however, tend to favour properties for personal use more strongly.
This diverse interest across multiple regions contributes to the market’s resilience, maintaining demand across a wide range of property types, from luxurious villas to more affordable condos.
3. Tourism-driven market resilience
Phuket’s tourism industry is on an ongoing rebound, with airport passenger arrivals in 2023 nearing pre-pandemic levels, signalling a strong recovery. The high tourist influx has led to a robust rental market, particularly for holiday homes.
Developers have responded by increasing the supply of such properties over the past decade, offering attractive return on investment (ROI) opportunities. For instance, projects like Trichada Essence in Phuket guarantee rental returns of 5-7% for a minimum of three years, with some developments offering up to 15 years of guaranteed income.
Th developers market these properties not just as vacation homes but as hands-free investments, where the management team handles rental operations entirely. This setup allows owners to earn passive income, with some developers even offering buyback options at the original purchase price plus 10 to 15% after a set period.
4. Government infrastructure initiatives
The Thai government has been investing heavily in Phuket’s infrastructure. One of the key initiatives is the expansion of Phuket International Airport. The government has instructure the Airports of Thailand (AoT) to increase the airport’s capacity to accommodate up to 18 million passengers annually by 2031. This expansion is crucial, considering the island’s rising tourism numbers and economic growth.
In addition to air travel improvements, the government has announced a comprehensive development plan that includes a new monorail system connecting Phuket International Airport and Phuket Town. This 41.7-kilometre light rail system aims to ease traffic congestion and provide a modern, efficient transportation option for both locals and tourists.
Looking further ahead, the Expressway Authority of Thailand plans to develop a new expressway connecting Patong Beach with Phuket Airport and the intercity expressway system, scheduled to open by 2030. These enhancements are part of a broader strategy to boost Phuket’s land, sea, air, and rail transportation systems, ultimately driving up property values as the island becomes even more accessible and attractive to residents and investors alike.
5. Stable economic growth
Before investing in real estate, it’s essential to consider the performance and outlook of the country’s economy. Thailand’s economic stability is a key factor that makes Phuket an attractive destination for real estate investment. According to the International Monetary Fund (IMF), Thailand’s economy grew by 3.4% in 2023, and experts predict an even stronger growth of 3.6% in 2024. This upward trend indicates that the country is on a positive economic trajectory, providing a secure environment for property investments.
Moreover, the long-term outlook for Thailand’s economy is equally promising. Over the next five years, Thailand’s economy is expected to expand by 15.1%, averaging a GDP growth rate of 3% annually. This sustained economic growth is a positive indicator for real estate investors, as it suggests that property values are likely to appreciate over time, offering both stability and the potential for significant returns.
Phuket’s unique combination of growing property values, diverse demographics, thriving tourism, ongoing development, and a stable economic backdrop makes it a top contender for real estate investment in 2024. However, as with any investment, due diligence is essential. Make sure that you thoroughly research and evaluate the property market in Phuket, just as you would anywhere else in the world.
To explore the best property options and make the most informed investment decisions, visit FazWaz. Their expert team is always happy to guide you through every step of the process so you can find the perfect property that aligns with your investment goals.
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