Phuket Boom: 20-30% Land Price Surge

"Phuket" the Pearl of Andaman in Thailand, has undergone remarkable transformations since the COVID-19 pandemic. While the tourism sector, particularly hotels, has been recovering with the return of foreign tourists, there is now a severe shortage of labor in the service industry. However, Phuket has transitioned from being an international tourist city to becoming a sought-after "residential city" with its beautiful nature and excellent healthcare facilities.

This shift has brought about dramatic changes in the real estate sector, making Phuket a top investment destination worldwide. The region offers unique advantages and returns due to its prime location and potential. As a result, land prices have experienced a significant surge.

Interestingly, Russians have emerged as the leading buyers of Phuket real estate, accounting for 50-60% of the market share compared to the previous 15-20%. This increase is attributed to factors such as the desire to relocate following the Russian-Ukrainian conflict and the appeal of Phuket's attractive lifestyle and investment potential. Additionally, some Russians see Phuket as a safe haven to escape geopolitical tensions and seek a healthier environment for their children's future.

The high demand for Phuket villas has led to a sales rate of 82.1%, the highest in a decade. Moreover, the surge in villa sales has not only driven up prices by 15-20% but has also affected land prices. The west coast, including Kata Beach, Karon Beach, Patong Beach, Kamala Beach, Bang Tao Beach, Choeng Sea (Laguna), and Nai Thon Beach, has experienced the highest increase in land prices. Notably, the Pasak-Kok Tanod Road area has witnessed a significant rise of 20-30% in land prices, surpassing 14 million baht per rai.

The changing market dynamics have also impacted property developers in Phuket. Local developers, including Botanica Group, Trichada Group, and Anchan Villa Group, have seen a return on investment and have become major players in the villa market alongside foreign investors. These developers have capitalized on foreigners' understanding of long-term leasehold rights and catered to their preferences. The resale of older projects has also proven profitable, generating returns of 20-35%.

While the condo market in Phuket experienced a slowdown during the COVID-19 pandemic, the current focus is on rebranding and revitalizing existing projects. However, the number of new condo projects remains relatively limited compared to the pool villa market.

Apart from Russians, there is also significant demand from Chinese customers. Chinese investors are primarily interested in purchasing properties for investment purposes, aiming to generate rental returns. Although the number of Chinese tourists in Phuket is currently low due to travel restrictions and limited direct flights, agents and investors are already planning their future connections and investments. Some Chinese investors have shown interest in unique opportunities, such as acquiring durian plantations or investing in activities that appeal to Chinese tourists, including elephant farms, speedboats, and restaurants.

Overall, Phuket's real estate market has undergone a remarkable transformation, with Russians and Chinese buyers driving the demand and influencing market trends. The region's scenic beauty, excellent healthcare facilities, and potential for investment have positioned Phuket as an attractive destination for both residential and commercial purposes.