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These factors position Phuket as the leading region globally for real estate investment. The evidence is in our review, prepared jointly with experts from the Thai real estate agency Exotic Property.
The success of real estate investments is closely tied to the economic health of the location. Thailand has shown impressive resilience and growth in this area. Recent findings from Deloitte's "Thailand’s Economic Outlook, 4Q2023" report indicate a swift recovery from the coronavirus crisis. Although the economy dipped in 2020, it has been on an upward trajectory ever since. Both the International Monetary Fund and the Bank of Thailand predict a growth rate of 3.6-3.8% by the end of 2024.
The primary driver of prosperity has been the hospitality sector. From the beginning of 2023 until October, foreign tourists have brought 939 billion baht (approximately $25.7 billion) into Thailand's economy. Phuket alone has received $8.5 billion, a significant portion of this sum.
For foreign investors, an attractive feature of Thailand's economic environment is the stability of the national currency. The Thai baht has maintained a consistent exchange rate to the dollar for the past 20 years, ensuring steady returns on investments in Phuket real estate.
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When you rent out apartments through an official management company or a hotel operator, the revenue is usually paid in the local currency and deposited into a bank account. If you opt for private arrangements, the terms vary based on your agreement. The exchange rate for the dollar has been stable, ranging from 33-35 baht, just as it was a decade ago. This rate slightly decreases in summer and increases in winter, making it a reliable currency for savings. Unlike some regions, here we primarily use multi-currency bank accounts. You can deposit dollars, euros, yuan, and other currencies, which are then converted into baht at the current exchange rate.
Phuket currently welcomes between 500,000 and 700,000 visitors monthly, benefiting from its proximity to large tourism markets like China, India, and Malaysia. The influx of Russian tourists has surged by 130% in 2023, fueled by direct flights and an extended visa-free period of up to 90 days. Additionally, European, American, and Australian tourists continue to visit in strong numbers.
The forecasts indicate a significant rise in tourist numbers. In response, Phuket authorities are developing a second airport in Phang Nga province to accommodate more direct international flights, ensuring Phuket remains a top destination.
Phuket is appealing not only to vacationers but also to long-term expatriates who choose to retire, enroll their children in local international schools, and work remotely with global clients.
It’s crucial for foreign investors to recognize that Phuket enjoys a consistent influx of tourists throughout the year, unlike some other destinations with marked seasonal variations. According to Knight Frank, the average occupancy rate for apart-hotels in the region stood at 81% for the first half of 2023, a figure that rarely exceeds 70% in many European locations.
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I can provide insights from Exotic Voyage, a tourism company within our group. This past winter, Phuket's hotels were fully booked, forcing us to accommodate tourists in mainland areas like Khao Lak and Phang Nga. These neighboring provinces, connected by a bridge to the island, offer more affordable accommodation options—often at half the price. They are particularly appealing for families with children. The availability of hotel rooms in these less-known regions helped us manage the overflow from Phuket, where there were no vacancies.
Phuket faces a significant shortage of accommodations for tourists, primarily due to limited available land and strict regulations on high-rise construction. The cost of land in prime locations has surged by 100% over the past two years, according to the Bangkok Post. However, this scarcity presents a unique opportunity for private investors.
By investing in an apartment in Phuket, investors can be confident of two key advantages. First, their property will be in high demand by tourists. Second, the limited competition allows for maintaining strong rental or resale prices, avoiding the need for price reductions.
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Phuket is a small island. 70% of its territory is occupied by mountains, nature reserves and farmland, where nothing can be built at all. The narrow strip of buildable land along the popular western coast beaches is nearly fully developed. In addition, there are restrictions on the height of buildings. Purchasing apartments close to the sea—on the first or second line—offers potential for medium-term gains.
Development is now expanding three to five kilometers from the beaches, where large developers are introducing residential complexes along with necessary infrastructure. This shift offers an attractive investment opportunity. Such properties attract expatriates planning long-term stays, with schools, hospitals, and shopping centers nearby, and the sea just a short drive away.
Phuket is celebrated for its high-quality construction, evidenced by the substantial presence of branded real estate projects on the island. Renowned brands such as Hilton, Radisson, Best Western, Wyndham, Renaissance, Sheraton, Movenpick, and MGallery offer properties here.
According to Savills, Phuket ranks among the top five global regions in the number of operational and planned branded complexes, surpassing even London in this category (Branded Residences, 2023).
A prestigious brand not only ensures quality construction but also guarantees top-notch services, including maintenance and rental management.
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After the pandemic, the demand for real estate in Phuket has soared to levels not seen in years. In response, developers have been quick to act. Prominent companies from Bangkok, new to the island, have initiated projects here. Additionally, developers with Russian and Chinese investments have become significantly active. The competition among them has spurred innovation in design, layout, and services, making the current offerings exceptionally appealing. We invite you to contact us to explore some of these unique projects.
Over the past 15 years, residential real estate in Phuket has appreciated by 150%, averaging a 10% annual increase. Despite this significant growth, prices remain accessible compared to other popular resort destinations. According to a recent study by Knight Frank in "The Wealth Report 2024," Phuket offers the best price-quality ratio among the world's most sought-after resort regions. Here, for $1 million you can purchase an average of 213 sq. meters of luxury real estate.
For perspective, $1 million buys only 30 square meters in Saint-Tropez, France, 50 square meters in Ibiza, Spain, and 91 square meters on Italy's Lake Como.
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The entry threshold for investment real estate in Phuket starts at $100,000, specifically for seaside resort complexes from reliable developers with licenses for daily rentals. One exceptional project at Nai Yang Beach offers 30-square-meter studio apartments, fully furnished and finished, for $85,000. However, this price is available only during initial sales and won’t last long. If you’re considering five-star apart-hotels under global brand names, prices start at $150,000. There are no tiny studios in such projects, for this money you will get 45-meter apartments.
In Thailand, the additional expenses involved in property transactions are relatively low, ranging from 3% to 5% of the property's price. This includes all potential buyer costs such as taxes, duties, and fees for connecting utility meters.
One significant financial benefit in Thailand is that new constructions are exempt from VAT. While many countries impose VAT on primary market transactions, increasing the financial burden on investors—like a 19% VAT in Cyprus and 11% in Bali—in Thailand, there is no VAT on such properties. Instead, developers pay a special business tax of about 3%, which they remit directly to the government, not passing these costs onto buyers.
Even in Dubai, known for its low-tax benefits, the overall costs are higher, as the registration tax alone amounts to 4%. Comparing these figures to European costs, where additional expenses can exceed 20%, highlights Thailand's attractiveness.
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Many investors reduce additional costs by conducting transactions remotely, which is a common practice with us. Every stage of the transaction can be managed from afar, which saves both money and time that would otherwise be spent traveling to Thailand. Our developers are equipped to accept various forms of payment including dollars, baht, yuan, and even cryptocurrencies, offering further flexibility and convenience for international buyers.
Phuket real estate stands out globally for its high returns, driven by two key factors.
Firstly, properties typically experience an average increase in value of around 30% from the beginning of sales to completion—a level of growth not commonly observed in European markets. Even after completion, finished apartments continue to appreciate, albeit at a slower pace.
Secondly, apartments in Phuket are in high demand for rental purposes, thanks to the continuous influx of tourists throughout the year.
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Guaranteed income programs are common in Phuket, providing investors with a fixed sum regardless of how their apartment is rented out. Currently, average yield rates range from 5% to 8% per annum. For those willing to take on some risk, there's potential to earn even higher returns.
Rental programs without guarantees, known here as Rental Pool, can yield up to 20% in a good year. However, during challenging periods like the height of the pandemic, these programs typically cover only maintenance costs.
For expert consultations, reach out to Exotic Property, a leading real estate agency operating in the Phuket market for over 15 years. As part of the esteemed Thai holding Exotic Group, Exotic Property offers a comprehensive suite of services, including consulting, transaction support, and post-sale assistance for investors and buyers of resort properties.
