There are two features of the property market that distinguish Phuket from most major vacation destinations: the market is driven by sales of condominiums and villas to foreign buyers, and it is virtually impossible for foreigners to receive financing from Thai banks.
This makes Phuket a cash market for houses and condos. Because there is almost zero borrowing to buy residential real estate in Phuket, interest rate fluctuations and typical causes of demand-supply shifts in other property markets have not significantly impacted Phuket.
In fact, over the last two decades, its market has shown remarkable resilience, maintaining its long-term buoyancy despite multiple events that temporarily brought tourism on the island to a standstill. One of the most notable was the Boxing Day Tsunami in 2004, but either side of that were financial crises in 1997, 2001, and 2008. Thailand also experienced drops in tourism due to public health emergencies such as SARS, Bird Flu, and most notably the COVID-19 pandemic. While these events caused temporary downturns, they proved to be short-lived blips, with the property market rebounding quickly each time.
Casual observers who believe all real estate markets behave the same are sometimes taken aback at the price stability of property in Phuket, even though for decades it has repeatedly avoided the slumps that have befallen other countries.
Foreigners who buy property in Phuket often arrive for the first time as tourists. They fall in love with the island, the people, the culture, and the food - or all of the above - and decide they either want a holiday home in Phuket or choose to relocate permanently.
As more and more young families decided to settle in Phuket, the number of international schools on the island exploded to the point where there are now 16 schools with international curricula, up from 11 in 2019. Furthermore, student enrolment in 2024 was up 17% year-on-year. This is on an island where foreign residents number fewer than 100,000.
While foreign buyers certainly dominate the Phuket real estate market, the impact of the local Thai market should not be understated. The United Nations estimated the total population of Phuket in 2024 to be 455,102 - a 1.3% increase on 2023. This is expected to reach 512,000 by 2035 - a 12.5% increase. This population growth will represent a corresponding demand for property from Thai nationals over the next decade.
Relatively short, direct flights (even on low-cost carriers) from regional countries like China, Hong Kong, Malaysia, and Singapore make it possible for families to live in Phuket while one parent commutes for the week to work elsewhere in Asia, returning home for weekends in paradise with the family. There are also professionals without families who make the same commute each week, preferring to call Phuket their primary residence.
What probably sets Phuket apart from other sought-after tropical island holiday spots, however, is its accessibility to people not just within the region, but from all over the world. In addition to Southeast Asia and China, there are direct flights from Korea, India, Australia, the Middle East, Turkey, Russia, and Western Europe. And with one stop in any of those places, visitors from the UK or North America can fly to Phuket without transiting in Bangkok.
While Phuket has a busy international airport of its own, the bulk of tourists in Thailand understandably arrive at one of Bangkok’s two main airports - Suvarnabhumi and Don Mueang. As of Christmas 2024, the total arrivals in the country had exceeded 35 million - a 25% increase over last year.
Whether directly into Phuket or via Bangkok, roughly one-third of all international arrivals in the country ultimately make their way to Phuket. As December 2024 approached, Phuket International Airport (HKT) was on track to welcome over 10 million foreign visitors. Combined with the more than 6 million domestic arrivals, HKT is once again approaching the record 18 million passengers who arrived in 2019.
This upsurge has been aided by expanded visa exemption rules for certain nationalities, with the Chinese being a notable addition to that group of countries whose citizens don’t need to apply for visas either in advance or on arrival. The exemption has also been lengthened to 60 days for many foreign travellers, which will make Thailand an even more attractive holiday destination.
But these changes only went into effect in July 2024, so they only impacted half of the year. Even more countries are due to be added to the exempt list next year, which is one of the reasons why the Tourist Authority of Thailand (TAT) is targeting 2025 as the year all arrivals records will be broken. TAT is expecting over 40 million total arrivals into the Kingdom, and Phuket is poised to break its own record this year, too.
The future beyond 2025 also looks bright for Phuket. “Phase 2” of Phuket International Airport’s expansion is currently in the design phase, with the Airports of Thailand (AoT) planning to expand the capacity at HKT from the current 12.5 million passengers to 18 million. In addition to a new terminal building, the 3-year, THB 6 billion project will also involve expanding the runways and the taxiways and adding a bespoke terminal for seaplanes.
Tourist arrivals are one of the main drivers of condominium and villa sales in Phuket. People visit the island on holiday and quite simply fall in love with it. The food, the culture, the weather, the beaches - what is not to love!? Sometimes it is love at first sight, and they visit a real estate agent on that very first visit. Otherwise, on a subsequent visit, a foreign buyer will look for either that dream retirement home or a rental property.
The real estate market in Phuket has for decades been dominated by condominium sales. This was due to both the ease of foreigners purchasing freehold condos and the strong market for rental properties on the island. For anyone who wants a holiday home to use a few weeks a year and then to rent out for the remainder, a condo is an easy entry into that market.
Condominiums are still highly desirable for the same reasons. From 2014 to 2019, there was an average of 1,148 condo units sold per year in Phuket. In 2023, the industry more than doubled that total with a record 3,300 condo units sold. However, as reported by CBRE, the first half of 2024 already saw condo sales reach 3,000 units. The final figures for 2024 will doubtless be impressive, since the year-on-year increase at the midway point was already up by a staggering 142%!
Interestingly, the condo market in Phuket has seen a change in the type of units being sold. Between 2014 and 2022, condominiums in the THB 8 million - 15 million range made up 49% of the total sales, whereas that figure in 2023 through the middle of 2024 was down to 17%. Units priced at or below THB 8 million make up 63% of all units sold in the most recent period, versus 45% between 2014 and 2022.
As impressive as the condo sales were in H1 2024, new villa project launches in Phuket are now actually exceeding new condo project launches. In H1 2024 there were 65 new villa projects launched, totalling nearly 1,300 units, with a cumulative value of THB 36 illion. In fact, with top-end luxury villas in Phuket now in the US$ 10 million range, the total market for villas on the island has reportedly exceeded a staggering THB 160 billion!
The strength of the market is seeing well-established Phuket developers expand their portfolio on the island, while new players are joining from both overseas and Bangkok. The Bangkok Post has reported that Sansiri, which has already completed 22 projects on the island, is planning a further 27 developments in the next 5 years. Capstone has recently launched the high-end development Peylaa Phuket Bang Toa, their first Phuket development. Other entrants into the market include AssetWise and Origin Property, and all these companies have one thing in common - they recognise both the historical buoyancy of the Phuket real estate market and the real potential for future growth.