Phuket’s Economic Engine: Foreign Investment and Tourism
Phuket’s real estate market and its broader economy are significantly propelled by foreign investment and a robust tourism industry. The island has experienced a rapid post-pandemic recovery, attracting an increasing number of foreign real estate buyers, particularly from Russia, China, Europe and the Middle East, who are drawn to its luxury property market. Ongoing infrastructure upgrades, including the expansion of Phuket International Airport and planned monorail systems, are further enhancing the island’s appeal and are predicted to boost property values by 10-15% in infrastructure-driven areas.
The Risk of Deterred Investment: A Looming Concern
While the nominee clampdown aims to regularise the market and ensure legal compliance, there is a tangible risk that the continued uncertainty and a perceived lack of clear, secure legal alternatives could deter legitimate foreign investment. This could lead to a significant decrease in the number of expats choosing to live and establish businesses in Phuket. Industry leaders have voiced concerns that Thailand currently lacks "an appropriate structure to support long-term foreign investment".
The current situation presents a classic policy dilemma: balancing robust enforcement with the need to attract foreign capital. The aggressive crackdown on illegal nominee structures, while necessary for legal compliance and national security, creates a short-term chilling effect on foreign investment confidence. The risk is that legitimate foreign investors, observing the increased scrutiny and legal instability, may opt for other, more predictable markets in the region.
This concern is amplified by the current oversupply of housing and condominium units in Phuket, with over 10,000 unsold units, indicating that supply may soon outpace demand. This situation, combined with the legal uncertainties surrounding leases and the ongoing nominee crackdown, could lead to a looming correction in the property market, potentially resulting in price depression and reduced rental returns.
It is noteworthy that despite a nationwide decline in residential transfers, Phuket, Rayong, and Samui actually recorded growth in legal property transfers in the first quarter of 2025. This suggests that the crackdown is successfully encouraging a shift from illegal nominee ownership to legitimate property transfers. However, overall foreign condo transfers nationwide still experienced a slight decline in units and value, indicating a complex picture where legalisation is occurring, but overall foreign demand might be exercising caution.
Proposed Reforms: A Path to Stability?
Recognising the imperative to attract global investment and address the issues highlighted by the nominee crackdown, the Thai government is actively proposing significant reforms:
99-Year Land Leases: The government proposes a new policy to allow foreigners to lease land for up to 99 years, as an alternative to outright ownership. Under this model, the land title would initially be transferred to state ownership, with foreigners obtaining usage rights resembling a leasehold purchase. This initiative aims to directly address nominee issues and provide long-term confidence to foreign investors, aligning Thailand with international standards for long-term property use. This concept was publicly revealed by Deputy Prime Minister and Minister of Finance, Mr. Pichai Chunhachaichan, on May 17, 2025. This is a strategic attempt to formalise and control long-term foreign land use, providing long-term security without granting outright ownership, thus preserving national interests while offering confidence to investors.
75% Foreign Condo Ownership: There are proposals to increase the foreign ownership limit for condominiums from the current 49% to 75%. While this would increase the proportion of foreign-owned units, voting rights in condominium management associations would reportedly remain capped at 49% to maintain Thai majority control. This change is expected to stimulate demand and reduce reliance on illegal proxy ownership structures.
Destination Thailand Visa (DTV): Attracting a New Generation of Expats: Beyond property reforms, the government is actively promoting the Destination Thailand Visa (DTV), a five-year, multiple-entry visa specifically designed for digital nomads, remote workers, and freelancers.
This initiative aims to attract a younger, skilled demographic and high-potential talents, investors, and professionals to live and work in Thailand long-term, addressing challenges like the declining working-age population and supporting labour market expansion.
Each entry under the DTV allows a stay of up to 180 days, with an option to extend for an additional 180 days, enabling nearly a year-long continuous stay. Eligibility generally requires applicants to be at least 20 years old and maintain a bank balance of at least B500,000 (approximately US$14,400) for the previous three months, along with proof of employment or business ownership.
The DTV also extends to those engaging in activities like Thai cooking classes, music festivals, Muay Thai training, sports programs, or medical treatments, broadening its appeal beyond traditional remote work. This visa offers legal work authorisation, access to essential services, and an affordable cost of living, positioning Thailand competitively among countries offering digital nomad programs.
While the Long-Term Resident (LTR) visa also offers extended stays (up to 10 years) for high-income professionals, the DTV provides a more accessible long-term option for a wider range of digital nomads and remote workers with relatively easier financial requirements.
Crucially, it must be emphasised that these are currently proposals and are not yet enacted laws. The Ministry of Home Affairs is tasked with expediting the legislative process, with a stated goal of presenting these proposals to the Cabinet in August for approval and implementation.
However, similar proposals have faced political opposition in the past. The success of these proposed reforms hinges not just on their passage, but on their proper and transparent implementation. Public skepticism about enforcement, as indicated by concerns about corruption, highlights that real change will require consistent and clear application of the new rules to restore foreign investor confidence.
Tourism Industry: Navigating Regulation, Not Collapse
While the user’s concern about a “collapse” of the tourist industry is understandable given the ongoing crackdowns, the overall picture from official reports indicates a strong recovery and growth, rather than a decline. Thailand received approximately 35 million tourists in 2024, nearing pre-COVID numbers.
For the first quarter of 2025, Phuket alone saw 3.89mn domestic and international visitors and B149 billion in tourism revenue, with daily international arrivals around 17,000 to 18,000, and both numbers are expected to continue rising. Nationally, Thailand is targeting over 40mn foreign arrivals in 2025, aiming to surpass its record-high numbers from 2019, with visitor arrivals showing a 3.9% year-on-year increase as of mid-March 2024.
The government’s actions, including the nominee clampdown and visa policy adjustments, are primarily aimed at regulating the industry and curbing illegal activities, not at addressing a collapse in tourism. For instance, the Ministry of Tourism and Sports is actively cracking down on illegal tour guides and businesses, with 40 tourism business licenses revoked in 2024 due to nominee practices. Foreigners are strictly prohibited from working as tour guides or operating tour businesses, and penalties for violations have been significantly increased, including hefty fines and imprisonment.
Furthermore, the proposed shortening of visa-free stays from 60 days to 30 days, while potentially impacting some long-term visitors, is largely supported by tourism operators who believe it will help curb abuses by individuals engaging in illegal businesses, such as unlicensed property rentals and work, without significantly affecting the majority of short-term tourists.
Phuket hoteliers, for example, do not expect to feel a pinch from this change, as the average length of stay is around two weeks. This indicates a strategic shift towards ensuring that foreign presence in the tourism sector is legitimate and contributes positively to the Thai economy, rather than exploiting loopholes.
The government’s focus is on fostering sustainable growth and attracting quality tourism that aligns with national interests, distinguishing between desired, compliant investment and undesirable, illicit activities.
Recommendations for Expats and Investors
Navigating Thailand’s evolving legal and economic landscape requires a cautious and informed approach from expatriates and foreign investors.
Prioritise Professional Legal Advice: Given the inherent complexities and dynamic nature of Thai foreign business and property law, it is paramount to seek independent, qualified legal counsel from experts. Relying on informal advice or outdated information carries significant risks.
Scrutinise Existing Arrangements: For those with current property or business interests, a thorough review of existing lease agreements, company shareholding structures, and operational compliance is imperative. This will help to understand potential vulnerabilities in light of recent Supreme Court rulings and intensified enforcement actions.
Avoid Illegal Nominee Structures: The risks associated with nominee arrangements are now higher than ever. Penalties for non-compliance are severe, including imprisonment, substantial fines, and asset confiscation for both foreign investors and Thai nominees.
Understand Leasehold Realities: The Supreme Court’s ruling means that automatic renewal for 30-year leases cannot be assumed. Future renewals must be renegotiated as new agreements. Expats should plan accordingly and avoid making upfront payments for extensions that are not legally binding. Any claims of ‘90-year’ leases should be treated with extreme caution.
Stay Informed on Legislative Developments: While the proposed changes to 99-year leases and 75% condo ownership are significant and could fundamentally alter the investment landscape, they are not yet enacted laws. Monitoring their legislative progress and understanding their final form is crucial for future planning. Similarly, understand the nuances of new visa categories like the DTV, ensuring it aligns with your long-term plans and eligibility.
Ensure Business Operations are Licensed: Beyond ownership structures, it is vital to ensure that all business activities, particularly short-term rentals of residential properties, fully comply with relevant acts such as the Hotel Act and the Tourism Business and Guide Act to avoid severe penalties.
Towards a Transparent and Sustainable Future
Phuket, and indeed Thailand as a whole, is striving to strike a delicate balance: protecting its national economic interests and sovereignty while continuing to attract vital foreign investment and talent. The ongoing nominee clampdown and the Supreme Court’s clear stance on lease renewals underscore the government’s firm commitment to legal compliance and transparency.
However, the success of this recalibration, particularly in maintaining Phuket’s allure for expats and investors, hinges on the swift and transparent implementation of proposed reforms. Without clear, secure, and legally sound alternatives for foreigners to buy property and establish businesses, there is a tangible risk that the number of foreign individuals choosing to settle and invest in the Kingdom will decrease. This potential decline could stifle the very economic growth the government seeks to foster, exacerbating existing challenges such as the oversupply in certain condominium segments.
For expats and investors, the message is unequivocal: the era of ambiguity is ending. Navigating this evolving landscape demands vigilance, strict adherence to the law, and a proactive approach to securing one’s interests within a transparent and evolving legal framework. The future of foreign presence in Phuket will ultimately be defined by how effectively Thailand can provide a structured, transparent, and sustainable environment for legitimate long-term engagement.
This article is the third and final in a series that is in whole titled ‘Thailand’s Shifting Sands: Navigating the Nominee Clampdown and Leasehold Uncertainty for Expats’. (See the first two articles in the series here and here.)
Simon Causton is a long-time Phuket resident, founder of Citadel Phuket and author of ‘The Phuket Periodical’ newsletter. X (Twitter): @SimonCauston