Investment in Phuket real estate continues to surge

Conflicts and geopolitical issues in several parts of the world are prompting many people from the Western Hemisphere to turn their attention to the East, both in terms of investment and purchasing homes.

Phuket, long a coveted destination for foreigners seeking a second home, has seen a continuous increase in demand. The sales of real estate and resorts in Phuket have doubled, from 1,500 units sold in 2022 to over 3,000 units in 2023, and the growth shows no signs of stopping.

Ho Kwon Ping, aka KP, founder and chairman of the Banyan Tree Group and the creator of the Laguna empire, paints a picture of the growing competitiveness in the Phuket real estate market. Not only have major developers from Bangkok, such as Sansiri, AssetWise, and Supalai, established projects in the area, but there are also foreign players from Russia, he says.

Despite the fierce competition, he views it as a positive development for two reasons. First, it will increase Phuket's recognition in various markets, boosting demand. Second, it will raise the quality of project development.

As a major developer, Banyan Tree Group has the advantage in terms of cost and resources, with more than 3,000 rai (1,186.11 acres ) of land at its disposal. It is anticipated that this land can be developed for another 20 years to support market growth.

A significant advantage for the Group over its competitors is that this land was purchased long ago at considerably cheaper prices than those today and benefits from infrastructure investment over the years, making new project development easier.

This has become a key selling point, differentiating its projects from the ecosystem in Laguna and offering convenient travel, comprehensive facilities and security, allowing them to cater to an elite clientele.

“The luxury segment does not face as fierce competition as the mid to lower segments, which are price-sensitive. This is a benefit, as there is no need to engage in price wars. All projects within Laguna, whether small units or luxury villas, are priced 25-30% higher than competitors. We have developed a variety of brands to cater to customers seeking luxury real estate in Phuket, setting us apart from competitors, similar to BMW's approach of offering cars of all sizes at a luxury level with higher prices,” Ho explained.

A significant shift in Phuket's real estate began with the Covid-19 pandemic, followed by the Ukraine-Russia conflict leading to an influx of Russians to Phuket in much the same way as the civil war in Myanmar has seen its nationals flock to Bangkok. Previously, Chinese buyers were dominant in Phuket's real estate market.

Currently, the number of Chinese residents in Laguna is stable, with no increase or decrease. It is expected that demand from China will return in the future.

Over the past 2-3 years, Phuket has truly become a global destination, attracting buyers from all over the world including Uzbekistan, Kyrgyzstan and India. Airlines have cashed in on the opportunities and now offer direct flights from 67 cities to Phuket.

“Although we are a smaller developer, we have more international sales managers than other developers in Thailand, who primarily focus on selling to Thais. We sell to foreigners, with representatives in 30 countries worldwide. Our goal is to have sales representatives in every city with direct flights to Phuket within the next two years,” KP said.

Domestic tourism has also increased since the pandemic, with Thais who used to travel to Europe now visiting Phuket, leading to a surge in luxury real estate purchases in Phuket in the 200-300 million baht range. More middle-class Thais are also starting to buy homes and condominiums as second homes, driving exponential growth in Phuket's real estate demand.

“Before Covid, the majority of buyers in Laguna were foreigners, accounting for 85%, and Thais 15%. In the past 1-2 years, 50% of buyers have been wealthy Thais purchasing luxury real estate, prompting more developers from Bangkok to invest in Phuket,” Ho noted.

For the Banyan Tree Group, over 40 billion baht has been invested in real estate development and sales, and 14 billion baht in hotels. Currently, there are 12 projects open for sale, totalling 16 billion baht.

Laguna Phuket spans 3,000 rai with a total value of 180 billion baht. One-third, or about 1,000 rai, has been developed. In the future, with continuous development, Laguna is expected to become a city in its own right with a population of 80,000-100,000 people.

From the perspective of the creator of the Laguna empire, although Phuket is a top destination for foreigners, the high demand is raising some concerns. Phuket's infrastructure is lagging behind, particularly in terms of traffic, which needs urgent development to keep pace with the city's growth. “Phuket should be promoted as a special administrative area, similar to Bangkok and Pattaya, to enable more efficient management and increase revenue collection for the central government,” Ho said.