another publication by IMAGE asia

Our Chaotic World

How geopolitics and global monetary policy affect Phuket’s real estate market

  Various place in Phuket

Phuket is a beautiful tropical island. Although a mere 660 metres from the mainland, in many ways we feel isolated from the wider world. This is not necessarily a bad thing; in fact, it adds to the allure of the island lifestyle. Life in Phuket is pretty much as good as it comes.

No matter how detached we sometimes feel from the rest of the world, in reality we remain globally interconnected. Unfortunately, this means we are not immune to the repercussions of global economic or political upheaval.

We have previously written about what a “new normal” may look like vis-à-vis the Phuket real estate sector. The radical paradigm shift we have experienced through Covid is unlikely to be permanent, but we do expect the industry to carry on evolving and mutating into something different to what it was pre-pandemic, and far different to what it is today. Many of those changes will continue to be forced upon Phuket from external global phenomena.

The correlation between tourism and property sales makes the Phuket real estate market unique, and we don’t expect this to change. However, the wind in the sails of the Phuket property market is not a steady breeze – sometimes we find ourselves languishing in the doldrums, always the result of global problems reaching Phuket.

As the tourist sector recovers from Covid-19, we must brace ourselves for new surprises. There are two imminent threats to tourism which we will focus on here: the ever-expanding global debt/increasing money supply, and the sad situation taking place in Eastern Europe.

The Covid era has seen unprecedented money printing, with most national governments taking on unfathomable amounts of debt. But creating money out of thin air did not start in 2020. Central Banks have given us record low interest rates since 2008, and in most countries this access to cheap and easy credit has significantly increased borrowing.

An increase in money supply usually leads to greater investment in real estate – as we have witnessed in recent decades – because “bricks and mortar” protect against the inflation which printing money can cause. But these countries tolerate property price inflation because it helps to prop up their otherwise struggling economies.


While interest rates are the dominant economic lever most countries use to manage their economies, interest rates have a limited impact on the Phuket property market. The real estate market here is driven by foreign buyers, and it is difficult for foreigners to borrow money from Thai banks. Most foreign banks will also not lend money to buyers of Thai properties, with the exception of Singapore, but mortgage rates there are too high to attract many borrowers.

As with similar global tourist destinations, the drop off in travel has led to a sharp decline in both the number of tourists and local residents. But any family struggling with their annual holiday budget is also unlikely to have the disposable income to buy a Phuket property.

While Phuket has traditionally offered superior rental returns, these have come from short term rentals to tourists. That market for investment properties has not yet made a comeback from Covid. At the same time, hotels may never return to pre-pandemic occupancy levels, and the commercial real estate market may likewise experience a glut for years to come. The number of shops, bars and restaurants which remain closed along the normally thriving West Coast can testify to this.

But all is not doom and gloom, as Phuket’s luxury villa and luxury condo market has remained buoyant, thanks in large part to a pandemic-driven relocation. A growing number of people have simply had enough of the situation where they live, and the ease of working remotely has drawn them to their new home offices in Phuket.

Most real estate agencies on the island can tell you this is the biggest draw for new buyers in Phuket. Amazing weather, excellent infrastructure, great schools and a much-improved lifestyle, together with cheaper cost of living, all continue to attract people to this amazing part of the world.

Over the last 15 years, one of Phuket’s largest sources of tourists and residents has been Russia. Discussing our interconnectedness to the world is therefore impossible without addressing the ongoing turmoil in Ukraine.

It is important to stress here, that this is a conflict between governments, not people. Given their similar cultural backgrounds, most Ukrainian and Russian residents of Phuket are good friends. It is a similar dynamic to the large Greek and Turkish communities in 1970s London, who remained on good terms despite the Cyprus conflict having their respective governments on a war footing.

There is no political point to be made here, only the acknowledgement of the friendly relations between Russians and Ukranians in Phuket, and the realisation that the size of the two communities means an impact from the war on the Phuket real estate market is inevitable.

Russian buyers seeking to buy property in Phuket will find the value of their rubles has declined sharply, which may make any purchase impossible. On the flip side, current owners may want to offload their Thai Baht-denominated properties and lock in a currency gain (at the time of writing, the THB has gained 71% on the ruble in just the last month).

No matter how the geopolitics play out, the dynamics of Phuket real estate are very different to other countries. Phuket does not have a “boom and bust” real estate market. We have enjoyed gradual price increases year after year, and not even a two-year global pandemic - with virtually no tourists - could crash the property market.

In this small but significant way, we actually are isolated from the rest of the world, and it is a major reason why people continue to buy luxury properties and relocate to Phuket.

This article is from the Thai Residential Phuket Property Guide.
To download the 2019/2020 Guide visit

 Contact info:

Thai Residential
82/37 Sam Pao Courtyard
Moo 4, Patak Road
T.Rawai, Phuket 83130
+66 94 8411 918
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