Ever since the world was introduced to the word ‘Covid’, the Phuket property market has been in state of reinvention. While some have fixated on the challenges, we remain focused on the opportunities this new dynamic offers anyone interested in buying Phuket property.
There are a few high profile issues weighing on people’s minds when they consider whether or not to buy a property in Phuket.The most obvious is the global reduction in tourist travel, which has caused the investment in affordable condos to taper off.
These condos comprise the bulk of holiday rental properties, and prior to Covid, offered guaranteed rental returns. With fewer tourists, these units are not in demand.
But the reduction in tourist travel is compounded by another problem: travel chaos in the US and Europe. As airlines attempt to get back up to speed, the staff shortages have resulted in a spate of delayed and cancelled flights. Since most international flights start with a domestic connection, it only takes a small delay on a short flight to ruin a planned trip to Asia.
Currency fluctuations are also playing a role. While the US and Aussie dollars have both strengthened significantly against the Thai baht over the last two years (great news for American and Australian buyers of Thai property), the UK pound and euro have seen slight depreciations in their currency vis-à-vis the baht.
Another issue for the Phuket real estate market to overcome is the loss of one if its largest groups of buyers – the Chinese. China is just starting to come out of a very highly publicised lockdown, which has affected manufacturing, the global supply chain, and of course the people’s ability to travel. Some Chinese are finding it difficult to get their passports renewed, while others are simply having their travel rights restricted. That said, there is a large Chinese population already in Thailand who continue to buy, but overall sales to Chinese buyers is down due to restrictions on travel from that country.
While these issues have clearly had their negative impact on the property market in Phuket, there is an even greater number of positive developments to counterbalance them.
While buyers coming from China may have slowed to a trickle, Thai buyers have picked up a lot of that slack. While the real Phuket estate market is still dominated by foreigners, Thais now make a growing percentage of Phuket property buyers.
We have seen a slew of people moving to the island in the last 18 months. The influx of foreigners started with psychology of lockdown: do I want to be stuck in the cold and rain, or would I rather lockdown on a tropical island? This migration accelerated with the introduction of Thailand Pass (which allowed travellers into Thailand with a two-week hotel quarantine), the reduction of quarantine restrictions to only 1-day, then finally the elimination of Thailand Pass altogether.
Along those same lines, Phuket is the first province in Thailand to make masks optional. While still required in many public buildings, you are no longer required to wear a mask outside in the 35°C (94°F) heat.
This newest wave of property buyers are not coming to Phuket for long holidays, they are coming to live. Lockdowns have convinced more retirees they would be happier in the sunshine, while digital nomads have realised they can have better weather – and a better lifestyle – in Phuket than they had at home.
For much the same reason affluent parents, who have the means and flexibility to live wherever they wish, have based themselves here because in addition to the benefits mentioned above, there is an excellent array of international schools for their children. New international schools will be opening to accommodate the growing number of parents with young children on the island.
On top of that, Thailand has introduced new visas geared specifically toward high net worth individuals, making it easier for them to stay here long term.
Property developers have responded to this by shifting their focus from the construction of modestly priced investment properties to luxury condos and villas for Phuket’s newest residents. Whereas the market was once 80% investment/20% residential property, those figures have now almost flipped, with over three-quarters of new construction being geared to the long-term residential buyer.
Phuket is now lacking inventory for villas and high-end condominiums, so this trend is likely to continue for the foreseeable future.
Another positive side effect of all of this is that Phuket’s yacht industry is once again booming. New marinas are planned, which will doubtless incorporate further luxury accommodation.
The question remains whether this recent buoyancy is pent-up demand which will eventually fizzle out, or if this new trend is sustainable.
While we see much cause for optimism, focusing on the pros does not mean being blind to the cons . . . it just means figuring out how to overcome them.
by Thai Residential Phuket Property Guide
This article is from the Thai Residential Phuket Property Guide.
To download the 2019/2020 Guide visit ThaiResidential.com