Just as winter begins to blanket the northernmost parts of the northern hemisphere, it is a fortuitous coincidence that Phuket begins to enjoy its finest weather of the year. The Andaman Sea takes on rich aquamarine hue and is as calm as a sheet of glass. Between November and April, we see lower humidity, less rain, bluer skies and more sunshine. The climate is also generally cooler, but “cool” in the tropics is relative.
This is high season in Phuket, and it typically starts after the first full moon of November, usually corresponding with Loy Krathong – a beautiful Thai festival where crowds conjugate around rivers and lakes (here in Phuket, at the seaside), to pay their respects to the goddess of water. Participants create small rafts, called krathong, decorated with coconut leaves, flowers and candles, and float them on the water.
Thailand is wonderful country, made even more so by its people and culture. But while we sometimes feel detached from the world and its problems, the Phuket real estate and tourism markets are not immune to the impact of global economics and geopolitics. In fact, that interconnectedness may be more pronounced today than at any time in the last few decades.
A fragile global economy has historically hurt the island but, as we have previously discussed, this impact has always been short-lived. Tourism and real estate on Phuket are remarkably resilient, bouncing back very strongly – no matter what the upheaval. Those upheavals today are as varied as they are far-reaching.
Inflation is hurting consumers the world over, and China’s zero Covid policy has not only resulted in economic chaos, but also travel bans. Hong Kong residents have had enough, and many have left for Singapore and Thailand. Russians and Ukrainians are both escaping a war, while Europeans are facing a cold and possibly dark winter because of natural gas shortages which are a result of that war. Even the US is seeing soaring energy prices, and on the foreign policy front they have their own tensions with China over Taiwan.
On paper, many governments are bankrupt. We are seeing a stock market collapse and what may only be the start of interest rate hikes. If the derivative markets have a repeat of 2008 that could trigger contagion in the global banking sector, this will likely lead to contagion around the world. Many country’s pension systems are on the verge of collapse. Add to that, property prices are beginning to spiral down in much of the western world.
But one does not get that feeling of doom and gloom in Thailand, and certainly not in Phuket. The reaction to global chaos this year has been literally the inverse of what we’ve come to expect.The economic climate today most closely resembles the aftermath of the 1997 Asian Crisis, when the collapse of the Thai baht gave a huge advantage to anyone using foreign currency to buy property. This was an anomaly in the history of Phuket property, which is now looking to repeat itself as the Thai baht has reached multi-year lows.
Large queues at airport immigration are back, with the largest tourist numbers in the last couple months coming from India, closely followed by Australia. The hotels, bars and restaurants are getting busier, and there is a noticeable increase in people out on the streets in Kata, Karon, Rawai and Patong. We are also experiencing traffic tailbacks on the island not seen since before the pandemic, and not just from the floods or from the repair works on Patong Hill.
Tourism on the island is definitely making a comeback, but the pandemic actually accelerated the influx of residents, both from abroad as well as other provinces in Thailand. Any slowdown in the real estate market during the pandemic appears to have been down to the inability of people to travel, rather than to inflation or other financial concerns. To anyone paying attention it is clear that, while many parts of the world are falling apart, Phuket is booming right now.
Whomever you speak to within the Phuket real estate sector will tell you that the market for both sales and rentals is on fire right now. Phuket is renowned as one of the best places for expatriates to retire or raise their children, hence the post-Covid influx of foreigners moving to the island.
Where once there were only a couple of international schools there are now dozens to choose from, the more popular of which having waiting lists. The two original marinas are continually seeing new competition. Luxury hotels, condominiums and villas are no longer centered on just a few areas, but can be found up and down the Andaman beaches, throughout the Kathu Valley, and even lining the coast of Phang Nga Bay. These miraculous changes in infrastructure over the last 20 years are now attracting an ever-growing population of foreign residents of all ages.
But it is not just foreign tourists. We have previously written about the large increase in local Thai buyers, but domestic tourism in Phuket has also been on the rise, aided by the discounts offered to Thai nationals holidaying through the government’s “We Travel Together” programme.
We are anticipating one of our busiest high seasons in Phuket for many many years, but as construction slowed during the pandemic there may be a lack of property inventory on the island to match the pent-up demand. Over 1 million tourists – who have been confined to their home countries for the last three years – are expected to travel here this high season, and many of them will looking for a place in the sun to which they can escape if there is ever another lockdown.
We know we are quite privileged to be living in such a beautiful part of the world, and it is always our pleasure to share Phuket with new arrivals.
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