Many tourists have holidayed on Phuket and eventually asked themselves this question after falling in love with the island. Some have a time-share mindset so they can have their own accommodation when visiting, while others envision a scenario where they transition into the expat life. Regardless of the reasons, when one considers purchasing a property in Phuket, they inevitably wonder if it’s a good idea in the long run. While no one has a crystal ball to look into the future, the best we can do is try and read the tea leaves – look for clues and hints that may help us make a prediction.
Tourism and Economic Growth
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Phuket's economy is heavily reliant on tourism, which has generally shown consistent growth over the years. The island's appeal ensures a steady stream of tourists and a burgeoning expat population, leading to a strong demand for rental properties. Under normal circumstances, this demand can be lucrative for investors renting out properties to tourists. Additionally, government-led infrastructure projects continue to boost Phuket’s appeal. Examples include the expansion of Phuket International Airport (with another planned) as well as improvements in road and transport networks. These developments are likely to enhance the island's accessibility and attractiveness, further reinforcing property values.
Rising Property Values
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Historically, property values in Phuket have shown a steady increase. The classic combination of supply and demand, limited land availability, and more people wanting to visit or live here, is responsible for this trend. Sure, the market isn’t always on a linear upward trajectory, but the overall trend has been positive. As we’ve discussed in other articles, geopolitical situations can have ripple effects. For example, the Russia-Ukraine conflict has increased investment on the island forcing prices up steeply. That being said, investors who purchase properties in prime locations or upcoming areas can potentially see significant returns on their investments over the long term.
Rental Yield Potential
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The rental market in Phuket is robust, particularly in popular tourist areas. Short-term vacation rentals can yield high returns during peak tourist seasons. For those interested in long-term rentals, there is also a growing expatriate community in Phuket, consisting of retirees, digital nomads, and professionals, which creates a steady demand for rental properties. Ensuring your property is well-maintained and marketed can maximize occupancy rates and rental income.
Legal Considerations
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Foreigners can own buildings in Thailand but not the land on which they are built. This means that while purchasing a condominium is fairly straightforward for foreign investors (as up to 49% of the units in a condo can be foreign-owned), buying land or houses requires more careful consideration. Options such as long-term land leases or setting up a Thai company to hold the land are commonly used. However, there are not only legal gray areas involved in some situations but common practices that are illegal yet rarely enforced. It goes without saying that one must seek out experienced and trustworthy legal counsel before making any decisions.
Quality of Life and Personal Use
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Of course, when we talk about whether a long-term investment is a good idea, this is measured by a completely subjective standard. Many investors will be focused only on the financial considerations of a property investment in Phuket. On the other hand, a portion of investors may be happy to simply take up residence in their property and not be fussed by short-term stagnation or drop in property values.