Phuket is a unique place, and so is its property market. The island’s economy relies almost solely on tourism so any hiccup that reverberates through the globe’s financial world is eventually felt here. Even though Phuket’s property market can be dynamic and have complicated variables, there are clear factors that influence the value of its land, condos, and houses.
Let’s start with the most obvious: location, location, location. The magical allure of water and the magnetic attraction it has on us is notably apparent in real estate prices. A condo’s value can increase by a factor of ten depending on its proximity to the sea. Even the slightest glimpse of the water from a balcony could double the asking price. In Phuket, regional property values can be wildly variable as well. Not all beaches are created equal; the world-famous west coast beaches are far more desirable than the east coast. Although beachfront properties demand top-tier prices, some of the most valuable land can be found on the steep seaside cliffs just south of Kamala – colloquially referred to as millionaires row. Less developed areas like Mai Khao and Phaklok are where some of the most affordable properties can be found as well as neighborhoods farther from the beach such as Kathu and Thalang. For example, average condo prices per square meter in Kamala are double the price in Kathu.
Then of course the simple economic theory of supply and demand comes into play. For the past 2-3 decades Phuket has been on the radar of international investors with the majority in recent years being Chinese and Russian. While the supply of condos is increasing, it is not matching the demand which has led to increased property values. With land values increasing, more development projects, especially near popular beaches, are opting to build condos instead of villas in order to maximize potential profits. This scarcity is driving villa prices higher as well.
There has been a sharp rise in demand in the past year matched by a spike in property values. The main driving factor has been the Russia-Ukraine war and the fact that many Russians have fled their homeland. While each has their reasons, whether it be avoiding being drafted or wanting to move their assets out of the country, it resulted in a mini real estate boom in Phuket. From 2021 to 2022, the number of condos transferred to Russian owners increased by more than 400 percent.
During the holiday season in some areas such as Cherng Talay around the Laguna resort complex and the Rawai/Nai Harn Beach area, holiday rentals were at 100 percent capacity. In Rawai, simple three-bedroom pool villas were at times fetching in excess of THB 225,000 per month. Under normal circumstances the vast majority of holidaymakers have cleared out by April, however, it seems that the year-round expat population will be significantly greater this year as many eastern Europeans will avoid returning home further bolstering the rental market on the island.