Phuket property investment in 2024
The trend of Chinese and Western investors looking to buy property in Thailand has been steadily increasing in 2022. Investor demand has focused on the country’s resort areas, particularly Phuket, but the purpose of purchase has changed from leisure to investment. In Phuket, rental yields of up to 10% per annum can be achieved by investing in resort properties, which also have the potential to increase in value by up to 30% during the construction period.
The main advantage of Phuket’s property market is its diversity. Firstly, even though the prices of new resort buildings have gone up since the pandemic, there is still potential for growth, since the primary group of foreign investors from China is only just starting to return to this market after the lockdown.
Secondly, the developers are completely international. Phuket is attracting the big players from as far afield as Bangkok, Australia and Europe. And thirdly, the tourist flow still has great potential for growth, with tourists from China and growing demand from other countries.
Foreign investor demand for Thailand grows
According to the Government Housing Bank (GHB), the number of transactions made by foreign investors to purchase apartments in Thailand surged by 82.3% in 2022 compared to 2021. Chinese investors retained their top spot, constituting 49.4% of all transactions. Russians continue to rank second among the most active buyers for five consecutive years, followed by investors from the USA, Great Britain, and France.
The regions that attract clients from different countries vary: Chinese investors are most active in the capital markets of Bangkok and Chiang Mai, while Russians and Europeans are more active in Phuket and other resort areas (including Koh Samui, Koh Chang, and Koh Lanta). According to GHB analysts, foreign home sales have just begun to pick up in the second half of 2022, due to the reopening of borders after the pandemic and the return of Chinese buyers to the market.
Thailand is a stable market
Over the past 10 years, property prices in Thailand have risen steadily by 1–10% per year, with no sudden jumps, according to data from the Bank of Thailand’s property price index.
After the pandemic, prices in new resort buildings in Phuket almost doubled in a short time. Before the lockdowns, a small apartment in an under-construction condominium could be bought for 70,000–80,000 US dollars, and by May 2023, similar units were for sale from 130,000 US dollars.
$157,000
Total area 30 m² Studio
$189,000
Total area 38 m² 1 bedroom
$200,000
Total area 72 m² 2 bedrooms
$196,000
Total area 42 m² 1 bedroom
$226,000
Total area 47 m² 1 bedroom
$149,000
Total area 28 m² 1 bedroom
$245,000
Total area 34 m² 1 bedroom
$120,000
Total area 37 m² 1 bedroom
The national currency, the Thai baht, has proved resilient to the dollar over the past two decades. The baht has fluctuated between 32 and 35 to the US dollar. In 2022, there was a depreciation to 38 baht per dollar, which the country’s monetary authorities managed to bring back to below 35 baht per dollar by the end of the year. Thanks to the stability of the baht, the profitability of property is roughly equivalent to that of the dollar.
Thailand is a welcoming nation with no limitations on acquiring property or setting up bank accounts. Furthermore, for residents of numerous countries, a 30-day visa-free entry is offered, which can potentially be extended based on your country of origin.
Phuket is a market for foreign investors
The island’s resort industry began almost 40 years ago in the Laguna area when a Chinese entrepreneur purchased the Bang Tao site, formerly a tin mine. He successfully revitalised the local landscape and within a decade had built the first resort hotel. In just 30 years, Phuket has become one of the most visited resort destinations in South East Asia. Foreigners also make up the majority of developers, property buyers and tourists.
It is not accurate to say that Russians are just starting to explore the Phuket property market. In my experience, the majority of Russian investment in Thailand has been in resort properties, particularly in Phuket.
As someone who has been involved in real estate on the island for over 16 years, I can attest to knowing a number of Russian-speaking developers who have been successfully building resort-style homes on the island for many years. A significant proportion of home buyers are also Russian speakers.
Booming demand for real estate in Phuket
According to the Real Estate Information Centre (REIC), foreign nationals registered 637 condominium units in Phuket during 2022. This figure is double that of 2021 and 2020, and 26% higher than pre-pandemic levels in 2019.
It should be noted that these data only relate to transactions involving completed residential properties, specifically those in the form of condominiums. However, based on my observations, a significant number of transactions took place during the construction phase in 2022, which will be reflected in the data for 2023–2025.
In 2023, demand continues to grow. According to Tranio, the number of requests from clients to buy property in Thailand increased by 57% in Q1 2023.
This is partly due to events in the Turkish market. Namely, the rise in prices in the Antalya resorts, the complication of the residence permit process and fears of the earthquake have forced investors to broaden their search. A significant proportion of buyers are considering the Thai market as an alternative.
From $1,129,000
Completion in: 2025.I 45 units in total
From $145,000
Completion in: 2026.I Total of 789 apartments
$157,000
Total area 30 m² Studio
From $1,092,000
Built in 2023 51 units in total
From $179,000
Completion in: 2025.I Total of 400 apartments
What attracts investors to the Phuket property market?
I believe that the interest in Phuket has been driven by the island’s confident development over the past few decades. Although, of course, many investors turned their attention to Phuket as uncertainty grew in other traditional markets.
High demand for island resorts
Phuket has been more successful than other destinations in Thailand in rebuilding tourism after the lockdown. In the beginning of 2023, up to a third of the country’s tourist arrivals come to Phuket through Phuket International Airport and Krabi Airport. In March 2023 alone, 364,000 arrivals were recorded on the island. The largest groups of foreigners are citizens of Russia, China, India, Australia and the USA.
The northern and central beaches of Phuket’s west coast (Bang Tao, Kamala, Layan, Nai Thon) are more attractive to investors. It is in this part of the island that the best hotels and resort condominiums are concentrated, where the most solvent tourists come. Developed infrastructure, improved areas and beaches contribute to high property occupancy rates.
Developed infrastructure
The infrastructure of the island makes it possible not only to come for a holiday, but also to live comfortably for a long time. There are more than 10 international schools on the island, offering American, British, French, Canadian, Finnish and Russian curricula. Medical services in Phuket’s private hospitals and clinics meet international standards.
Restaurants, shopping centres, rental services, and well-maintained roads attract expats, winter visitors, and medical tourists from developed countries. As a result, life in Phuket continued even during the lockdown, and properties continued to generate income for their owners.
Low barrier to entry into the primary market
Small apartments of 30–40 sq. metres in condominiums with resort infrastructure cost from 100,000 US dollars. Prices per square metre start at 3,200 US dollars. New small villas in less popular locations on the island cost from 250,000 US dollars. A spacious villa with a garden and a swimming pool in an attractive investment area can be purchased from 1,000,000 US dollars.
Low property taxes
Thailand has low taxes for buyers and property owners. The amount of tax varies depending on the form of ownership: leasehold or freehold. Leasehold is more profitable for investors, as the registration tax is only 1.1%. A leasehold property costs at least 5% less than a freehold property. It also does not need to be declared. If you sell a leasehold property, you do not have to pay income tax on the increase in value. There is no inheritance tax if the property is worth less than 100,000,000 Thai baht (2,900,000 US dollars).
Favourable visa regime and transport links
There is an international airport in the north of Phuket, the second busiest in Thailand. There are direct flights to Phuket from over 20 countries. Transfer from the airport to any part of the island takes no more than 1 hour.
The Thai authorities encourage international tourism with easier visa requirements. Citizens of over 60 countries can visit Thailand without a visa. The standard visa-free period is 30 days, but this is regularly extended to 45 days. The basic period can be extended for another 30 days by paying a fee of 1,900 baht (55 US dollars) directly in Thailand at the local immigration office.
Those who decide to stay longer in Phuket can apply for business visas through company registration or student visas if they are enrolled in an educational institution, such as a language school. Expats with children can enrol their children in Phuket schools and kindergartens, and then obtain student visas for them and guardianship visas for themselves.
For affluent travellers who do not want to be restricted by visa requirements and deadlines, there is the Thailand Elite programme, which is like a paid club membership with premium service and the option of multiple border crossings. The most basic option, Elite Easy Access for 5 years, costs 600,000 baht (17,500 US dollars).
If you invest more than 500,000 US dollars in property in Thailand, you can apply for a Long-Term Resident (LTR) visa, which is valid for 5 years. In addition, the investor must have assets worth at least 1,000,000 US dollars and an annual income of at least 80,000 US dollars in order to apply for this visa.
Read more about Thailand visas in our article.
Year-round tourist season and rental yield
Phuket is a popular tourist destination all year round. The sea is calm, the weather is sunny, and the air temperature is cool (22—27°C) from November to February. In March and April, sunbathers flock to Phuket, where the temperature in the shade can reach 35°C, and the sea warms up to 29°C. Surfing enthusiasts and tourists alike visit Phuket during the monsoon season from May to October, when the weather is moderately warm.
During the high season from October to April, the occupancy rate of resort condominiums tends to be 100%. During the monsoon season, the number of arrivals to Phuket drops by no more than half from peak levels.
Occupancy in the low season is highly dependent on the management company and the complex’s rating on booking services. Complexes managed by international hotel brands and skilled local management companies are able to ensure regular occupancy of apartments at high prices even in the summer.
Remote transactions and multiple payment options
When completing a remote transaction, developers and foreign investors communicate by post to exchange documents, while property rights can be registered with the Land Department through a trusted lawyer.
Phuket developers accept payment by bank transfer, cash and even cryptocurrency. Crypto exchanges in Thailand have been licensed by the state under the Digital Assets Act since 2018, so the legality of a transaction involving payment in cryptocurrency is guaranteed. The seller withdraws the cryptocurrency received into their current account in Thai baht and provides the buyer with a payment receipt.
Tranio has an office in Phuket. Our managers and lawyers will organise a turnkey transaction and the purchase cost will not increase.
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Profitability of Phuket resort properties
Phuket condominium units offer owners a rental yield of 5–12% per annum in Thai baht and increase in value by up to 30% during construction.
$115,000
Total area 39 m² 1 bedroom
$188,000
Total area 36 m² 1 bedroom
$351,000
Total area 88 m² 2 bedrooms
$310,000
Total area 74 m² 1 bedroom
$150,000
Total area 42 m² 1 bedroom
$199,000
Total area 57 m² 1 bedroom
$222,000
Total area 97 m² 1 bedroom
Rental yield
Management companies of resort condominiums in Phuket usually offer apartment owners a choice of how to distribute the profits from renting out condos to tourists. There are two basic options:
- guaranteed yield, where the owner receives a fixed income of 5–7% per annum from the value of the purchased property under long-term contracts for 2–5 years. A guaranteed yield contract protects against the risks of downtime and loss of profit for any reason;
- rental pool, where the annual rental income from all the apartments in the condominium is accumulated on the management company’s account and then distributed among the owners during the accounting period in proportion to the area owned minus the management company’s share (30–40%). This is a riskier but potentially more profitable scheme. In good tourist seasons, such as 2022 and the beginning of 2023, the owners’ profitability exceeds 10% per year before taxes.
Combined schemes have also emerged: some management companies set a minimum profitability threshold (guaranteed yield) and distribute any profits above that level according to the rental scheme pool. Read our article on which rental strategy is more lucrative in Phuket.
Increase in value during construction
Phuket developers rarely rely on bank loans to finance construction. Instead, they finance the purchase of land plots, project development, permitting, and the start of construction from their own funds; the remaining financing comes from prepayments made by home buyers. Consequently, there is a significant benefit for buyers of housing under construction in Phuket, which can be as much as 30%. In countries where housing purchases from under construction projects are executed via escrow accounts, providing complete protection to the end buyers, there arises no such revenue at the initial phase of construction.
The bonus for purchasing housing under construction can be further enhanced if you make a complete prepayment at the beginning of the construction phase and do not use instalments. Developers give an additional 5–10% discount for such full and early financing of construction.
Instalment plans even for finished housing
In Phuket, payments are typically distributed according to construction stages. This means that the investment size is always proportional to the actual cost of the project (including land and erected structures). All projects in Phuket offer this instalment option.
Some developers offer the option of buying completed investment apartments in instalments. In this case, the property is rented out and begins generating income for the buyer immediately after the contract is signed and the first instalment is paid. The remaining cost is paid in instalments over 1–5 years with a commission of 3–7% depending on the instalment period.
This option of paying in instalments for completed properties is somewhat similar to a mortgage, except that the loan is given by a developer rather than a bank, and the property is registered in the buyer’s name once the instalment plan has been paid in full. There are no mortgages for foreigners in Thailand; only one credit institution offers housing loans to foreigners at 9% per annum and above (more details in our article).
What to choose for your investment: apartment or villa?
Demand for villas in Phuket is even stronger than for condominiums. According to official REIC data, 149 villas were purchased in Phuket in 2022, which is 4.5 times more than in 2021 and 14% higher than in 2019 before the lockdown.
Phuket villas are mainly rented out on a long-term basis and are in high demand. Long-term rental agreements for new luxury villas are often signed before the properties are commissioned. The main types of tenants are digital nomads, families with children attending local international schools, and those who come to Phuket to give birth to a child and spend maternity leave on a tropical island.
The net yield on long-term villa rentals exceeds 6% per annum.
From $1,129,000
Completion in: 2025.I 45 units in total
From $1,092,000
Built in 2023 51 units in total
From $811,000
Completion in: 2024.I 20 units in total
From $576,000
Completion in: 2024.IV 21 units in total
From $367,000
Completion in: 2024.III 30 units in total
Phuket is one of the best places to invest in real estate in 2023
Low taxes, high returns, a strong national currency, excellent climate and developed infrastructure are all attracting foreign investors to Phuket. The island has a relatively low barrier to entry into the property market (from 100,000 US dollars). A high rental yield of at least 7% per annum is guaranteed by a stable tourism market, and during the construction period, which lasts an average of 2 years, you can earn up to 30% on the increase in property value. More and more investors are looking at Phuket as a place to invest and protect their capital, not just as a popular tropical resort.
Tranio’s local representatives in Phuket will arrange a personal or virtual meeting to provide investment advice, showcase projects from trusted developers, and help you finalise a turnkey deal.
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