A closer look at Phuket’s boom

The Phuket property market is expected to prolong its growth after posting another record high this year.
However, concerns remain over the island’s infrastructure, which needs to be improved to support long-term sustainability.
Ho Kwon Ping, founder and executive chairman of Banyan Group, the hospitality-led property developer behind Laguna Phuket, said the Phuket property market has boomed in recent years.
“I find that property markets worldwide, including China, Bangkok, the US and Europe, are at best in a doldrum, and at worst crashing down after a decade of growth. But Phuket is a remarkable exception,” he said.
BREAKING RECORDS
Mr Ho said the growth rate in Phuket property sales is unparalleled worldwide — a phenomenon that defies global trends.
For example, with Banyan Group’s revenue, property sales have risen from one-third of total income 20 years ago to more than half the past three years.
Last year, sales reached a record high for the company and are expected to set new records this year.
Property consultant CBRE Thailand is also posting record property sales in Phuket, with growth doubling this year from 2023 — a peak year that recorded a fourfold increase compared with the average.
“Overall sales are so substantial that a new condo project is launched every two weeks,” said Prakaipeth Meechoosarn, head of Phuket property sales at CBRE Thailand.
“Developers expect a significant influx of foreign buyers during the high season in the final two months.”
NEW MARKETS
Ms Prakaipeth said Thai buyers are increasingly interested in purchasing high-priced residential units in Phuket, a market previously dominated by foreigners.
One of the main reasons is the appeal of new properties launched recently.
“About 60% of the buyers at The Standard Residences, Phuket Bang Tao, for which we are the sales agent, are Thais, purchasing units both as investments and for personal residence,” she said.
The project comprises 200 hotel rooms and 188 condo units priced from 12 million baht, located on a 19-rai site in the Bang Tao area near an entrance to Laguna Phuket. After launching in March 2024, sales have reached 70%.
Branded residences have attracted both Thai and foreign buyers, with new markets including the United Arab Emirates, Saudi Arabia, Israel and Japan, said Ms Prakaipeth.
In Laguna Phuket, Banyan Group recently sold three ultra-luxury beachfront villas, priced from 250 million baht each, out of five total units at Banyan Tree Residences Beach Residences, all purchased by Thai buyers, said Mr Ho.
“Before the pandemic, we had a limited number of Thai buyers. This changed during the pandemic, as many became familiar with us through the Phuket Sandbox initiative, which included one of our properties, Banyan Tree Phuket,” he said.
FOREIGNER-DRIVEN
According to the Real Estate Information Center (REIC), condos and villas led the way in Phuket’s residential market, which experienced year-on-year growth across nearly all segments in the first half of 2024, fuelled by strong demand from foreign buyers.
The number and value of total supply, new supply, new sales and remaining supply of condos and villas in Phuket all recorded year-on-year increases during this period.
The standout performer was villas, mostly purchased by foreigners, which reached record highs across all metrics, with significant half-on-half increases in every category, said Siddhipen Siddharthapong, acting assistant director-general at REIC.
The largest half-on-half growth for villas was in the volume and value of new supply.
In the first half of 2024, the number of villas surged to 1,175 units, rising 383% from 243 units in the second half of last year.
Similarly, the value of new supply climbed to 38.3 billion baht, up 272% from 10.3 billion baht in the previous period.
This highlighted substantial growth in both unit numbers and value within the villa market, according to REIC.
The previous high for the number and value of villas launched in a half-year was 542 units valued at 27.8 billion baht in the first half of 2023. Other recent half-years recorded villa launches ranging from zero to 260 units, noted the centre.
As new supply expanded, the total supply of villas surged to 2,261 units worth 84.5 billion baht in the first half of 2024, compared with 1,288 units valued at 58.6 billion in the second half of 2023 — the first time supply exceeded 1,000 units.
VILLA SALES SKYROCKET
New sales of villas grew significantly in tandem with supply, soaring to 787 units worth around 30 billion baht in the first half of 2024, compared with 403 units worth 17.9 billion in the second half of 2023.
This amount climbed from 216 units worth 8.58 billion baht in the first half of 2023 and 132 units worth 4.47 billion in the second half of 2022.
In the first half of 2022 and earlier, new villa sales ranged between 0-80 units per six months with a maximum sales value of 1.86 billion baht, recorded in the first half of 2019, according to REIC.
Remaining unsold villas in the first half of 2024 reached 1,474 units worth 54.5 billion baht, a new record high for both categories, marking the first time the figures exceeded 1,000 units and 41 billion baht.
These figures rose from 885 units worth 40.7 billion baht in the second half of 2023.
Despite the half-on-half increase in remaining supply, with a 66.5% rise in unit numbers and a 33.9% rise in value, growth was lower than that of new sales, which surged by 95.2% and 67.4%, respectively.
In the first half of 2024, the absorption rate for villas was the highest at 8.7%, suggesting remaining supply would take only six months to sell out if no new supply is added, noted the centre.
The top three locations for new villa sales were the Thepkrasattri-Srisunthon area, with 411 units and an absorption rate of 5.4%; Bang Tao Beach-Surin Beach, with 131 units and an absorption rate of 8.4%; and Nai Yang Beach-Mai Khao Beach, with 102 units and an absorption rate of 6.8%.
Other areas recorded new sales ranging from 3-30 units.
The top-selling price range for villas sold during this period was 30.01-50 million baht, totalling 216 units, followed by 25.01-30 million baht, with 136 units sold, and 20.01-25 million, with 109 units sold.
The first half of 2024 also recorded a significant increase in the value and average price per unit of low-rise houses registered for long-term leasehold by foreigners, reaching 1.94 billion baht and 28.1 million baht per unit, respectively, from a total of 69 units, according to REIC.
This was a sharp uptick from the second half of 2023, which registered 84 units valued at 642 million baht, an average of 7.64 million baht per unit.
Condos, driven by foreign buyers, had a 6.8% absorption rate, with nine months to sell out, while low-rise houses, mainly for Thai buyers, had a 2.9% rate, needing 28 months to sell.
“Only the number and value of the total and remaining supply of low-rise houses, whose buyers were mainly Thai, declined, while sales and new supply increased, suggesting that demand outpaced supply,” said Ms Siddhipen.
INFRASTRUCTURE NEEDED
Ms Prakaipeth said Bang Tao was one of the most sought-after areas, not only for buyers but also for developers, with numerous commercial and residential projects currently in development.
“The development zones are expanding into adjacent areas, such as Bang Jo and Pru Jampa, as land in Bang Tao becomes limited,” she said. “This influx of property development has led to traffic congestion, extending travel times by about one-third.”
The lack of mass transit options leads to a reliance on personal vehicles. The Phuket Smart Bus operates only to and from the airport along the west coast, indicating a need for a mass transit system, such as a light rail, to provide access to other areas and help minimise traffic congestion, said Ms Prakaipeth.
“Expanding road lanes and building highways can help reduce traffic congestion, especially when floods hit Phuket,” she said. “Flash floods create significant traffic disruptions across the island.”
Mass transit in Phuket has been discussed for decades in Thai governments, but never materialised as budget allocation from the central government is a lengthy process, even though Phuket generates significant income for the country, said Ms Prakaipeth.
To expedite infrastructure development, residents and business owners in Phuket suggested the island be designated as a special administrative area, similar to Bangkok and Pattaya. This would allow the revenue generated on the island to remain there and be reinvested into developing critical infrastructure that supports the community.