Inside the numbers: the potential of Phuket real estate

Nevertheless, there are more and more people looking to sell their properties before construction is completed, so we are approaching a market of strong speculation on large-scale projects with affordable condominiums.

As for villas and resort-level homes, the pandemic has led to a mass migration to Phuket, driven by urban exodus, changes in remote work, and an increasing focus on quality of life. This, combined with the radically changing geopolitical crisis in Eastern Europe, has suddenly made the island's retirement or secondary home sector a target for many end users. Global migration has changed our world, and Phuket's geographical location as a winter getaway for much of the Western world is a strong driver of demand. The Thai government's approved programs, including the long-term visa program "Thailand Elite," the retirement program, and the education guardianship visa that extends to families, are key factors attracting real estate buyers. But let's return to buyers from Eastern Europe, who have become a leading force in Phuket's real estate market over the past two years. This includes not only Russians but also investors from Ukraine, Kazakhstan, and Uzbekistan. In tourism, we always say that you can't stop if you can't get there, but this also applies to real estate buyers. Anyone who has visited Phuket International Airport during peak season sees that airlines from Eastern Europe outnumber any other carriers. As for Russians in particular, the increase in real estate transactions in Phuket is linked to the increasingly restrictive environment in the West regarding the banking industry, investments, and any kind of business. Due to financial instability within the country, despite the currency's depreciation, they view Thailand, and specifically Phuket, as a safe haven. Suddenly, real estate becomes the new bank for Russians.

It's hard not to notice the significant growth of the real estate sector in Phuket, which calls into question tourism as a key economic indicator. In the Greater Bangtao area alone, which includes Cherngtalay, Laguna, and Layan, over 20,000 residential units are either under development or in the planning stages. However, when it comes to purchases and investments, these individuals and groups have high liquidity, primarily make cash payments, and adopt a long-term strategy regarding premium properties. I don't even want to attempt to predict global geopolitical events, but it's unlikely that we will see a wide range of turbulence in the next 3-5 years, so in most cases, buyers' money remains invested in real estate. With minimal exposure to lending or a retreat of buyers back to their home countries, any kind of crash is unlikely to occur. From past events, we have learned that there is a tide and ebb, similar to the ocean's tide, and real estate is a cyclical endeavor. Once a peak is reached, there is froth, and niche opportunities arise. For resort properties, low-price sales are usually due to death, divorce, or personal financial issues, so broad market movements are likely to be less probable. What happens, as before, is that demand levels off, the upward sector of the secondary market emerges, and supply becomes competitive with new developments or primary sales. This may be a reasonable outlook for the low season of 2024. But, in my opinion, on the broader scale of global upheavals, Phuket's position as a safe haven for real estate investment may avoid the cycle. Growth in other sources of geographic migration, the return of China, and other geopolitical events will undoubtedly encourage more diversity among buyers and migrants to Phuket. As for the bubble, I leave that to the reader's judgment.