Phuket’s real estate market has experienced a significant boom, with property prices soaring by 15-20% over the past few years. This surge has raised concerns among authorities about potential money laundering activities linked to the influx of foreign buyers, particularly from Russia.
Key Takeaways
- Real estate prices in Phuket have risen by 15-20% in recent years.
- Authorities suspect money laundering activities linked to foreign buyers.
- A crackdown on illegal real estate activities has been initiated.
Surge in Real Estate Prices
Phuket has seen a dramatic increase in real estate prices, with land in some areas tripling in value. The president of Phuket’s Real Estate Association, Maetapong Upatising, attributes this surge to several factors, including the influx of affluent Russians following the Russian-Ukraine war. The island’s amenities, such as international schools, good transport infrastructure, a deep-sea port for yachts, and golf courses, have also attracted wealthy foreigners.
Dominance of Russian Buyers
Nattha Kahapana, managing director of Knight Frank Thailand, noted that Russian buyers now dominate the market, accounting for 40-60% of property sales, up from 10-15% previously. This has contributed to the 15-20% increase in real estate prices. Prakaipet Meechusan, head of Phuket Real Estate Trading Department at CBRE Thailand, highlighted that most buyers purchase luxury residences primarily for investment purposes, with 79% buying for rental income and 21% for personal use.
Money Laundering Concerns
Amid the real estate boom, the Department of Special Investigation (DSI) has raised concerns about potential money laundering activities. Authorities suspect that some foreign buyers may be using real estate transactions to cover criminal activities, such as falsely inflating property prices, avoiding taxes in their home countries, and laundering money from illegal sources. There are also concerns about clandestine gatherings of foreign criminals and the covert integration of digital currencies within currency exchange businesses.
Crackdown on Illegal Activities
The Economic Crime Suppression Division (ECSD) of the Royal Thai Police recently cracked down on a large Thai nominee network that illegally helped foreigners, mostly Russians, set up real estate companies. The operation resulted in the seizure of 225 bank accounts, 245 land documents, and other assets worth over 1 billion baht. The main suspect, a 45-year-old Russian woman named Iana, was found to be involved in nine companies, including seven real estate firms.
Extensive Land Inquiry
In a related development, Phuket authorities are conducting an extensive land inquiry following a high-profile case involving a Swiss man accused of assault. The investigation has led to the revocation of land titles for several properties and the inspection of over 100 rai of land. The National Anti-Corruption Commission (NACC) is also involved in the investigation to ensure that land titles were obtained legitimately and to identify any wrongdoing by officials.
Impact on Local Residents
As authorities grapple with these challenges, the rapid increase in property prices has made homes in Phuket unaffordable for ordinary Thais. The situation has sparked concerns about the long-term impact on the local community and the need for stricter regulations to prevent illegal activities in the real estate market.
Sources
- Phuket real estate boom sparks money laundering suspicions, Nation Thailand.
- Crackdown on Thai nominee network illegally helping Russians set up real estate companies in Phuket – Pattaya Mail, Pattaya Mail.
- Phuket Authorities Conduct Extensive Land Inquiry After Swiss Man Case, Khaosod English.
