Phuket’s real estate market is experiencing significant shifts, with a notable increase in resales and a surge in demand for rental properties. The market dynamics are influenced by various factors, including international buyer trends, infrastructure developments, and potential economic challenges. Here’s a comprehensive look at the current trends and developments in Phuket’s real estate sector.
Key Takeaways
- Resales now account for 68% of transactions in Phuket’s real estate market.
- The rental market is experiencing sustained demand, with condominiums being the most popular choice.
- Foreign buyers, particularly from Russia, the UK, and the US, are driving the market.
- Concerns about a potential property bubble are emerging, with comparisons to past real estate crises.
- Infrastructure developments and government initiatives are expected to impact the market positively.
Resale Market Surge
Phuket’s real estate market is witnessing a significant shift towards resales. Data from Thailand’s leading property portal, FazWaz.com, indicates that resales now account for 68% of transactions, a substantial increase from previous years. This trend is even more pronounced in the single-family home segment, where resales make up 70% of transactions.
The growing preference for resales is attributed to the competitive pricing of older properties compared to new developments. Brennan Campbell, head of brokerage at FazWaz, notes that the secondary market is surging, but with lower sales values due to the lower-priced resales. This trend is expected to put pressure on developers to compete with resales.
Rental Market Trends
The rental market in Phuket is also experiencing sustained demand, particularly for extended and long-stay rentals. Condominiums hold nearly 60% of the rental market share, with one-bedroom units being the most popular. The average rental term has slightly reduced to just over nine months in 2024, with yearly rentals accounting for over half of the demand.
Foreign renters, particularly from Russia, the US, and the UK, continue to dominate the market. The top submarkets for rentals include Cherngtalay, Kamala, Rawai, and Patong/Kathu.
International Buyer Trends
International buyers play a significant role in Phuket’s real estate market. The top international source markets for condominiums in early 2024 were Russia, the UK, the US, France, Australia, and Italy. For single-detached homes, the leading buyers were from the US, the UK, and Russia.
A notable growth market is India, with increasing interest from Indian buyers in various property classes. The Thai domestic segment has also continued to post gains in all types of property classes this year.
Potential Property Bubble
Concerns about a potential property bubble in Phuket are emerging, with comparisons to past real estate crises. The recent downturn in Bangkok’s property market, where condo prices have dipped by 22%, is seen as a potential indicator of a cooling period for the entire Thai property market.
Thailand’s high household debt, which sits at 88% of GDP, is another concern. Many Thais may not have the buying power to compete with foreign investors, potentially limiting future local demand.
Infrastructure Developments and Government Initiatives
Phuket’s infrastructure developments and government initiatives are expected to positively impact the real estate market. The government’s plans to enhance Phuket’s potential, including infrastructure development for transportation along the Andaman coast, are seen as key drivers of growth.
In the first quarter of 2024, major real estate conglomerates invested over 56 billion baht in Phuket, Pattaya, and Hua Hin. This influx of investment is expected to drive further growth in the condominium market, with over 8,500 new units anticipated in 2024.
Conclusion
Phuket’s real estate market is undergoing significant changes, with a shift towards resales and sustained demand in the rental market. While concerns about a potential property bubble exist, the market’s strong fundamentals and ongoing infrastructure developments provide a positive outlook for the future.
Sources
- Phuket’s real estate world’s collide as off-plan sales flatten in wake of growing resales | Thaiger, Thaiger.
- Inside the numbers: the potential of a Phuket property bubble | Thaiger, Thaiger.
- Updated trends in Phuket’s rental property market | Thaiger, Thaiger.
- Demand for condos, branded residences in Phuket and Pattaya surges, Nation Thailand.
- Step by Step: Is Phuket’s property bubble about to burst?, The Phuket News.
