Reasons Phuket Property continues to make investors nervous yet they keep coming back.

Property prices in Phuket have increased by approximately triple in the last decade. That's not a typo. A property that fetched at 15 million baht as a seaside villa is fetching 45 million. And the demand keeps coming https://stormphuket.com/properties-for-sale-in-phuket/.

So what's driving this? A few things. Tourism did not actually go away in this country — it simply had a COVID-detour and came back with a vengeance. Demand in the long-term to rent by digital nomads shot up from 2021 onward. And the island's geography does the work at no cost: you can only go so far before you've reached jungle or mountain or sea.

Phuket is not a single market. Five or six of them are packed onto one island, and lumping them together is how investors lose money.

Patong? Large population density, nightlife, short-stay rental powerhouse. It is noisy, clamorous, and the capital appreciation narrative is at a slower pace. A completely different crowd is drawn to Rawai and Nai Harn —  a distinct type of resident: expat retirees, families, individuals who have discovered that paradise can exist without the nightlife scene. The most popular prices are offered by Bang Tao and Laguna due to golf, beach clubs, and restaurants where the wine list is longer than the menu.

In 2019, one of my friends purchased a two-bedroom apartment in the area of Kata Beach for just under 4 million baht. He rented it out short-term, received approximately 150,000 baht in high season alone, and flipped it in 2023 at 5.8 million. No real estate genius here. He just chose the right area, worked with a reliable manager, and kept his cool during COVID.

The rules around foreign ownership are famously tricky. Foreigners are not allowed to hold land in their own right — Thai law does not allow foreigners to hold more than 49% of the total floor area in any one building for condominiums. The game to play is condos, and this implies proper title deeds and clear legal ownership. Villas are more complicated — leases of 30 years, often renewable, are the workaround of long-term, but that's not actual ownership. Know what you're signing.

The leasehold vs freehold debate never gets old at expat dinner tables. Western buyers are terrified by leasehold since they are used to freehold ownership. However, a well-structured 30+30+30 year lease in Phuket with proper legal documentation can be quite secure. The devil is always in the fine print. Hire a local real estate attorney — not the attorneys of the developer, yours.

Developer projects have gone on a rampage all over the island. Some are outstanding. Others are glossy brochures full of romance with artist impressions and vague completion timelines. Pre-construction prices are enticing — usually 15-25% below completion prices — but buying off-plan carries real risk. Look at the developer's history, his/her completed projects, and has he/she ever abandoned a building halfway? It happens.

Don't accept rental return claims at face value. Marketing papers are fond of making out numbers such as 8-10% assured returns. Guaranteed by whom, exactly? The high season in Phuket lasts around November through April. Occupancy can plummet during low season. A realistic net yield on management fees and maintenance and vacancy would be in the 5 to 7% range on a well-positioned condo. Not bad at all. But not magic money.

The only thing that has changed significantly is the purchaser. In some segments, Russian buyers were taking up too long a time — Surin Beach had a whole slang name on account of it. Sanctions that followed after 2022 changed that somewhat. Chinese buyers that withdrew during COVID have begun to come back. More Middle Eastern, Australian and Scandinavian buyers are entering the market. The market is diversifying, and this is likely to make it more robust.

There is slow improvement of infrastructure. The LRT connecting Phuket Town to the airport has been long overdue to an extent that it has become a joke. But the roads have gotten better over five years ago. Phuket Town itself is experiencing a real renaissance — old shophouses are being transformed into boutique hotels and coffee shops, drawing in a type of client that ten years ago would have ignored the old quarter entirely.

In the long-run, the island is not going to go anywhere. The attraction has been: beaches, food, weather, an affordable lifestyle versus Europe — and this is a sticky one. The issue to any buyer is whether they is buying reasonably, in the right location, with the legality of ownership that he or she actually knows. Get those three right and Phuket real estate still makes sense.