Phuket has never had it so good and property is booming, despite the temporary set backs of tightened ownership regulations and the uncertainty that followed the 2006 coup. But properties in Phuket continue to change hands regularly as international investors and the wealthy increasingly want a ‘piece of Phuket’. The days of an undiscovered paradise are long gone and the speculators have come and gone as the market settles. Investors with an eye on ‘the next big thing’ are better off looking at other islands along this coast, but those with more genuine interests to develop on the back of a robust and maturing infrastructure will find Phuket property very agreeable.
Entry level into acquiring Phuket properties isn’t cheap, and there certainly isn’t the mass cheap apartment scenario that Spain undertook in the seventies and eighties. The investing here is far more up-market and tasteful. Although it has slowed down, relative to Pattaya for instance, the investment on Phuket is set to continue growing with more developments emerging. Phuket is considered relatively safe when it comes to your money, with long-term returns encouraging. Accessibility, location, style and size however, are all important when investing in Phuket properties.
Also, it is important to consider the distance to the airport. A lot of Phuket’s part-time residents, work in Hong Kong, Singapore, Bangkok or other parts of Asia, thus the commute when time is precious can often be limited. Is a longish drive to the southern coastal hotspots of Nai Harn, Patong, Kata and Chalong, whereas, Cherng Talay, Phuket Royal Marina and Laguna areas are more idealistic.
Most importantly, when investing in properties in Phuket, is the reputation and professionalism of the developer. Phuket probably boasts a higher standard than anywhere else in Thailand – a country not known for exceptional standards of quality – and this is largely due to the international nature of the industry. Many of the companies are managed by experienced property developers from other sophisticated locations, with the advantage of competent local staff.
Initially it was the wealthy Bangkok Thai nationals that snapped up much of the land during Phuket’s original boom, when its potential was recognised in the early eighties. This has dominated the commercial property business, including resorts, apartment phuket and retail space in the popular tourist centres. Now the focus is more on residential villas as second or retirement homes for the wealthy. Many buyers do so purely for investment as the pre-build price usually matures by up to 70 per cent following completion.
Investors looking at acquiring Phuket properties should take the time to properly familiarise themselves with the local market and the ownership laws and structures in particular. The most important factor influencing the local market is that only Thai nationals can own land.A legal structure for Condo Phuket developments allows foreign ownership of up-to 49 per cent of the building. For stand alone developments like villas, a complex company structure and lease of freehold agreement is usually employed to circumvent this law. However, you can never legally own the land.
In late 2006 the government decided to more strictly interpret this modus, and investigate the status of the apparent Thai partners. This created pressure on the industry and resulted in a slowdown. It had a devastating effect on the property market in Samui which had notoriously become riddled with corruption, land encroachment and unlawful ownership structures. Since then investors have been cautious, waiting for clarification or updating of the legal structures to accommodate an important pillar of these island’s economies.