Shifting trends: the rise of the Phuket villa

For centuries Phuket has been attracting foreigners in search of a better quality of life. From itinerant fishermen and farmers to Asian and European traders to labourers who came to mine Phuket’s once abundant tin, people have come from all around the world to settle on this tranquil tropical island. Today they arrive on airplanes, rather than boats, and rather than completely uprooting their former lives, they are simply choosing a more idyllic spot from which to work remotely or to retire.

In the last 30 years, this influx of foreigners has created a buoyant real estate market, which itself has undergone changes over time. The previous trend, pre-Covid, was dominated by investment in condominiums – either as a holiday home or rental property – but post-Covid has seen a noticeable upswing in the sale (and further construction) of villa developments across the island.

That is not to say that condominiums have fallen out of favour – quite the contrary. Condos remain a popular investment option for foreigners because they can be purchased as freehold property, owned in perpetuity and handed down to future generations. But for all their inherent benefits, condos do have a couple of notable downsides.

For starters, you don’t have the same privacy afforded you by a private villa, as you will always encounter fellow residents in the pool, checking your post, going to the car or even just sticking your head out the door. And depending on the layout of the condo complex, you may also lose privacy in front of your own windows.

The other possibly greater inconvenience is that condos are run by a committee, and they have rules that everyone must follow. Some of these rules make sense and ensure peace and quiet and harmony. Other rules are sometimes enforced by committee members who manage to persuade a majority that something is for the greater good. This includes bans on owning pets, which is a non-starter for any foreigner who will not leave their family pet at home.

A villa, on other hand, ticks all the boxes. The property is your own to do with (pretty much) as you like, with no restrictions. You will have the privacy of a wall to ensure that your sunbathing and barbecues are all free from prying eyes and, if you own pets, they have their own garden in which to run around. That garden will likely also have a swimming pool and a terrace for outdoor dining, or simply sitting and enjoying the weather. If you are fortunate enough to be elevated and sea-facing, you may also be enjoying immaculate views from your terrace and garden.

Not only that, for families with children the convenience of a house with its larger size, as well as the garden and private swimming pool for playing, cannot be understated. As mentioned at the outset, Phuket is currently experiencing increased demand for villas, and the number of families relocating to the island is certainly one of the reasons for this.

The heightened appeal of villas has naturally led to higher prices, but as with any housing market, there are entry level homes, super luxury estates, and everything in between. Unlike other housing markets, however, the prices are not driven by changing interest rates, and the real estate market in Phuket has never experienced the boom-bust cycles seen in other countries. (We have covered this in detail more than once.)

Villas have always been an attractive investment, and remain so, but the foreign buyer must familiarise themselves with Thai property law to ensure that the purchase does not lead to problems in the future. The laws are being enforced more stringently than in recent years, and failure to follow them to the letter could result in a castle in the air, rather than a dream home in paradise.

To anyone interested in buying a Phuket villa, the following are the key points of property ownership in Thailand which foreigners must understand before investing:

Only Thai persons/entities are permitted to own land in Thailand.

• The options for buying is limited for foreigners, and might only be possible through a Thai spouse or a Thai company.
• Thai companies must have real Thai shareholders who have been shown to invest in the company (not nominees).
• Audited accounts and tax returns must be filed each year (the company must actually generate revenue and pay its tax).

• In short, a foreigner must follow the corporate laws of Thailand in order to own property through a Thai company, and these few bullet points are only the main issues that must be addressed. Foreigners must also understand that, although they may own the building they do not technically own the land, although they may have control of the Thai company that does.

But for anyone in the market for a Phuket villa, the administration of a fully compliant limited liability company is a small price to pay to live in paradise.

Phuket has magnificent weather, food, scenery and beaches – it is no wonder that foreigners continue to come here in their millions on holiday every year.

It is equally unsurprising that that many of these tourists decide to become either investors in Phuket property, or full-time residents in the Jewel of the Andaman.

There is also the issue of water scarcity, which has always been a problem on the island. This is especially so in years of lower than average rainfall. In September 2023, an article in BNN highlighted the crisis the island is facing should long term water solutions not be addressed, and even suggested Phuket was on the brink of an emergency.

This article is from the Thai Residential Phuket Property Guide.
To download the 2019/2020 Guide visit ThaiResidential.com