Big Changes in the Phuket real estate market

Phuket Island has metamorphosed over the last few decades. It was once just one of thousands of islands in tropical Asia, but as its popularity has grown over time, the Jewel of the Andaman Sea is now regarded as one of the world’s finest vacation hot spots.

The island’s continuously improving infrastructure and road network, and the ever increasing number of new attractions, are all enticing more and more tourists to visit. More tourists means more buyers of real estate, many of which are deciding to make Phuket their home.

To cater for the huge influx of foreign nationals choosing to make Phuket their main residence, many developers have been honing in on the villa market.

Although Phuket’s property market has seen spectacular growth in the last few decades, nothing can compare to what is taking place today. New developments are springing up everywhere. The market seems to be buzzing. The choice of styles is also refreshing for the market, appealing to a broader range of tastes, and giving potential buyers a much larger selection.

New projects seem to be moving inland as more and more west coast land gets used up. With the lower inland land values, this also offers prospective buyers villas at lower listed prices. This attracts those purchasers with lower budgets, but who are still looking for a modern luxury villa on a nice sized compound with a private pool.

With this ever increasing amount of new residents looking for a home, it is no surprise that the number of villas being sold has been rising on the island. This has been one of the main shifts in the dynamics of the market, as prior to 2020 and the advent of Covid, a higher percentage of buyers were looking for a vacation residence or an investment property.

The post-Covid boom has certainly attracted a lot more villa buyers. The latest CBRE Report suggests that 484 villas were sold in 2023, a record year. In fact, if we include the last four half-year periods (two years), villa sales over that period amounted to almost the equivalent of sales taking place over the previous seven years.

The same record-breaking numbers also applied to the Phuket condominium market for 2023, with approximately 3,400 units sold during the year. For Phuket to be selling nearly 500 villas and 3,400 condominium units in a single year is impressive.

It is worth noting, however, the period from the first half of 2020, all the way through to the second half of 2022 were the worst performing years on record. This must have created a huge amount of pent up demand as many buyers with the intention to purchase a Phuket property could not travel during this timeframe. Some did manage to buy remotely, but this coiled spring of willing buyers was obviously unleashed as soon as the world returned to some form of normality.

This record-breaking 2023 has certainly spurred many developers to match the 2023 demand. But people are beginning to take notice of this huge amount of villa development across the island, not just in prime areas, but everywhere.

There is a very good chance that we have not seen the end to new projects either. They are springing up every day, and many smaller projects, selling just a handful of villas, seem to go unnoticed. But cumulatively, these numbers are huge.

Will this pace of new projects being launched in Phuket over the last 18 months continue, not just into 2024, but beyond?

As most bystanders can see, this frenzied level of development is most clearly discernable in the Cherng Talay municipality. The amount of development in this area is nothing short of staggering. In Cherng Talay, we can see projects springing up in Bang Jo, around Blue Tree, Pasak area, Boat Avenue, Laguna, Layan and even in the once isolated Manik area.

We can all see land prices rising in value, but a valid question that must be asked is who exactly is driving these land price increases? Is it the actual buyers of villas, or it is the developers looking to capitalise on this current trend? We shall have to wait and see how this all pans out, and whether the current frenetic rate of development will abate enough to pull demand and supply equilibriums into more realistic territory.

With the Cherng Talay area developing the most rapidly, and with an area of just 14.3 square miles, there are other factors to also consider.

For example, if all the projects in this municipality do come to fruition, there are likely to be thousands of new vehicles on the roads. Could this lead to severe congestion in the years ahead? This is excluding the large amount of construction lorries, transit cement and dump trucks, bulldozers etc. on the roads, as well the motorbikes and cars of construction workers during the development cycle.

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.