Why Buy Property in Phuket

Known as the Pearl of the Andaman, Phuket is Thailand’s largest island. Located in the southern tropics, the island offers up world-class beaches, intriguing culture & heritage, endless shopping opportunities, magnificent temples, energetic nightlife, vast fine dining choices and some of the best street food that the Kingdom has to offer. Phuket is a tropical paradise that offers a little bit of something for everyone.

Truly a lifestyle destination, Phuket continues to develop and grow at a rapid, yet sustainable, pace. With continued expansion in the hospitality and tourism sector, as well as the recent opening of an all new international airport and various real estate projects and developments slated for the near future, it is easy to see why the economy of Phuket continues to grow and why the island itself is a safe place to invest.

An Ever Improving Infrastructure

With an easy to navigate infrastructure, international airport and a range of luxury services including golf courses, yacht marinas, shopping developments, schools and hospitals, Phuket makes an excellent choice for a place to settle down. Relocating families to the island is easy, and there is a vast network of clubs and societies for the expatriate community. Anyone who visited Phuket even 15 years ago would hardly recognize it today.  In fact, people who return to Phuket after only 1 or 2 years away, are amazed by the pace at which development continues. And it doesn’t seem to be letting up; if anything it’s accelerating every year. The progress is simply incredible.

Price Stability and High Returns

Phuket property market provides secure and stable returns for investors. Both in capital gains as well as annual rental returns. The growing property market has become an attractive investment destination for investors worldwide. Any nationality can buy property in Thailand. Thailand values have increased over 300% in the past decade, offering investors lucrative capital gains. Rental returns provide investors with 5-10% annual returns.

Thailand’s property market benefits from lower mortgage debt levels than any other countries as foreign investors cannot secure loans against property and the Thai banks are very conservative with regards to lending, a lot more conservative than their western counterparts. Therefore this leads to great price stability and low risk and a reduced potential of a market bubble.

The Attraction of Rental Income

Investors in the Phuket property sector are also drawn to the potential of rental income. Phuket’s tourist industry has grown exponentially over the last 45 years, and this influx of tourism continues to drive the rental market. But the market has not been without its challenges.

During the last two decades alone, Phuket has been through the Asian Crisis, the Indian Ocean Tsunami and the global financial crisis.   The resilience of the holiday industry in the face of these three catastrophic events is telling. And what it tells you is that the property rental market in Phuket will continue to flourish.

In the current low interest rate environment, investors don’t know where to put their money.  Viewed purely from a Return on Investment (ROI) standpoint, the choice between a guaranteed rental return and leaving money in the bank to earn little or no interest isn’t a hard one to make. Some countries, such as Switzerland, now have negative interest rates.  This means if you deposit too much money in the bank, the bank will actually charge you to keep it there.  (Some banks are taking the same action against large depositors in Euro accounts.) For anyone faced with paying the bank to deposit money, an investment in Phuket real estate is a no-brainer.

Current Phuket Property Prices are Low

Phuket property can be bought for bargain prices, at least compared to other markets in the world. For potential investors in global property, it costs less to buy Phuket property than real estate in nearly every other major  property market in the world. Following the old investment maxim of “buy low, sell high” is much easier when prices are low to start with.  Phuket currently offers great value, especially in the freehold condominium market.  In fact, compared with Phuket, you might consider prices elsewhere to be downright extortionate.

Holiday destinations such as Spain, Portugal, Italy or Greece are much more expensive.  And prices in the “real estate capitals” of the world – such as Hong Kong, Singapore, Dubai, London and New York – don’t even bear thinking about. An equivalent freehold condominium property in London would fetch around ten to fifteen times more than in Phuket. Its rental yield would also offer a far lower ROI.

Throughout history, these major markets have seen boom and bust scenarios, so the sustainability of their current price levels could be called into question.  Phuket is still a fledgling market, with huge upside potential. Spain experienced a massive transformation over the last thirty years. Even excluding the effects of the Euro, Spain’s property prices have grown to levels that rival many other parts of Europe. This is especially true on the southern Costa del Sol, where houses or villas used to be considered cheap to most other Northern European home owners.

Thailand has seen some of the usual hiccups along the way, but it is not inconceivable that Thailand’s tourism industry could one day rival Spain’s.

Investment Properties with Rental Guarantee

The rental market is buoyant and Hotel Managed Condos offer 5-10% guaranteed rental return for as long as 15 years. Factor this into capital growth and you can expect a very healthy return on your investment, both short term and long term. Rental guarantee is becoming an increasingly popular type of investment for buyers in Thailand. Rent guaranteed properties, in theory, allow the buyer to make a safe and effortless investment while he or she waits for their property to appreciate. It’s safe in the sense that during the length of the contract the buyer will receive regular and stable rental returns, and effortless in the sense that the development’s management company assumes all maintenance and occupancy responsibilities. This is an especially useful method of investing for the expat and foreign investor market, which tends to consist of very transient people who are thus not able to easily manage their properties.