The number of international tourists that arrived in Thailand over the 11 months of 2023 exceeded 24 million people. Holidaymakers and real estate buyers visited the country. In H1 2023, the number of condo purchases by foreigners increased by 65.6% year-on-year. What is the situation in the local market today, why do overseas nationals choose Thailand for investment and what kind of profit can they expect? Oleg Golubev, co-founder and Managing Director at Serene Innovations and Developments on the island of Phuket (Thailand) answered these questions for Thailand Real Estate.
– How are things going in the Phuket real estate market today?
– I have been living in Phuket for more than 11 years. Following the pandemic, there is huge pent-up demand here that applies to both resale property and transactions through developers. Although tourist arrivals have not fully reached the pre-pandemic number of visitors, the number of real estate transactions not only recovered to an acceptable level but also exceeded expectations. For example, over the past year, our company has concluded more than 300 contracts for the purchase of various types of property with a total value of about two billion baht (about USD 55.5 million).
– What profit does local real estate bring and what are the factors that affect it?
– There are several strategies for investing in Phuket real estate:
- Rental income: Phuket is very popular with tourists, especially in winter, although the island is now also popular among those who live in Thailand all year round.
- Income from the resale of real estate purchased in the initial stages of planning or construction of property.
- Income from exchange rate differences for residents of countries with high volatility.
Normally, the annual income from real estate is 5–10%, while there are exceptional cases in which earnings can be one and a half to two times higher.
The investor’s profit depends on the experience of the developer, the reliability of the management company and, of course, the quality of the property. Do not underestimate the location. Perhaps location is the most important factor in real estate success. In the coming season, Layan Beach will be the most developed area on the island. According to the most conservative estimates, about 10 new properties will be launched there. A national park, an incredible beach and scenic views will push up the value of these projects.
– How are prices changing: how do 2019, 2020–2021 and now compare? How have demand and transaction tactics changed?
– Due to the pandemic prices did not drop in 2019 and 2020 but growth stopped. Smooth growth began in 2021, and in the 2022–2023 season prices increased by 30–50% due to pent-up demand and the great popularity of Phuket and Thailand in general.
By the beginning of 2023, most of the real estate on the island had been sold and a new wave of development arose. Some projects are being sold privately, even before the official start of sales.
– What are the best investment destinations in Thailand today? Is now a good time to invest?
– Of course, one of the most popular and lucrative investment destinations among expats is the island of Phuket. Construction and tourism are currently booming here. Nowadays you can buy real estate here in two clicks. There are many handy remote transaction tools. For example, our company is launching a new meta-reality tool in the upcoming season. Buyers will now be able to walk around the under-construction development in a virtual space and examine all the features and details of the project to make a purchasing decision.
– What trends in demand do you observe among foreign buyers?
– In addition to buying for investment purposes, more and more people are choosing Phuket for relocation and entire families are moving here. Thailand is a very friendly country with a well-developed infrastructure that is easy to adapt to. Previously condos were on-trend but today we are seeing high demand for villas.
– What are the key factors, in your opinion, that are fuelling the Thai real estate market?
– The three driving factors are:
- Climate: the temperature here is stable all year round.
- Nature and environment: for example, there are no hazardous industries on the island of Phuket.
- The beautiful beaches of Thailand the stability of the economy and the local currency exchange rate.
– Are real estate investment returns expected to increase by the end of 2023? By what percentage?
– Prices are most certainly expected to rise since November since the high season begins in Thailand and with it, as a rule, the demand for purchasing real estate increases. With Thailand’s new tourism incentives, we can expect an even greater increase in the number of visitors. Property prices are projected to rise by 30–50%, so now is a great time to invest in our island.
– Why is the Thai real estate market so popular today? Which countries constitute the main competition and which criteria play a role? Why do overseas investors increasingly prefer investing in Thailand over other popular destinations?
– Thailand is developing very quickly and is implementing many infrastructure projects. International schools, large shopping malls, and high-end and middle-class hospitals allow both investors and tourists to comfortably stay here at any time and feel safe. Today, Thailand does not have many competitors. Of course, Phuket is often compared to Bali but, in my opinion, these are completely different markets and the number of offers in Phuket significantly exceeds the capabilities of the Balinese market.
– Investing in real estate is always a long-term endeavour. What type of property is better to invest in at the start and how to reduce the payback period?
In its strategy for the next five years, our company Serene Innovations and Developments sees great demand for high-tech products:
- villas with smart home technologies
- rental condos
- long-term rental complexes designed for expats
- commercial property (Phuket is experiencing a startup boom)
The result depends on the investment strategy. Many investors make money from rising prices, however, such a strategy carries risks. I believe that if you invest for the long term, it is impossible to lose. As an asset, real estate is always an excellent investment.