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The real estate market in Phuket: 2024 forecast

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As we step into the year 2024, the real estate landscape in Phuket continues to evolve, presenting both challenges and opportunities for investors, homeowners, and industry stakeholders.

In this article, we will give you a clear picture of what's happening in Phuket's real estate scene for the year ahead.

If you need a full and more detailed report, with fresh data and actionable advice, please note that you can get our property pack for Thailand. This pack will also give you unlimited access to our team of experts, allowing you to ask them anything related to the housing market in Phuket specifically.

How's the Thai economy doing?

Current state

The real estate market in Phuket, Thailand, is deeply intertwined with the country's economic and political stability.

Historically, Thailand has experienced periods of political upheaval and economic instability, which have, at times, affected the real estate sector.

However, in recent years, there has been a trend towards greater political stability and economic growth, which has positively influenced the real estate market.

Focusing on the real estate market in Phuket, it has seen significant growth, particularly in the tourism-driven areas. The island is a popular destination for both tourists and expatriates, which has fueled demand for both residential and commercial properties. This demand is reflected in the development of high-end condominiums, luxury villas, and hotels.

However, it's not just luxury properties that are in demand; there's also a healthy market for mid-range and affordable housing, catering to a broader demographic.

Government policies have historically played a role in shaping the real estate market. Thailand has regulations that limit foreign ownership of land, which has historically been a point of contention for foreign investors.

However, there are ways around this, such as long-term leases or purchasing property through a Thai company.

More recently, the government has implemented policies aimed at stimulating the real estate market, such as offering tax incentives for first-time home buyers. These policies often have a ripple effect on the market, sometimes boosting demand and prices.

In terms of recent regulatory changes, the Thai government regularly updates its policies concerning property buying and selling, which can affect both local and foreign investors.

For instance, changes in tax laws, visa regulations, or foreign ownership rules can significantly impact the market.

Locally, Phuket is seen as a lucrative area for real estate investment. The island's natural beauty, coupled with a well-developed infrastructure, makes it attractive for both residential and commercial investments.

Popular areas for investment include beachfront properties, luxury villas in gated communities, and condominiums in tourist hotspots. These areas tend to offer high rental yields, particularly during the tourist season.

For foreign investors, there are specific incentives and drawbacks to consider. Incentives include the potential for high rental yields and capital appreciation, especially in tourist-frequented areas.

On the downside, the legal complexities of property ownership, such as the prohibition of foreign land ownership, can be challenging.

Additionally, fluctuations in the local currency and changes in government policies can add to the risk.

When compared to neighboring regions or similar tourist destinations, Phuket's real estate prices can be competitive.

However, they are often higher than in less developed parts of Thailand due to the island's popularity and development level.

The legal framework surrounding real estate investment in Thailand, including Phuket, is relatively stable and transparent, but it does have its nuances.

For instance, the processes for property registration, due diligence, and compliance with regulations can be complex, especially for foreign investors. It's crucial for investors to engage with local legal experts to navigate these complexities effectively.

Outlook and forecast

Phuket's real estate market has some unique factors that distinguish it from others.

One of the key factors is its status as a major tourist destination, which drives a significant demand for short-term rentals and vacation properties.

This tourism-centric nature means that the real estate market is closely tied to the health of the global travel industry. Properties in prime locations, especially beachfront and sea-view properties, are in high demand, often fetching premium prices.

Additionally, the presence of an international airport in Phuket enhances its accessibility, making it more attractive to foreign investors.

Forecasting Phuket’s economy and stability, and by extension, its real estate market, requires considering several factors. The global economic climate, tourism trends, and domestic political stability all play critical roles.

Given the current trajectory, the outlook seems cautiously positive. The Thai government has been actively promoting tourism, and Phuket, being a flagship destination, is likely to benefit from these efforts.

This could translate to a sustained demand for real estate, particularly in the hospitality sector and residential properties catering to tourists.

Comparatively, Phuket's growth in terms of real estate development and prices has been faster than many other regions in Thailand. This is partly due to its international appeal and the limited availability of prime land, which drives up property values.

However, it's essential to note that this growth can vary significantly between different areas within Phuket.

Regarding anticipated changes in government policies in 2024, it's challenging to predict specifics without current data.

However, potential areas of change could include modifications to property taxes, adjustments in foreign ownership regulations, or new initiatives to promote sustainable development, especially given Phuket’s environmental concerns. Any such changes could directly impact investment attractiveness and market dynamics.

There are several indicators suggesting improvements in Phuket's real estate market. The ongoing development of infrastructure, like improved roads and public facilities, enhances the island's livability and appeal.

Additionally, the continual upgrading of the airport and expansion of direct international flights can boost tourism, indirectly benefiting the real estate sector. These improvements could lead to increased property values and higher demand in both the residential and commercial sectors.

However, potential investors should be mindful of specific risks. Political instability in Thailand, environmental concerns like flooding or overdevelopment, and fluctuations in the global economy impacting tourism, are significant risks.

If any of these risks materialize, they could lead to a decrease in tourism, negatively impacting rental yields and property values.

Moreover, changes in government policies regarding foreign property ownership or taxation could also affect investor confidence.

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What about housing prices in Phuket?

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Current state

In Phuket, the trend in real estate prices over the past few years has been largely influenced by external factors like global economic conditions and the health of the tourism industry.

Generally, there has been an upward trend, especially in areas popular with tourists and expatriates. This growth, however, has experienced fluctuations due to various economic and environmental factors.

Looking at how real estate prices have reacted to past economic crises or booms, it's clear that Phuket's market is somewhat sensitive to global economic trends.

For instance, during periods of global economic downturn, such as the 2008 financial crisis or more recent events like the COVID-19 pandemic, the real estate market in Phuket experienced a slowdown.

Prices either stagnated or, in some cases, declined slightly, mainly due to reduced foreign investment and a dip in tourism.

Conversely, during economic booms, particularly when global travel is thriving, there's been a noticeable increase in property prices, driven by higher demand.

Comparing current real estate prices to those a decade ago, there's been a significant increase. This rise is attributable to several factors, including the continued development of Phuket as a premier tourist destination, improvements in infrastructure, and a general increase in the cost of living.

The appreciation in property values over the last decade also reflects the growing interest from foreign investors and retirees seeking a second home or investment property in a tropical location.

Currently, the real estate prices in Phuket are showing a trend of either stabilization or moderate increase, depending on the area and property type. This trend is influenced by the recovering global economy and a gradual resurgence in tourism post-pandemic.

Regarding which types of properties are experiencing the highest growth, luxury villas and high-end condominiums in prime locations, such as near beaches or with ocean views, are seeing the most significant appreciation.

This trend is driven by the scarcity of such prime properties and the high demand from affluent buyers and investors who are willing to pay a premium for exclusive locations and amenities.

The population change in Phuket has also impacted the real estate market. In recent years, there's been an increase in both the expatriate and local populations.

The growth in the expatriate population is fueled by retirees and remote workers attracted by the island's lifestyle, while the local population growth is driven by economic opportunities in the tourism and service industries.

This demographic change is creating a demand for a wider range of properties, from affordable housing to luxury residences.

Specific factors causing these trends include the ongoing development of the island's infrastructure, like better roads, improved airport facilities, and enhanced public services, which make the island more attractive for long-term living.

Additionally, the Thai government's efforts to promote tourism and foreign investment have also played a role in attracting more people to the island.

Outlook and forecast

The current state of real estate prices in Phuket is influenced by a combination of economic and demographic factors.

First and foremost, tourism is a major driver. Phuket's popularity as a global tourist destination means that areas with high tourist traffic tend to have higher property values. The demand for short-term rentals and holiday homes drives up prices, especially in beachfront or scenic locations.

Another factor is foreign investment. Phuket attracts a significant number of foreign buyers, including retirees, investors, and expatriates.

This demand from overseas buyers, particularly for high-end properties, has a considerable impact on property prices. The ease of access to the island, facilitated by its international airport, also plays a role in attracting these buyers.

Demographically, there has been a steady increase in the expatriate population in Phuket.

Many foreigners are drawn to the island for its lifestyle, climate, and relatively lower cost of living compared to Western countries. This influx contributes to the demand for residential properties, both for purchase and rent.

Looking at potential factors that could lead to an increase in housing prices in Phuket in the near future, several trends and events stand out.

Firstly, the continued expansion of the tourism industry, including the development of new resorts, attractions, and improved infrastructure, could further boost demand for real estate.

Secondly, if the Thai government introduces more favorable policies for foreign property buyers or further relaxes restrictions on foreign property ownership, this could attract more international investors, driving up prices.

However, it's important to note that these factors may not uniformly affect all cities and regions in Thailand. Other regions may have different economic drivers and demographic trends, leading to variations in how their real estate markets respond.

Conversely, there are also factors that could lead to a decrease in housing prices in Phuket. One significant risk is the global economic climate.

A downturn in the global economy could lead to a decrease in tourism and foreign investment, which would negatively impact the real estate market.

Environmental concerns, such as rising sea levels or natural disasters, could also affect property values, particularly in coastal areas.

Another potential risk is political instability. Thailand has experienced political upheavals in the past, and any future instability could deter investors and tourists, leading to a fall in property prices.

Again, these risks may not be applicable to all regions of Thailand equally. Each region has its unique economic and political context, which will influence how its real estate market reacts to these trends and events.

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How's the demand for the real estate market in Phuket?

Current state

In Phuket, the current demand for residential real estate is quite robust, primarily driven by its appeal as a tourist destination and a favored spot for expatriates and retirees.

The market dynamics in terms of buyers and sellers can vary depending on the specific area and type of property.

Generally, in prime locations, especially those near beaches or with scenic views, there is often more demand than supply, leading to higher prices.

In contrast, in less popular areas, the market might be more balanced or even have more sellers than buyers.

The supply of new housing is somewhat responsive to this demand, but it can be constrained by factors such as availability of land, especially in highly sought-after areas.

Developers tend to focus on creating properties that cater to the higher end of the market, such as luxury villas and condominiums with amenities that appeal to affluent buyers and investors.

This focus on high-end properties means that there might be a shortage of more affordable housing options, which can be a concern for local residents.

Buyers in Phuket are typically looking for properties that offer a combination of lifestyle and investment opportunities. Properties with unique features, such as beachfront locations, sea views, or proximity to tourist hotspots, are particularly in demand.

There's also a significant market for properties that offer a sense of community and security, like gated communities and condominium complexes with shared amenities.

For investors, properties that can yield good rental returns, especially during the tourist season, are highly sought after.

Interest rates for mortgages play a crucial role in determining the buying power and demand of consumers. While specific rates can vary depending on the financial institution and the buyer's profile, Thailand's interest rates have historically been relatively low compared to many Western countries.

This lower cost of borrowing can enhance buying power and stimulate demand, particularly among local buyers.

However, it's important to note that for foreign buyers, the terms and availability of mortgage financing can be more restrictive, which might impact their ability to purchase property.

Regarding recent changes in government policies or regulations, these can significantly impact the local real estate market.

Changes could include adjustments in property taxes, which could either encourage or discourage investment, or modifications to laws regarding foreign property ownership, which would directly affect the demand from overseas buyers.

Additionally, subsidies for homebuyers or changes in zoning laws can influence the development of new properties and the types of housing available.

It's important for buyers and investors to stay informed about such changes, as they can have a substantial impact on the real estate market dynamics in Phuket.

Outlook and forecast

Demographic shifts, such as aging populations and urbanization, have a notable influence on the real estate market in Phuket.

The island has become a popular destination for retirees, particularly from Europe and North America, who are attracted by the climate, lifestyle, and relatively lower cost of living.

This trend has increased the demand for residential properties that cater to the needs of older individuals, such as single-story homes, properties with easy maintenance, and communities that offer a sense of security and amenities like healthcare facilities.

Urbanization is also playing a role. As more people move to urban areas for employment opportunities, particularly in tourism and related industries.

There's a growing demand for apartments and condominiums that are close to work and leisure amenities. This shift is leading to more development in and around Phuket’s urban centers.

Current trends in household formation, such as smaller family sizes and an increase in single-person households, influence the types of properties in demand.

There's a noticeable trend towards smaller, more manageable living spaces, like one or two-bedroom apartments and condos. These types of properties are particularly appealing to young professionals, small families, and expatriates living in Phuket.

In terms of real estate as an investment in Phuket, there's a strong market in Phuket for properties that offer good rental yields and potential for capital appreciation.

This includes luxury villas and condominiums in prime locations, particularly those with sea views or close proximity to beaches and tourist hotspots.

Such properties are not only attractive for their rental income potential during the tourist season but also for their value as vacation homes.

Cultural trends and shifts are also influencing the demand in the housing market. For instance, there’s a growing interest in sustainable living and eco-friendly homes among a segment of buyers.

This trend is leading to a niche market for properties that incorporate green technologies, use sustainable materials, and have a minimal environmental impact.

Regarding the purpose of buying properties, there's a mix of buyers in Phuket. While many purchase properties for personal use, like retirement or vacation homes, a significant number of buyers are investors looking for rental income or capital appreciation.

The high demand for vacation rentals makes buying property for investment purposes quite attractive.

Foreign investment plays a substantial role in the Phuket real estate market. It creates more demand, especially for high-end properties and those in prime tourist areas.

However, there are restrictions on foreign ownership of land in Thailand, which can limit the type of properties foreigners can buy directly. Typically, foreigners can purchase condominium units or lease land for a fixed period.

Despite these restrictions, foreign investment remains strong, often facilitated by legal structures that allow foreigners to effectively control land-based properties.

As for niche markets, apart from the eco-friendly homes mentioned earlier, there’s also a market for luxury properties, including high-end villas and exclusive condominium complexes.

These properties often offer premium amenities, such as private pools, security, and concierge services, and cater to affluent buyers who are looking for exceptional holiday homes or investment opportunities.

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How's the rental market in Phuket?

Current state

The demand for rental properties in Phuket is dynamic and influenced by various factors, including the season, the type of tenants, and the overall health of the tourism industry.

The island's popularity as a tourist destination creates a high demand for short-term rentals, especially during the peak tourist season. This demand is particularly strong for properties that cater to holidaymakers, such as furnished apartments, villas, and condominiums.

In terms of specific types of properties, apartments and condominiums, particularly those with good locations and amenities, are in high demand.

These properties are popular among tourists, short-term visitors, and expatriates who prefer the convenience and facilities that such accommodations offer.

Single-family homes and villas are also popular, especially for longer-term rentals among expatriates and retirees who value privacy and more living space.

When considering the features most sought after by tenants in rental properties, location is key. Properties close to beaches, tourist attractions, and amenities like shopping centers, restaurants, and entertainment venues are highly desirable.

Size and amenities are also important factors. Rentals that offer spacious living areas, modern facilities, and extras like swimming pools, gyms, and security services are more attractive to potential tenants.

Tenant preferences vary significantly between urban, suburban, and rural areas in Phuket. In urban areas, tenants often prioritize convenience and proximity to amenities and nightlife, opting for apartments or condos.

In suburban and rural areas, tenants might prefer single-family homes or villas that offer more space and a quieter environment. These areas are often favored by families and long-term expatriates.

The demographic characteristics of tenants in Phuket vary. In urban areas, you’re more likely to find young professionals, couples, and smaller families, often attracted by the employment opportunities and lifestyle. These tenants typically look for modern, convenient living spaces.

In contrast, suburban and rural areas might attract larger families and retirees who are looking for more space, tranquility, and a community-oriented environment.

Income levels and economic factors significantly influence the type of properties tenants are renting. Higher-income tenants, often including expatriates and well-off professionals, are more likely to rent larger, well-located properties with more amenities.

On the other hand, tenants with lower income levels, such as local workers in the service industry, may opt for more affordable options like smaller apartments or shared accommodations.

Regarding regions with high concentrations of specific tenant groups, areas close to major tourist attractions and beaches are popular among tourists and short-term visitors.

In contrast, areas with a more residential feel, perhaps a bit removed from the main tourist hubs, are more popular among expatriates and retirees.

These areas often offer a mix of single-family homes, townhouses, and villas, catering to the needs of these longer-term residents.

Outlook and forecast

The rental market in Phuket is primarily influenced by its status as a major tourist destination.

The influx of tourists, particularly during the high season, drives a significant portion of the demand for short-term rentals. Properties in close proximity to beaches, entertainment zones, and other tourist attractions are particularly in demand.

Additionally, the island's growing popularity among expatriates and retirees for long-term stays also shapes the rental market, with a steady demand for villas, apartments, and houses.

Evolving lifestyles and work patterns, such as the increase in remote work, are starting to influence rental preferences in Phuket.

With more people able to work from anywhere, there's a growing trend towards properties that offer good internet connectivity and dedicated workspaces.

This shift might lead to a higher demand for rentals that cater to the needs of remote workers, including those with extra space for a home office and located in quieter, more residential areas away from the main tourist hubs.

Demographic changes, such as an increase in the number of retirees and expatriates, are reflected in the rental market.

These groups often look for longer-term rentals, leading to a stable year-round demand for certain types of properties, such as single-story homes or those with community facilities like health clubs and social activities.

Emerging urban areas in Phuket are becoming new hotspots for rental properties. Areas that were previously overlooked are gaining popularity due to infrastructure improvements, like better roads and expanded services, making them more accessible and livable.

These areas often offer more affordable rental options compared to the established tourist zones, attracting a diverse range of tenants including young professionals, local families, and long-term expatriates.

Technological advancements and innovations are also impacting the rental market in Phuket. Online rental platforms have made it easier for property owners to market their properties and for tenants to find suitable accommodations.

Additionally, smart home technology and high-speed internet are becoming increasingly important features for tenants, influencing their rental choices.

Sustainability and green living are emerging trends in the rental market. There is a growing awareness and demand for eco-friendly homes, especially among younger tenants and those from countries where environmental consciousness is more pronounced.

Properties that incorporate sustainable features like solar panels, energy-efficient appliances, and sustainable building materials are becoming more attractive.

The rental market forecast in Phuket differs from other regions of the country. While urban areas like Bangkok might experience steady demand driven by employment and education opportunities.

Phuket's rental market is more influenced by tourism and expatriate lifestyles. This means that the market in Phuket might be more volatile, with seasonal fluctuations.

Looking at the long-term outlook for the rental market in Phuket, considering all these factors, it seems poised for steady growth. The continued appeal of Phuket as a tourist destination, coupled with its attractiveness to remote workers, retirees, and expatriates, should sustain demand for rental properties.

However, this market is also susceptible to global economic trends and changes in travel habits, which could lead to fluctuations.

In terms of niche markets, luxury properties and eco-friendly homes are experiencing unique trends in Phuket. There's a consistent demand for high-end rentals, including luxury villas and condominiums with premium amenities.

At the same time, the growing interest in sustainability is opening up a market for rentals that prioritize green living, which could see significant growth in the coming years.

Make sure you understand the real estate market in Phuket

Don't rush into buying the wrong property in Thailand. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

real estate market Phuket

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.