Phuket: A Magnet for Affluent Russians in Search of a New Home in Paradise
Phuket, declared Sophon Suwannarat, the new governor, is a paradise open to everyone seeking a second home." Dressed in exquisite Thai silk, he graced the champagne-fueled launch celebration of Gardens of Eden in a lavish villa perched atop the five-star Anantara Phuket on Layan Beach.
In December, Gardens of Eden, a colossal 11 billion baht ($315 million) real estate venture, was unveiled, marking the largest property development on Phuket to date. It stands out as a prime illustration of the significant transformation occurring in the Phuket property market, with surging sales of private residences and condominiums.
Embarking on a Journey: Seeking an Enhanced Quality of Life
The pivotal shift observed is that these markets, spearheaded by Russia, China, India, and Europe, are progressively transitioning from investment-driven purchases to relocation-driven decisions, as families actively seek an improved quality of life.
In 2022, Russians emerged as the leading investors in real estate, acquiring 240 units with a total expenditure of 875 Million Baht. This substantial investment surpassed the purchases made by French, American, Chinese, and British buyers.
The Gardens of Eden, spanning 73 rai (11.7 hectares) on Bang Tao Beach, is hailed as a "luxurious wellness residential and hospitality community." Notably, 70% of the expansive grounds are thoughtfully dedicated to permanent features such as gardens, water features, playgrounds, and exercise areas.
The standard entry-level pricing for condominiums in Phuket ranges from 100,000 to 140,000 baht per square meter. However, Gardens of Eden sets itself apart by offering units at a premium, with prices ranging from 220,000 to 300,000 Baht. The condominium launches on Phuket's central west coast have taken center stage, showcasing the allure of Bang Tao Beach and Layan Beach. Recent reports highlight the thriving market for Phuket condominiums.
It is estimates that over the past 18 months, approximately 27,000 Russians have chosen Phuket as their new residence. Arriving with pre-existing income, they secured accommodations. Phuket, often referred to as the Pearl of the Orient, stands out as the crowning jewel in Thailand's tourism sector, boasting 26 pristine sandy beaches, crystal-clear seas, breathtaking natural landscapes, and the freshest air in the region. The island is currently experiencing a thriving surge in popularity.
Meanwhile, Thailand experienced a recovery in overall visitor numbers last year, surpassing 28 million, as reported by the Tourism Authority of Thailand. However, this figure still falls short of the pre-COVID-19 peak in 2019, which was just shy of 40 million.
Given that approximately a fifth of the country's economy is closely linked to tourism, the pandemic had a significant impact. Notably, Phuket bore the brunt, with a staggering fifty percent of its gross provincial product relying on the hospitality sector, making it particularly vulnerable to the challenges posed by the global health crisis.
Locals bore the brunt of the situation, with over 100,000 residents reportedly leaving the island. Demonstrating the persistent labor shortage, Phuket boasted one of the country's lowest unemployment rates, standing at approximately 0.45% in the first quarter of 2023, within a population of around 420,000, as per official figures.
Reliance on tourism
The confirmed risk of excessive reliance on tourism has prompted a shift in focus, as highlighted by Governor Sophon. Now, the emphasis is on enticing affluent individuals to invest in second homes, consider permanent relocation, or retire on the island.
A French entrepreneur, whose catering business succumbed to the economic challenges posed by COVID, seamlessly transitioned into the realm of real estate, and he hasn't regretted the decision. He emphasized that certain residential property values in Phuket have experienced a remarkable annual growth of 17.5%. Furthermore, he pointed out that Phuket boasts a robust secondary market, a rarity in comparison to the less liquid and overly developed real estate landscape of Bangkok.
The desire among foreigners to establish residence in Phuket is not a novel phenomenon. A long time resident made the decision over two decades ago when he moved from Hong Kong, driven primarily by a preference for the lifestyle. The noteworthy aspect now is the substantial surge in the numbers opting for this lifestyle change.
International schools
International schools are essential to making the island viable for young families. Following education liberalization in the early 1990s, Thailand's first major franchise was the U.K.'s Dulwich International College in Phuket, today the British International School.
United World College Thailand emerged later, presenting "a comprehensive, transformative, and rigorous IB continuum education spanning from pre-kindergarten to grade 12, catering to both day and boarding students," as outlined on its website.
Phuket challenges
However, numerous challenges persist. According to Thanusak Phungdet, the senior chairman of the Phuket Chamber of Commerce, the predominant issue is undoubtedly traffic. It congests the towns and proves challenging to alleviate, particularly along the steep and winding coastal roads.
Days after assuming office on August 22, Prime Minister Srettha Thavisin, accompanied by members of his Pheu Thai party's tourism policy committee, visited Phuket to explore potential initiatives aimed at promoting Thailand's largest island and second-smallest province.
National growth slumped to just below 2% during the political uncertainty of 2023's second quarter. "We have to forget about politics but think of the country's best interests," Srettha told reporters, noting that Pheu Thai did not have a single member of parliament representing Phuket.
Emphasizing tourism as the prime catalyst for short-term economic growth during slowdowns, he reiterated this viewpoint. Having previously served as the president of the property developer Sansiri, the new prime minister revisited the topic the following month and again in December, providing additional updates.
Phuket however, remains a top destination for tourism and property investors with many real estate options available and in development.
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