Phuket Property Market Focus on Villas For Sale
Thailand in general and Phuket in particular has established itself as an international resort destination, offering a wide range of luxury villas, condominiums and apartments for sale.
For those buying a villa in Phuket, their purchase is easily comparable to that offered in the Mediterranean and Caribbean, but at a fraction of the price.
Widely recognised as the pinnacle of the Asian resort property market, Phuket’s property market has grown since the 1990s, in tandem with the development of its tourism.
The Phuket villa market is well positioned due in part to the island’s infrastructure, including world-class leisure facilities and amenities and an international airport offering excellent accessibility.
Many investors choose to invest in this market as it offers a blend of western luxury and an exotic tropical lifestyle.
“Most of the quality villa developments in Phuket are offered for sale on a leasehold basis”
Definitions of the different types of villas in Phuket.
A “villa” is a general term for landed properties, often a one or two-storey structure built on private land.
Most villas for sale in Phuket are located in a subdivision or gated community with a limited number of houses.
Most of the quality villa developments in Phuket are offered for sale on a leasehold basis.
Under Thai law, foreigners are not allowed to own land outright, so a series of 30-year renewable leases are granted.
As for apartments or condominiums, there is no restriction for foreigners to buy provided that the number of foreign owners owning a flat in the same building does not exceed 49%. Indeed, the law stipulates that the majority of the owners must be Thai nationals.
Of course, Thai buyers are able to purchase land and house in real estate developments that offer the option of full ownership.
The types of villas in Phuket can be generally classified as follows:
1) High-end villas located on the front line of the beach:
Phuket villas are luxury homes located in beachfront locations with panoramic sea views. Prices for these villas for sale in Phuket usually start at around 3 million USD for a 3 or 4 bedroom property.
The most common features include a private pool, spacious indoor and outdoor living areas and high standards with full communal facilities and professional management.
2) Luxury villas in Phuket:
Prices of luxury villas for sale in Phuket usually start at around USD 1 million and are mainly located in low density developments offering a high level of privacy.
Common features of these luxury villas include prime hillside or beachfront locations, some with sea views.
These villas offer an excellent standard of construction and finish. The majority of these properties have a private pool, with full communal facilities and professional property management.
3) Semi-detached villas or townhouses:
There are a number of developments offering semi-detached villas or townhouses in Phuket, particularly around the Laguna Patong area.
These developments are often located further inland, mostly without sea views and in higher density developments with smaller plots.
This type of property offers a good quality of construction with a range of common facilities, usually at prices starting at around 500,000 USD.
4) Villas that are part of star hotels in Phuket:
Phuket has a growing number of villas for sale that are managed by four and five star rated hotel groups, for example The Point Yamu by Como, Banyan Tree and Dusit Thani.
These resorts of course charge a fee as the owners will benefit from the four or five star management.
The price of a villa in a branded resort for sale in Phuket starts from around USD 750,000 for a four-star residence and from USD 2 million for a five-star level villa.
Locations of villas in Phuket
There has been a diversification of locations being developed in Phuket. The west coast was the original centre of property development where many luxury villas are now located, including Amanpuri.
As the main west coast locations have been developed, the once neglected south and east coasts are now seeing an increase in the number of exclusive property developments, for example Cape Yamu and The Point Yamu by Como.
Projects are also expanding beyond Phuket to Phang Nga, Krabi and the outer islands of Phang Nga Bay.
The West Coast:
The beautiful beaches of the west coast from Nai Thon to Kata Noi are the centre of Phuket’s tourism and also have the vast majority of hotels and high-end resorts.
Originally villa developments were concentrated in Patong until the launch of Laguna Phuket which shifted the development to areas such as Bangtao and Surin, and is now the centre of luxury property developments in Phuket.
The East Coast:
With a limited number of prime beachfront locations available to the west of Phuket, the east coast, which offers stunning views of Phang Nga Bay, is now growing rapidly.
Access to Phang Nga Bay has also persuaded a number of marina property developments, namely Yacht Haven, Royal Phuket Marina, Ao Por Grand Marina and a number of luxury villa projects, including Marina Living by Ao Po Grand Marina, The Cape Yamu, Baan Yamu Como Point Yamu.
The South Coast:
The remoteness of Phuket’s international airport and golf courses has resulted in a slower pace of development. That said, South Phuket not only has excellent beaches, but also a number of headlands with quality real estate developments offering sea views. The popularity of Cape Panwa and Rawai for example has increased.
The North Coast:
Due to the shortage of beachfront land on the west coast, a number of property developers have set up on the northern beaches of the island.
The main advantage is the proximity that these villas offer to Phuket International Airport.
The inland:
The most sought-after developments are those close to the sea with easy access to the beach and those with golf course views or close to lively areas such as Phuket town.
But properties further inland are becoming increasingly attractive to individuals who wish to buy a villa in Phuket but are limited by their budget.
Grand Phuket (Phang Nga, Krabi and outlying islands):
Phang Nga is an interesting alternative to some of the busy beaches of Phuket. Located north of Phuket, Phang Nga offers an unspoilt coastline close to Phuket International Airport.
The property market here is still largely undeveloped, but a number of property developments are taking place.
What are the options for buying a villa in Phuket?
1) Phuket villa resale market:
Resale villas are second-hand properties offered for sale by private owners, as opposed to sales directly from the original developer. These properties may be under construction (off-plan) or completed.
To date, Phuket has a fairly weak property market for resale homes, as most buyers are long-term investors looking for a rental return and occupy their villa very often.
However this is an area to watch as the Phuket resale villa market is a growing and maturing market.
2) Completed Phuket villas:
In general people discover Phuket as tourists, enjoy its outstanding white sandy beaches, unparalleled hospitality, tropical climate, excellent value for money, world class diving sites and some of the best golf courses in South East Asia.
Many later opt to invest in its property market and decide to buy a villa in Phuket as a second home or retirement home.
3) Off-plan villas in Phuket:
Off-plan villas are homes sold in schemes that are currently being planned or built. To minimise the risk when buying an off-plan villa, it is important to buy from a reputable developer.
The majority of quality developments selling off-plan have show homes available to view. There is often the potential for price increases for off-plan properties at the end of the scheme, as off-plan sales are usually offered at a lower price at launch.
4) Investment villas:
There are a number of projects positioned as investment properties with rental yields.
These investment properties are built for investment purposes and are subject to occupancy restrictions for the owners.
The level of guaranteed return generally varies between 5% and 8% for a period of 1 to 6 years and annual owner usage of 45 to 60 days, depending on the project.
Investing in Phuket
There are now over 3,000 villa owners on the island. For the past 10 years or so, Phuket has been offering property buyers an investment with a good potential return on capital.
Some investors have experienced average investment appreciation of 20% to 50% per annum for prime beachfront or ocean view locations, and some Phuket properties have even seen a 100% increase in asset value between launch and completion.
Lifestyle, Leisure & Infrastructure
Phuket currently has over 1,700 hotels and resorts as well as numerous sports and leisure facilities. The island has a total of six golf courses, including Blue Canyon Country Club, Laguna Phuket Golf Course and Mission Hills, and also four marinas offering a total of 655 marina berths.
Phuket’s tourism and property market has matured and there is also a growing choice of high-end restaurants and entertainment.
The island’s infrastructure is also well developed with an international airport, 6 major hospitals and 3 international schools. The development of Phuket’s infrastructure and leisure facilities has complemented the growth of the Phuket property market over the years.
Weather
Phuket enjoys a mild tropical climate and a fairly constant temperature throughout the year (25 to 35 degrees Celsius), with the ideal weather being during the European winter months of December to March/April.
There are two distinct seasons in Phuket: the dry season and the rainy season. The weather in Phuket is perfect when the dry season starts from November to January, while March and April are the hottest months. The rainy season runs from late April to November when the rainfall is heaviest.
Access to and from Phuket
Arrivals to Phuket exceeded 5 million visitors in 2019. Served by a total of 42 airlines (14 of which are charter airlines), Phuket International Airport offers flights to destinations such as Hong Kong, Singapore, Kuala Lumpur, Moscow, Seoul and many more.
Phuket Villa Market Survey (We do not yet have the official figures for 2020 at the time of writing)
- A total of 95 villas were sold in the second half of 2019, up 51% year-on-year.
- New property sales were dominated by investors who wanted rental income and were looking for low-end villas priced below THB 35 million, accounting for 94% of total villas sold in H2 2019.
- The high-end market (THB 35 million and above) improved with a total of 6 high-end villas sold.
- Four villa projects were launched in Q2 2019, two of which belong to the lower segment with prices below THB 35 million. The other two belong to the entry level segment, while one was in the high end segment with prices from 35 to 90 million.
A summary of the process of buying property in Thailand.
Payment terms when buying property in Thailand:
The majority of new properties in Thailand are sold off-plan or under construction. Buyers will always be asked to pay a deposit for the reservation of the unit they have chosen. This ensures that the property is taken off the market. Thereafter, some time (usually 30 days) is allowed to draw up the legal documents before the first payment is made on signing the contract.
Thereafter, the remaining payments are usually spread over the duration of the construction.
Here is an example:
- Signature of the sales contract: 20%.
- Completion of the foundations or base of the villa: 20%.
- Completion of columns, floor slabs and roof frames: 20%.
- Completion of the structure of the villa, including external doors and windows: 20%.
- Substantial completion of the villa and final transfer of ownership: 20%.
Sinking fund:
In a new villa or condominium development, each owner will pay an initial amount into a sinking fund when ownership is transferred. This amount will be used in the future for major renovations and repairs that are not part of the operating budget.
Common area management costs:
In a villa scheme (note that this also applies to a condo/apartment building), specifically appointed property managers will normally be responsible for managing the common areas.
This service includes:
- 24-hour on-site security
- Maintenance and watering of all common area landscaping
- Cleaning and maintenance of all common areas
- Management office and staffing as well as related costs, accounting and insurance.
- Electricity and water supply in the common areas. Waste collection and pest control.
The property management company reports directly to the owners’ committee on management issues and the financial status of the project.
Reminder
As a reminder, according to Thai law, foreigners are not allowed to own land outright, so a series of 30-year renewable leases are granted (Leasehold).
However, a foreigner can own the house or villa he buys (the building, not the land).
As for apartments or condominiums, there are no restrictions for foreigners to buy provided that the number of foreign owners owning a flat in the same building does not exceed 49%.
Indeed, the law stipulates that the majority of the owners must be Thai nationals.
Of course, Thai buyers are able to purchase land and house in real estate developments that offer the option of full ownership.
