Analysis and Trends: Overview of the Phuket Real Estate Market 2019

Real Estate Pricing

It is almost a misnomer to refer to “The Phuket Real Estate Market” because it is not a homogeneous entity. It is divided (and even subdivided) into categories which collectively include a diverse array of buyers. This section aims to address some of the fundamentals which impact the cost of property in Phuket, with an emphasis on the prices being paid by foreigners.

The national statistics suggest that while the Thai property market has slowed slightly over the last two years, it made steady gains over the 10 years up until January 2016. The house price index stumbled until mid-way through 2017, then continued rising into the fourth quarter of 2018. At the time of writing, it is slightly off its recent highs.

Since the beginning of 2008, Thailand’s house price index is up 52.73%. (The impact of the current pullback has been only – 0.29%.) In simple terms, this represents a 4.79% rise in prices per year. If you are an investor who looks at capital appreciation in terms of a compound annual rate of return, it is a CARR of 3.87%.


Phuket Real Estate Market Price

Increased Tourism

Before going further, it is important to distinguish between the Phuket property market, and the market in Thailand as a whole (even in Bangkok specifically). Bangkok is the capital city of Thailand, and also the major population centre for the country. With a total population of over 16 million, Greater Bangkok is home to nearly one quarter of the total population of Thailand. Because there are more people concentrated there than anywhere else in the country, the property market tends to move with the economy.

In a strong economy, like we have seen for the last decade, estimates of demand can become optimistic, and over-building can occur. At the time of writing, stories of unsold condominium units in Bangkok are common. But that is Bangkok, not Phuket.

While prices in Phuket may loosely follow the ebb and flow in the rest of Thailand, the demand from foreigners in Phuket sets its real estate sector apart from the country as a whole. And those foreign buyers are almost always introduced to the island by taking a holiday here. Everything tells us tourism in Phuket will continue to grow. And so therefore will the real estate sector.

The evolution of visitor to resident sometimes takes a while, but it happens a lot. People fall in love with Thailand, and it gradually becomes their default vacation destination, with more and more holidays being spent here. The love affair with the country is truly complete when they buy or lease a condo or villa in Thailand, and decide to move, work or retire here.

The condominium market has seen especially rapid growth over the last 15 years, and this is due in large part to the increase in tourism. But something else has happened during this period – interest rates were slashed the world over.

Phuket Real Estate Interest Rates

Interest Rates

In the wake of the global financial crisis in 2008, interest rates were lowered to encourage spending and investment, and to discourage savings. Since then, the relatively meagre income being offered by traditional investments (e.g. bonds) has prompted investors to look elsewhere for higher returns. Banks in some countries, such as Switzerland, are not actually paying depositors, but are instead charging the people who deposit money there. Some offshore banks are also charging any Euro depositors whose balances go above a certain level.

These “negative interest rate” policies have motivated investors to look for alternative sources of income, and the idea of an income producing rental property on a tropical island is naturally quite appealing. The last few years have seen a marked increase in studio and one bedroom units being sold to foreigners, who are in turn renting them out for better yields than a bank could offer.

Thankfully for foreign buyers, there is one unwelcome result of low interest rates which is not a factor in Thailand. In a low interest rate environment, the cheap cost of borrowing typically sends more people into the real estate market, driving prices higher. This can lead to speculative property bubbles.

In Thailand, however, it is almost impossible for a foreigner to get a mortgage, so virtually all property sales are done for cash. No borrowing means no speculation. No speculation means no bubble. No bubble means no crazy price spikes. Prices in the foreign market have gradually increased in Phuket, but it has been a steady rise, predominantly driven by the natural forces of inflation and demand.

Phuket Real Estate Market Inflation

Market Inflation

Modest inflation is the target of almost every central bank, and most consider a “healthy” rate of inflation to be between 2% and 3% per annum.

Inflation pushes up the building costs of each property. Bricks, mortar, roof tiles, household appliances, the fixtures and fittings – even the plants for the garden – are all increasing in price.

Property prices have not “exploded” in Phuket, but no developer can escape some effects of inflation.


Land scarcity (Phuket is an island, after all) will almost certainly have a massive impact on property prices one day, but that day has not come because, for now, there is ample supply of housing units, and it is meeting rather than lagging the demand.

Increased tourism, low interest rates, inflation and scarcity are all reasons why Phuket property prices possibly should be increasing faster, but there are two key factors keeping housing prices in check: Burmese labourers and the Supply-Demand dynamic.

Low Wage Inflation

Most construction in Phuket (in fact, throughout Thailand) utilises Burmese workers. There is an ample workforce just over the border, and given the employment prospects at home, they are happy to accept work in Thailand. They are also willing to work for lower wages than a Thai worker would demand.

Supply and Demand

Conventional supply-demand dynamics don’t really apply to Phuket.

In a classic scenario, when a large number of buyers are looking for properties, but no one is selling, it creates a fast-paced market with prices rising and new developments selling out quickly. When the tables turn, and the market is flooded with properties, sellers begin to find it difficult as prices start to fall. A buyer looking for a great deal usually finds one then.

One of the reasons this cycle repeats itself over time is that periods of weak demand result in fewer units of housing being built, and the resulting scarcity drives prices higher when demand improves. The “boom times,” however, typically see over development, which leads to oversupply, weakening demand and falling prices.

The foreign buyer dynamic has thus far prevented this “boom-bust” scenario from playing out in Phuket. Visitors to Thailand come from all over the world, but the specific nationality of the largest tourist segment keeps changing as individuals from different countries discover Thailand and Phuket.

The buyers of Phuket real estate once came almost exclusively from Europe and America, as well as Thailand’s Asian neighbours (e.g. Malaysia, Singapore, Australia, New Zealand). But when western currencies began to weaken, Russians discovered Phuket. Russian activity then lessened as the result of a depreciating Rouble, which is when the Chinese discovered Thailand.

Throughout the last three decades, there has not been a protracted decline in demand long enough to send prices significantly lower (as some volatile western markets have experienced), nor has there been over development due to excessive estimates of future demand. Instead, supply has kept pace with demand, and the buyers have been willing to accept modest price increases for new units. Some of these increases have been due to the natural forces of inflation, while the popularity of Phuket property has also allowed developers to demand gradually higher prices.

Economists have a measurement of how much demand changes as a result of price increases, which they call “price elasticity of demand”. Inelastic consumer goods include tobacco, alcohol, and medicine because any price increase has very little impact on demand.

Phuket real estate is neither an addiction nor a life saving medication, but it is what economists would call “relatively inelastic”. As long as the inflow of tourists with disposable income continues to keep pace with the supply of housing units, there is no reason for this to change.

Phuket Real Estate Affordability

Housing Affordability

The fact that Phuket has avoided a property bubble, with prices instead being kept in check, has been a major consideration for property investors.

Given the number of foreign buyers who earn their living elsewhere – outside of Phuket, and not necessarily even in Thailand – the traditional relationship between house prices and salaries/wages does not directly impact the foreign market. And with foreigners generally unable to finance a Thai property, the prices in this sector of the market are also not affected by local interest rates, nor are they subject to the “boom and bust” scenarios which can result from excess lending.

What could affect foreign demand in Thailand are the deposit rates being paid in other countries. As discussed, a number of foreign buyers in Phuket are seeking rental returns to compensate for the interest rates not currently being paid by banks. If deposit rates begin to rise, prospective buyers would have to determine whether a property investment is paying enough to justify tying up their cash.

Affordability in Phuket’s foreign market is thus down to who has cash and who doesn’t, and as long as the prices in Phuket remain low relative to the countries where the buyer has worked and lived, Phuket will remain an attractive place to buy.

And with house prices in China, Russia, Europe, Australia and North America all significantly higher than the cost of most equivalent properties found in Phuket, the prospects for a buoyant market going forward are quite favourable.

Phuket Property Market

“The Local Market”

It is impossible to discuss a property market as dynamic as Phuket’s without a discussion of the local market. While much of the “visible” real estate market on the West Coast targets foreigners, there is a sizeable (and growing) local population in Phuket, and they are also buying.

While the median household wage in Thailand may still be low by western standards, the influx of Burmese workers for low-wage, labour-intensive jobs is a solid indicator of the growing prosperity among Thai households.

A strong economy has created a rising tide in wealth, which has (so to speak) lifted all boats, and the net-worth of most Thai nationals in Phuket continues to climb. That said, most local salaries are not high enough to afford those developments targeted at foreigners, but there are plenty of areas on the island where housing is affordable to someone on a local wage.

For the local population, the traditional ratio of house prices to wages does determine affordability, and any change in this ratio will affect the demand within the local market. But if the price gap between local developments and those targeting foreign buyers becomes too wide, there could be a knock-on effect for “foreign property prices”.

In this way, local prices can act as a quasi-cap on foreign prices.

Confidence and Optimism

In any housing market, confidence is directly correlated to the number of new buyers: the more buyers, the higher the confidence. But what drives confidence?

When it comes to real estate, there are many forces at play, such as supply and demand, affordability compared to income, the flexibility of bank lending, shifting demographics – even a general feeling about the economy as a whole.

The local property market in Phuket will certainly be affected by local business confidence. When business activity levels drop off, most businesses cut costs and put any expansion plans on the back burner. This can potentially have a major effect on employment. If an individual is worried about their job, or the economy in general, they are likely to hold off on buying a property.

If that local business confidence is either causing, or the result of, a drop in tourism, the foreign market will also be affected because fewer holiday makers will mean fewer new foreign buyers.

In a Nutshell

The Thai and Foreign property markets in Phuket are distinct, but the fortunes of both are inextricably tied to the island’s tourism sector.

As the island continues to develop and prosper, so too will the property sector. Phuket is an island, so land is definitely finite. Eventually (who knows when this will be) there will be no more land available for development. Scarcity and inflation are not playing a role at the moment, but longer term these are the “double-whammy” which should support higher prices on the island for years to come.


When a seller advertises a property the price is their notion of the home’s worth, but the only true valuation comes when they find a buyer who agrees with them. Value is therefore far more subjective than price.

If no one is willing to pay the price being asked, the property is being over-valued. That is not to say it wasn’t worth that price 6 months earlier, or that won’t be worth that much again one day, but in the here and now, that is not the value.

Buyers make the market. The value is only what a given buyer is willing to pay, and property price swill keep going up until no buyer can be found. This is essentially how a property bubble forms and ends, and it happens in almost every country. The dynamics are slightly different in Phuket.

The following offers an idea of how buyers (and sellers) in Phuket arrive at their notions of what a property is worth.


Beauty Is In The Eye Of The Beholder

This sentiment is especially applicable to Phuket property.

Someone relatively new to Phuket may have a perception of a property’s value based on what an equivalent property costs at home, or in other holiday destinations they have visited. Their judgment may also be clouded by excitement, anxiety, trepidation – or any cocktail of emotions which can prevent them from making a sound, objective assessment.

In most countries, a house can be fairly valued by an assessor, and the price will be based predominantly on comparable houses in the area. In Phuket, however, people tend to pay what they think something is worth.

Motivated or Unmotivated Sellers

In the past, distortions crept into the market when existing long-time owners (most of them not really motivated sellers) decided to “test the market” by placing their properties up for sale at ridiculously high asking prices. This created artificially inflated prices on nearby properties.

Given the number and variety of properties now on offer, very few people profit from this strategy today, but some do, which can affect the asking prices of surrounding properties. In fact, there are quite a few examples of individuals overpaying for land, properties and businesses.

Phuket Real Estate Appeal

Relative Value

Low interest rates have led to overinflated real estate sectors in many countries, so buyers are hunting bargains. The relative value of Phuket property is often enhanced when a comparable property in the purchaser’s home country is considerably more expensive. Thailand has seen many foreign buyers attracted to the value for money in Thai real estate, although they don’t always appreciate that sometimes they could have driven a harder bargain.

Paying a Premium

Overseas buyers are sometimes willing to pay a slight premium for “the dream”. While they could have saved money with a little a more searching or negotiating, it is not always easy to place a price tag on a dream. For anyone living in a cold climate with dark winters, who has a stressful job and spends most of their day sitting in traffic, Phuket is paradise. Owning a property here could very well be about filling a void in their lives.

Personal Appeal

There is no such thing as universal appeal. What makes a given property more desirable to one prospective buyer may be a turn-off for another.

Someone may be attracted to Phuket for its greenery, and actively seek out peace and solitude. That person would likely be put off by crowds, shops and nightlife (which could be the main attraction for someone else).

People with children generally want to be in the proximity of an international school. This can override all other considerations when choosing a home.

Astute buyers will always concentrate on the single most important locational attribute when choosing a property, and this will largely determine what constitutes good value for money.

North, South, East or West

The residents of the specific geographical locations on Phuket can be as different from one another as the regions themselves.

The distance to the airport matters to someone who is commuting to work in Bangkok, Hong Kong or Singapore. Spending only two days each week with their families, they don’t want to spend extras hours on Fridays and Sundays in the car. These individuals tend to prefer the North of the island.

The West Coast has the beaches. It also has the sunset views and crystal clear waters. The West side of the island is therefore in high demand and properties sell at premium prices (especially those close to the beach and/or offering sea views).

The East Coast is relatively undeveloped, and while it boasts the marinas and some other high-end developments, land is generally cheaper on that side of the island.

The central valley is very green, boasting some remarkable unspoiled jungles, but it also has golf courses and housing estates. Just as it does geographically, the Kathu Valley also falls in between the West and East Coasts in price.

Phuket Town has more housing developments targeting the Thai market, but it is also starting to receive more attention from foreign buyers, especially given its proximity to the expanded Central shopping centres. Despite that fact, prices have not yet reached the levels seen in other areas.

To find out more about the different areas of Phuket, you can read our articles here:

A Comprehensive Guide to the Best Locations to Buy Property in Phuket

Phuket Real Estate Map

New vs. Old

The age of the building in question is also important, because resales in Thailand are typically less attractive for buyers than new builds. Newly completed developments have that showroom appeal – they are clean, well maintained, and they are, after all, new.

The condition of the condominium or villa is important to any potential buyer, and older properties do have a certain element of wear and tear. Sellers often ignore this because they are used to seeing it every day, whereas a buyer is looking at every property with fresh eyes.

Sellers who are desperate to unload their property must consider all the factors that can lead to a successful sale. Phuket is a fledgling market, with more new properties being sold than older ones. The attractions of new property developments for buyers, including the prospect of guaranteed returns and full management services, as well as discounts when buying off-plan, make selling an older property more difficult.

It is not impossible, but if sellers do not respect this dynamic, and instead try to ask too high a price, they may have their property on the market for a while.

A Little Goes a Long Way

Many sellers fail to maximise the selling potential of their homes. Quite often, a property could be sold for substantially more if the seller were to spend a little money on some mostly cosmetic improvements. Buyers will not buy unless they feel a “connection” to the property they are viewing, and an otherwise marketable home may be selling itself short because the owner does not recognise the potential shortcomings, or is unwilling to address them.

There are also countless properties available for rental that could do much better with only a few small tweaks. In fact, the rental potential can be boosted significantly with only a modest outlay, and the prospect of higher rental income obviously increases the re-sale value of the property in question.

But it is not only renovations that make a difference. Simple changes to lighting, space conceptions and finishing touches can make the difference between a mediocre and superior rental property.

While objectively fine enhancements are important, the appeal of any property is ultimately subjective, and someone will only pay for that property what they think it is worth.


A = Property Value: THB 27 million

B = Rental Income: THB 1.8 million per annum

The P/R Ratio is A ÷ B = 15

A P/R Ratio between 15 and 20 typically represents good value. A P/R higher than 20 should be considered inflated, while anything below 15 would represent a potentially excellent investment property.

calculating pr ratio

The Home Price to Rental Income Ratio

Phuket Property Price Rent Ratio

There are many ways to establish the worth of a home, but comparing the potential rental income to the market price has historically been the preferred method of determining a property’s value.

In the same way a Price Earnings Ratio (P/E ratio), is used to value companies, the House Price to Rental Income Ratio (Price/Rent Ratio, or P/R Ratio) is used to value a property.

The P/R Ratio is calculated by dividing the sale price of a property by the yearly earnings that property would generate when rented out. A high P/R suggests an inflated home price relative to the rental income the owner could earn A low P/R, by contrast, usually signifies a good investment opportunity.

Because the ratio also corresponds to the number of years it would take to recuperate the full initial expenditure through rental, the P/R is a simple guide to the investment potential of property. A P/R of 15 would mean the income generated from rental would payback the purchase price of the property in 15 years.

If rental income is the motivation for purchasing a property, it is important to identify one which will offer a favourable P/R ratio. But if the requested rent is too high, the property may remain empty for extended periods of time, reducing the income generated by the property.

That said, the current low interest environment has distorted traditional thinking, and new buyers are willing to accept lower yields than they did a few years ago. Ensuring a consistent income stream – even if the P/R is not optimal – is therefore seen as preferable to leaving the property empty.

Even if the rental market is a bit soft, an owner may be willing to accept lower rental yields now, in anticipation of strong capital appreciation when the property is sold. Unless the rental market is booming, having a steady rental income is better than leaving the property empty in anticipation of higher rents. When it comes time to sell, any discerning buyer will want to see the rental income history, and the selling price that property ultimately commands may depend on the income it has been able to generate.

It is also worth noting that some cities or otherwise fashionable areas around the world have seen consistently high P/R ratios (as high as 50 or 60, in some cases) for a long period of time. This suggests that most people in these areas own property for habitation and potential capital appreciation, not for rental purposes. This doesn’t necessarily mean that rents in these areas are low, only that they are cheap relative to the cost of buying the property.

Although Phuket is a different market to the rest of Thailand, the broader Thai residential property sector currently has reasonable P/R ratios compared with many other countries.

With some of the “guaranteed return” developments in Phuket also offering to cover insurance, bills, hotel licenses, maintenance and upkeep, as well as management and rental services, the effective P/R to be earned from these properties is actually higher. Taking these costs into consideration, a 5% net guaranteed return may equate to an effective gross return of 7% or more. In terms of P/R, a 7% return equates to a P/R ratio of approximately 14, which we know represents good value.

Please remember that most guarantees are for specific periods of time, so owners should anticipate more erratic rental income once the agreed contract term expires. Erratic is not necessarily bad – some years may see rental yields exceed what the developer offered as a guarantee – but income could also falloff while the owner gets to grips with joining a rental pool, or renting it out themselves.

Material and Build Quality

A new or even a mature property may look beautiful, but the materials and workmanship underneath the plaster may be a mystery. Buyers should be inquisitive, and even do some of their own research into the materials used to build the foundations, walls and roof, as well as looking closely at the windows and indoor finishings.

A development which employs the best architectural talent can usually expect not only design quality, but build quality. Good architects are artists, and they do not want to put their name on something substandard. The materials they use, the fixtures, the furniture, the kitchen and all the finishing touches will demand a premium price.

Ask yourself the question: was this property built to a standard that will keep it in good shape for many years to come?

The Price per Square Metre

Everyone always wants the best deal possible, and in Asia this usually means finding as many square metres as possible for the desired price. The price per unit of space definitely makes a difference, and quite often this drives the final decision.

A buyer who goes in search of a new home in Europe, Australia or North America does not necessarily pay the same attention to square footage (or metreage) as we do in Asia. It’s just not that important. You either like the property, or you don’t. It either fits your needs, or it doesn’t. It’s either on par with surrounding properties, or it’s not.

In Phuket, however, this little dimension can have an out sized importance for potential investors. In most cases it is easy to determine why a THB 32,000/m2 property costs so much less than a THB 200,000/m2 property. But it is sometimes harder to ascertain why one property is significantly more expensive than comparable properties in a similar area.

It stands to reason that high demand across the broader real estate sector will push prices higher, but there are other factors which need to be considered.

In Phuket, the developer of a new build will set the price per unit based not merely on the demand for those units, but also to achieve what they consider to be a satisfactory profit. Furthermore, developers who pride themselves on the use of high-end fixtures and finishings (especially fully equipped western kitchens) will typically demand a premium over those who do not.

Phuket Property Developer

Sometimes, however, the price/m2 may seem entirely random. That is when demand is driving the price. If new units are flying off the shelves like Cabbage Patch Dolls, then the price/m2 may be perfectly valid. With a new build, developers have even been known to raise prices during the various stages of the initial offer period, in order to take advantage of this high demand and improve their margins.

At present, most developments seem to have no problem with sales, but some certainly sell faster than others. Ultimately, the properties will either sell for the asking price or they won’t. If the price is set too high to attract demand, the developer will have to accept a smaller profit.

Some condos are aimed at entry level investors, so land costs are obviously going to make a difference. The geography of Phuket Island means that you are never far from the sea, but the general rule of thumb is that the more inland you are, the lower the price per square metre, so you get more for your money. The differences are noticeable.

While proximity to key attractions can be important, the major price differences will be between urban, rural, beach and sea view. Phuket Town (which attracts more locals than foreigners), has a lower price per square metre than Patong, which has one of the higher averages, as does most of the West Coast.

But there is not really one area that has just low prices, or another with only high prices, unless we isolate individual West Coast hillside developments, with their stunning views and superior architecture. While condominium prices will vary, the average price on the West Coast is around THB 100,000 m2, but beach and sea view will almost always be more expensive.

When calculating the average price per square metre of properties in a given area, scarcity and density must also be taken into consideration, otherwise any indicative price range can be misleading. Two similar condominium resorts may have 50 and 400 units for sale, respectively. The average weighting will obviously be skewed towards the development with the higher number of units, meaning there is no reliably accurate way to determine an “average” price per square metre for the area.

Furthermore, the data for some properties may not be included in the figures, or it may be falsely represented. There are areas which are mostly undeveloped, but may have one or two high end resorts, thus giving the impression on paper that the area is far more expensive than elsewhere in Phuket. Yet land prices in that area may be cheaper than in other parts of the island, which will ultimately fuel further development of better-value condominiums or villas.

We have seen the latter dynamic frequently, whereby a high price/m2 is being demanded in areas where the land has traditionally been cheaper, such as the East Coast. The “island mentality” suggests that a finite quantity of land justifies these higher prices, but there is still a fair amount land left for development. Land in high-demand areas is becoming increasingly difficult to find, but this does not necessarily justify “high-demand” prices in other areas of the island.

Buyers should be aware that some properties exaggerate their floor sizes, making the price per square metre lower than what it should be. Such instances are rare, but do exist. If you are in doubt, ask for the floor plan and take a tape measure with you on the viewing. If a developer is misleading buyers about the price per square metre, it begs the question: “What else could they be misleading investors about?”

Villa buyers or investors should also establish whether the price per square metre is for the living area or for the entire land plot, which can be somewhat more difficult to ascertain than sizing up a condo. For example, does it include patios, veranda, gazebos, terraces and balconies, or even car park spaces, garages or car ports? A large patio area (or in the case of a condo, a large balcony) could considerably lower the price per square metre but may not actually add to “living area”.

In a Nutshell

Price per square metre in Phuket is higher than in other provinces of Thailand, and in some cases it may be comparable to prices in Bangkok. Compared to other holiday destinations around the world, however, both condominiums and landed property are remarkably good value for money on a cost per square metre basis.

Square metre prices tell us whether the property we are looking at is on the low or high end of properties in a given area, but they are not the only measuring stick. Discerning buyers can use this as a starting point, but it is only one factor to consider when determining whether a property is a sound investment.

Phuket Real Estate Price

If you haven’t already done so, you may also want to read our informative article on the factors affecting Phuket property prices:

An Overview on Phuket Property Prices


In an effort to help buyers better identify their ideal property, Thai Residential have classified the different types of properties available in Phuket.

While the choice is extensive, the categorisation is perhaps somewhat subjective. Different property types can be difficult to pigeonhole, or they may even overlap with other categories. The price of a given property in one category may more closely match prices in either more or less expensive classifications. The categorisation and the prices below are thus purely for guidance purposes.

Phuket Low-End Condominiums

Low-End Condominiums

The low-end condominium sector is appealing to anyone who just wants a “base” in Phuket. These are generally smaller and not intended to compete with better-located, family developments. They might nevertheless still be convenient to shops or beaches, and modern enough to use as either a home or a rental unit.

These condos can offer remarkable value for money, especially for foreigners on a budget. A number of freehold condominium developments on the island offer studios or one bedroom units that can sell for under THB 2 million.

Phuket Real Estate Apartments


Although the majority of new builds in Phuket are condominium projects, there are those which offer only apartment ownership. They may look identical on the surface, but condos and apartments are very different in both structure and law. Whereas a freehold condominium gives the foreign buyer permanent ownership of the unit, apartments are sold on a leasehold basis only. (See more on leasehold property below.)

Some foreign buyers may be attracted by an apartment because it meets or satisfies their requirements. But these should probably be viewed as alternatives to leasehold condominiums, as both the prices and ownership structure are comparable.

Bungalow Estates

The word “bungalow” originates in the Bengal region of eastern India (just across the Andaman Sea from Phuket). A Bengali style house typically consisted of a small one story structure with a veranda. This housing concept is now used the world over, especially in Thailand.

Bungalow style houses today are varied in form, and can range in price from THB 3 million to THB 7 million (sometimes more).

The last thirty years have seen an increasing number of bungalow constructions. These are usually situated in rural areas, or in the vicinity of Phuket Town. Some are collections of similarly styled houses in small estate-like developments, while newer up-market bungalow developments can also be found in popular tourists areas, offering sea views and unique design concepts.

Depending on the way the development or collection of homes is structured, some of these bungalows may be available for sale to foreigners.

Townhouses real estate market

Townhouses or Townhomes

These properties are quite common in Thailand’s local real estate market. In Phuket they are found mostly in the suburbs surrounding Phuket Town, as well as along most major roads on the island.

A townhouse is usually a terraced structure with two or more stories. Those that face a main road are often referred to as “shophouses” because they typically have a shop on the ground floor, with accommodation on the upper floor(s). (Unfortunately, some areas have seen shophouse developments go unoccupied, a consequence of over development in the sector during the last two decades.)

Foreign buyers, especially those with Thai spouses, or families who are looking to live closer to built-up, higher-density areas, might want to consider purchasing a townhouse. Some newer townhouse developments are quite stylish, and while prices may vary, they can start as low as THB 3 – 4 million.(Luxury townhouses in prime areas can go as high as THB 30 million.)

Resort Style Condominiums

Resort Style Condominiums

Freehold condominiums represent a sizeable percentage of all property units purchased by foreigners in Phuket. These medium-to-high end condominiums are usually priced between THB 3 million and THB 15 million, depending on quality, location, floor space, etc. They tend to offer facilities, such as a gymnasium and communal swimming pool.

By offering a guaranteed income on the unit for the first few years, they also attract buyers looking for an investment opportunity, rather than a place to live. As a result, many condo owners do not live in Phuket, and visit infrequently.

Occasionally these developments also have luxury condos for sale. In some cases these are units closer to the beach, or possibly a duplex (or even a penthouse), offering the owner the feel of a spacious villa, but with the option to buy freehold.

Low and High Density Estate Houses in Phuket

Low and High Density Estate Houses

Extremely popular with Thais, housing estates are usually gated communities, located further inland or in areas where land is more plentiful. Three-bedroom houses with small gardens range from THB 4 million to THB 7 million.

There are now dozens of estate developments in Phuket, targeting the growing middle-class Thai population, which also includes foreigners with Thai wives and families. Some developments are lower-density areas with larger properties and larger gardens, and prices there might start at THB 10 million or above.

Luxury Freehold Condos Phuket

Luxury Freehold & Penthouse Condominiums

Some property developers understand the frustration foreigners face by not being able to own land legally. They have responded by creating freehold luxury condominiums.

With stunning sea views, a quality developer and good management, these units offer all the ingredients required by happy buyers with money to spend (prices can be in excess of THB 50 million). Some of these spacious freehold properties resemble a villa, while others may be luxury penthouses, offering the living area of a private villa with the added bonus of a rooftop garden, terrace and private pool.

As these luxury condominiums are often apart of a resort-style complex, they also offer a range of common area facilities, such as gymnasium, restaurants and communal pool.

The developer may also offer rental guarantees similar to those mentioned above.

 luxury freehold condominium

Marina Living

Thai Residential categorise these properties as a separate group because they attract a different type of buyer. The properties in these communities range from condominiums to townhouses to villas, and prices vary significantly depending on location, type of home and size.

They are obviously attractive locations for anyone who keeps a boat moored in Phuket or enjoys the proximity to the sea. But the fact that they are also stylish urban environments, with plenty of facilities, and generally close to international schools may also be appealing. (The RPM and Boat Lagoon, for example, are practically across the street from the British International School.)

The Royal Phuket Marina also has the rather unique “Aquaminium”. This singular design offers a luxury freehold condominium, with direct access to a private berth for a boat. It is the only place on the island where you can go from the shower to the open water in a matter of minutes.


While a foreigner may own a villa (the physical “bricks and mortar”) outright, full freehold ownership of the property relies on the right to own land – a right which is only afforded to foreigners under extremely special circumstances. The same law applies to estate houses, bungalows and townhouses (unless they have been legally structured for foreign freehold ownership).

Please see more on this in the section of the Phuket Property Guide titled:  Buying and Leasing Property In Thailand.

Phuket Villa Estates

Villa Estates

Usually found inland, a few kilometres from the beach, these villas offer good value for money. They tend to be walled-in, tucked away from main roads, without any spectacular views. Typically making excellent use of available space, the layout of these villas usually offers a stylish patio area, with a private pool in the centre of the courtyard.

Depending on the developer, the materials used could be perfectly adequate and look just fine, but they may be inferior to those materials used in higher-end villas.

One of these villas might provide a comfortable and affordable home for anyone seeking a place in the sun, especially if it’s in close proximity to beaches, shops and restaurants. Prices can start as low as THB 7 million, and some developers offer rental programs for investors. A villa could prove to be an extremely well priced long-term investment.

High End Villa Market Phuket

High End Villas

High end villas are typically near the beach, or in tourist areas. Compared with villa estates, they have slightly larger land plots and floor areas, as well as superior build quality, fixtures and fittings. The attention to architectural detail is usually also more pronounced.

For those with a little more money to spend, high-end villas provide more comfort and enjoy more space. High End and Luxury Villas are extremely easy to rent in the high season, fetching a good return on investment. Some developments in this sector even offer rental programs with guaranteed income for investors.

These villas may sell for as little as THB 20 million and can go as high asTHB 50 million.

Luxury Villas and Super Luxury Villas

There is not a fixed point where high end villas end and luxury villas begin, but for the purpose of this classification, “luxury villas” will be those priced above THB 50 million.

But what, apart from price, makes them so luxurious? They are generally located in the finest areas, with larger plots and living areas. The progressive architectural designs feature spacious interiors, high ceilings, modern western appliances and a keen attention to detail. All bedrooms will have walk-in closets and feature en-suite bathrooms with the highest quality fixtures and fittings.

Luxury and Super Luxury villas are usually nestled on lush tropical hillsides, with spectacular Andaman Sea views, all the more resplendent at sunset. They have large gardens, with a sundeck, an infinity pool, and an outdoor dining sala. In short, the highest standards of quality and comfort.

While the prices start at around THB 50 million, don’t be surprised to see luxury villas being advertised in the USD 10 to 20 million range.

Demand for Rental Income


The potential for long-term capital gains has historically driven most global property markets, and while this is still a reasonable expectation in Phuket, the market is being driven by investors now, and they are demanding a better return on their money.

The developments offering guaranteed returns are in high demand. The returns vary, but the average is between 6-7% per year. The time frame of the guaranteed income can be as short as 3 years, but some developers offer guaranteed returns for up to 20 years. If owners are part of a rental program, they are also offered at least two weeks (sometimes up to 2 months) of personal use per year. Occasionally, the length of personal use allotted will be based on whether the owner wants to use it in low season or high season.

In some cases, owners are asked to keep the standard interior design and furniture package. The decor may not represent the owners’ personal tastes, but the management company must be able to advertise and deliver a consistent standard.

Both villa and condominium projects are marketed as income producing, but condominiums, being more affordable, make up the bulk of sales in Phuket. There are also “condotels,” which enjoy both condominium and hotel licenses. They have professional management like other condos, but the extra hotel license allows the properties to be rented out on a short-term basis (i.e. for periods shorter than 30 days).

Sam Fauma and his colleagues at the International Law Office have some advice on short-term and long-term rentals.

sam-faumaWhat Sam Says About Short-Term vs. Long-Term Rentals

The Hotel Act of Thailand (2004) clearly states that a hotel is “an accommodation established for business purposes of providing temporary accommodation service for travellers or any other person in exchange for compensation.” However, the Act specifically excludes from that definition “an accommodation established for the purpose of providing accommodation service for monthly paid service charge or upward only.”

In other words, any business providing temporary accommodation for a period shorter than 30 days is considered to be operating as a hotel, and falls under this act. A condo or villa owner in Phuket may not realise it, but if they are renting through an agent or an internet service (e.g. or they, too, may find themselves defined as a hotel, and thus be required to have a hotel license in order to offer short-term rental.

Thankfully, in 2008, there were Ministerial Regulations issued for an exemption from this Act, as follows: “Any dwelling place which has a number of rooms not more than four rooms, whether in a single building or in several buildings, and with a total service capacity of not more than 20 guests, operating as a business which provides an additional source of income for the owners.” So if you own a condo, or multiple condos, with no more than four bedrooms, sleeping no more than 20 people, you may apply to exempt your properties, and carry on with legal short-term rentals. As the owner of such premises, however, you are also required to report to the Hotel Registrar.

The popularity of Airbnb (especially) has highlighted the number of rentals which are technically illegal, but they do not have to be. It is surprising how few people make the effort to ensure that they are in compliance with Thai law when they rent their property.

Are the Guaranteed Returns on Investment (ROI) Really Guaranteed?

Clint Eastwood once said, “If you want a guarantee, buy a toaster.” So what would Dirty Harry make of the guarantees being offered by Phuket property developers? Are the returns really 100% guaranteed?

This question does not have a straightforward answer, and without trying to be funny, the best answer really is yes…and no.

First and foremost, the guaranteed return contract must be reviewed by a lawyer to ensure it represents the buyer’s interests. If it is poorly constructed, part of the return could be going to the developer for common area maintenance, while the buyer is left to pay for their own maintenance and management fees. Because these fees are typically absorbed by the developer, this underlines the importance of securing the right lawyer.

Once the wording of the contract is ensured, in our experience, short-term guarantees are realistic because developers usually budget for this expense. In most cases, it will already be built into the sales and marketing costs of each unit. In fact, some developers actually prepay the rental returns as a lump sum as soon as the final payment on the condo is received.

The viability of longer-term rental guarantees, however, will be down to the overall health of the tourism industry in Phuket. Any major contraction in tourist figures would almost certainly trigger a contraction of the local economy. A prolonged contraction would have a knock-on effect on the property market, as guaranteed returns are based on filling available units with tourists every year.

The number of tourists visiting Phuket has been steadily increasing over the last twenty years. During this time there have been events which negatively impacted tourism (see Black Swans of Tourism on page 66), but after a falloff, the number of tourists continued to reach new highs.

But how bad were the bad years? There was the Asia Crisis, the bursting of the tech bubble, bird flu, SARS, the global financial crisis, military coups and a tsunami in the middle of peak season. These events had a marked effect on tourism at the time each occurred, but both Thailand and Phuket bounced back with renewed vigour each time.

In terms of rental guarantees, the only thing likely to derail most ROI agreements (aside from poor management or bankruptcy) would be a ruinous contraction in the tourist economy. If a buyer is motivated by the promise of guaranteed rental returns, they should have a lawyer carefully review any agreement drawn up by the developer or management company, especially if they are buying multiple units at a single development.

The necessary due diligence must find out as much as possible about the:

  • credit worthiness of the developer
  • track record of the management company
  • terms of their own occupancy, and
  • consequences should they decide to sell the unit during the guaranteed period (to make sure there are no penalties for doing so).

It is also worth asking what happens when the terms or promises made by the developer and/or management company are not met in full. If the conditions are not met, what other forms of compensation exist?

These checks may be moot if the development prepays the rental returns, which would negate any risks involved with the guaranteed rental return contract.

Owners in Phuket who rent their properties out to holiday makers are seeking clarification on the situation regarding short term rentals. You can read our article about this here: 

An Overview on the Current Situation of Short-Term Rentals in Phuket 2019

Phuket Property ROI

One of the latest marketing strategies by developers, especially on leasehold units, is to offer buyers a guaranteed buy-back program. This is effectively promising to buy back the condo unit or villa at full price, or even at a profit, after 5, 10 or 15 years.  Here is our article on the subject: 

What Is a Developer Guaranteed Buy-Back Option When You Buy a Phuket Condominium or Villa?

In a Nutshell

The property sector remains extremely buoyant, with condominium prices in Phuket far from being in bubble territory. Amazing deals are still easy to find for anyone seeking a home in paradise. Based on the low-end price comparisons with most western economies (and even other Asian ones) current prices in the Thailand property market represent great value.

Anyone looking for an investment property is spoiled for choice, with new units in quality condo developments starting under US$ 100,000, while upscale luxury villas can run into the tens of millions of US$. Phuket has something for every buyer, whether they are looking for sea and sand, a cooler hilltop location offering peaceful seclusion, or the hustle, bustle and excitement of the towns.

Guaranteed rental return schemes are legitimate, and for the most part are well run, but they may also be vulnerable to circumstances which are well outside of the control of the developer.

So while a developer’s offer of returns cannot, of course, be 100% guaranteed, rental returns in Phuket have been very consistent for over two decades and have even survived some significant bumps in the road which may have proven crippling to another tourist market.

Phuket Property Buyer Risks

It should stand to reason that someone making a major purchase, especially one as large as a property, will endeavour to do the relevant research before they sign on the dotted line. Anyone who is not inclined to conduct the necessary due diligence themselves should employ the services of a competent lawyer to do it for them, but a surprising number of people do neither.

Generally speaking, risk and reward are inseparable – the higher the perceived reward, the greater the risk we are willing to take. Any buyer of Phuket property should be aware of the risks that exist, while adopting sensible solutions to mitigate said risks.

A lawyer obviously has the resources to dig even deeper, but here are a few tips anyone can follow to ensure their property investment is sound.


Regulatory Risk

In most countries, with most investments, you can count on regulatory protection. Unfortunately, the real estate industry is largely unregulated in Thailand. This means foreign property sales agents are pretty much left to their own devices.

Real estate agents can by and large tell you whatever they like, regardless of the risk it may expose you to, just to get the sale. If a disreputable agent thinks that telling you a fib (or withholding information) will put money in their own pocket, some of them will not hesitate to keep you in the dark.

Therefore, it is of paramount importance, that buyers of real estate in Thailand, especially Phuket, are fully aware of the risks associated with using either the wrong Phuket real estate agent, or not seeking professional advice from an experienced lawyer.

You can learn more about the risks associated with Phuket Real Estate below, or you can read our comprehensive summary here:

A Comprehensive Summary of the Risks Associated with Buying Real Estate in Phuket 

Developer Reputability

There are a number of competent developers in Phuket, both foreign and local, with plenty of expertise in the market, but no one is infallible. Every company, even large corporations, can face difficulties if there are any hiccups in the market. Unfortunately, a buyer assumes the corresponding personal risk if anything goes wrong with their chosen developer.

Developers range from small local and small foreign companies to large local and large foreign ones. Some local developers are listed on the Thai stock exchange, while some international developers are listed on the exchanges of their home countries. It is relatively easy to check the balance sheet of a listed company, but the fact that a foreign company has a solid balance sheet at home does not mean they would hesitate to pull the plug on an overseas venture that ran into trouble.

The finances of private companies are less easy to assess, but that is not to say that private companies are a bad choice. A good private company with audited accounts obviously has nothing to hide. Provided the accounts are in order, it is likely the company is well-run.

Nevertheless, size can make a difference, especially to local buyers. The projects of some well-established Thai companies sell out very quickly based on reputation alone, and they have no need to negotiate price because their developments tend to be in high demand. This also has relevance for foreign buyers, given that 51% of any condominium must be Thai-owned. The strong demand and price in elasticity of projects from these established developers translates into a certain stability for foreign buyers or investors.

A buyer is exposed to much less risk from established companies than from a “one man band” developer, especially one launching their first project. Many developers rely on their reputation to attract new buyers for their future developments, and those who have built a solid reputation deserve the acclaim they receive. But anyone can make mistakes, and the reasons developers may experience financial woes can range from the unforeseen to the self-inflicted to the unlucky.

A company could be feeding the personal habits of its shareholders, overextending itself with debt, or simply mismanaging a project. A good developer might be unlucky in their choice of location, or with a changing regulatory or zoning assessment stopping a project at any stage of construction (See EIA Approval below).

One other risk buyers run when dealing with smaller developers is “Key Man” risk. What happens if the managing director, senior partner or owner dies? Is there any insurance in place to cover the premature death of a “Key Man”? The reality is that key people very rarely, if ever, make provisions to protect the company or the investors should anything happen to them. Buyers should ask about these provisions when dealing with a private company.

In summary, previous developments and reputation should therefore not be the only criteria used when selecting a property. Private developers may potentially expose buyers to greater risk, but this does not mean they should be discounted. If thorough due diligence is conducted on every developer, the risk of anything going wrong is greatly diminished. If an investigation of the developer still leaves you unsure, there is an old investment adage you should listen to: “If in doubt, stay out.”

Legal Representation

Buyers always run the risk of receiving poor legal advice, which is why it pays to use a lawyer who comes highly recommend by a friend or acquaintance, and is known for their honesty, integrity and reputation. Most importantly, their advice should be independent and have no ties to the agent or the developer.

Crucially, you must use a lawyer. If a real estate agent/advisor says you don’t need a lawyer, then what you really don’t need is that agent. Immediately seek another company to help you with your purchase.

The best lawyers are rarely the cheapest, but a property purchase is not the type of transaction to scrimp on. In a country where most foreign buyers are not familiar with the laws, or the pitfalls encountered by others in the past, the best representation is worth its weight in gold.

Once you have chosen the right lawyer, by all means listen to them and heed their advice. Many people choose to ignore sound legal advice because it is not what they want to hear. This is a common – and massive – mistake. Maybe they have fallen in love with a property, or simply run out of time on the island and are rushing into a decision. Whatever the reason, there is no excuse for failing to heed legal counsel.

While a lawyer may not be able to check everything, they can certainly do enough to tilt the scales further in favour of the buyer. Just as experienced lawyers will be able to warn the buyer against any shenanigans, choosing a lawyer with insufficient experience could have disastrous consequences for any buyer.

Real Estate Legal Representationrta

EIA Approval

The Environmental Impact Assessment, or EIA, has been around since 1981, and is a process which determines the potential negative repercussions a development may have, but not only on the environment. An EIA also establishes the measures a developer must take to ensure that resources are used efficiently, that the project is beneficial to Thailand economically, and that it is in accordance with the continued development of the Kingdom.

Developers are fond of mentioning the fact that they have EIA approval, especially when they are selling a development off-plan, and the land is still an overgrown area of weeds and trees. But while EIA approval is important, it is only an indication that the ball is rolling. It is possible for EIA to be rescinded if the project does not comply.

In other words, it is about protecting the environment, in the near and long-term, and determining whether a development is for the good of the area and the Thai people. The assessment may have a broad purview, including air quality, ground pollution, how waste water will be removed or treated, noise pollution, how it affects the surrounding natural environment, how it affects the neighbours and whether the development is visually acceptable. Depending on the size, most but not all developments do require EIA approval, although receiving it is not a guarantee. The green light is only given on the condition that it complies with all the regulations throughout the construction process, and the ability to do so can literally change with the weather.

A condo built on a hillside might run into problems if excessive rains cause soil run off, and with it a change in assessment. If design modification scan bring the project back into compliance, it may yet go ahead. If not, it may never be completed.

In fact, one changing regulation in Phuket caught some developers unaware in December 2018. Development on a gradient/slope greater than 35% will no longer be allowed on the island(with an exception for single or single-detached houses not exceeding six meters). Companies which had not already secured a building permit were prevented from proceeding with construction, leaving some “early bird” investors, who had purchased units off-plan, out of pocket.

A cancelled project can leave investors in financial difficulty, and it may be outside of the developer’s control to do anything about it. If construction is halted by a ministerial/regulatory decree, the developer (as the recipient of an administrative order) may file for compensatory claims against the government. The buyer can, in turn, make a claim against the developer, but rather than seeing a completed home in 1-2 years, the buyer may instead still be waiting for their money back.

Most people agree that attempting to safeguard the environment during construction is a net positive for everyone. While it is incredibly rare, a project could be abandoned because of changing environmental impact assessment – whether the entire structure is finished, or the first brick has yet to be laid.

Dirty Land

Because a fresh assessment can always give a developer the green light, a project lacking EIA approval is not necessarily a lost cause. A project built on Dirty Land, however, is another story altogether – a horror story.

The absolute worst situation in which an investor can find themselves is one where they have been persuaded to purchase a unit in a project built on national forest or government land. Some condominium developers, either knowingly or unknowingly, have built on land that was involved in land corruption cases going back over 30 years (known as “dirty land”).

There is no statute of limitations on the government reclaiming this land, and we fully expect any encroached land to be reclaimed at some stage in the future. But this is not just our opinion, most lawyers are sure this will transpire sooner or later.

When the government returns this land to the forestry department or the Royal Navy, illegal buildings will be knocked down, the land bulldozed over, and new trees planted. And when that happens, anyone who bought there could possibly lose 100% of their investment.

Buying Off Plan

Buying Off-Plan

For any would-be property owner, the riskiest way to purchase property is to buy it off-plan. It is a common enough practice, and in a buoyant market, the development may even be sold out before the foundations are laid. There are pluses and minuses to the practice, and it is important for every buyer to understand both.

The benefits should be obvious. The buyer is looking at a potentially great property, typically at a reduced initial offering price, and is motivated by scarcity and discount. If the buyer waits, there may be nothing left to buy, or what there is will certainly be more expensive.

Generally speaking, off-plan developments entice investors looking for immediate capital appreciation, rather than those looking for a home to live in. On brand new projects, buyers usually have the opportunity to purchase a unit (or more than one) before the actual construction has started. It may be that the completion date is months, or even years away, but buying off-plan usually comes with attractive discounts for the buyer.

The “early birds” also get the prime choice of units. The first buyers in always get the highest floors, the views of the sea and/or the rooms facing the swimming pool. If an investor is not in early enough, and does not have a prime unit, they may find it hard to resell. This is especially true when so many other developments are available, some possibly offering better views. Another downside of buying off-plan is the risk the development is never completed. If the buyer’s lawyers conduct the necessary due diligence, this risk is greatly reduced. But unexpected bankruptcies can still occur, and extreme misfortune can result in EIA approval being rescinded (as above).

In some cases, Phuket properties have been sold at slightly inflated prices, in an attempt by developers to “build in” sales and marketing fees, guaranteed returns and even additional profit. Where there is initial overvaluation, it could take a few years before price inflation alone can recoup someone’s investment if they decide to sell the property.

Unfortunately, there have been enough horror stories over the last 20 years for investors to have learned from. Sadly they have not. That’s because most buyers are new to the island and haven’t been here long enough to have experienced what can go wrong, and what has gone wrong in the past.

But provided due diligence is carried out on the desired project, the pre-construction discounts when buying off-plan make it very attractive to buyers/investors, especially if they are seeking capital appreciation.

If you would like to read more on this subject, you may also like to read our articles here:

The Benefits of Buying a Phuket Condominium Off Plan

The Risks of Buying a Phuket Condominium Off Plan

The Perception of Risk

Everyone has different perceptions of risk, mainly because they come from unique backgrounds, both in terms of life experiences and financial standing.

A multi-millionaire will buy a condominium in Phuket and suffer no real emotional or financial loss should anything go wrong with their purchase. After all, the amount they stand to lose may equate to the interest they earn in a single day. Conversely a retiring couple may have just enough money for a condo, and a well-planned subsistence in retirement. If such a purchase were to go wrong, it could financially cripple them.

The problem most property investors face is different still. They cannot earn money by leaving it in the bank, a concept that is relatively new to anyone over the age of 30. They are instead forced to seek out alternative ways to grow their money because they fear a different type of risk – inflation risk, which eats away at the spending power of any money left idle in th