The Role of China, India and Russia in the Growth of Phuket’s Property Market


THE ROLEof China in the Growth of Phuket’s Property Market

There are more visitors to Thailand (and Phuket) from China than from any other country. Even without the Pan-Asian Railway Network, the influx of people and capital from China have already been key driving forces in the tourism and property sectors.

China’s population (at the time of publication) is 1.42 billion, which constitutes a staggering 18.5% of the world’s population. Its economic transformation over the last 50 years has been astounding, becoming a manufacturing powerhouse and the world’s second largest economy. Most forecasters agree that in the next 15 years it will overtake the USA and become the largest economy in the world.

As the economy continues to grow, Chinese nationals are using some of their new-found wealth to purchase property overseas, and are estimated to have spent over US$ 100 billion on foreign real estate in 2017 alone. Much of this money found its way to Thailand, especially Phuket.

China’s largest website for buyers of overseas property, Juwai, places Thailand third on its list of countries receiving enquiries from prospective Chinese property investors.

China Buying Phuket Properties

Why are Chinese Investors Buying Phuket Property?

Quality real estate in China today is generally considered to be over-priced, especially in the major cities. Most middle class Chinese have been priced out of the market in their own country, but Phuket remains affordable for them.

Compared with China, real estate in Phuket is cheap, and in many respects, represents better value for money than property in other countries named on the Juwai list referenced above. But price is not the only factor.

Here are some other reasons why the Chinese are investing in Phuket:

Here are some other reasons why the Chinese are investing in Phuket:

At current prices, the Chinese see plenty of upside price potential for Phuket properties. Patient investors will profit handsomely.

The Chinese are familiar with and accept the concept of leasehold property. All property in China is owned by the government – Permanently! – so the only option in China is leasehold.

Foreigners can buy freehold condominiums in Phuket, which is a concept that is unknown in China. Ownership “in perpetuity” is a major attraction for Chinese buyers.

With interest rates currently sitting close to zero (0.35%), the Chinese see the opportunity to get average rental yields of 6% – 7% per year as too good to pass up.

As the crow flies, it’s only 100 miles from the Chinese border to Chiang Rai province in northern Thailand. Although a bit further byroad, it’s still only a 5-hour drive through Laos to Thailand. This relative geographic proximity makes Thailand a very attractive destination.

There are dozens of flights to Thailand every day, departing from most major Chinese cities. And 22 airlines currently offer direct flights from China to Phuket.

Some Chinese nationals admit to being unsure of the future prospects for the Chinese economy. This uncertainty is driving them to get money out of China and into another currency. Phuket and the Thai Baht are both attractive alternatives for them.

In addition to being unsure about their economy, many Chinese are equally unsure of their government – the same government which imposes capital controls to restrict the transfer of money out of China. If anything, these restrictions have served as a greater motivation to move at least some of their money. Most Chinese are familiar with ways to move their Yuan over the border, and violators don’t seem too concerned at the prospect of being caught.

The volume of Chinese buyers in Phuket was somewhat lower in the second half of 2018, owing in part to a boating accident involving Chinese nationals (see A Relatively Recent Swan on pg. 66). During this time, the country has also been clamping down on people taking money out of China (as mentioned above).

Money coming from China will be a fundamental driver in Phuket real estate for the foreseeable future. As the number of tourists increases, even more Chinese will be exposed to the benefits of Phuket property investments. This is a relatively new segment of buyers, and as it grows it should add increasing buoyancy to the real estate sector, both in Phuket and the rest of Thailand.


India currently sends the seventh largest number of tourists to Thailand each year, but these 1.3 million visitors are only 0.1% of India’s population. To put this in perspective, the Netherlands ranks sixth in terms of visitors to the UK each year, but the 2.06 million people who travel from Holland to Britain annually represent nearly 12% of the Dutch population.

Numbering nearly 300 million, the Indian middle class is over 17x the population of the Netherlands. That is only the middle class, and that number is expected to double in the coming years. This largely untapped market could not only boost tourist numbers in Thailand, but also property sales.

As with China, India is geographically close to Thailand, making this a convenient country in which to own an investment property or a holiday home. The straight line distance between Calcutta (in the east of India) and Chiang Mai (in northern Thailand) is only 736 miles (1,185 km), making it only a 1 hour 20 minute flight. The flight time to Phuket is only 2 hours 15 minutes.

People who are worried about the impact of currency controls in China fear that a further tightening could decimate the Phuket property sector. But don’t forget, Phuket has been there before. When a Euro depreciation saw Western Europeans stop visiting, Russians picked up the slack. When the Rouble declined, and Russian tourist numbers fell off, the Chinese picked up the slack. What if Chinese investors stop buying?

Because Indians have not been coming to the island in large numbers up until now, sales of property to Indians remains a largely untapped market. Since Indians are not yet an established clientele, it is perhaps premature to expect investors from the Subcontinent to make up for any drop off in sales to Chinese buyers. Nevertheless, it will be interesting to see how larger numbers of Indian investors will impact Phuket Real Estate.

The first direct flights from India have already begun, with Go Air – one of India’s rapidly growing airlines – starting direct flights from both Delhi and Mumbai. Three direct flights now operate between Mumbai and Phuket, with two per week from Delhi.

What is truly encouraging is the fact that 1.3 million people visited Thailand from India last year without any direct flights operating to Phuket. There are now 5 direct flights per week from only 2 cities. How much more will Indian tourism (and property investment from Indian nationals) in Phuket grow when flights begin from other Indian cities?

Why Chinese Are Investing in Phuket Real Estate Market
Russians investing in Phuket Property Market

The Russian Market in Phuket

Russian tourists are the sixth largest segment of visitors to Thailand, but estimates suggest that more than half of all Russian visitors to Thailand come to Phuket.

It should therefore come as no surprise that Russian investors rank behind only the Chinese for the most property bought in Phuket each year.

Until five years ago, tourism and investment from Russia could be seen everywhere on the island, but that changed with the depreciation of the Rouble. The stabilisation of their currency has seen Russians flock back to Phuket in droves, and the tourist sector has welcomed them with open arms. Shops have signage in Russian; restaurants have menus in Russian; and businesses have recruited Russian speakers to better accommodate this important market segment.

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Phuket Property Guide 2021 – Table of Contents


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