Which Nationality is Driving the Phuket Property Market in 2023/2024?
As we have always stated, the Phuket tourism sector provides the fuel that keeps the Phuket property market either burning hot or cooling to the point of stagnation. Or, in the worst case, absolute inertia, as seen during the Covid period. Tourism, most definitely feeds the Phuket real estate market. It, therefore, stands to reason, that the number of tourists who visit the island, and the specific nationalities that make up those tourist numbers, are the key drivers of the Phuket real estate market.
Tourism has been recuperating, and if the island of Phuket can continue to maintain this growth, we can expect the Phuket real estate market to keep growing too.
So who is currently leading the charge in tourism in 2023, and thus the Phuket property market? It’s easy to see that Russians are certainly leading the way in Phuket, and why they have also been the leading property buyers. This has been measurable by statistics showing Russians have been the leading foreign purchasers of condominiums recently. In terms of value, Russian condo transfers in 2022 were more than three times that of second place, France. And over four times more than third place, the United States.
Unlike the period leading up to 2019, Russians are now also moving to Phuket en masse, and are not just buying low price condominiums for investments. That old trend has changed significantly. Today, many Russians are also buying luxury villas.
Where Have All the Chinese Buyers Gone?
Over the years leading up to 2019, there were more visitors to Thailand (and Phuket) from China than from any other country. As we have noted previously, certain nationalities tend to be the key driving force behind Phuket’s tourist numbers for periods of time, only to be surpassed by other nationalities as geopolitical, even economical, situations change. Such as been the case with China, whose numbers now seem to have been surpassed by the influx of both Russian tourists and residents.
Nevertheless, many Chinese did manage to make Phuket their home, although recent numbers have reduced significantly. China’s dominance for a few years in the Phuket tourism and property sectors, has been thwarted, predominantly, because some citizens are no longer able to renew passports or in the case of property, they have been experiencing difficulty in moving money overseas to finance a Phuket property purchase.
China’s population in 2023 is nearly 1.43 billion, which constitutes a staggering 18% 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 may overtake the USA and become the largest economy in the world.
The travel restrictions and currency controls may have meant that the boom that Chinese investors created prior to 2019 in Phuket has unfortunately come to an end. However, with China’s proximity to Phuket and such a huge population, we hope that this proves to be only a temporary respite.
COULD THE INDIAN SUBCONTINENT BE A KEY DRIVER FOR PHUKET PROPERTY IN THE YEARS AHEAD?
Could India fill any future gaps in both the tourism and the Phuket property market in the years ahead? We hope so.
Before the world experienced Covid, India sent the seventh largest number of tourists to Thailand each year. But the important point to note here is that the 1.3 million visitors made up 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 Phuket, 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 were worried about the impact of overseas travel bans and currency controls in China feared that this could have decimate the Phuket property sector. But don’t forget, Phuket has been here before. In fact, many times. 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. Now the Russians are back again, who would take up the slack if the Russians stop buying? India and its citizens could, of course, be the ones to fill the gap in the next major trend change.
The first direct flights from India began in 2018, with Go Air, and prior to Covid, there were 5 direct flights per week. Today there are numerous flights weekly, available from many different airlines, mainly from Mumbai and Delhi, with new flights being added all the time. Air India, for example, will be adding an additional 4 non-stop flights per week starting on December 15th, 2023. All these direct India to Phuket flights are excluding flights which stop in Bangkok for transit to Phuket. Based on these ever-growing number of flights, it certainly appears that the popularity of Phuket as a holiday destination for Indians is on a continual rise.
Because Indians have not been coming to the island in large numbers in the past, sales of property to Indians remains a largely untapped market. Unlike Chinese nationals, Indians have only a little trouble transferring money overseas and certainly don’t have any travel bans. It will be interesting to see whether any future large numbers of Indian tourists might impact Phuket real estate as we move into the years ahead.
Russia’s 2023 Love Affair with Phuket Property
In terms of condominium units sold in Phuket up until the end of 2022, Russian’s bought nearly five times more condo’s than second place France (albeit about three times the value). Russians were also the highest number of non-Asian tourists coming to Thailand over the past 12 months too, with nearly 855,000 so far in 2023 (data as of August, 2023). Estimates also suggest that more than half of all Russian visitors to Thailand over the years have come to Phuket.
It has not always been smooth sailing for Russian buyers and investors in Phuket real estate. The Russian Rouble has played a significant part in the trends we’ve seen over the past 15 years, but for the time being, it certainly seems to be more stable. Russians are flocking back to Phuket in droves and even the Thai authorities have made visa requirements more favourable for Russian citizens to encourage this dynamic further.
If the Thai authorities and the Thai tourist sector continues to welcome them with open arms, and the Russian Rouble stays stable, then we can expect to see more Russian nationals in the years ahead. The island continues to see more Russian restaurants and the ever-growing Russian expatriate population living happily on the island, is easily visible by the number of Russian children in the international schools.