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Investing in Phuket in 2023 — what does this island mean for an investor and an immigrant?

Phuket is the main place to move in 2023. Therefore, the demand for real estate is growing here, and the supply does not keep pace with the demand. At the same time, local developers keep offering instalment payments and other beneficial opportunities for customers.

The market has revived

The pandemic created a pent-up demand, which provoked buyers to become more active in the Phuket real estate market. Economic and geopolitical factors forced the dynamics to move up: everything on the market is being sold off. Prices are gradually rising in the resort island. The tourist flow has grown significantly.

It was difficult to buy a property in Thailand for expats in a decent finished project some time ago. However, the construction companies retained at least two or three villas or several apartments, which they used as showrooms, and sold them later. They are also sold out in Phuket. Therefore, the buyer should pay attention to the complexes that are about to be completed.

New buildings, secondary real estate and illiquid housing in Phuket

Phuket has a well-developed secondary housing market. Although brand-new buildings have greater potential, because many properties on the secondary market were built too long ago. They need to be repaired and require a lot of money for this. For example, there are about 30% of highly-liquid apartments in a good complex. Another third of residential complexes have medium liquid properties. The remaining part is illiquid real estate. However, the most important thing is why pay for ready-made, but outdated housing, if you can buy brand-new real estate with better features in instalments?

Why can an apartment in a top-end complex be illiquid? It is clear that any developer tries to include as many residential units as possible into its project. As a result, some of the owners get not the best location and not the best views, although the complex is good.

Moreover, there is another type of illiquid properties. For example, a construction company in Phuket is commissioning a brand-new complex in a good location. It has discount offers for its customers – residences for 3.8-3.9 million baht (about $110,000). There are the same ones with access to the pool (without a sea view) for almost 7 million baht. Of course, the latter are better for rent, but this price will not satisfy investors. This means that the apartment will bring no more than 7% of the cost, and it makes no sense to invest at such a price. You can pay another 2 million baht and purchase a premium one-bedroom studio with a larger area.

Investment strategies

Some real estate market professionals advise focusing on properties for 300,000 euros. You can buy a property in Phuket for this amount of money to generate income. There are offers in the lower price segment, but there is very high competition.

Many investors use the traditional speculation scheme:

  • They conclude a deal at the beginning of sales, and terminate it in the middle or end of construction.
  • • At the beginning of sales, they pay only 20-30% of the cost, then they make the next payment after putting the building into operation in 1-1.2 years.
  • • At this stage, you can add 20% to the value and resell the property. The main risk in this scheme is not to sell this property in advance. In this case, you will have to keep paying the developer and terminate the deal. This option is not suitable for those who have a limited budget.

Professionals advise buying 1-3-bedroom residences. You can also purchase two studios and combine them, or ask the developer to do it during construction. Such properties are in high demand among people who plan to live in Thailand for a long time. However, if you want to purchase small studios, you should consider unique projects.

The second strategy is buying a property for rent. In this case, branded residences in the complexes of international hotel brands are a more profitable option. You can live there and use the hotel infrastructure, or you can rent out your apartments. The main thing is that the contract should have no restrictions, and the payment system should be transparent.

This option is not perfect for those who want to make money on resale. However, some developers offer a buyback option in a few years. In this case, the investor gets back either the price at the time of purchase, or only 10-20% more. This is not the most profitable investment.

We will help you purchase a profitable property in Thailand

Thailand-Real.Estate and its specialists can offer you the most favourable investment offers in all areas of Thailand at competitive prices and on excellent conditions. You will definitely pick up the right property from an extensive catalogue and become a successful investor in Thailand.