Condo prices in Phuket continue to rise steadily at 5 – 10% per annum. The condominium market in Phuket has been and continues to be, a success story. Phuket property prices, in general, have risen by 410% on average across the island since the December 2004 tsunami. Condo prices in Phuket are driven by several factors including; the cost of the land, cost of construction, location, and overall quality.
Land prices for the Phuket Property market vary depending on location. The most expensive area of Phuket is Patong with land coming in at 50 to 80 million THB per rai. This makes the average cost per square of condominium units in Patong the most expensive on the island at 130,661 THB per square meter.
Land prices in Kata and Karon are not far behind Patong making the average cost of a condominium unit 115,826 THB per square meter. Surin and Kata are home to the current fastest-selling condominium projects on the island proving that quality developments in developed areas close to the beach are still the focus of customer demand.
In Surin in particular, there are a number of good quality studio units in convenient locations within walking distance to the beach and amenities.
Location Cost per square meter (THB
The cost of construction depends on the quality of materials, architecture, level of planning, and construction management. The cost of construction of the structure of a condominium building is low and relatively the same across the developments in various market sectors. The pronounced difference in costs comes in the finishing and the amount spent on the type and quality of materials. For example, wooden flooring can often cost 5 to 7 times the price of regular tile flooring.
The property market in Phuket has evolved to a stage now where undeveloped and available sea view land is extremely hard to find meaning that new-build beachfront and sea view condos are becoming increasingly scarce. The knock-on effect is that price of condos that have quality sea views and/or are located close to the beach is increasing quicker than the market in general. The signs are that value of premium sea view properties will be sustained into the future.
Other factors that affect demand include the general health of the world and regional economy and local political stability. Politics in Thailand has been making headlines in the last few years but savvy investors and visitors know that political change is a reliable constant backdrop and that a ‘business as usual approach’ prevails.
The new terminal at Phuket Airport is now open and visitors to the island are set to increase to 12.5m visitors a year. The number of tourists entering Thailand is increasing year upon year with over 31m tourist arrivals to the kingdom in 2016. This increase in visitor numbers will continue to fuel the real estate market as tourists evolve into repeat visitors and expats often seeking the three-fold benefits of a holiday home, a decent return on investment and healthy capital gains.
Condo prices in Phuket are projected to continue to increase at an average rate of 5 to 10% a year. There will be some reductions in short-term demand caused by various factors that will have a knock-on effect on prices but the mid to long-term picture looks promising. Phuket is at the hub of an expanding region and a top three-holiday destination in a country that is the geographical and center of ASEAN.