Not Europe anymore! Phuket attracts Polish capital

Wprost.pl: What does the real estate market in Phuket look like today from an investor’s perspective and what drives the demand for the purchase of apartments and houses?

Martin Phillips, Phuket Plus expert: The real estate market in Phuket is growing rapidly. What drives him? First of all, there is strong year-round tourist traffic, which peaks between November and the end of March, which translates into stable demand for rentals. Foreign investors are also playing an increasingly important role, looking for diversification and higher rates of return than in Europe. Recent events in the Middle East have further increased interest in Phuket as a safe and stable investment destination. Another important factor is the development of infrastructure and the high standard of new investments, often offering a “resort lifestyle” model. As a result, Phuket is no longer just a holiday destination, but is becoming a full-fledged investment market.

Many people fear that investing in real estate in Thailand may be a trap. Is it right?

Absolutely not! Before purchasing, it is important to thoroughly familiarize yourself with the procedure, Thai law regarding real estate ownership and to have a trusted agent. In the Phuket Plus office, we have Polish-speaking advisors who guide future investors step by step through the purchase process – from the moment of signing the contract, through formalities at the local bank and office, to handing over the keys to the ready-to-move-in apartment.

While we’re on this topic, what are the main differences between property rights in Thailand and Europe, especially for foreign buyers?

In Thailand, foreigners cannot own land. However, they can use legal solutions that ensure a level of security comparable to European real estate markets.

Which ones specifically?

Poles can purchase apartments in two ways. The first is the so-called foreign freehold (ownership in a condominium), which means full ownership of the premises and share in common parts (without ownership of the land). The second, very popular model is leasehold, i.e. a lease for a period of 30 years, with the possibility of further renewal for subsequent periods. At Phuket Plus, we provide such renewal free of charge. One of the reasons for choosing this solution is the price. Apartments in the leasehold model can be up to 15% cheaper than in the freehold model, while generating similar rental income.

What real rates of return can investors expect for short- and long-term rentals? What does profitability depend on?

Profitability depends on many factors, such as the frequency of use of the property by the owner, the chosen rental strategy, seasonality of prices, market conditions and the level of services offered. Typically, investors can expect returns of around 6-7% per year, although there are projects that reach even 9-10%. However, much depends on the period of the year during which the owner intends to use the property personally. A new solution that we are the first to offer to our clients in Phuket are hotel apartments, which is a very beneficial solution for investors who hope to maximize rental profits.

What does this mean?

This is due to the fact that Thai law allows short-term rentals, i.e. less than 30 days, only in facilities with a hotel license. Such solutions allow you to achieve higher daily revenues and high occupancy throughout the year, which in turn translates into higher profits for investors. Additionally, it is worth taking into account the increase in the value of the property – prices increase from the moment the project is sold at the off-plan stage until its completion. Under favorable market conditions, this increase may reach up to 20% per year.

How much capital is needed today to enter the Phuket real estate market – both in the premium segment and in more accessible investments?

Apartment prices in Phuket are still more attractive than in Europe and this attracts many young investors who are thinking about their first apartment. Then they most often choose one-bedroom apartments priced from PLN 460,000 to PLN 600,000. In turn, families with children choose larger, more functional two-bedroom apartments, the prices of which start from around PLN 600,000. I know that many people dream of a villa with direct access to the beach, but such properties are rare and much more expensive. For example, residences with an area of ​​approximately 140 m² with a sea view start from approximately PLN 8 million. For 40% of this amount, in one of our investments, we have a luxurious penthouse with a private swimming pool with an area of ​​170 m2. Therefore, in practice, many investors choose more rational solutions, i.e. properties located a few minutes from the beach, in quieter locations, with a wide range of amenities on site.

The boom in buying real estate in Spain or Portugal is over. Why are more and more Europeans, including Poles, buying real estate in Phuket?

Mainly because Phuket is still in a growth phase, while markets such as Spain and Portugal are already largely saturated. Even Dubai today is not free from investment risks and uncertainties, which have deepened as a result of the war in the Middle East. This means that investors in Phuket have greater potential for property value appreciation. Profitability is also a key factor. Phuket is a year-round destination with strong tourist demand, which allows it to generate income from both short-term and long-term rentals. In practice, this means higher rates of return than in popular locations in Southern Europe.

How do you evaluate the price-quality ratio and lifestyle offered in Phuket?

The budget that allows you to buy a standard property in Spain or Portugal, in Phuket allows you to enter the premium segment with access to hotel infrastructure, swimming pools, SPA and management services. The investment model offered by developers is also important. Customers buy turnkey properties and can then entrust their management to professional operators. This is particularly attractive for foreign investors who do not want to get involved operationally.

Many Poles point to Thailand as an ideal destination not only for work, but also for retirement. What attracts them to the island?

As I mentioned, Asia, and Thailand in particular, is perceived as a stable and developing market with high growth potential. However, we cannot forget about an element that is difficult to measure financially, not to mention priceless. Phuket offers a lifestyle that for many is becoming a real alternative to Europe. The combination of a warm climate, spectacular nature and unique cuisine – one of the best in the world – makes an apartment purchased as an investment often become a second home.