Are you interested in buying a condo in Phuket but don’t know where to start? See our blog to get our opinion about buying a condominium or an apartment in Phuket for your property investment.
Why Buying A Condo In Phuket?
The non-Thai investment in condominiums as holiday homes in Thailand has been steadily increasing for more than two decades for a number of reasons. By law, overseas investment in the purchasing of freehold land and property as regards housing in Thailand is forbidden. Phuket property investment is restricted to the freehold of condominiums, a practice which is strongly protected by the Condominium Act of 1975. This has given non-Thai nationals the confidence to invest in condos, safe in the knowledge that their investment is secure. As a foreign investor, you become the registered owner of the condominium and if you decide to sell, either to a Thai or another non-Thai, the funds can be transferred to your home country without any restrictions.
Overseas investment in condominiums continues to grow at a steady rate, particularly from the expanding economy of China. With rental returns guaranteed to reach figures as high as 8%, condominium investment is thriving. Maintenance of your condo is largely trouble free as developers arrange for the daily care, advertising and general repair to be carried out through a hotel chain management scheme. All the properties have the services of excellent security staff, CCTV and key card access. They are also ready furnished and have access to the amenities of the complex such as swimming pools and community areas. The complex itself will be situated near to local beaches and markets.
Condo Prices In Phuket
As in any other property market, property for sale in Phuket Thailand is determined by the location and the cost of building. Patong, situated in a bay in the middle of the western coastline, is currently the most expensive with land priced at approximately 130,000 THB per square metre. Surin, situated further north is priced at around 105,000 THB per square metre, but recent developments are proving popular due to being within an easy walking distance of the beach and local amenities. The majority of the developments, including Kamala and Karon, are in the southwestern quarter of the island. Consequently, Phuket Town, on the eastern coast is much cheaper at 64,000 THB. Condominiums that open directly onto the seafront are the most expensive due to a decreasing availability.
The actual building of the condominium shell is relatively low, but the sale price reflects the finishing and that depends on the quality of materials. For instance, a tiled floor is much cheaper to install than a wooden one. A Phuket condominium for sale that is highly stylised, is inevitably more expensive than one that is more basic. However, a condo for rent in Patong Phuket generates a much greater rental income, eventually compensating for the initial purchase price. Another factor that will affect prices is demand.
Phuket Property Demand
Demand for the purchase and rental of properties in Phuket has been consistently increasing for more than twenty years at a rate of up to 10% per annum. As a holiday destination, Phuket is rated as one of the top three in the world, attracting large numbers of tourists, particularly since the Tsunami disaster of 2004. Phuket’s weather is considered generally benign as it avoids the strong typhoons and cyclones of the Philippines and the Hong Kong region. The temperature is an average 31 degrees Celsius throughout the year, peaking in April and again in September, making it an ideal holiday destination. Situated in the Andaman Sea off the west coast of Thailand, the island of Phuket has the sandy beaches and idyllic scenery that tourists find irresistible. Patong’s luxury apartments, situated around a sheltered bay are proving to be very popular.
The new terminal at Phuket airport in the north of the island is expected to admit approximately twelve million visitors each year. Organised excursions to the Phra Taew National Park are of interest and there is easy access to the mainland via the Sarasin Bridge. Tourism to Phuket has risen in total to more than thirty-one million a year. Demand for rented holiday accommodation is expected to continue rising, providing investors with guaranteed returns on their investments.
Average ROI Of Property Investment in Phuket
The main factor for any investor is the Return On Investment (ROI). The average monthly rental income on a two-bedroom condominium in Phuket is just over 20,000 baht whereas a villa style property with four bedrooms is ten times more. Due to the high demand, developers can offer investors guaranteed rental deals of up to 9% gross for up to fifteen years. Similar schemes in Hong Kong or Singapore are only around 3%. A Phuket condominium for re-sale can be undervalued but still command a high rent return.
Packages from hotel chains to manage lettings without monthly fees for three years or longer, with owners being allocated approximately four weeks use, are popular. Developers offer rental guarantee schemes that give investors their first year’s rental income, twelve months before the final payment is due. Developers also have buy-back schemes with a reduction on the original price of a percentage of the interest rate. The ROI appears substantial, with investors likely to profit through rental income or capital gains.
Read Also: 3 Phuket Property Investment Strategies
Conclusions On Buying A Condo In Phuket
The sale of condominiums in Phuket has been attracting foreign investment for decades, a proven statistic of security, stability and expansion, a trend that is set to continue. With investments protected by the Condominium Act and hotel chains providing the maintenance, investors can be confident that their investments are in a safe haven. Phuket’s warm, settled climate has an enduring appeal for tourists, whose numbers are set to reach record levels with the expansion of the airport, ensuring that there is more than adequate demand for the rental potential and re-sale of condominiums. With guaranteed income or capital gains, buying property in Phuket appears to be a very lucrative investment.