PHUKET, 28 March 2024: Phuket has seen an unprecedented invasion of international buyers, transforming the island into the world’s largest leisure-branded residential real estate market.
The supply of branded properties has now eclipsed a staggering USD 2.3 billion (THB80 billion) and is expected to grow further, according to new data from hospitality consulting group C9 Hotelworks.
One of the most compelling storylines of Phuket’s economic shift from a tourism-dependent economy into a property giant is the blurring of lines between hospitality and real estate. A key example is Phuket’s largest developer, Laguna Phuket, which has undergone a massive change in focus from hotels to branded real estate.
Earlier this year, Singaporean tourism icon KP Ho’s Banyan Group announced that an adjacent land bank to their Laguna Phuket integrated resort would be developed into a USD2 billion lifestyle-led branded real estate offering.
Ho’s longer-term strategy has changed from a hotel-led strategy with the Banyan Tree brand at the forefront to a multi-brand strategy that has witnessed the chain’s renaming and created a property-led growth trajectory.
Tracking the change of investment sentiment from hospitality to mixed-use projects, C9 Hotelworks’ Managing Director Bill Barnett says: “Post-pandemic we have seen a flood of Thai-listed real estate groups return to Phuket, spurred by an accentuated return to trading of the resort market and stabilisation of tourism. Added motivation for developers is the soaring demand created by an influx of affluent overseas and domestic property buyers relocating to the island or viewing an investment in branded property as a safe haven.”
Some brands that have entered the market recently include The Standard in Bangtao. This area has been the epicentre of growth in the last year, including announcements by leading Bangkok developer Sansiri and Dubai-funded green-space real estate play Gardens of Eden, spread over 73 rai (29 acres) of ocean-facing land.
Turning the page, Phuket’s tourism market in 2023 was all about higher room rates, which, for most hotel owners, grew their bottom lines. Market-wide hotel performance data from STR shows that compared last year to the high-water years of 2018 and 2019, average room rates reflected higher occupancy by 20-30%. Despite lower occupancy with muted Chinese demand by 2-10%, hotels experienced a net profit growth.
C9 Hotelworks Managing Director Bill Barnett adds: “This is not about the island changing, but how the larger world is undergoing unprecedented volatility coupled with the islands’ growing attraction as an international community.
The appetite for branded residences reflects a notable change in buyer values, and we expect not only more hospitality affiliations but also a significant new addition of non-hotel brands, such as those from the fashion, automotive, and restaurant sectors. Phuket, with its record-setting resort-grade branded residences property supply, now stands side by side with urban best-in-class destinations Miami and Dubai as billion-dollar marketplaces.”
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