Phuket's residential property market is evolving from a tourism-driven market into an increasingly investment-oriented destination, with buyers placing greater emphasis on rental income and capital appreciation, according to SET-listed Origin Property.
Thanagorn Vutipong, chief executive of property developer Park Luxury Co, a subsidiary of Origin Property, said Phuket remains attractive to both Thai and foreign buyers because properties can generate rental income while offering potential capital gains.
"Rental yields of around 7-10% and capital gains of 15-20% per year are making Phuket increasingly attractive as an investment destination, rather than simply a market for holiday homes," he said.
The trend is supported by persistent demand despite an estimated 40,000-50,000 residential units across Phuket, with some projects achieving more than 60% sales and certain developments selling out within two months.
Foreign buyers account for roughly 70% of Origin's Phuket customers, with Russians representing 47%, followed by Poles at 16% and Chinese buyers at 6%, indicating a more diversified international demand base.
Mr Thanagorn said foreign buyers are increasingly looking beyond established tourist areas, with Surin and Rawai beaches attracting interest from long-stay buyers seeking less crowded locations with stronger potential for rental income.
Thai buyers, meanwhile, account for 30% of Origin's Phuket customers, comprising mainly local business owners and Bangkok-based investors who purchase condominiums for rental income rather than solely for personal use.
The typical budget among Thai investors has increased to around 3-4 million baht per unit from 2-3 million previously, suggesting buyers are increasingly willing to pay more for properties offering stronger rental potential.
Foreign buyers also provide developers with relatively strong cash flow, as condominium buyers typically pay deposits of around 70%, while villa buyers can put down about 90%, compared with roughly 15% for Thai buyers.
"Foreign buyers typically make higher upfront payments, giving developers greater visibility over sales and collections as projects progress," said Mr Thanagorn.
For developers, Phuket's investment appeal is also reflected in profitability, with gross margins for residential projects estimated at 50-60%, significantly above the 30% average in Bangkok, Mr Thanagorn added.
However, rising development costs are becoming a growing challenge as competition intensifies, with developers increasingly competing through pricing, promotions and higher agent commissions to secure buyers, he said.
Land prices in Phuket have risen by about 300% over the past three years, with plots in Bang Tao reaching around 60 million baht per rai and beachfront land approaching 100 million baht per rai.
"The sharp increase in land costs means developers must increasingly select sites based on development economics, as condominium prices may need to reach around 200,000 baht per square metre to maintain project viability," said Mr Thanagorn.
Despite rising costs, Origin plans to expand its Phuket portfolio, reflecting its confidence that investment-led demand can support residential development beyond the traditional tourism cycle.
The company currently has eight residential projects comprising 3,937 units worth 15.6 billion baht, with average sales exceeding 60%, while three hotels under development will feature 601 rooms.
