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Phuket has emerged as the world's largest leisure-branded residential real estate market, with a staggering supply of branded properties exceeding USD 2.3 billion, according to a recent report by C9 Hotelworks. This transformation is fueled by an influx of overseas buyers, reshaping the island's economy from tourism-centric to a property powerhouse.
A notable trend in Phuket's economic evolution is the blurring distinction between hospitality and real estate. For instance, Laguna Phuket, the island's largest developer, has shifted its focus from hotels to branded real estate, reflecting a broader industry shift.
The Banyan Group, led by Singaporean tourism magnate KP Ho, recently announced a USD 2 billion lifestyle-oriented branded real estate project adjacent to the Laguna Phuket integrated resort. This signifies a strategic pivot from a hotel-centric approach to a multi-brand strategy, aligning with the changing landscape of the industry.
New players entering the market include The Standard in Bangtao, a hub of recent growth, as well as developments by leading Bangkok developer Sansiri and the Dubai-funded Gardens of Eden project, spanning 73 rai of ocean-facing land.
Although Phuket's tourism market witnessed lower occupancy rates in 2023, primarily due to subdued Chinese demand. Despite this, it witnessed an increase in room rates, leading to improved bottom lines for hotel owners. Market-wide data indicates a 20-30% rise in average room rates compared to pre-pandemic levels in 2018 and 2019, contributing to overall profitability.
Thai banks, which had previously retreated during the Covid-19 crisis, have resumed lending for greenfield projects, enhancing stability in hotel trading. With real estate transactions robust and rental prices surging, developers are integrating hospitality and property components to command premium prices leveraging established brands.
Skyrocketing land prices across the island have necessitated the inclusion of real estate components in hotel projects, further blurring the lines between hospitality and property development.
C9 Hotelworks' research also underscores the growing demand for international schools, with the current count of thirteen expected to double in the coming years. This trend serves as a key driver for residential real estate demand, particularly among expatriate families seeking educational opportunities for their children.
In summary, Phuket's transition into the world's largest leisure-branded residential market reflects a convergence of factors, including shifting developer strategies, rising international investment, and evolving consumer preferences. The integration of hospitality and real estate components, driven by the need to maximize land value and meet changing market demands, underscores the island's continued growth and appeal to investors worldwide.
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