Phuket's Market for Branded Leisure Residences Surpasses $2.3 Billion, Becoming the World's Premier Destination
In PHUKET, THAILAND, an influx of international buyers has propelled the island to the forefront of the global market for branded leisure residences, with the current inventory exceeding an impressive $2.3 billion (THB80 billion). This figure is poised for further growth, based on the latest insights from the hospitality consultancy C9 Hotelworks.
Garrya Beachfront Hotel Residences by Banyan Group
A noteworthy trend in Phuket’s transition from a tourism-dependent economy to a real estate powerhouse is the merging of the hospitality and real estate sectors. This trend is exemplified by Laguna Phuket, the island's largest developer, which has shifted its focus from hotels to branded real estate.
In a significant development earlier this year, KP Ho of Singapore's renowned Banyan Group disclosed plans to develop a lifestyle-focused branded real estate project adjacent to their Laguna Phuket resort. This move is part of Ho's broader strategy, transitioning from a hotel-centric approach to a diversified brand strategy, leading to a renaming of the chain and a shift towards property-driven growth.
Bill Barnett, C9 Hotelworks’ Managing Director, observes a shift in investment sentiment from hospitality to mixed-use developments, driven by a resurgence in Thai-listed real estate groups investing in Phuket. This interest is fueled by a stable resort market, revitalized tourism, and robust demand from affluent buyers both from abroad and within Thailand, seeking branded properties as secure investments.
Recent market entrants include The Standard in Bangtao, a hotspot of recent growth, alongside notable projects by Bangkok's Sansiri and the Dubai-backed Gardens of Eden, highlighting the island's appeal.
The tourism sector in 2023 saw a focus on higher room rates, boosting profitability for hotel owners despite a slight dip in occupancy rates. This was supported by market data from STR, showing room rate increases of 20-30% compared to the peak years of 2018 and 2019.
The stability in hotel trading has encouraged Thai banks to recommence lending for new projects. With soaring real estate transactions and rental prices, developers are blending hospitality with real estate to achieve premium sale prices through branding.
The necessity of including a real estate component in hotel projects is underscored by skyrocketing land costs on the island.
Barnett highlights the post-COVID-19 landscape, with rising global migration and the work-from-anywhere culture contributing to Phuket's appeal. Thailand's welcoming visa policies and incentives for long-term stays further amplify the island's attractiveness for property investments.
C9 Hotelworks also points to the growing number of international schools in Phuket as a key demand driver, with the current count expected to double, enhancing the island’s status as a vibrant international community.
Barnett reflects on the broader implications of these changes, suggesting Phuket’s burgeoning branded residences market positions it alongside global powerhouses like Miami and Dubai, driven by evolving buyer preferences and a diversification of brands entering the hospitality sector.
SOURCE: www.c9hotelworks.com
