Since the tragic events in Phuket in Boxing Day 2004, land prices on the island have tripled in value. This surge in prices has been led by land prices on the West Coast, most notably in the traditional and well-established tourist destinations of Patong, Kata, Bangtao, Laguna and Surin.
However across the island prices have increased three-fold; land prices in the South and Central Phuket are now averaging more than THB10 million per rai, as indicated by the chart from Siam Real Estate’s Residential Market Report 2014.
What is clearly noticeable by studying the chart (below) is that land prices in the North of Phuket have lagged prices in all other locations. To many Phuket residents this may seem obvious as for years the North of Phuket lacked the necessary infrastructure and tourist appeal for land price increases to match the rest of the island, however this is all about to change.
After the global financial crisis of 2007-08 residential property and real estate developments concentrated on the traditionally popular locations along Phuket’s West Coast, the increasingly popular Southern locations of Nai Harn and Rawai, and Phuket’s central hub, Kathu. By comparison the North has seen little in the way of new developments in recent years, and remains the least developed location on the island.
However this will change in the future, according to Siam Real Estate, as the real estate firm is seeing a growing trend of improved infrastructure in the North which will lead to a growing demand for more residential property development.
Currently the North boasts two deep water marinas at Ao Po and Yacht Haven, while the Phuket International Academy and School has some of the highest education standards and sports facilities in Thailand. There is also the international airport and Phuket’s Airpark, plus three golf courses, and Tesco Lotus has built a new superstore in Thalang, with Homepro and Makro are on the verge of opening their latest stores neighboring Tesco. The North of Phuket provides also easy access to some of Phuket’s best beaches: Nai Yang, Mai Khao, Nai Thon and Layan offer long stretches of white sand along the Andaman Sea and are almost deserted when compared to the beaches of Patong, Kata and Karon.
Before the end of 2016 Phuket’s airport expansion will be completed, which will allow the North of the island to provide fast and hassle free access many parts of the world. This is ideal for the increasing number of Phuket residents who use Phuket as a base and commute for business throughout the Southeast Asian region.
Despite these recent improvements in the local infrastructure, land prices in the North still remain reasonable and Siam Real Estate is seeing a growing trend of individual buyers looking to build large residential homes – taking advantage of the lower land prices.
Longer term land investors looking to land bank have also been attracted to the North of Phuket as land price increases have lagged the rest of Phuket, and there are some great opportunities to buy reasonably priced land plots with great potential to increase in value.
In the future, the real estate firm expects to see increasing land prices in the North as demand increases from property developers and individual buyers looking to take advantage of the lower land prices in the increasingly desirable area.
Other trends in land prices to note include a growing trend on Phuket’s West coast of new residential property developments moving more inland to locations, such Cherng Talay and Layan, and further North to Nai Thon, Mai Khao and Nai Yang. This growing trend is due to the lower land prices in these more inland and less developed locations. The price of land within one jilometre of Bangtao beach has been driven upwards by large resort developments, in particular the Laguna resort area which continues to expand.
For property developers to keep their selling prices in-line with market demand residential developers have had to move to new locations where land prices are lower.
Land prices in the Central area have been increasing during recent years due to the expansion plans by Central Shopping Mall and the plans for The Mall Group (Siam Paragon) to open a new Shopping Mall in the area. In recent years the Central area has seen a growth in the development of condominiums which is adding to the increase in land prices.
Land prices in the South of Phuket match those of Central Phuket. The South has seen a steady increase in residential property development as prices are much less than the West coast. The South has a thriving Expat community; Chalong Marina for boating and diving enthusiasts, access to Naiharn beach which remains attractive to tourists and has the necessary infrastructure to support the growing demand.
Is with any investment, returns will not increase in perpetually and property and land investors must consider past performance and future prospects. Once again the North of the island has lagged the rest of Phuket however, the increases in Phuket’s land prices has woken up investors to the potential of Phuket and North of the island has excellent prospects to outperform relative to current land prices.
Main Image: A beachside resort two-bedroom villas with lake views located in a Luxury Estate, Mai Khao, North Phuket. It’s listed for sale with Siam Real Estate for THB36.95 million.
The article was written by Kevin Hodges, the North Branch and Investments Manager for Siam Real Estate in Phuket and author of the firm’s Phuket Residential Market Research Report. He has more than six years’ experience in Phuket’s real estate market, and provides advice and assistance to property buyers, sellers, developers and investors. Call +66 (0) 76 324 042 and email [email protected]
