A look at Phuket’s travel and tourism industry may provide some new ideas and inspiration for the island’s real estate agencies and property developers – given the proven global link between tourist visits and subsequent property purchases.
In its latest research report, real estate agency Savills focused on the second half of this year, and noted the travel and tourism industry in the kingdom is the 18th largest globally. Thailand is also the second most-visited country in Asia after China.
It reported that during 2014, 24.8 million international visitors travelled to Thailand. It was the 10th most-visited country in the world according to the United Nations World Tourism Organisation (UNWTO) in 2013, the latest year for which UNWTO data is available.
By tourism expenditure, Thailand’s rank was higher, at 7th globally and contributed 19.3 percent to the country’s GDP last year. By 2025 the World Travel & Tourism Council (WTTC) has estimated that more than 25 percent of Thailand’s GDP will be generated from travel and tourism.
With such a high figure there must be the possibility of knock-on effects to the property and real estate sector in Thailand.
For those unfamiliar with Thailand’s southern resort island, Phuket’s land area is 543 square kilometers, a tenth of Bali’s 5,780 square kilometers. Something that both destinations have in common is that they are at risk of lax zoning and over development, which can decrease destination competitiveness, Savills reported.
From January to April 2015, the top five inbound markets were China (25 percent share and a 95 percent annual growth), Japan (5 percent, +17 percent), South Korea (5 percent, +19 percent), Russia (4 percent, -48 percent) and India (3 percent, +19 percent). This is valuable data for anyone selling property on the island.
Phuket’s popularity among Asian visitors, including Thai domestic visitors, is still the main story with 53.6 percent of all international arrivals during 2014 coming from Asia. International visitors have shortened their length of stay from 6.6 days to 4.4 days on average, reflecting the shift from long-haul to short-haul arrivals, while domestic visitors reduced from 4 days to 2.9 days on average.
With a 95 percent year-on-year growth in Chinese visits by air in 2014, and as reported many times by Dot Property during the last four months, it is evident that Phuket has been discovered by Chinese travelers. Southeast Asian customers are also increasing.
High average expenditure on shopping is a characteristic of Asian travelers to Phuket, and the average percentage of total expenditure spent on shopping by Asian foreign visitors is 32 percent compared with 23 percent for all international visitors.
Savills reported that the average daily spend for visitors to Phuket was THB 5,368 during 2013, an increase of 14.8 percent over 2012. International visitors contributed THB 5,799 per day, approximately 54.8 percent higher than Thai visitors who spent THB 3,746 per day.
Despite what have been two tumultuous years for Thai politics, Phuket hotels have recorded increased occupancy (+7.3 percent) this year compared with the same period last year, but a lower Revenue per Available Room (RevPAR) which recorded a decrease of 0.8 percent.
In terms of transport infrastructure on the island, and something that will result in direct benefits for the property sector, a proposed tram system will run from Tha Noon, on the southern tip of Phang Nga, across the Sarasin Bridge, to Phuket Town and Chalong Circle.
This route is estimated for completion during 2021, and the route will be 60 km long and have 20 stations. Travel time from the airport to Phuket Old Town will be 45 minutes, Savills reported.
In its summary, Savills said that despite lesser known Southeast Asian destinations coming into the market due to ease of travel facilitated by low-cost carriers, Phuket will remain a relevant destination for hoteliers.
In what also applies just as much to the property and real estate sector, political unrest and the detonation of a bomb in central Bangkok on August 17 are likely to harm tourist perceptions and investor confidence in the short term. However, travelers (and indeed property buyers) are likely to accept a certain level of negative media coverage of Bangkok’s political unrest before Phuket is affected.
It said the hotel market, and by nature the property market too, will continue to shift towards regional Southeast Asian travel as the Russian market recovers. The slowdown in China is concerning for Thailand, and especially Phuket where more than a quarter of international visitor arrivals are Chinese – but ever more competitive airfares should offset some potential decreases in demand.
