Phuket has a well-earned reputation as a bit of a “Teflon” investment destination. Through most of the ups and downs over the last 20 years- When Phuket has really come into it’s own, things have mostly been either good, very good, or amazing when it comes to real estate investment returns. A few blips, including COVID, but any company in the world would sell their souls to have the type of overall increase in value and volume that Phuket has been putting up year over year since 2005.
Now, that’s not to say its been perfect — the 2004 Tsunami, the 2020 COVID pandemic, and an ongoing global financial crisis all hit here in Phuket, too but as soon as the sun came out after each one, Phuket was back in action and supply and demand played its eternal chess game. That’s what’s happening now. There is a confluence of things that are making it appear as if Phuket is in a bubble and getting ready to burst
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What are those things? Traffic, “over-tourism”, too many properties for sale (oversupply), Russians coming and Russians going, Chinese not coming or Chinese not leaving. I’m not going to sit here and say that there aren’t a few things that warrant attention and perhaps action. What I am saying is that no matter what happens, it will be short-lived and Phuket will bounce back and continue on the same train it’s been on for two decades.
Why? I thought you’d never ask! Let’s list a series of true or false.
“Phuket is way WAY more busy/crowded/traffic-y than it used to be.”
True.
For me. And a few thousand other expats who remember what Phuket was like more than 10 years ago when you could drive from top to bottom in about 45 minutes. Before the coup in 2014, things were pretty idyllic here.
False.
For 10,000,000 plus visitors per year who have never been here and have no recollection of what it used to be. They can only look at what it is, and compare it to their lives back home. The magical juxtaposition between Phuket and wherever they come from is only slightly less dramatic than it was 20 years ago because things have gotten worse in the west at a pace equal to or greater than any decline in Phuket’s day-to-day life.
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“Phuket is Overdeveloped.”
True again.
For me, again. And a few hundred thousand people who come here for a quiet “lounge-on-the-beach” holiday to enjoy coconut drinks and fire shows and send sunset photos to their friends back home. The construction is a headache. The changing demographic is a headache. Having to adjust to “newcomers” is ALWAYS a headache.
False.
For 14,000,000 visitors per year who don’t really care about nature or yoga until it’s “selfie-time”. Then, as long as they can find a secluded space with a palm tree and a yoga mat for their influencees (is that even a word??) then they are fine. In-between virtue signaling however, they want food, drink and distractions, just like they have back home. Most of these people don’t care about art or architecture or Thai customs… they want to take pictures of their food and their abs and drink themselves silly after Muy Thai class or “Hot Pilates”, then see how many likes they get for the dopamine bump the next morning.
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“It’s gotten too expensive.”
True.
For me. And anyone who comes to Phuket expecting a tropical hammock on the beach, Boho, EatPrayLove experience on a backpacker budget. Prices are up, Real estate prices are bordering on (temporary) insanity. Taxis are still an insult to my intelligence, wallet, business sense and the English language. Even with Grab. And a decent meal that was USD 3 five years ago, will cost you USD 8.50 now.
False.
For every tech bro, influencer, crypto millionaire, local landowner who sold or rents out their property, real estate agent, developer, architect, property manager, hotel or car rental agency who has been not only riding the wave, but each taking a little bit of “fuck you/revenge profit” that they somehow feel they deserve for surviving COVID. Those people have made millions and millions on the backs of tourists, who really are not the ones complaining… it’s the ever-expanding group of expat locals who miss “the way it was”.
So, what’s the end game?
There will be a *chooses wording carefully here* correction. It will happen in pockets across Phuket and it’s already happening in Bangkok. “Gosh Mickey… What’s a correction?” You might ask.
Well… a correction is when things are a bit out of sync with the market. It happens everywhere and with damn near everything, there’s a market for it. When it happens at a grocery store, it’s a special. When it happens at a department store it’s a “year-end sale”. When it happens in my neighborhood, it’s a correction.
It’s a combination of supply and demand, mixed with a market sentiment that may or may not be based in fact. There will be a few too many homes than the market will be able to absorb at the rate it has been for the past few years. As a result, some homes will sit on the market for sale, longer. Some developers, being cash-poor and having big loans to pay to banks, will start to lower prices or try other incentives.
This will affect new development, which will slow to almost a standstill for all but the most robust developers. This will impact local sentiment, which will affect the stories that local agents tell their clients… prices will fall SLIGHTLY in some places but remain basically unchanged in others…What WILL change, is the amount of time it takes to sell a new property (especially off-plan).
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As smaller, under-funded developers start to go belly-up, leaving half-finished condo and villa shells littered around the island like strategic air-strike leftovers, large investors like Black Rock will see the value in the Thai market and begin to buy wholesale properties by the dozens. This will happen MUCH faster than in previous blips or bubbles, because the goal is to deploy capital and control the market, not necessarily make short-term profit.
This will keep the market from sliding down more than 10 percent total in most places. (There will, of course, be exceptions.) Every chicken-little developer and untrained real estate “agent” (order-taker/ chauffeur) will claim the end is nigh. But it ain’t.
The screaming will last exactly 25 months from now, when on 1 November 2026, hotels start to talk about how busy they are for high season, and RevPar is picking up again, and lo and behold, the “Bubble that never was” will be over.
But wait, there’s MORE!
During those precious 25 months, something equally amazing will happen. I call it “Escape from The Pearl of the Andaman”. (Actually, I never called it that before, and it’s kinda dumb, but anyway…)
Expats of means who are really annoyed by all the things I outlined above will realize that there are places in Thailand where the lifestyle can be pretty dang close to the way it was 20 years ago in Phuket. There is an awful lot of beachfront in this country, and once you have a family and your kids are no longer keeping you tethered to an international school, you can look North, over the bridge. I believe that is exactly what will happen
A distrust of “off-plan” development, combined with a throwback to the old-days-lifestyle that is available in any of 100 different seaside towns, villages and cities up and down both coasts of Phang Nga province will start to garner more attention than ever imagined. Chief among them? The 50km stretch of beach on the Andaman coast north of Phuket, and the 20Km stretch of waterfront property on Phang Nga Bay.
With the promise of a new airport, prices less than 50 percent of Phuket, existing infrastructure developed with expansion in mind, and a growing population, the area over the bridge will be able to absorb a large percentage of the disgruntled permanent expat population without even breaking a sweat. Those people will realise that they can still get to their favorite restaurant once a week, but have a far simpler, quieter, less traffic-jammy lifestyle about 60km to the north.
And that, my friends, is how this will play out.
See you in the Great White (sands) North!
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This article was first seen on Michael Aumock’s LinkedIn page.
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