Since the tragic events of Boxing Day 2004, land prices in Phuket have tripled, with the highest increases on the west coast, especially in the traditional quality travel destinations of Patong, Kata, Bangtao, Laguna, and Surin. Despite the tripling of land prices across the island, the average price of land in southern as well as central Phuket exceeds 10 million baht per rai (rai, Thai land unit area), as shown in the picture drawn by Siam Real Estate's "Report on the Residential Market 2014".
As is evident from the graph below, land prices in the northern part of Phuket are lagging behind the rest of the island. For many Phuket residents, this seems to be evident as for many years the north of Phuket has lacked the necessary infrastructure and tourism appeal to keep up with the rest of the island in terms of land price increases, but this is about to change.
Since the onset of the global financial crisis in 2007-08, residential property development in Thailand has been concentrated in the traditionally popular areas of Phuket's west coast, the increasingly popular Nai Harn and Rawai in the south and the central Phuket hub of Kathu. In contrast, new developments in the north have been making little headway in recent years and remain the least developed area of the island. However, this is all set to change in the future, as there is a significant trend towards improved infrastructure in the north of Phuket, which will lead to increasing demand for residential property development. There are currently two small deep-water marinas in the north, at Ao Po and Yacht Haven, and with the Phuket International College and School with the highest educational standards and sporting facilities in Thailand, as well as the international airport and Phuket's small civilian airport (Airpark), plus three golf courses, including Blue Canyon and Mission Hills golf course. Tesco Lotus recently opened a new supermarket in Thalang, and Homepro Home and Makro will soon be opening new chains near Tesco. Some of Phuket's best beaches are easily accessible from the north: Nai Yang, Mai Khao, Nai Thon and Layan have long stretches of white sand and are almost empty compared to the beaches of Patong, Kata and Karon. 2015-2016 Phuket airport expansion is complete, making travel to and from the north of Phuket even faster and easier.
Despite recent improvements in local infrastructure, land prices in the north remain at reasonable levels and we are now seeing a growing trend of individual buyers looking to take advantage of the lower land prices here to build large homes. Long-term land investors looking are also being attracted to the north as land prices in the region have lagged behind the rest of Phuket and there are many good opportunities to buy land with significant value-add potential at reasonable prices. We expect land prices in the north to rise in the future as the north becomes more attractive by the day, with property developers and individual buyers looking to take advantage of the current lower land prices.
Other notable trends include the increasing number of new residential developments on Phuket's west coast moving inland to areas such as Cherng Talay, Rayang, and further north to Nai Thon, Mai Khao and Nai Yang. This growing trend is due to lower land prices in this inland. Land prices in the 1km radius around Bang Tao Beach have been driven up by large resort developments, especially the continued expansion of Laguna Resort. For real estate developers, in order to keep sales prices in line with market demand, residential developers have had to move to new locations where land prices are lower.
Land prices in central Phuket have been on the rise in recent years, driven by the expansion of the Central Shopping Mall and The Mall Group's (Siam Paragon) plans to open a new shopping centre in the area. In recent years there has been an increase in condominium developments in the central region, which has further contributed to the increase in land prices. Land prices in the south of Phuket are similar to those in central Phuket, with residential property development in the south steadily increasing as land prices in the area are much lower than on the west coast. The south has a thriving expatriate life community; Chalong marina for boating and diving enthusiasts, easy access to the popular Naihan beach for tourists, and the necessary infrastructure to support the growing demand.
In any investment, returns do not increase permanently and investors must consider past performance and future prospects. Again, the northern part of the island lags behind the rest of Phuket, however, the rise in land prices in Phuket has awakened investor attention to the potential of Phuket and the northern part of the island and it is expected to have a positive future.
Read more on Richard Lusted column, Siam property Thailand CEO
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This is an exclusive article for juwai.com.
This article is contributed by Juwai Columnist, Richard Lusted.