With 8.4 million visitors in 2017 alone, Phuket is currently Thailand’s most popular island destination. The number of visitors set a new record for the fourth consecutive year. Looking back at past years, the island has undergone significant developments before transforming into what it is today.
In the old days, Phuket was an isolated island that served foreign backpackers with only a handful number of small resorts. Gradually, the number of tourists grew after the completion of the Sarasin bridge in 1967. In the 1980s, Phuket island became more well-known with key developments such as Amanpuri, the first luxury hotel and villa which opened in 1987.
Phuket Airport first began offering international flights in 1984; this made the island even more popular among tourists. In 1988, the Phuket Airport was taken over by Airport of Thailand (AOT) and has been upgraded to serve up to 966,294 passengers. The ability to serve as an international airport has allowed the Phuket Airport to continually increase its capacity and number of passengers.
Development on the island started at Laguna Phuket, Asia’s first integrated resort spanning over a thousand acres, on the site of a former tin mine, in 1988. CBRE’s first foray in Phuket was as the exclusive agent for Allamanda at Laguna, Phuket’s first major resort condominium development which was completed in 1993.
After 10 years of prosperity, Phuket weathered the storm brought about by the 1997 Asian Financial Crisis as well as the devastating Tsunami in 2004, the same year CBRE established a permanent office in Phuket. The island continued to grow – both as a tourist destination and as a place to buy a second home, claiming its position in Forbes Magazine’s Top 5 Tourist Destinations in 2005. Although the island endured another major hit during the 2008 Global Financial Crisis, the number of tourist arrivals doubled from one million in 2007 to two million in 2010.
The influx of tourists led to plans to expand the Phuket Airport in 2014, the first phase of its expansion was completed in 2016 and international arrivals reached 8.4 million in 2017, representing an 800% increase from 2007. The Phuket tourist market has evolved from being driven by wealthy Asian and European feeder markets to 37% of its arrivals being Chinese tourists in 2017, which was unthinkable in 1988.
There are now 23,000 hotel rooms excluding guest houses, 8,000 resort condominiums, and 4,000 resort villas. The resort residential property market has changed. Today’s resort property buyers not only want vacation homes, but they also want them to be income-producing properties. This has meant that developers have had to adapt their product to match purchasers’ needs as well as comply with the requirement to have a hotel license in order to offer properties on a daily-rental basis.
Branded residences such as the Banyan Tree and the Sheraton, along with ultra-luxury villas with asking prices above THB 500 million per unit from Layan Residences by Anantara, Avadina Hills by Anantara and The Estates at MontAzure have been targeting the higher-end market.
Prakaipeth Meechoosarn, Director of Resort Property Sales for CBRE Phuket, has seen the market evolve since she first joined the company in 2004. “Originally, most of the buyers were Asia-based expatriates looking for a second home. We have since seen the market expand to Russian buyers and now Chinese and other Asians including Thai buyers. Individual Thai purchasers are also looking to benefit from the robust tourism market by purchasing properties in projects that provide rental income”.
Phuket’s success has spread to neighboring provinces and we can now talk about the “Greater Phuket Market “or “Andaman Coast Market” for hotels including the potential for residential resort properties from Khao Lak to Krabi.
Over the past 30 years, Phuket has steadily transformed from an underdeveloped island formerly dependent on tin mining and rubber to a top tourist destination. The future presents opportunities with the growth in the number of people living less than four hours flight away who have started going on overseas holidays. Europe saw this trend in the 1970’s and now it is Asia’s turn – further supported by the amazing growth in low-cost carriers where now, literally almost “everyone can fly”. Both hotel and residential resort property developers can capitalize on this. There are challenges on how to deal with the era of mass tourism from protecting the environment, limiting overcrowding, and trying to balance the desire to grow a tourism industry while at the same time preserving the attractiveness of Phuket as a destination.
Report by CBRE.