PHUKET PROPERTY MARKET
The Phuket real estate market is Thailand’s most mature resort property market. The west coast was the first location to be developed in Phuket, with a range of resorts, condominiums and hotels. With the scarcity of prime beachfront locations in this area, the south and east coasts have become increasingly popular among homebuyers. Inland sites and golf courses are also being developed.
Property buyers continue to focus on the west coast where it is still possible to acquire quality properties with outstanding views. A wide range of developments are now available on the east and south coast and neighbouring islands and provinces.
As Phuket’s popularity as a destination continues to grow, with increasing demand for villas, condominiums and apartments to rent, both new homes and quality existing properties continue to offer a sound investment opportunity.
Villas, condominiums and apartments for sale on Phuket’s real estate market has attracted people buying homes for both investment and to use as a holiday property. Buyers are now tending to live in their villas and condominiums for longer periods and are choosing to retire to Phuket. Phuket’s wide range of real estate suits all types of buyers, with the following property types and options available:
A villa is the name most commonly used for a house or home in Phuket. They are normally are part of a resort and usually bought as a holiday home, often with a rental or property management service. In Phuket, there are many sizes and styles of villas, from two-bedroom pool villas to large four to six-bedroom villas with private grounds and large infinity swimming pools. View Phuket villas for sale listings
The two most common forms of property & land ownership are leasehold and freehold through acquisition by a Thai company.
Leasehold: A foreigner may register ownership of a 30 year lease with the Land Office. This may be a lease of a condominium or freehold land provided the title against which the lease is registered is freehold or “Nor Sor 3 Gor” which is a form of good quality title just below that of chanote.
Ownership of landed properties is more restricted as foreigners are prohibited to own freehold land. However, by this structure, a foreigner can effectively own land. There are no restrictions on foreigners owning a building out right. Therefore, the foreigner may own the building erected on the land over which they have a 30 year lease.
The maximum lease term allowed to be registered by law is 30 years. Most luxury resort villas are sold on a 90-year leasehold tenure, comprising a 30-year lease term with an option to renew for a further two terms. The villa is typically sold on freehold and the land component on a 90-year lease. The contractual right of lease renewal is between the developer or a special purpose company and individual buyers, therefore choosing projects backed by a reputable and financially stable developer is also essential to ensure the options to renew are granted at the end of each lease term as the renewed options cannot be registered against the land title.
This structure is transparent and is fully in accordance with Thai law. It is a commonly accepted tenure even for purchasing multi-million dollar top-end luxury resort villas and many reputable projects in Phuket adopt this. However, we recommend that buyers consider the quality of the contract and the contracting party who guarantees the further lease terms.
For added security for buyers, many luxury villas are sold on a leasehold structure with shareholding in the landholding company. Shareholding rights offer buyers a voting right in the landholding company to ensure that the rights of leasehold renewals are honoured. This is a substantially better proposition than just a contract with the developer.
With legal representation by law firms who are familiar with villa transactions, the process can be made much simpler for a buyer, whether this is under a straight lease or shareholding structure.
Freehold Ownership Through a Thai Company: The last type of ownership structure is freehold through acquisition by a Thai company. Whilst foreigners are prohibited to own freehold land, they are able to set up a Thai company with majority shareholding by a legitimate Thai partner i.e. 51% Thai owned and 49% Foreign owned. However, setting up a Thai holding company is a specialist area which requires legal input. The foreign party can be appointed to run the company and can through shareholders’ loans have additional financial control. This needs to be thoroughly understood and the comparative risks evaluated.
Phuket villas located inland may start from below THB 10 million but luxury four-bedroom oceanfront villas will exceed THB 200 million, while exceptional villas can achieve over THB 300 million.
Condominiums offer freehold title. There are numerous condo projects in Phuket, principally located on the west coast and adjacent to the beach.
A more limited number of condominium projects, generally those of a superior quality, have full sea views.
Typical condos have two to three bedrooms, generous balconies and range from THB 5 million for those located inland or near to beaches to THB 15-55 million for luxury condominium projects with sea views.
Foreigners can own up to 49% of the total saleable area of a condominium project on a freehold basis.
Freehold Condominium Title: Under the 1991 Condominium Act, foreigners are allowed to purchase freehold condominiums up to 49% of the total floor area of the building. The condominium must be registered with the Land Office and, as the purchaser you need to be sure you are buying within the foreigner quota.
In order to be able to realize any subsequent sale proceeds you must also remit 100% of the purchase price in foreign currency from abroad, and obtain the correct bank certificates. The owner of a condominium unit will be named on the title deed of the unit, which will also show the common elements of the condominium located outside the unit, e.g. parking space, private garden area.
This is a straight forward process executed through a simple sales and purchase agreement which gives buyers a clear registered and measured title and cannot be bettered.
Protected Leasehold Apartment: This type of ownership also offers the same term(s) as normal leasehold terms. However, with the added security, you control the land holding company by owning some shares in the said landholding company. Very simply put, you will lease the unit back to yourself as you control the land holding company together with other unit owners, and the lease can be renewed every thirty (30) years for an unlimited period; all leases granted to shareholders will be renewed on their expiry date, effectively creating what we believe to be a perpetual lease. Shareholding rights offer buyers a voting right in the landholding company to ensure that the rights of leasehold renewals are honoured and renewed.
Top quality condos range in price from THB 100,000 to THB 180,000 per square metre. Most condominiums will have facilities such as swimming pools, clubhouses or sports facilities.
CBRE, a leading Phuket's real estate agent, has further information on the Phuket Villa Market.