With recent months seeing relative instability and poor returns from overseas property investment, the past twelve months have seen property investors going through a period of reflection, as they look to see which international markets will offer them the long term returns of investment they are looking for. Issues such as increasingly fragile economies and oversupply in traditional markets, have seen investors starting to look at markets such as Phuket with a view to them offering higher yields over the next few years.
Larger than Singapore, and located approximately 860 kilometers south of Bangkok, Phuket is one of South East Asia’s premier tourist destinations. Friendly locals, good infrastructure, exceptional cuisine and a tropical climate have resulted in large numbers of international property investors moving into Phuket. As such, the island is rapidly becoming a regional hub of international property investment, offering relative stability in uncertain times.
Recently Phuket has seen some exciting, and genuinely innovative property development projects being launched on the island. Projects such as the Royal Marina and the Laguna Village are well conceived developments, which prove attractive to overseas investors. These projects offer a genuine lifestyle choice for people, offering waterside living in a beautiful and friendly environment.
As well as the favorable local conditions for investors, the second factor affecting this growth in demand for property in Phuket is the increasing acceptance of overseas property investment in Thailand by the local authorities. At present, Thai law states that a foreigner may not own the freehold to the land, however they are able to purchase a freehold title for the building which sits on the land. In effect, the resulting purchase agreement will see the purchaser buying the freehold title for the property, and a separate 30 year lease on the land itself. In this instance, it is common for the contract to provide an option to extend the lease a further two times, each for thirty years, effectively giving a 90 year lease.
Property legislation in Thailand is slightly different for investors wishing to purchase a condominium, where a developer is likely to offer the purchaser both a leasehold and freehold option. Under Thailand property law, foreign ownership of a condominium must be under the allow limit of 49%, and in this instance ownership on a freehold basis can be offered. However if the block is currently over the 49% foreign ownership quota, then the property will be offered on a leasehold basis with the option to extend twice for periods of 30 years.
Whilst this method of property legislation may seem time consuming and complex, it is commonly practiced throughout Thailand, and it is believed that the authorities are currently looking at streamlining this process. As with all property purchases overseas, the requirement for a solid understanding of local legislation makes the choice of a good, multi-lingual solicitor a key factor to a smooth transaction.
These more favorable conditions, coupled with the stable political and economic climate currently being experienced in Thailand, investors are seeing long term returns from a market which currently represents good value in the property market.
The market for properties for sale in Phuket is gaining popularity, but still has a long way to go before reaching maturity. With a range of property on offer in the region, Phuket has something to cater for every budget and taste.