Developers, funds spark phuket boom

Developers and foreign property funds from Pakistan, Bangladesh, India, the Middle East and Europe are mulling investment in residential and hospitality projects on Phuket, collectively worth up to Bt100 billion, before the end of 2010.

Huge returns on investment are behind the rush. One survey by property consultancy Colliers International Thailand has found that property investment in Phuket generates returns of up to 100 per cent within two years.

Risinee Sarikaputra, head of research, said 17 new residential projects worth about Bt20 billion would be launched this year. As well, property funds from Pakistan and Bangladesh and India's Taj Exotic Group are planning both residential and hospitality projects in Phuket next year and in 2010 worth nearly Bt50 billion.

UK investor Gulu Lalvani, founder and chairman of Binatone, a global leader in communications technology, has also spent nearly Bt10 billion on residential projects and a luxury retail development in Phuket.

Risinee said Taj Exotic was the largest investor. It is one of India's leading property firms, with residential and hospitality projects in many countries. It is expanding its business in Thailand through a joint venture with Thai partners.

Taj will buy 30 rai of land on Koh Lone, off the southeastern coast of Phuket, and spend Bt7.6 billion to build just 49 luxury residences. Each of them will sell for about Bt314 million. Taj also plans to spend nearly Bt5 billion to build a luxury hotel on Koh Lone by the end of next year.

Risinee said the property funds from Pakistan and Bangladesh were strongly interested in investing in Phuket and nearby provinces like Phang Nga and Krabi. They have an investment budget of nearly Bt10 billion to spend over the next two years.

Up to 90 per cent of residential buyers in Phuket are foreigners, especially from Europe, the Middle East, Scandinavia and Asia. Most of them buy under conditions of a 30-year lease, renewable for a further 30 years.

Nearly 95 per cent of new investors in Phuket are also foreigners who set up joint ventures with Thai partners, in order to comply with Thai law covering land ownership.

Risinee said although the number of new residential units launched in Phuket this year was below last year's figure, their value had shown strong growth, because they were targeting the luxury rather than the middle market.

Colliers International Thailand believes 969 residential units will be sold in Phuket this year, more than last year's 828 units but still below the 1,473 sold in 2006.