Phuket has been named the champion of the world's largest market for Branded Residences, valued at over 2.3 billion USD. A recent report from C9 Hotelworks reveals intriguing trends in the integration of global hotel brands with real estate, with a record increase in development projects in the area.

Garrya Beachfront Hotel Residences by Banyan Group

A remarkable phenomenon is unfolding on the island of Phuket, as foreign investors flock to secure properties, making Phuket the largest market for Branded Residences in the world. Currently, the total value of these projects has exceeded 2.3 billion USD and is expected to continue growing. Data from C9 Hotelworks, a leading hotel consultancy group, indicates that this phenomenon is driven by the expansion of tourism coupled with confidence in Phuket's potential, resulting in numerous luxury Branded Residences developments on the island.

The economic transition of Phuket from a tourism-dependent city to a real estate powerhouse is a story worth watching. This phenomenon is reflected in the thin line between the hotel and real estate businesses.

A clear example is Laguna Phuket, the largest real estate developer in Phuket, which has shifted its strategy from focusing on hotel operations to developing branded properties. Earlier this year, Banyan Tree Group invested over 2 billion USD to develop a luxury branded real estate project on land adjacent to Laguna Phuket. This project offers a modern lifestyle, reflecting the long-term strategy of KP Ho, a renowned Singaporean tourism leader, who has transitioned from managing hotels under the Banyan Tree brand to a multi-brand strategy, leading to a rebranding of the hotel group and a focus on growth through real estate development.

Bill Barnett, Executive Director of C9 Hotelworks

Bill Barnett, Executive Director of C9 Hotelworks, who has been tracking the shift in investor interest from hotel businesses to mixed-use projects, explains, "After the pandemic, we have seen many Thai real estate companies return to invest in Phuket. The main driving force comes from the recovery of the resort market and the revitalization of tourism. Additionally, another incentive for real estate developers is the increasing demand from high-end property buyers, both Thai and foreign, who wish to relocate to Phuket or believe that investing in branded real estate is a safe investment."

Recently, notable brands entering the Phuket real estate market include The Standard in the Bang Tao beach area, which has become a growth hub over the past year. Sansiri, a leading real estate developer from Bangkok, has also announced investment plans in Phuket, including the launch of Gardens of Eden, a green real estate project on over 73 rai of beachfront land funded by Dubai.

In 2023, the Phuket tourism market has seen an increase in room rates, resulting in higher net profits for most hotel owners. Data from STR comparing hotel performance across the market to 2018 and 2019, the peak years for tourism, shows that average room rates have increased by 20-30%.

The stability of hotel transactions in Phuket has revived! After Thai banks slowed down lending during the COVID-19 crisis, they have resumed lending for new hotel projects (greenfield projects) again. The main reason is that the Phuket real estate market is bustling with transactions and rental prices are soaring, prompting real estate developers to integrate hotel and real estate businesses, hoping that using renowned brands will enhance sales value.

One factor influencing hotel project development is the rising land prices across the island, forcing developers to adjust their strategies by integrating hotel businesses with real estate to increase sales value. For example, by managing renowned hotel brands alongside selling residential accommodations.

Moreover, a significant factor driving demand for real estate in Phuket post-COVID-19 is the changing global labor market. Bill Barnett believes that the increasing trend of global migration due to political events, combined with the work-from-anywhere trend and the aging society that retires earlier or chooses to live in vacation spots, has further increased the demand for housing in Phuket. Additionally, the Thai government's supportive policies for tourism and foreign investment, such as visa exemptions, long-term visa programs, and the Thailand Elite program, have further stimulated Phuket's appeal as an attractive destination for investors and those seeking housing.

Research from C9 Hotelworks also highlights another important factor: the increasing number of international schools, which currently stands at 13 and is expected to double in the coming years.

Bill sees that the transformation of Phuket is not solely due to the island itself but is influenced by global volatility and the increasing allure of Phuket as an international community. The popularity of branded accommodation projects clearly reflects the changing demands of buyers. It is anticipated that in the future, not only will there be more hotel brands, but also brands outside the hotel industry will integrate, such as fashion brands, automotive brands, and various restaurant brands. With the surge in branded resort accommodation projects, Phuket has become a billion-dollar market comparable to leading tourist cities like Miami and Dubai.

Click to read and download the report Phuket Branded Residences Market Review