In recent years a new trend has emerged with more visitors choosing to rent private villas instead of staying in hotels.
A big improvement in rental demand for Phuket villas and condominiums was seen during the high season last year. These tenants are coming from a greater variety of countries, including Hong Kong, Singapore, Russia, Korea and India, as well as Europe, and are looking into properties on the island from north to south.
The inquiries for the '”Millionaires’ Mile” in Kamala are mostly from Europeans and wealthy Russians. In fact Russians are spread across all areas but they favour the busy Patong and Karon areas the most, for the areas’ restaurants, nightlife and shopping malls.
Koreans prefer to stay in Bangtao, next to the Laguna area. More retail community developments are emerging in many parts of island, not only at Patong.
In the Cherng Talay-Bangtao area, the Boat Avenue project is a mixed-use development that integrates commercial and residential functions, creating a new walking and shopping street for the Laguna area.
Visitors looking for rental units are staying for three days to as long as one or two months, depending on nationality. Most Europeans prefer to stay for at least one month, whereas Asians look for places to stay on a weekly basis.
Significant increase in inquiries last year and the growth of the rental market reflect the expansion of tourist arrivals to Phuket – a record number of more than 4.2 million international passengers passed through the city’s airport last year.
The Russian invasion in particular continues to pick up momentum every year, drawing more visitors seeking a warm-weather holiday as well as business investor.
The average length of stay of Russian tourists is two weeks. Koreans make up another growing market but they tend to stay for just four to seven days.
Rental rates vary widely depending on unit type, size and property location. A three-bedroom villa with usable area of 242 square metres in the Laguna area costs about B30,900-B38,600 per night during the peak season.
In Kamala, B62,000 per night will get you a four-bedroom villa with usable area of 950 sq m on a one rai plot of land. Projects located in the Karon and Patong areas are cheaper, with one-bedroom units costing as little as B2,800 a night and two bedrooms for B8,300.
Most of the upmarket villa buyers in Phuket use their residences periodically throughout the year and expect some form of rental management during the time they are not on the island. Some are pure investors and rarely come to Phuket.
The two-bedroom segment is the most promising as it meets the needs of the new groups of visitors now coming to Phuket and seeking affordable rentals.
This year, many budget condominiums are also being launched across the island, and the developers are offering buyers rental returns guaranteed at six years for three years in some projects in Patong and nine years for a project located in Karon.
Selling prices at these developments range from three to five million baht for a studio unit. Units of this type are expected to be able to command rental rates of B3,800 to B4,800 a night in the high season from November to April, and B1,500 a night in the low season.
Nattha Kahapana is a director of Knight Frank Phuket.