AREA President Sopon Pornchokchai points to a confluence of factors for the empty housing: Thailand’s aging society with a declining birthrate, coupled with a continuous surge in new residential units. This creates a glut of empty properties, including houses, condominiums and townhouses. In Phuket, a popular destination for retirees and foreign investors, this trend might be even more concerning.
Phuket’s pristine beaches and idyllic lifestyle have fueled a real estate boom in recent years. Luxurious resorts, sleek condominiums and sprawling villas have sprung up across the island, catering to a specific market segment: tourists, retirees, and foreign investors seeking a slice of paradise. However, this very success story might be harboring a hidden threat.
An oversupply of luxury villas and condominiums catering to this specific market segment could lead to a situation where many lie empty, becoming concrete monuments to excessive development. This phenomenon has several negative consequences. First, it disrupts the natural beauty of the island. Pristine landscapes that once captivated visitors are now dotted with half-built developments or rows of unoccupied villas. This not only impacts the aesthetics of the island but also discourages the very tourists it aims to attract.
Second, an oversupply of luxury properties stagnates the property market. With a significant portion of the market focused on high-end properties, it creates a bottleneck, hindering growth in other segments. Local residents and those seeking more affordable options are squeezed out, potentially hindering Phuket’s ability to attract a wider range of visitors and residents.
THE IMPACT ON AFFORDABLE HOUSING
The focus on luxury developments also casts a shadow over the availability of affordable housing options for Phuket’s residents. With land and resources being channeled toward high-end projects, the construction of apartments, townhouses and affordable single-family homes suffers. This creates a housing shortage for the very people who keep the island functioning – from restaurant staff and shopkeepers to tour guides and construction workers.
A lack of affordable housing options not only impacts the livelihoods of these residents but also hinders the overall growth of the tourism industry. Without a readily available workforce, businesses struggle to operate efficiently, potentially impacting the quality of service offered to tourists.
Phuket is not the first Thai island to grapple with the consequences of overdevelopment. The nearby island of Koh Lanta offers a cautionary tale. Once a backpacker’s paradise, Koh Lanta saw a surge in luxury resorts and high-end condominiums catering to affluent tourists. However, this rapid development came at a cost. The island lost its unique charm, and the lack of affordable housing options pushed out many local residents. Today, Koh Lanta struggles to attract the budget-conscious travelers who once formed the backbone of its tourism industry.
POTENTIAL SOLUTIONS: RE-EVALUATION, TAXATION AND UTILISATION
AREA President Sopon’s proposals offer a springboard for addressing the issue of vacant properties in Phuket. Re-evaluating property values based on market realities could make them more accessible to buyers, particularly those seeking more affordable options.
Additionally, a tax on unoccupied properties, as suggested by Mr Sopon, could incentivise owners to either rent or sell their vacant units, injecting much-needed liquidity into the market and making these properties available to a wider range of potential residents.
However, solutions go beyond mere taxation. Here are some additional strategies Phuket could explore:
- Conversion Projects: Many vacant properties, particularly luxury villas, could be converted into smaller units or boutique hotels, catering to a broader range of visitors and residents. This would not only increase occupancy rates but also revitalise underutilised properties. A move towards office space could see companies relocating from across the region to be based in Phuket.
- Focus on Local Needs: Development projects should prioritise the needs of the local population. Encouraging the construction of affordable housing options for residents would not only address a critical need but also create a more stable workforce for the tourism industry.
- Infrastructure Investment: Local government should be halting further development, especially in the Cherng Talay area until significant resources have been channeled towards improving Phuket’s infrastructure. This includes upgrading transportation networks, investing in waste management systems and developing educational facilities. A robust infrastructure would benefit residents and enhance the island’s overall appeal for tourists. Other countries have made it mandatory for property developers to give back to the community in terms of investment in infrastructure and Phuket could be wise to follow this line.
- Regulation and Transparency: Effective regulations are essential to curb excessive development and ensure responsible use of land resources. Transparent zoning laws and clear guidelines for construction projects can help prevent the sprawl of luxury developments and encourage a more balanced approach.
A CALL FOR SUSTAINABLE DEVELOPMENT
The situation in Phuket underscores the need for a more sustainable approach to development. Finding ways to utilise these empty properties, perhaps through creative conversions or investment in local infrastructure, could breathe new life into these assets and benefit the entire Phuket community.
Phuket’s allure remains undeniable. Pristine beaches, clear waters, warhaven, and a vibrant culture continue to draw visitors from across the globe. However, addressing the issue of vacant properties is crucial to ensure the island’s long-term prosperity. By striking a balance between development and responsible planning, Phuket can ensure its status as a paradise not just for tourists, but also for its residents and the property market.
This multi-pronged approach, encompassing market adjustments, creative property utilisation, investment in local needs and sustainable tourism practices, offers a roadmap for Phuket to navigate the challenges of a changing property market.
Simon Causton is a long-time Phuket resident, founder of Citadel Phuket and author of ‘The Phuket Periodical’ newsletter. X (Twitter): @SimonCauston