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Phuket a hot market for Indian property buyers

Last updated on: January 9, 2013 12:34 IST

Phuket a hot market for Indian property buyers

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Aabhas Sharma in New Delhi

When Gulu Lalvani thought of developing the Royal Phuket Marina, he was confident that a lot of overseas investors from Europe would be among his top buyers.

To Lalvani's pleasant surprise, Indians have emerged among the top 10 buyers in Phuket, Thailand. Lalvani, founder chairman of Hong Kong-based telecom company Binatone Group, moved to Phuket in 2004.

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Image: Indians are among the top 10 property buyers in Phuket, Thailand.
Photographs: Fatih Saribas/Reuters

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The big pull for him, as for the others, he says, are the "S" factors - "sun, sand, sea and sailing".

In 2006 Lalvani started work on the Royal Phuket Marina, a yachting and residential waterfront development which houses luxury villas, residential apartments and penthouses.

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Image: A food vendor on Patong Beach in Phuket.
Photographs: Jason Reed/Reuters

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Indians, he says, are looking at Phuket as a second home. They're buying everything - from studio apartments to villas and chalets. These are people between 30 and 50 years of age who are making their second or third property investment.

Today, almost 14 per cent of property buyers in Phuket are Indians, but it's Russians and Chinese who are leading with 30 per cent of the buyers coming from Russia alone.

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Image: Chinese 'soldiers of god' participate in a ritual procession in Phuket.
Photographs: Bazuki Muhammad/Reuters

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A 2012 research by real estate consultancy Knight Frank shows that Phuket's tourism market consists of two widely contrasting groups - lower middle class and the ultra-wealthy.

"People who come to Phuket fall in love with the place and invest in it as a second home," says Nattha Kahapana, director, Knight Frank, Thailand.

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Image: A boy plays soccer at Karon Beach on Phuket island.
Photographs: Nicky Loh/Reuters

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A three-bedroom, 1,500 sqft apartment in Phuket's beach areas of Kalim and Patong would cost around Rs 55 lakh. Compare this to the apartment prices in Gurgaon, Mumbai or even Greater Noida and the difference is vast.

A three-bedroom apartment in Goregaon in Mumbai would cost over Rs 1.2 crore (Rs 12 million).

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Image: A fisherman casts his net at Patong Beach in Phuket.
Photographs: Damir Sagolj/Reuters

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Similarly, in Gurgaon, a three-bedroom apartment is not likely to be available for anything less than Rs 1 crore (Rs 10 million). In the last two years, the condominium, or apartment market in Phuket has grown by 50 per cent.

About 2,200 new units were announced in 2012. Bankers, professionals and lawyers are the prime buyers amongst Indians in this segment.

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Image: A sea food restaurant at Patong Beach in Phuket.
Photographs: Damir Sagolj/Reuters
Tags: , Phuket , Gurgaon

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Studio apartments of less than 800 sqft are, meanwhile, available for as low as Rs 35 lakh in Phuket. For the urban Indians, it's the villas which are a big draw.

Lalvani says of the several high net-worth individuals who have invested in Phuket's villas are the Ruia brothers who founded the Essar group.

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Image: French children play volleyball on Patong Beach in Phuket.
Photographs: Chaiwat Subprasom/Reuters
Tags: Phuket , Lalvani , Essar , Ruia

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The oceanfront and sea-view villas command a premium price, costing over 10 million Thai Bahts, or about Rs 2 crore (Rs 20 million). These are five-bedroom, or bigger, villas located in areas like Kamala Beach and Layana Beach.

An area called Millionaire's Mile - home to the biggest luxury villas in the island - is the most coveted. Villas here cost more than Rs 8-10 crore (Rs 80-100 million).

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Image: A view of Patong Beach in Phuket.
Photographs: Chaiwat Subprasom/Reuters

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Oceanfront villas fetch the highest prices, with some costing over Rs 100 crore, says Kahapana. The sea-view villas are priced between 10 million to 145 million baht - that's about Rs 2 crore to Rs 26 crore (Rs 20 million to Rs 260 million).

In 2010, a villa spread over 1,213 square metres sold for $7 million.

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Image: Tourists enjoy the nightlife in Phuket.
Photographs: Sukree Sukplang/Reuters
Tags: , Kahapana

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It had five bedrooms with en-suite bathrooms, a huge cinema and entertainment room, enormous European and Thai kitchens, as well as an infinity pool with an outdoor bar.

"If someone is looking for really high-end villas, then Phuket is the place," says Lalvani.

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Image: Thais fish from a boulder at sunset near Patong Beach in Phuket.
Photographs: Adrees Latif/Reuters
Tags: Lalvani

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Anuj Puri, country head at real estate consultancy Jones Lang Lasalle, says simple property rules make transactions easier in Phuket.

"There is also considerable demand for mid-income homes from Phuket's local population, which makes a right-priced property there a fairly interesting long-term proposition."

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Image: A man bundles up giant umbrellas along Patong Beach in Phuket.
Photographs: Jason Reed/Reuters

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Phuket is also engaged in a massive infrastructure upgrade, which always spells good news for any property market, says Puri.

Phuket, already a popular wedding destination, caught the attention of Indian buyers after 2006. Till the 2008 global economic crisis, price rise was almost 50 per cent year on year.

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Image: Foreign tourists in a bar in Patong Beach, Phuket.
Photographs: Sukree Sukplang/Reuters
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Till 2010, there was a lull as was the case with all real estate markets, says Lalvani. The residential apartments at Lalvani's Royal Phuket Marina sold out within months of the launch.

The most sought-after property here is Aquaminium, which has private drive-in boat garages and allows access to private yacht docks.

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Image: Tourists dance to electronic music during an open-air party at Patong Beach in Phuket.
Photographs: Damir Sagolj/Reuters

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Lalvani's township has houses in the price range of 10 million to 165 million Thai Baht - about Rs 2 crore to Rs 30 crore (Rs 20 million to Rs 200 million).

Kahapana feels that land plots with sea views are now becoming scarce in Phuket which will lead to an acute price rise in the future.

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Image: A tourist drinks beer at Patong Beach in Phuket.
Photographs: Bazuki Muhammad/Reuters

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Areas like Mai Khao in north Phuket will see greater development, he says, as there is still more land available there as compared to other parts of the island.

In the last few years, Phuket's property market has seen an appreciation of 15 per cent per year and has almost doubled in the last six years.

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Image: Tourists enjoy the sea on Karon Beach in Phuket.
Photographs: Sukree Sukplang/Reuters

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Compared to other holiday islands like the Caribbean or Mediterranean, similar properties in Phuket are relatively cheaper.

Phuket being only a four-hour flight from India is an added advantage.

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Image: Sun sets on Patong Beach in Phuket.
Photographs: Chaiwat Subprasom/Reuters

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"The capital appreciation of a property in Phuket is likely to be higher as one gets the benefit of the currency growth as well as the property growth," says Lalvani.

Puri, however, feels that Phuket is not in the top five investment destinations. But the fact that over half of the tourists that visit Phuket each year are return travellers is significant, he adds.

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Image: Peter Krantz from Sweden relaxes with his family on Kamala Beach in Phuket.
Photographs: Chaiwat Subprasom/Reuters
Tags: Phuket , Lalvani

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For those keen on investing in the island, here's an important fact: foreigners aren't allowed to buy land in Phuket but can own homes.

Land acquisition is possible with a 30-year lease which can be renewed.


Image: Beachgoers relax at Patong Beach in Phuket.
Photographs: Bazuki Muhammad/Reuters
Tags: Phuket

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