Phuket Is World’s Largest Leisure-Branded Residential Market
New report from C9 Hotelworks reflects a blurring of the lines between global hotel brands and real estate as destination development hits new height. Phuket has seen an unprecedented onslaught of overseas buyers transform the island into the largest leisure-branded residential real estate market in the world. The current supply of branded properties has now eclipsed a staggering USD 2.3 billion and is expected to grow further according to new data from hospitality consulting group C9 Hotelworks. One of the most compelling storylines of Phuket’s economic shift from a tourism-dependent economy into a property giant is the blurring of lines between hospitality and real estate. A key example is Phuket’s largest developer, Laguna Phuket, which has undergone a massive change in focus from hotels to branded real estate. Earlier this year Singaporean tourism icon KP Ho’s Banyan Group announced that an adjacent land bank to their Laguna Phuket integrated resort would be developed into a massive USD2 billion lifestyle-led branded real estate offering. Ho’s longer-term strategy has changed from what was once a hotel-led strategy with the Banyan Tree brand at the forefront to a multi-brand strategy that has witnessed a renaming of the chain and the creation of a property-led growth trajectory. Some of the brands to enter the market recently include The Standard in Bangtao, an area that has been the epicentre of growth in the last year, including announcements by leading Bangkok developer Sansiri and Dubai-funded green-space real estate play Gardens of Eden spread over 73 rai of ocean-facing land. Turning the page, Phuket’s tourism market in 2023 was all about higher room rates which for most hotel owners grew bottom lines. Market-wide hotel performance data from STR that compared last year to the high-water years of 2018 and 2019 reflected higher average room rates by 20-30 %. Despite lower occupancy with muted Chinese demand by 2-10%, hotels experienced a net growth in profits. In terms of hotel trading stability, Thai banks that went to the sidelines during the Covid-19 crisis re-emerged and are starting to lend again to greenfield projects. With Phuket real estate showing strong transaction levels and rentals soaring, developers have quickly pivoted to mixing hospitality and property with the expectation of driving premium sale prices through the use of brands. Another factor has been necessity, where land prices across the island are skyrocketing. The only way to underwrite hotel projects is by adding a real estate component. Further highlighted in C9 Hotelworks’ research is a leading demand driver - a rising number of international schools that currently number thirteen and is expected to double over the next few years.
Tags : C9 Hotelworks Covid-19 Phuket’s tourism market Laguna Phuket