Phuket has a robust house market, mainly on the strength of villas that are sold as second homes. However there are also several residential house projects similar to gated communities which appeal to the local market. Away from the popular tourist areas there are also plenty of lovely houses, as well as land for sale. Buying villas in Phuket is also a solid sector of the property market but limited to a privileged few.
Since Thai law forbids foreigners owning land, this puts a dampener on buying houses in Phuket. Of course, there are ways around the law, which has supported the robust development of villas, but since late 2006 the officials have pledged to more strictly monitor the common practice of foreigners establishing companies to own the land or houses by proxy. If you have a Thai spouse or a legitimate company with capital-injecting Thais (51 per cent minimum share), then you can assume del facto ownership of the land via this vehicle. Many others are now opting for a renewable 30 year lease (up to 90 years maximum) on the land, while retaining ownership of the building. In all cases, due diligence and full trustworthiness of your partners is essential, as Thai law is notoriously unreliable in protecting a foreigners interests if disputes over ownership arise.
With this quasi-lawful means, buying houses in Phuket can be rewarding, and since much of the foreigner market is shut out, the diminished demand suits the buyer. However, property in Phuket is typically much more expensive than most other popular ex-pat centres in Thailand. Since the topography of the island tends to carve it up into parts, space can sometimes be limited, and much of the land is held by local speculators. With a bullish growth in recent decades, expect land in Phuket to expensive.
There are however, several house projects around Phuket, ranging in price from roughly 4 million baht for a 200m2 house with modest garden, to the high end market at 45-50 million baht in Patong and Kata. There has been, in recent years, an increasingly huge demand for the middle housing market catering to foreigners, including areas around Chalong, Surin and the southern coastal areas (Karon and Kata). As a newcomer, the safest option is buying houses in the prestigious projects (gated communities) but these Phuket houses cost roughly 30 to 50 per cent more than a stand alone house in a regular locals suburb. Of course, with the latter you risk all the usual habits of an Asian neighbourhood, such as noisy neighbours, uncontrolled dogs and so on.
However, those with the means usually by placing the land ownership in the name of a Thai spouse find that considerable savings can be made from buying land in Phuket and developing their own houses. In Phuket some do this as a development investment, since materials and labour are cheap, and the choice of styles excellent. But although building a house can be rewarding, the process to completion can often be a nightmare. Skilled labourers are readily found and cheap but, delays, shortcuts, inferior materials and lack of detail to jobs can often be the problem. Having some Thai know-how to motivate the team and inspect quality, as well as bargain, can certainly help.