Discover Why Russians Are Buying Property in Phuket

The Thai beach resort is considered a foreign investment hotspot.

On October 30, an Ikar Airlines jet carrying 449 passengers arrived at Phuket International Airport, marking the return of direct service from Moscow after a hiatus of nearly three years. This reopening of the route has led to an influx of Russian winter tourists, with 233,000 Russian visitors arriving on the island by the end of January, the largest foreign group to visit Phuket.

A local newspaper called the Russians’ return a “stunning comeback.” This surge boosted Thailand’s tourism sector to surpass the targeted 10-million-visitor mark post-COVID-19 in 2022.

Besides tourism profits, the presence of the “snowbirds” had far-reaching impacts on the local economy. Last year, Russians surpassed Chinese buyers as the primary purchasers of condos on the island. Russians own 40% of Phuket’s condominiums, according to Thailand’s Real Estate Information Center. One sales representative said the property market was “crazy” due to war-related investor concerns. “November, December, and January was a really busy season; they bought more than in the previous decade,” the agent added.

Concerned about the long-term outlook for their economy, Russians are increasing their purchases of safe haven properties in Southeast Asia. Initially, countries such as Bulgaria and Germany were popular options for purchasing real estate overseas. But, after the invasion, Europe is no longer the preferred option. In 2022, the Middle East, Turkey, and Southeast Asia were the most popular regions for property acquisitions.

In 2022, according to the Moscow-based firm Intermark Real Estate, Southeast Asia contributed to 27% of international deals, up from 12% in 2021. In contrast to Istanbul and Dubai, where citizenship or moving played a big role, Russians only bought property in Phuket and Bali as an investment. The region’s distance from and apathy toward the conflict in Ukraine was another point in its favor. “Asia appears to be neutral, safe, and secure for Russians,” said a Thai property market specialist in the real estate industry.

At the beginning of 2022, it looked unlikely that Russian visitors would invest in real estate by the end of the year. For vacationers, the invasion of Ukraine in February 2022 caused a terrible situation. Credit card firms such as Visa and Mastercard went out of business in Russia, while airlines canceled flights. One headline portraying the dilemma of the 6,500 Russian visitors detained in Thailand read, “Cashless and flightless.”

Thai travel agents turned their attention to India and Malaysia and expected the Chinese market, which was the mainstay of Thai tourism before COVID-19. Few visitors who actually visited used roundabout routes through third countries. For Russians looking to fly to Phuket, the airport in the border city of Oral, Kazakhstan has become a backdoor.

As Russian airlines launched direct flights to Thailand, the situation altered rapidly. Aeroflot added more flights from Krasnoyarsk, Novosibirsk, and other cities in Siberia to meet the increased demand. A beachgoer in Pattaya presented herself on a YouTube travel channel as follows: “I’m from Siberia. It is now quite cold, about 30 degrees below zero. The owner of a local tavern observed, “Some are tourists eager for a two-week sunny break, while others, along with some draft dodgers, are in there for the long haul.” Locals in Pattaya have seen more “snowbird” activity for acquiring driver’s licenses, bank accounts, and visa extensions this season. The head of the Phuket Immigration Office said that 7,600 Russians had asked to stay longer.

The recovery of the Russian market has compelled Thai authorities to adjust their prior estimations. Based on existing trends, Thailand’s Tourism Authority has recently set an ambitious goal of welcoming 1 million Russian tourists by 2023. Yet, the conflict continues to create logistical difficulties for passengers. Russian airspace is now accessible to a limited number of international airlines. The number of flights departing Moscow and other places is still limited.

SOURCE: The Diplomat

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