“Phuket is a paradise and we welcome everyone who wants it for their second home,” declared Sophon Suwannarat, Phuket’s new governor.

Dressed in fine Thai silk, he was guest of honor at the champagne-fueled launch party for Gardens of Eden in a luxurious villa atop the five-star Anantara Phuket on Layan Beach.

Launched in December, the 11 billion baht ($315 million) Gardens of Eden is the biggest real estate development to date on Phuket and one of the best examples of a sea change in the Phuket property market as sales of private residences and condominiums boom.

“The major change has been that these markets, led by Russia, China, India and Europe, are increasingly not buying for investment, but for relocation purposes as families search for a better life,” according to C9 Hotelworks in a December analysis titled “The Phuket Report.”

It reported that Russians were by far the biggest purchasers of houses in the first half of 2023, spending 875 million baht on 240 units, far outpacing French, American, Chinese and British buyers.

The 73-rai (11.7-hectare) Gardens of Eden on Bang Tao Beach has been described as a “luxury wellness residential and hospitality community” with 70% of the grounds devoted permanently to woods, gardens, water features, playgrounds and exercise areas.

To be built in two phases, the complex will have over 560 residential units. It is being developed by Thailand’s Amal Group with the backing of DPD Invest, a Dubai-based private equity fund serving principally Russian and Middle Eastern investors.

“We are inspired to make this region a better place to live for the global community and we feel strongly about the sustainability agenda,” said Yana Chuvalova, the marketing and sales director from Russia’s Siberia.

Chuvalova is married to Gardens of Eden Chief Executive Aleksandr Chuvalov, a veteran developer in Russia’s Black Sea city of Sochi. The couple plans to raise their young family in the complex.

Chuvalov estimates that 27,000 Russians have settled in Phuket in the past 12 to 18 months. “They came with income already and found places to live,” he told Nikkei Asia. “The Russian economy is closed.”

According to Ravi Chandran, who oversees the project’s corporate affairs, entry-level pricing for condominiums in Phuket is between 100,000 and 140,000 baht per square meter. But Gardens of Eden is charging 220,000 to 300,000 baht.

“In terms of value, setting, location and all the environmental things it is going to give, it’s a sweet spot. I do not see an issue with price,” he said.

“The rapid growth of the island post-pandemic is astounding,” The Phuket Report said, “indicating record-breaking numbers by the end of the year.” Year- to-date domestic and international airport arrivals had passed 6.24 million by November, an 88% increase on 2022. Within that, international arrivals were up nearly 140%.

The area’s soaring real estate sector was valued at 27.5 billion baht in sales and inventory at the end of June. Among the enticements are nine hospitals, with a private Bumrungrad International Hospital on the way; 13 international schools, with at least six more planned; eight retail malls; four marinas; and six golf courses.

According to CBRE, an international property consultancy, Phuket’s central west coast led condominium launches with Bang Tao Beach and Layan Beach at the fore. It recently reported that Phuket condominiums “demonstrated exceptional performance in the first half of 2023, achieving the highest sales volume in the past decade.”

“Further solidifying this trend, as of Q3 2023, CBRE’s transaction value in Phuket soared by 113% compared to the entire year of 2022,” it said.

Phuket, the so-called Pearl of the Orient, is in many ways the jewel in Thailand’s tourism crown with 26 sandy beaches, clear sea, spectacular natural backdrops and the cleanest air in the region. The island is booming.

Thailand’s overall visitor numbers meanwhile recovered last year to over 28 million, according to the Tourism Authority of Thailand. The 2019, pre COVID-19 peak was just shy of 40 million. With about a fifth of its economy tied to tourism, the country was severely impacted by the pandemic, but Phuket suffered much more with fully half of its gross provincial product dependent on hospitality.

Locals fared the worst. By some accounts, more than 100,000 people quit the island. As evidence of the ongoing labor scarcity, Phuket recorded one of the lowest unemployment rates in the country — about 0.45% by the first quarter of 2023 in a population of some 420,000, according to official figures.

The danger of overdependence on tourism has been confirmed. As Governor Sophon said, the emphasis has shifted to encouraging wealthy outsiders to buy second homes, relocate completely or retire permanently to the island.

One resident Frenchman, whose catering company was bankrupted by COVID, moved into real estate and has never looked back. He said some residential property values have been rising at 17.5% per annum and that Phuket supports a genuine secondary market that is much harder to find elsewhere in Thailand, particularly in illiquid, overbuilt Bangkok.

Bill Barnett, managing director of C9 Hotelworks, told Nikkei Asia that there is nothing new about foreigners wanting to make Phuket home. It is a decision he himself made over 20 years ago when he relocated from Hong Kong, and it was all about lifestyle. It is simply the numbers that are now exploding.

“People come to Phuket because of geography,” Barnett said, noting that 53 airlines touched down on the island’s single runway in November.

“That’s incredible. There are places around the world that would die for that,” he said. “You can fly directly to 40 cities, and you are within seven hours of a third of the world’s population. You can’t do that in Bali.”

International schools are essential to making the island viable for young families. Following education liberalization in the early 1990s, Thailand’s first major franchise was the U.K.’s Dulwich International College in Phuket, today the British International School.

Property ads in a Phuket real estate agency with phone numbers for Russian speakers. (Photo by Ken Kobayashi)

United World College Thailand arrived later, offering “a holistic, transformative, and rigorous IB continuum education from pre-kindergarten to grade 12, including both day and boarding students,” according to its website.

“UWC was a great indicator,” said Barnett. “It attracted ex-Microsoft people from Singapore who came to live here for their kids, and they wanted to start businesses. They are entrepreneurs. I think you will see more startups.”

But there are plenty of headaches. Thanusek Phungdet, senior chairman of the Phuket Chamber of Commerce, told Nikkei that by far the biggest problem is traffic. It chokes the towns and is hard to reduce along steep and winding coastal roads.

There are also sewage management problems and the need to pipe in water from the mainland, along with ongoing or planned projects for airport expansion, EV public transport, a light rail scheme and a tollway to link the old Sarasin Bridge with the existing airport, raucous Patong Beach and Phuket town. The list is daunting.

“This was all planned four or five years ago by the chamber of commerce before COVID,” Thanusek told Nikkei. “The Prayuth government accepted everything, but there are 77 provinces around Thailand. Democracy can be slow with its checks and controls. This is not the same as Russia or China.”

Within days of entering office on Aug. 22, Prime Minister Srettha Thavisin visited Phuket with members of his Pheu Thai party’s tourism policy committee to see what could be done to promote Thailand’s largest island — and second-smallest province.

National growth slumped to just 2% during the serious political uncertainty of 2023’s second quarter. “We have to forget about politics but think of the country’s best interests,” Srettha told reporters, noting that Pheu Thai did not have a single member of parliament representing Phuket.

“Tourism is the best way to spur growth in the short term when the economy slows down,” he said. Formerly the president of property developer Sansiri, the new prime minister returned the following month and again in December to follow up.

Thanusek of the chamber of commerce was encouraged. “Now Srettha has come, and I think he may understand the business sector better.”