Thirty years ago Phuket was a backwater where backpackers slept in bamboo huts on Patong Beach. Now developers are selling US$10 million villas. Welcome to Asia’s new playground for the rich and famous.

When, on Boxing Day 2004, the tsunami devastated Phuket’s western coastline, local residents feared a meltdown. Renown for its sun, sand and laid back lifestyle, it had become one of the most popular resorts in Asia- and tourism had been booming. Three years after the tsunami, Phuket is back and hotter than ever; visitor numbers for the first half of 2007 exceeded all of 2004, and more than 1500 new hotel rooms opened for this high season alone. But tourism isn’t Phuket’s only trend; the property market is soaring.

“If anything, the tsunami put Phuket on the map”, says John Edgar, the Director of Sales at the Marriott Beach Club, a wing of the JW Marriott Resort and Spa Mai Khao Beach. “Before, people hardly knew the difference between Thailand and Taiwan. Then for months Phuket was [in the] headlines of every newspaper and TV set in the world. Now everybody wants to be here.”

For years Marriott struggled to sell their Beach Club’s spacious time-share condos which started at $23,000 for a week’s accommodation in low season for the next 75 years. “Now they sell like hot cakes” says Edgar. So much so, Marriott are about to release a second Beach Club wing with another 133 condos.

“For high end luxury villas and condos, Phuket is booming”, confirms Charlotte Fieulle, the Phuket manager for resort properties at property broker CB Richard Ellis. “Up until now developers have mostly been fly by night Mama and Papa projects. Now things are starting to get serious”.

CB Richard Ellis has more than a hundred on the books and many already sold out. Cape Sienna-Kamala’s stylish ocean front villas range from $1.13 to $1.9 million each and sold in just seven weeks. At nearby Bang Tao, Saisawan will offer seven minimalist-designed villas with indoor and outdoor showers and private wine rooms. “At last you have found your bliss!” says Saisawan’s brochure of the 16 villas start at $1.6 for ocean access to $4.9 for absolute beach front. They have all been snapped up too.

“Beach front location is like gold dust in Phuket”, says Filleul as we drive between Saisawan and the bare-block where Shangri-La Phuket Resort and Spa will soon start to build. They too will have residencies.

Phuket’s beaches buzz with the sounds of construction- each project more impressive than the last. Barama Bay, an 80 acre island off the West Coast, “will be like nothing else in Asia” says Anthony Franklin, marketing director for the TGR Asia, the company developing the island. Offering homes, a yacht-berth, destination spa and hotel by Jumeirah- best known for the Burj Al Arab in Dubai, the island promises to be the most exclusive property in Thailand. And although the property is nowhere near being built, TGR say they have already sold 70% of Barama Bay’s residential villas, most sitting in-between the US$3 and 10 million dollar ranges.

A few kilometers south developer Campbell Kane has joined designer Phillip Starck, architect Jean-Michel Gathy and Aman Resorts founder Adrian Zecha to build Cape Yamu, a set of 28 acre-plot homes flanking a wind swept stretch of west coast beach. Twenty-six have already sold. On the hill above, The Bay also has villas, all with private pools and better views but no direct beach access. Both estates will be serviced by Zecha’s resort, The Yamu.

Zecha, a long term Hong Kong resident, kick started the island’s property trend when he built residential villas at his resort, Amanpuri, in the 1990’s. The first Aman resort to be built, the pavilion- style residencies, each with a pool (or two or three), sea views and team of maids, gardeners and cooks, presented a new standard of luxury on the island. They are still the islands most sought after residencies- and very rarely for sale.

Hong Kong money is behind some of the biggest and most prized projects in Phuket. Alan Zeman, the entrepreneur behind the Lan Kwai Fong entertainment area, is currently putting the finishing touches on Andara, a 29 villa property overlooking Kamala Beach. It has already sold out. Zeman is now planning a second phase of condominium residencies as well as a boutique hotel with rooms selling for around $3,000 a night.

Then there is Gulu Lalvani, the head of Hong Kong’s Binatone Telecom, the world’s second biggest manufacturer of digital cordless phones. He invested $150 million into the ambitious Royal Phuket Mariner, a sprawling development that when finished will offer 400 waterfront villas, penthouses and condominiums (including some with their own indoor boating lounge), a 300 berth yacht hub, a five-star resort, dozens of restaurants and cafes lining a Riviera-style promenade and 8500 square meters of retail space, including a gourmet deli, patisserie and boutique shops. Lalvani’s latest inspiration is Zoran Island, a man-made island capable of berthing super yachts.

Hong Kong residents are also the biggest buyers of Phuket real estate- securing almost 60% of the market. “After spending December and January in Hong Kong, Phuket becomes a very attractive alternative”, says Alan Zeman.

The softly spoken New Zealander and former Cathay Pacific pilot Peter Hay was one of the Royal Phuket Mariner’s first home owners, buying from plan before construction began. Hay originally bought into Phuket as a holiday house, escaping Hong Kong’s chilly winters, but decided to stay, opening the sports bar Skippers downstairs from his condo.

According to the developers of the Royal Phuket Mariner, Hay’s property has increased more than 70% since when he purchased it, from plan, a few years ago. Since then, nine of his co-workers have also bought condos at the mariner.

There are no shortage of buyers in Phuket, despite Thailand’s stringent new visa laws and proposed crackdown on property-ownership laws. Foreigners are banned from owning land in Thailand, but can purchase up to 49% of “floorspace” on a 30-year leasehold basis, provided the company who owns the condo is Thai. Or they can buy property through a Thai company, providing the company is Thai owned.

In the past many foreigners were getting around this by “buying” the majority of voting shares, a wishy-washy agreement challenged earlier this year by the current caretaker government. What’s more, there are no mortgages available, so buyers must pay in cash.

It’s a complicated system with risks, which is what makes internationally branded hotel-run residencies, like Shangri-La and Jumeriah, so attractive. Owners benefit from being a part of a big organization, with some political clout, plus, by adding their villa to the hotel pool, they get guaranteed rental income.

“For the majority of buyers, this wont be their first or second home, but more likely third or fourth. They are high net big spenders. They don’t really care about politics, they just want a house by the beach”, says Scott Gorsuch, the director of communications and Campbell Kane.

Not everyone is convinced. “It’s madness to invest in this country”, an hotelier who wished to remain anonymous told me. “Thailand is a police state and foreigners have little to no rights. The government could take your house at the drop of a hat”.

“Politics is definitely an obstacle” says James Pitchon, the Executive Director for CB Richard Ellis in Thailand. “But when you look at the alternatives- Malaysia, Indonesia- the quality of lifestyle- hospitals, roads, access, and availability of Western foodstuffs-Phuket still wins”.

It’s a vibe best summed up in the words of Alan Zeman: “Phuket is sun, sand, beautiful beaches, no pollution and a wonderful culture”. Paradise.

A version of this article was published in the April 2008 issue of Silk Road, the in-flight magazine of Dragon Airlines.