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Wealthy Russians Buying Villa’s in Phuket Jumps 82% in One Year
While Phuket has long attracted wealthy Russians, the influx is increasing as Vladimir Putin’s war in Ukraine makes competing locations in Europe and elsewhere more difficult to access.
According to real estate consultancy Knight Frank Thailand, the number of villas sold on the island increased 82% last year to 338, with Russians purchasing over half of them. Restaurants, saunas, and concerts have all sprung up to cater to the new customer.
According to the Thai Tourism and Sports Ministry, 791,574 Russian people arrived in Thailand between January and June, representing a more than 1,000% increase over the same time last year.
According to the Phuket Tourist Association, more than half of those flew directly into Phuket airport and were the island’s top source of tourists this year.
Christian Steinbach, sales director at FazWaz Property Group, told Bloomberg, Russian speakers are the largest single nationality of buyers in Phuket, with one Russian customer purchasing 16 villas last year.
“You can generate high rental returns,” he asserted. “And there are many people who just want to live in a nice place.”
In a sign of the island’s importance in strengthening Russia’s diplomatic reach in Southeast Asia, Foreign Minister Sergei Lavrov visited Phuket in July and spoke with his Thai counterpart.
The diplomatic office is located within the Royal Phuket Marina, a beachfront complex with boat moorings, flats, and stand-alone villas ranging in price from $300,000 to multiple millions of dollars.
While Europe and the Middle East have long been popular Russian havens, Thailand’s beaches, nightlife, and openness in destinations like Phuket, Krabi, and Pattaya provided an affordable option in Asia even before the crisis in Ukraine began in February 2022.
Since Putin launched his invasion, the EU has made it more difficult for Russians to visit the bloc, canceling several direct flights to European cities. As a result, individuals are flocking to nations with simple visa requirements, such as the United Arab Emirates, Turkey, and Thailand.
According to Prakaipeth Meechoosarn, head of Phuket property sales at CBRE Group Inc.’s Thailand unit, Thailand has introduced several new visa programs in the last year that allow longer stays for those who bring in money or special skills – such as in the IT, social media, and crypto-asset industries. Concurrently, the resort islands in the country’s south have drawn many comparable professionals, digital nomads, and young families from Ukraine.
According to Elena Marinicheva, vice president of Russia Sotheby’s International Realty, a typical Russian buyer in Thailand may be an entrepreneur in their mid-30s from the Federation’s eastern regions, such as Vladivostok. However, she claims that Moscow and St. Petersburg investors are becoming increasingly interested in the Thai sector.
This has aided in the development of a variety of cottage industries. Alexander Nakhapetov, for example, stated that his entertainment business is thriving. He said a 250,000 baht ($7,333) box at a Russian rock event he organized in Phuket’s Laguna Grove earlier this year sold out within the first hour. He is assisting in organizing a performance by the St. Petersburg State Academic Ballet Theatre on the island in December.
Sanctions have impacted transactions, with Visa Inc. and Mastercard Inc. among the numerous global financial organizations that ceased operations in Russia following the invasion of Ukraine. People have devised workarounds, such as linking to China UnionPay Co. platforms and digital assets and paying with cash in dollars and euros. However, transferring funds out of Russia becomes more difficult as time passes, and the ruble depreciates against the Thai baht, according to Steinbach.
Thais, particularly those in the south, are adapting to the demands and habits of Russian visitors. The announcements at Phuket International Airport are in Russian. Many street signs and shop names are in Cyrillic. Street sellers serve borscht and bliny alongside Thai favorites like pad thai and spicy tom yum soup.
Veranda, a Russian restaurant company, just launched its fifth Thailand branch, adding to the island’s eateries and grocery outlets. In addition, Nikolay Batargin, the proprietor of the Chekhoff restaurants in Phuket, recently established his third site, which serves Russian cuisine. He described the island’s high season as “mad” from November to April.
Super-Rich
Thailand’s allure extends to the ultra-rich. According to Bloomberg statistics, the 237-foot yacht Cloudbreak thought to belong to Russian real estate mogul Alexander Svetakov, was photographed in Phuket last Christmas.
In January, construction materials millionaire Igor Rybakov offered business-coaching seminars on the island for 20 people, beginning with qigong exercises to relax the attendees.
“Everyone is welcome in Thailand,” said Batargin, a restaurateur.
While commerce has benefited the economy and created much-needed jobs in tourism- and investment-dependent Phuket and Krabi, the flood of Russians has also driven some potential purchasers from Thailand and other countries away from the market. Local workers are suffering the effects of inflation for basic products and their rents.
However, in the aftermath of Covid, most people are ready to tolerate side effects as long as Thailand remains a haven from conflict, sanctions, and hostility. Tolerance is a mantra for those who visit Thailand’s islands for vacation or to make a new home.
“The atmosphere for everyone is wonderful and peaceful,” said Yuri Vorona, manager of the Roadhouse restaurant in Phuket, which caters largely to Russians and their Thai friends — but Ukrainians do occasionally drop in. “We have ordinary Russians who want to rest rather than fight.”
