How to choose profitable real estate in Phuket: 5 best principles

Key aspects of buying real estate in Phuket

When making a decision to purchase real estate in Phuket, it is important to consider a number of key factors to ensure maximum benefit from your investment. In this article, we will discuss several fundamental principles that will help you choose the most suitable property.

Location selection

The first aspect to consider is the choice between the west and east sides of the island. Each of these sides offers different living and rental conditions.

• Western zonenotable for its beautiful beaches and well-developed infrastructure aimed at tourists.
• Eastern partis characterized by a quieter atmosphere and picturesque landscapes.

Type of rental

The next point is choosing the type of rental you want to use: short-term or long-term.

• Short-term rentalis becoming increasingly popular due to generating significant income during the peak season.
• Long-term leaseIt can offer a higher level of stability and requires less attention to management.

Real estate management

The third aspect of the choice is determining whether you will manage your property yourself or use the services of a management company.

• Althoughindependent bookkeepingSaving your money can be quite a challenging task for beginners.
• Professional management companiesThey can provide assistance not only in managing the property but also in resolving various legal and tax issues.

Choice of property type

The fourth important factor is the choice between new properties and the secondary market.

• New buildingsThey often offer modern amenities and attractive conditions for investors.
• Secondary housingIt can be more affordable, leading to significant savings.

Apartments or villas?

Moreover, it's important to consider this choice — an apartment or a villa. Each of these categories has its own advantages and disadvantages, and your choice should depend on your personal preferences and investment goals.

Guarantees when purchasing

Equally important is the opportunity to receive various guarantees when making a purchase, such as guaranteed income, rental programs, as well as the possibility of cashback and buyback options.

• These options have their unique advantages, and knowing about them will help you make an informed decision.

Ways to increase profitability

To increase the profitability of your investment property, it is worth considering nine different strategies.

• It's important to actively seek new opportunities, such as acquiring properties in the early stages of construction.
• Participation in private salesbrokerage discounts, leasing arrangements, and the use of installment payments from developers.
• Also, don't forget abouttax deductionsand options for acquiring assets that can be transformed to generate additional income.

The market during a crisis period

Moreover, it is important to consider the impact of economic changes in the market. Often during a crisis, many advantageous offers arise, creating excellent conditions for profitable purchases.

Customer experience

According to our data, 74% of the transactions conducted by our company in 2020 were repeat deals. This confirms that clients who have experience with Phuket and our services return for new investments.

One notable example is a client who initially purchased an apartment for $100,000, and after seeing positive results from their investments, soon invested $3.2 million in real estate.

Recommendations and support

Our clients often recommend us to their acquaintances, which speaks to our reputation and the quality of our approach.

We don't just help choose the right properties and finalize deals, but we also support clients at every stage of property ownership.

Our work doesn't end with signing the contract; we take care of our clients throughout their entire investment period.

Our experts are ready to offer assistance with tax and legal matters, which is especially relevant for foreigners considering purchasing real estate in another country.

Contact us

We are always open to communication and ready to provide all the necessary information. Contact us, and we will confidently guide you through the Phuket real estate market, offering the best options for your investments.

Introduction

Every year, tourists spend about 2.5 to 3 billion dollars on the island of Phuket. A significant portion of this money goes towards hotel services and apartment rentals. When it comes to investing in real estate in Phuket, it's impossible to overlook the issues related to the hospitality industry.

Hotel business in Phuket

If you take a look at the map of the island, it becomes clear that the main hotel complexes are located along the western coast, including areas like Kamala, Bang Tao, and Nai Thon. This is because the best beaches are found here, while the eastern part of the island is not suitable for swimming. As a result, the western coast is actively developing:

• Modern infrastructure projects are being created.
• Elite residential complexes are being built.
• The influx of affluent tourists is only increasing.

Investment opportunities

For potential investors, this means that it makes the most sense to acquire properties specifically on the West Coast. It is best to focus on prime real estate assets that are in short supply in the market, especially those located right by the sea.

Rent and profitability

When it comes to renting, short-term contracts represent a more profitable strategy for investors. Winter travelers coming for a few months are willing to rent a one-bedroom apartment in a high-quality complex for 45,000 baht (about $1,500) per month. Long-term contracts usually involve lower prices, often with discounts ranging from 20% to 50%. If the rental exceeds six months, the cost becomes even more attractive.

Nevertheless, the same apartment can be rented out for short-term stays at $100 per day. The average occupancy rate of serviced apartments in Phuket reaches 74%:

• 90% in the high season;
• 40% is low;
• 100% during special occasions, for example, on New Year's Eve.

Thus, by renting such apartments, one can earn approximately $2,220 per month throughout the year, not including additional income during peak seasons.

Legal aspects

It is important to remember that according to current legislation, renting out apartments for short-term stays is only possible with the presence of...hotel licenseTypically, such licenses are obtained by residential complexes that are built in tourist areas and meet all hotel service standards. Therefore, buildings that do not have this license are automatically excluded from the list of properties that interest investors.

Real estate management

When it comes to property management, there is an option to either handle it yourself or hire a management company. Five years ago, significant changes occurred in the Phuket real estate market. Major international hotel chains began to enter the region, seeking to establish contracts with local developers. The concept is as follows: the developer constructs a property that meets hotel standards, and then the management is handed over to a well-known brand.

Changes in the market

Previously, there were many small management companies and individual owners in Phuket, each with their own portfolio of apartments scattered across various complexes. However, with the new development in the hotel management market, competition has increased, leading to changes in property management approaches. The modern market demands a more standardized and professional approach, which opens up new opportunities for the tourism industry and enhances Phuket's appeal to investors.

Ways to find tenants

Each of us has looked for tenants in various ways: from word of mouth and social media to specialized platforms. Currently, underutilized market players are facing intense competition from large international hotel brands such as Best Western, Wyndham Group, Sheraton, and others.

Competition among hotel brands

These powerful companies possess significant resources, extensive experience, and recognizable brands. As a result, they are able to maintain a high occupancy rate in their properties even with high rental prices, regardless of the time of year, which is attractive to investors.

Risks and advantages of hotel management

Undoubtedly, hotel operators receive a portion of the revenue, but they also take on the overwhelming majority of the risks, which allows investors to expect stable, and sometimes even guaranteed, income.

Therefore, we strongly recommend considering complexes with professional management located on the beachfront – this is the safest and most likely the most profitable investment option.

Self-rental: risks and costs

From a theoretical standpoint, one could try to increase income by renting out an apartment independently. However, what expenses and risks arise in this case?

• Any unforeseen situation can negatively impact such a small business.
• For example, in 2020, many private apartments remained empty, while owners of hotel apartments continued to receive stable income that had been secured in advance.

New builds vs. secondary market

When it comes to choosing between new buildings and secondary properties, it is undoubtedly wiser to invest in new buildings.

• At the sales launch stage, you can purchase real estate at a lower price, which will positively impact profitability.
• In the secondary housing market, it is often difficult to find properties with high returns.

The most profitable options are indeed apartments in hotel complexes with professional management, located in the best resort areas of Phuket.

Development of hotel chains

Hotel chains have started to actively develop in this region relatively recently. Many investors, when investing in this real estate, chose programs with guaranteed returns in the first five years, where selling the asset before the program ends is considered economically unviable.

However, even if someone decides to sell their property, the new buyer will find themselves in an unfavorable situation.

Scenario with the sale of an apartment

Let's say the first investor bought an apartment during the construction phase for 3.5 million baht with a guaranteed return of 7% for five years. After two years, he sells the completed apartments on the secondary market for 4 million baht. The new buyer will be forced to accept the rental terms, and he will receive 7% not from 4 million, but from the 3.5 million baht spent by the first investor.

Real estate sales strategy

Exiting an investment makes sense if the planned timeframe is between five to seven years, when the construction of the first line will be completed and property prices will have increased. However, if you intend to sell the asset earlier, it’s better to avoid participating in a program with guaranteed income.

At the moment, while there are still attractive offers in key locations, it's worth taking the opportunity to acquire interesting properties.

Apartments or villas: what to choose?

What to choose: apartments or villas? In reality, you can earn significantly more with apartments.

• There are several reasons: firstly, villas have a higher share of costs - both at the time of purchase and during their maintenance and repairs.
• Thus, for those who wish to receive a stable and profitable income, apartments will be the most optimal choice.

Decrease in the profitability of villa rentals

In the current situation, the rental yield from villas is not at its highest level. First of all, it is worth noting that interest in renting villas is significantly lower compared to apartments. Typically, these properties are located several kilometers away from the coast, as land in these remote areas is much cheaper.

Moreover, for a complete rest in a private house, having a car is often necessary. However, many travelers are not eager to get behind the wheel in unfamiliar areas, especially if left-hand traffic is the norm there.

Lack of professional management

Another important feature is that most of the villas available for rent are not managed by professional hotel management. Owners either handle the rental process themselves or work with small companies, which can negatively impact the quality of services provided and, consequently, the level of income.

It is also important to consider that many villas do not have an official hotel-type license. This means they cannot be legally rented out for short-term stays, and in the case of long-term rentals, prices are usually significantly lower.

Exceptions in villa rentals

Nevertheless, there are exceptions to this rule. In Phuket, you can find villas that are located in close proximity to the sea and are managed by experienced managers with all the necessary licenses. This gives owners the opportunity to earn guaranteed income. However, for such properties, you will have to pay significant amounts – from 2 to 3 million dollars and even more.

Real estate listings in Phuket

Currently, there is a wide range of real estate offers for sale in Phuket. One of the attractive properties is an apartment priced at 242,011 euros.

• The apartments are located on the island of Phuket.
• The area is 47 m² with one bedroom.
• The complex includes 39 buildings ranging from two to five stories high.
• 234 apartments with a picturesque view of the lake or tropical mountains.
• Infrastructure: restaurant, bar, kids' club, gym, and other amenities.

The following interesting apartment costs €108,957 and has an area of 30 m². It is part of a five-star resort complex that covers a total area of 99,200 m².

• The complex includes a 500-meter flower avenue.
• Six swimming pools and 23 boutique stores.
• 450 apartments with various layouts.

In addition, there are apartments available for 157,000 euros with an area of 27 m². The complex consists of nine condominium buildings that are 4-5 stories high.

• The total area of the hotel complex is 20,240 m².
• Inside, there are all the necessary amenities for a comfortable stay.

Additional options

Finally, it is also worth mentioning the 45 m² apartment, priced at 134,355 euros. This building consists of seven floors and includes:

• Pool and jacuzzi on the roof.
• Large adult and children's pools on the first floor.
• Reception, café, parking, and 24-hour security.

The interior design is done in a modern style with an emphasis on minimalism, creating an atmosphere of harmony with nature. As a result, the real estate options in Phuket are diverse, and everyone can find a suitable offer within their budget.

On the Thai island of Phuket, you can find many unique residential complexes located between the famous Rawai beach and other popular spots. These properties offer a great combination of cozy living, safety, and comfort, making them ideal for living.

Exclusive apartments

One of the remarkable offerings is an apartment with an area of 156 square meters, priced at 902,135 euros. It is located in a gated complex consisting of 30 residences and borders a five-star hotel. Here, you will find restaurants, bars, and spas, as well as numerous opportunities for outdoor activities such as golf and sailing.

• Children's clubfor children aged 4 to 12 years.
• Sports facilities, includingtennisandvolleyball courts.
• Conference rooms and a business center for work and relaxation.

Apartments with a smaller area

If you are looking for a smaller apartment, you should consider the 30 square meter apartments being offered for 40,230 euros. This new project is located in the heart of the island and consists of three eight-story buildings. Amenities include covered parking, a communal pool, and 24-hour security. These modern studios are perfect for those who value comfort and a dynamic lifestyle.

Luxurious villas

Don't forget about the stunning villa priced at 269,218 euros with a total area of 165 square meters. This residential complex consists of 37 private villas, which feature playgrounds, green areas, and cafes for residents.

• Single-story villa with a private garage for two cars.
• Tropical garden and private pool.
• Summer shower and terrace with loungers.
• A kitchen with a full set of equipment.

Impressive villa

For those looking for something more impressive, a luxurious villa with an area of 1,900 square meters is offered for 5,282,776 euros. It is surrounded by stunning views of the waters of Phang Nga Bay.

• Spacious terraces for relaxation.
• Personal gym and cinema.
• A private plot of land with its own swimming pool.

Luxury real estate

Don't miss the opportunity to consider a villa priced at 12,841,210 euros and covering an area of 897 square meters. This complex includes 13 luxurious villas with options ranging from four to six bedrooms and belongs to the elite housing category.

• Available on the premisesrestaurantandwellness center.
• Spaand a beach club for residents.
• Round-the-clock security for your safety.

Latest interesting options

In conclusion of our review, it's worth mentioning another interesting villa with an area of 430 square meters, priced at 1,367,553 euros. It is located in a complex of 44 luxurious villas, where there is a management company office and 24-hour security. The interiors of these homes are designed in a modern style.

• Spacious rooms and high ceilings.
• A comfortable atmosphere, which makes this house a wonderful place to live.

Each of the complexes in Phuket combines a peaceful atmosphere with all the necessary conditions for comfortable living, making them ideal options for both permanent residence and vacation.

Villas on Phuket Island

Villas on the island of Phuket are an excellent choice for those dreaming of comfortable and stylish accommodation, where modern technology perfectly blends with the beauty of nature. The available options offer a variety of layouts and unique architectural solutions, making it possible to find the right home to meet any needs.

Examples of villas

For example, we can consider an option with a cost of101,337 €, occupying70 square metersThis villa is part of a complex consisting of129 single-story housesEach of them is equipped with:

• a spacious and bright living room connected to the kitchen,
• two bedrooms.

The complex offers all the necessary amenities, such as:

• playground
• pool,
• stores and cafes,
• 24-hour security.

The architectural designs of these villas are done in a Japanese style, where minimalism perfectly blends with the natural beauty of Phuket. The ceiling height reaches3 meterscreating a sense of space and freedom.

Luxury housing options

If you are looking for more luxurious accommodation, take a look at the villa priced at1,561,517 €, with a total area of248 m²This object includes:

• two bedrooms,
• three living rooms.

The uniqueness of these villas lies in their modern design, filled with light, offering stunning views of the clear waters of Phang Nga Bay.

Real estate in Phuket, Thailand

Real estate in Phuket, located in Thailand, offers a wide selection of enticing properties for purchase. For example, you can become the owner of a villa with an area of 133 square meters for just €406,367. This luxurious complex consists of 14 villas, conveniently situated along a secluded path and surrounded by picturesque tropical forest, creating an atmosphere of quiet seclusion and comfort. Each building is framed by a living hedge, providing additional privacy and security.

Spacious villa

Another interesting property is available for €698,444 - a spacious villa in a modern complex of 33 buildings. It is located in close proximity to one of the most renowned international schools, making it an ideal choice for families with children. The villas in this complex are designed in such a way that panoramic windows offer magnificent views of the picturesque town and the surrounding hills, creating a cozy and inspiring atmosphere.

Budget apartments

For those looking for more budget-friendly options, there is another property available for €90,597. This is a 24 m² apartment with one bedroom and a bathroom, located in the heart of Karon – a popular tourist destination. The complex includes 214 modern apartments and offers its residents all the modern amenities, as well as the beauty of the surrounding nature. There is a rooftop area with a pool that offers stunning views. This complex includes:

• gym
• walking paths
• lounge area
• round-the-clock security

Luxury villa

If you are interested in purchasing luxury real estate, you should consider a villa priced at €937,184, which has an area of 460 m2 and includes four bedrooms. This small complex consists of only eight villas and offers its residents a high level of security thanks to its security systems and video surveillance. The villa is designed in an elegant Japanese style and includes:

• finishing
• sanitary equipment
• built-in kitchen
• a variety of other nice amenities

However, it is worth noting that the furniture package is not included in the price.

Real estate investments

Investing in real estate in Phuket not only offers the opportunity to enjoy a luxurious vacation but also allows you to be part of a stable investment project. Investors can expect additional income thanks to professional hotel management. Typically, such programs provide guaranteed income for a period of three to five years after the property is put into operation, helping new owners avoid financial losses in the initial stages.

In 2021, the minimum entry threshold for investors is $110,000, which will allow you to become the owner of an impressive studio apartment measuring 30-35 m2, fully furnished and meeting all hotel standards. These apartments are located in a prestigious tourist area and a high-quality residential complex. When purchasing a property, you can expect additional offers from the developer, making the process of acquiring real estate even more attractive.

Conclusion

Thus, by choosing real estate in Phuket, you gain an exceptional opportunity for relaxation while minimizing the risks of financial loss, as well as a reliable way to invest with guaranteed income.

Fixed payments to property owners

During the agreed period, the property owner will receive a certain fixed amount in their bank account, regardless of whether the apartment was rented out or remained vacant. In Phuket, the usual rate is around 7% per annum, and in some residential complexes, you may encounter offers with yields reaching 10%.

The "Rental Pool" program as a source of income

The main source of profit for investors is the "Rental Pool" program, which comes into effect after the fixed sum payments are completed. By this time, the hotel should meet the required occupancy standards, allowing for high accommodation prices to be set.

How does the program work?

The hotel evaluates the total cash flow from a pool of identical apartments, such as one-bedroom apartments with a pool view. From this total amount, a certain portion of the income remains with the hotel itself, while the remaining profit is shared equally among the apartment owners.

Before signing the agreement, it is crucial to carefully review the program's terms and understand what share of the income will belong to the investor. If approached wisely, one can expect significant profit growth compared to guaranteed payments. In practice, property owners can earn between 10 to 15% of their property's value annually.

Cashback option for investors

For investors who prefer to acquire properties at the construction stage and wish to minimize waiting time, the cashback option is relevant. This offer is very popular among Russian-speaking buyers.

• When using this option, the investor receives an annual return of 7% of the total cost of the apartment immediately after payment.
• Returns are possible even if the construction work is not yet completed.

Thus, you can start earning income right away, without waiting for the construction to finish and the rental program to begin. This can significantly increase the overall profit by 15-20%.

Buyback guarantee from the developer

In addition, at the stage of signing the purchase agreement, the developer may offer a buyback guarantee. For example, they might commit to repurchasing the property after 10 years for 110-115% of the original price. However, selling the property at market value may be more advantageous, as its price is likely to increase significantly more than 10-15% over a decade.

We regularly inform clients about price fluctuations for their real estate, starting from the purchase stage, selecting the most promising options with potential for price growth, and negotiating the most favorable discount terms.

Two main ways to generate income from real estate

It is important to understand that real estate as an investment asset has two main ways of generating income:

• The first one involves earning income from rent.
• The second is in capitalization, which should never be underestimated.

If you earn 10% annually from renting out a property, but after 10 years it will be difficult to sell it for just 50% of its value, then in the end your income will amount to 50%.

Introduction

If you plan to hold your investment property for ten years, assuming an annual return of 7%, and eventually sell it for 50% more than the original price, the total return could be an impressive 120%. This highlights the importance of a thoughtful and strategic approach when selecting properties for investment. It's crucial to understand how you plan to market your property, who you will offer it to, and at what price.

Ways to increase profitability

There are several ways to increase the overall profitability of your investments that can help you maximize your returns. One of the most effective options is to purchase real estate in the early stages of its construction.

• At this stage, you can purchase the property at the lowest price.
• Developers are offering the most favorable conditions.
• As construction nears completion, the prices of apartments typically rise.

Nevertheless, it is worth noting that in 2020, due to the pandemic, housing prices remained stable, providing unique opportunities for interested buyers. Currently, new buildings with a high degree of readiness can be offered at prices similar to the starting ones, which represents a significant advantage for those looking to invest.

Pre-sales and working with brokers

An interesting fact is that real estate sales can begin long before official listings appear, when developers launch so-called pre-sale events through major brokers.

• In such cases, a limited number of apartments are offered at special prices available only to select clients.
• It's important to establish contact with a reliable broker in advance.

The emergence of such offers requires you to make quick decisions, as these properties are in high demand.

Advantages of working with brokers

Collaboration with brokers also brings significant advantages to developers, as it helps them reduce costs on marketing and selling real estate properties.

• Brokers in the market can offer clients favorable conditions, including installment plans, gifts for furniture, as well as bonuses for property management services.
• In this case, brokers receive their commission from the developers, not from the buyers.
• This means that you, as a buyer, can expect professional support without any additional financial costs.

Options for ownership in Thailand

When purchasing an apartment in Thailand, you have the option to choose between full ownership (freehold) and a long-term lease (leasehold) for a period of up to 90 years.

The prices offered by developers also include options for properties under leasehold conditions, which gives you the opportunity to choose the most suitable option for personal investments.

Conclusion

In conclusion, it should be noted that success in real estate investments largely depends on a well-thought-out strategy. This strategy should take into account not only the potential returns but also the optimal timing for selling. It is essential to closely monitor market trends and leverage all the advantages offered by early investments and collaboration with experienced brokers to maximize the benefits of your investments.

Full ownership rights

If you want to have full control over your property, you need to prepare additional funds amounting to about 10% of the total transaction amount. This is usually a set amount, ranging from 8,000 to 10,000 dollars. Don't overpay, as it could reduce your profit.

Choosing a lease

In this regard, real estate leasing represents an interesting option that provides similar opportunities for utilizing properties and can offer a chance to purchase at a lower price, which contributes to increased profitability. Some construction companies offer clients favorable installment plans.

Installment terms

For example, at the construction stage, it is possible to pay 50% of the cost upfront, while the remaining amount can be financed with a loan for a term of one to five years at an interest rate ranging from 3% to 7% on the remaining funds. These terms are also available in projects offering initiatives with "guaranteed income," although the interest rates there may be less favorable, starting from 5% per annum.

Despite this, the system works, allowing you to get an installment plan for 50% of the housing cost at an annual interest rate of 5%, while simultaneously receiving a 5% return on the total apartment value. This means you can pay off the debt to the developer using rental income while still remaining profitable.

Conditions for large investors

For large investors who purchase several apartments (from six to ten), as well as entire floors or buildings, special conditions are provided. The advantages of such deals include:

• improved income
• cost reduction
• large area size
• the opportunity for a unique design approach

You can discuss the nuances of layout or finishing on your floor, based on individual tasks and investment strategy.

Tax deductions

As for tax deductions, the standard income tax rate in Thailand is 15%. When distributing income from sales, the developer or hotel operator withholds this tax. By filling out a tax return and listing all your expenses and income, you can expect a deduction of about 2-3%. We offer our clients accounting services, as we have auditing companies in our group.

Rental through a rental pool program

The most profitable option is to rent out compact apartments, such as studios or one-bedroom apartments, within a rental pool program. However, there is high competition in the secondary market, making it difficult to sell such properties. In Phuket's serviced apartments, smaller units prevail, as these apartments have a quicker return on investment. At the same time, there is a higher demand for two-bedroom apartments in the secondary market.

Strategy for acquiring adjacent studios

A good strategy is to acquire two adjacent studios and then create openings between them. This will provide the highest rental yield, and when it comes time to sell, you can present these units as a two-bedroom apartment with the possibility of reconfiguration. This approach is more versatile and can be appealing to both other investors and families looking for more spacious housing.

Choosing the time for the deal

Choosing the right time for a deal is a key aspect of successful investing, especially in times of economic instability. By being at the right moment, you can significantly increase your returns on investments.

Conclusion

In conclusion, summarizing our article on real estate investments in Phuket, I want to emphasize that a successful approach to selecting properties for investment requires a clear understanding of both the local market and financial mechanisms. Phuket offers unique opportunities for investors, and knowing the fundamental principles of selection can significantly impact your profitability.

Key aspects for investors

We examined five key aspects, such as:

• Location selection
• Type of rental
• Presence of a management company
• Hotel license
• A comprehensive approach to investments

These points should be considered when investing in this field. The long-standing experience of our company shows that repeat sales have become a common occurrence, which reflects the trust our clients have in us. A particularly striking example is the story of our client, who started with a small investment and over time became the owner of a significant real estate portfolio.

Comprehensive approach

This success would not have been possible without the comprehensive approach we apply: from strategy development to legal support. I am convinced that such accompanying services and constant attention to the needs of the investor will help to make the most of the opportunities offered by the real estate market in Phuket.

Result

Ultimately, real estate on this picturesque island can become not only a profitable investment but also a very exciting experience. If you have any questions or want to learn more about investment opportunities, feel free to reach out to us. We are always ready to support you at every step of your investment journey.