Property investment in Thailand for foreigners in 2024
Thailand is rightly regarded as one of the best countries for property investment in Asia, and an excellent alternative to Europe and the Middle East. The Thai market offers investments without the extremes of gambling with a high jackpot and risk, or purely protective investments where the millions of pounds invested will certainly not burn out, but the returns won’t be substantial. Suffice it to say that investment funds based in Singapore and Hong Kong are choosing to invest in Phuket-based projects rather than in projects on their own developed islands. For many investors, Thailand has proven to be the perfect balance between emerging and fully established markets.
Thailand’s economy remains a bastion of stability in Asia
Thailand’s economy is one of the most stable and largest in the Association of Southeast Asian Nations (ASEAN). According to the International Monetary Fund (IMF) for 2023, Thailand ranks second in ASEAN in terms of total nominal GDP (574 billion US dollars) and fourth in terms of nominal GDP per capita (8,000 US dollars per person). The rankings are similar in terms of purchasing power parity.
GDP and inflation forecasts for Thailand in 2023:
Bank of Thailand (BoT) | National Economic and Social Development Council (NESDC) | |
GDP | +3.6% | +2.5–3% |
Inflation | +2.5% | +1.7–2.2% |
The Bank of Thailand’s GDP forecast for 2024 is +3.8% and inflation is +2.4%.
The NESDC identifies three drivers of economic growth:
- Increased personal consumption by Thai citizens;
- Stable restoration of foreign tourism to the country;
- Stable expansion of private and public investment.
The Thai baht to US dollar exchange rate, as of September 2023, fluctuates between 35 and 36 baht per dollar. A decade ago, in September 2013, the range was between 32 and 33 baht per dollar. An increase or decrease in the exchange rate of 1 baht is deemed noteworthy by economists, as is inflation exceeding 3% in any given month. All of this indicates the stability of both the national currency and the economy as a whole.
The most significant increases in macroeconomic figures occurred in 2022, when, due to the substantial growth in energy costs, the dollar exchange rate plummeted to 38 baht, and inflation briefly surged to 7%. Nevertheless, compared to global standards, the shocks experienced by Thailand in 2022 seemed minor.
Tourism accounts for around 20% of Thailand’s economy, with the majority of GDP coming from exports. It should be noted that many economists classify tourism as a service export category, as money is also received from overseas. The COVID-19 pandemic has become an unprecedented challenge for Phuket’s economy, but not for the country as a whole.
Thailand faces unexpected challenges, but it has always shown a knack for minimising or quickly compensating for economic losses. For example, a significant drop in Russian and European tourists between 2014 and 2015 was countered by attracting tourists from China. Residents of that nation remain the top property buyers in Thailand, although the number of visitors from China has not fully recovered to pre-COVID levels.
Forecasts suggest that around 25-30 million tourists will arrive from abroad in 2023, which is 80% of the 2018–2019 peak, while the forecast for 2024 is around 30–35 million, which is almost 100% of the pre-pandemic levels. However, some markets have already exceeded pre-pandemic levels, such as Phuket, where visitors from Russia have already surpassed 2019 figures and may even be the highest number of Russian tourists ever recorded for Thailand. On the other hand, the Chinese tourism market is not expected to reach pre-crisis levels this year.
The decrease in visitor numbers can mainly be attributed to the postponed group tours from China. However, these tours are only catered by a handful of hotels. The current 3.4 million [overseas visitors in the first half of 2022] have a far wider market, including villa and condominium apartment owners, and hotel operators, not solely limited to the Chinese market.
Tourism generates demand for rental accommodation, not only from tourists themselves, but also from those working in the tourism industry and related sectors, be they Thais from other provinces or foreigners. Furthermore, the tourism industry in Phuket serves as a key driver for the island’s overall development, attracting diverse types of tenants such as wealthy European retirees and young digital nomads. By reinvesting the profits from tourism, the island offers a range of accommodation options to suit any requirement.
Choosing an investment project: location
From a property investment perspective, Thailand as a whole can be divided into three types of market, with geography being secondary and the economic profile of the location being primary.
Bangkok
The capital of Thailand and its neighbouring provinces form a vast urban agglomeration with a population of many millions. It is the largest such conurbation in the country, as there are no other cities with a population of one million. The primary investment property in this area is condominium units, with the main income generating schemes being early stage purchases during the construction phase, sales on completion and long-term rentals.
$341,000
Total area 48 m² 1 bedroom
$572,000
Total area 56 m² 1 bedroom
$817,000
3 bedrooms 3 bathrooms
$408,000
1 bedroom 1 bathroom
$286,000
2 bedrooms 2 bathrooms
$218,000
1 bedroom 1 bathroom
$245,000
2 bedrooms 2 bathrooms
$313,000
1 bedroom 1 bathroom
The capital’s market is considered developed and highly competitive: attractive properties sell out extremely quickly; you need to look for profitable options with an experienced agent and before the start of construction. At the same time, as condominiums in the capital are much more class-distinct than in Phuket, for example, the price range can be quite wide.
Price structure for apartments from one of the leading developers:
Segment | Price per sq. metre |
D-minus | $1,000–1,700 |
D | $1,700–2,300 |
C | $2,300–4,300 |
B | $4,300–7,100 |
A | $7,100–11,400 |
S | $11,400 and above |
In Phuket, this developer presents segments D to B, and in the Bangkok conurbation, everything on the list is available for viewing.
Developed tourist destinations
Phuket and Pattaya have traditionally been developed tourist destinations in the context of property investment, but by 2023 only Phuket has fully recovered, while Pattaya is still recovering from the coronavirus crisis. The process has been slow due to staff shortages, changing tourist demographics, a limited number of flights and the still unresolved problem of Pattaya not having its own airport.
Traditionally, Pattaya has excelled in offering more affordable investment properties with the associated quality issues. Given that tourism to this resort has not yet returned to pre-pandemic levels, cheapness at the expense of quality can easily be seen as a risk factor. It was difficult to rent or resell an apartment in a poorly located or poorly constructed condominium at the peak of tourism; now it is doubly difficult.
From $56,000
Completion in: 2026.II Total of 186 apartments
From $55,000
Completion in: 2028 Total of 816 apartments
From $71,000
Built in 2019 Total of 1060 apartments
From $82,000
Completion in: 2028 Total of 1400 apartments
From $226,000
Total of 44 apartments
From $85,000
Completion in: 2025.IV Total of 2470 apartments
Typically, resort property in Phuket and other popular locations, as well as property in the capital, will provide a secure income (up to 30%) if purchased early and sold after the property is commissioned. In addition, in developed tourist markets, there are opportunities for high income short-term rentals of apartments or villas, which can provide up to 10% of gross income per annum. In addition, developers often offer a guaranteed yield of 5–7% for the initial period after the property is put into operation, when tourist demand for the property is just emerging.
Phuket developers rarely rely on bank loans to finance construction. Instead, they finance the purchase of land plots, project development, permitting, and the start of construction from their own funds; the remaining financing comes from prepayments made by home buyers. Consequently, there is a significant benefit for buyers of housing under construction in Phuket, which can be as much as 30%.
From $1,129,000
Completion in: 2025.I 45 units in total
From $145,000
Completion in: 2026.I Total of 789 apartments
$157,000
Total area 30 m² Studio
From $1,092,000
Built in 2023 51 units in total
From $179,000
Completion in: 2025.I Total of 400 apartments
Emerging tourism markets
From an investment perspective, emerging markets include locations that are unfamiliar to most tourists, such as Hua Hin and Chiang Mai, as well as popular resorts where a developed property market has not yet been established, notably the islands of Koh Samui, Krabi and Phang Nga. Locations such as Bangkok have higher standards for the investor’s expertise, which includes the ability to distinguish their personal choices from what visitors demand in order to generate rental income.
$666,000
Total area 320 m² Land area: 700 m²
$275,000
Total area 116 m² Land area: 260 m²
$678,000
Total area 625 m² Land area: 678 m²
$562,000
Total area 220 m² Land area: 220 m²
The main advantage of emerging markets is the opportunity to invest in a property that will retain and increase its value for years to come: a successful seaside villa, for example. In Phuket, there are virtually no such properties left, and every new project is in high demand.
The downside is that an emerging market may not offer a quick return on investment and will be much less stable in a crisis than a market in Bangkok or Phuket. Emerging markets also differ in that property rents and prices can be significantly lower than in developed markets. A beachfront hotel room in Koh Samui can cost 30 US dollars per night, while the same room in Phuket will cost at least twice as much.
Choosing a resort investment property: types of investment
Apartment or villa
The debate over whether a villa or an apartment is better for an investor has been going on in Phuket for years. It will continue until Thailand changes its land laws to allow foreign ownership. Although there are proponents of this reform, their attempts to lobby for it over the past few decades have been in vain.
The main advantage of owning an apartment in a condominium is that you can obtain full ownership in your name (foreign freehold). By law, villas are usually leased for 30 years with the option to renew twice for another 30 years each time (leasehold). However, apartments in condominiums are also available on a leasehold basis, which can prove lucrative.
Condominium is a form of ownership, not a type of building, as the term literally means «shared ownership».
Technically, there is nothing stopping a developer from building a condominium in a low-rise complex format, as opposed to a traditional apartment building, resulting in individual units that resemble townhouses or villas. Nevertheless, in reality this is extremely unusual and there is a huge demand for such properties.
$115,000
Total area 39 m² 1 bedroom
$188,000
Total area 36 m² 1 bedroom
$351,000
Total area 88 m² 2 bedrooms
$310,000
Total area 74 m² 1 bedroom
$150,000
Total area 42 m² 1 bedroom
$199,000
Total area 57 m² 1 bedroom
$222,000
Total area 97 m² 1 bedroom
Villas and townhouses are traditionally more expensive: from 300,000 US dollars for a modest house versus 110,000 US dollars or even less for a studio apartment, but in the future they can provide higher rental income (or, conversely, lower). Condominiums have a narrower yield spread. In all cases, it makes sense to focus on the level of «up to 10% per annum on the amount invested».
Phuket’s advantages include a wide range of supply at different price points, with entry thresholds starting at 110,000 US dollars in developing locations and 330,000 US dollars in developed resorts with premium services. In addition, new developments in Phuket in all classes offer good increase in value during the construction phase (approximately 10–15% per annum) and high rental yields thereafter, averaging 7–8% per annum.
From $1,129,000
Completion in: 2025.I 45 units in total
From $1,092,000
Built in 2023 51 units in total
From $811,000
Completion in: 2024.I 20 units in total
From $576,000
Completion in: 2024.IV 21 units in total
From $367,000
Completion in: 2024.III 30 units in total
Independent and managed rentals
The era of independent property management is slowly fading away, which bodes well for developers, investors and tenants alike. Delegating specific operational responsibilities to professionals is a sign of a maturing market.
Most new short-term rental properties are often launched with the expectation that the property will be managed by a hospitality company and part of the property’s name will be a well-known hotel brand, such as Wyndham or Banyan Tree.
If you want to rent out your property independently, you will need a wide range of knowledge that goes beyond the field of marketing. For example, any property in the tropics will suffer from a humid and hot climate, and if it is located on the coast, this factor must also be taken into account. The repair and maintenance of the building will require the hiring of local labour, and the payment of taxes will require the outsourcing of an accountant. A separate issue is the need to monitor changes in legislation.
An experienced management company takes on all the associated risks and is legally responsible for the fulfilment of obligations, i.e. for the investor’s profit. In the event of unforeseen circumstances, the investor’s interests are protected along with the company’s other clients.
Short and long term rentals
Investment in resort property typically involves short-term rental of an apartment or villa to maximise income, often up to 10%, which is a realistic target.
Subletting provisions are often included in long term leases. This option is similar to short-term rental of a villa through a management company, except that an individual tenant rather than a legal entity will be renting the property.
This is not to say that buying a villa or apartment for long term rental is without merit. There are many specific locations in Phuket where you can focus on this particular income stream. Profitability is likely to be lower than that of daily rentals, even allowing for stable occupancy throughout the year. Nevertheless, this option has merit as a secure investment. In addition, for investments of up to 110,000 US dollars it may be the only alternative available.
Rents in the centre of the island are low; in terms of profitability, such apartments will be inferior to those in the resorts, but they can be rented for long periods to winter visitors. You can earn 300–500 US dollars a month in an apartment, as opposed to 1000–2500 US dollars for a place on the coast. However, you won’t be able to find an apartment on the coast for around 70,000 US dollars, whereas you can find such properties in the centre of the island.
The location of a property purchased in Phuket is largely determined by its intended use. For daily tourist rentals, the ideal locations would be the west coast from Nai Harn to Mai Khao, which includes Karon, Patong, Surin, Bang Tao, Nai Yang and Nai Thon. However, if the property is to be used as a residence or for expat/winter rentals, other locations may be more suitable, such as the centre or east of Phuket, including Kathu, Wichit and Chalong.
A studio in a condominium in the centre of Phuket may be the best option for someone who has just moved to the island and is unsure of the best place to live. The studio will be ideal for a new expat without a large capital reserve, but with a taste for quality and modern living.
It is also worth noting that Bang Tao deserves special attention. A number of new properties are currently under construction further away from the coast, but are being marketed as housing by the beach.
From $145,000
Completion in: 2026.I Total of 789 apartments
$157,000
Total area 30 m² Studio
From $1,092,000
Built in 2023 51 units in total
From $179,000
Completion in: 2025.I Total of 400 apartments
From $130,000
Completion in: 2025.IV Total of 231 apartments
From $130,000
Yield 5.0% Completion in: 2027
From $159,000
Completion in: 2025.I Total of 273 apartments
From $199,000
Completion in: 2027 Total of 128 apartments
Types of investment activities in Thailand and investment programmes
A quality investment property in Thailand will increase in value and generate rental income before resale. The country would not be so popular if you had to choose between renting and reselling. Phuket resort property is in demand because it does both at the same time.
The parameters are interrelated. A house or apartment that generates a high rental income will steadily increase in value. The key to success is to find and buy such a property quickly, as lucrative opportunities are fleeting. While buyers of homes for their own use consider the colour of the bathroom tiles, investors assess the demand for rental properties. If demand is high, they will buy.
Buying early is the first secret of successful investment. Often, by the time the property is delivered, the price has risen by 30%, but in some projects the purchased apartment can be put on the market within a week of purchase and sold at a profit, even if it only exists on paper.
It is important to consider that an asset may become less attractive over time due to external factors. Tenant preferences and market trends may change, and new properties such as condominiums and villas may emerge, diverting tenants’ attention elsewhere. As a result, a proportion of investors will choose to take profits, similar to a Forex trader placing a take profit order. In this case, since the apartment has reached the required profit threshold, it would be preferable to sell it to generate income.
Usually, the developers determine the concept of the property beforehand: is it suitable for permanent residence or for short-term rental? In the first case, you are buying an apartment that you can rent out yourself or through a specialised company.
In the second case, the investor essentially buys a room in a future hotel, often under a prestigious hotel brand. The main advantage is that everything in such a project is aimed at maximising profit; the main disadvantage is that, in order to increase it, the developer and management company impose various restrictions, such as a limit on the length of the owner’s stay and strict furnishing standards from which it is impossible to deviate.
The main types of generating rental income are via guaranteed yield and rental pool. Typically, investors offer a guaranteed yield during the initial stages of a property’s introduction to the market, while it is still unfamiliar to tourists. Subsequently, they switch to a rental pool scheme whereby the income is dependent on actual revenue. In Phuket, a reasonable guaranteed yield is around 5–7% per annum. However, a popular property can produce a yield of 9% or more with a rental pool scheme.
Increasing profitability in Thailand
There are various ways to boost profits from property investment in Thailand. The main secret is to buy early. At the initial stage, when the project has just been launched and construction has not yet started, developers offer the most favourable conditions: the price may be 30% lower than at later stages; furnishings may be offered free of charge; instalment plans may have a more attractive payment schedule. The developer needs to get investors interested in a new project, so early bird discounts are beneficial to both the developer and the investors.
You should not neglect the developer’s instalment plan, which is often interest-free. Considering that inflation in Thailand is usually 2–3% per year, the developer can afford such terms. In addition, most developers know that mortgages in Thailand are almost inaccessible to foreigners, so a project designed for a foreign investor is immediately planned with this in mind. Regular properties may cost less for a Thai buyer, but do not offer interest-free loans.
Some Phuket developers offer buyers the opportunity to use their project as a financial instrument, in addition to rental yields. Essentially, by purchasing an apartment in a project without instalments during the earliest stages of construction, buyers thereby finance the project, and developers are willing to pay up to 5% annual yield on this capital, even during the construction phase.
This scheme is called pay back. It is a good way to get a double benefit: to buy an apartment at a more favourable price at the start of sales and start earning income even before the apartment is rented out.
Trivial as it may sound, choosing an agent who has a long history with a particular developer also helps to speed up the return on investment. An old and trusted partner may have preferential terms from the developer that are only offered to them and not available to others.
As in many other areas of business, the seller is often willing to offer discounts to an investor who is willing to buy several units in a condominium or several villas in a complex. Although these are substantial assets, the seller’s primary objective is still to sell one project and move on to the next.
You can also save money on the type of ownership if the developer offers both freehold (full ownership in a foreigner’s name) and leasehold (long-term lease). However, this only applies to condominiums, as only in condominiums is it possible to register a property as freehold in a foreigner’s name.
Tranio has an office in Phuket. Our local lawyers and managers will help you complete a turnkey deal and the cost of purchase will not increase.
Leave a request
Finally, the basic advice is to treat property investments as just that: investments. Pick those that make a profit rather than those that appeal to personal taste. You may not like a particular condominium, but if it is popular with tourists, it is likely to be profitable. It is important to remember that we are talking about future income, not immediate gains. Investing in an area that will be tourist-friendly in a year’s time may prove to be a wise decision in the long run.
We will send you a content digest not more than once a week