Editor: Cheyenne Hollis
Dot Property Blog January 2020
This article is from Thai Residential, a real estate agency specializing in Phuket. The lure of Phuket rental income generation has attracted property investors to the island for decades. The tourist sector has grown dramatically over the past four years in particular and the steady inflow of foreign tourists is helping fuel the rental market. What’s more, the Phuket real estate market has remained resilient despite a number of obstacles. In the last 20+ years alone, Phuket has experienced the Global Financial Crisis, the bursting of the tech bubble, and the Asia Crisis. Additionally, global health scares like SARS and bird flu as well as the Boxing Day Tsunami in 2004 have also impacted the island. Faced with such potentially catastrophic developments, a decline in the tourism industry and property market would be expected. And yet, Phuket’s property rental market came back stronger after each event and both sectors are thriving today. The basics of Phuket rental income generation For real estate investors, it is necessary to understand what they can expect in terms of Phuket rental income generation. The island compares favorably with other popular holiday destinations when it comes to peak period rental yields. But unlike most tourist areas in Europe, where there is little-to-no rental business during the low season, the Phuket market is busy throughout the year. That’s due in part to strong domestic tourism and relatively favorable weather conditions. While there are some heavy rainfalls during August and September, there are no periods where tourism completely stops which helps with Phuket rental income generation. “Your potential return on investment is far greater in Phuket compared to a country that regularly sees a lull in their rental market during the wintertime,” Warren Rodrigues, one of the founding partners of Thai Residential in Phuket, states. Challenges regarding Airbnb properties are something Thailand is dealing with like many other global tourist destinations. The law in Thailand prohibits villa or condominium owners from renting out their property for a period of less than one month unless they have a hotel license, but developers are helping real estate investors solve this issue. “Branded residential developments and condotels have hotel licenses, but still offer freehold condominium unit ownership to foreigners. These are generally for investment purposes only, not for living in, but if your objective is rental yield this may be ideal for you. Many projects also include a chance to stay at the property for a set number of days each year. This provides you with the option to take your holiday in Phuket,” Warren explains.