Investing in Phuket property: past the marketing, into the numbers

Owners in Phuket essentially pick between two ways of generating income, and each attracts a different kind of buyer.

Opt for long-term tenancies (contracts running 6 to 12 months, occupied by remote workers, school-enrolled families, or seasonal residents) and expect somewhere around 4-6% gross on a realistically priced condo or villa, paired with light management overhead and comparatively little exposure to seasonal ups and downs. Demand in this segment has expanded noticeably since 2021, concentrating especially around the Cherng Talay-to-Bang Tao stretch and wherever international schools cluster.

Short-term holiday letting markets itself on headline gross figures of 6-10% for well-run units — a number that conveniently omits costs long-term rentals never face: commission eating 20-35% of revenue, booking-platform fees, utilities, linen replacement, general wear from constant turnover. Peak months (November to April) can push occupancy to 80-90% on desirable properties, while the rainy season regularly falls under 50%. Once the dust settles, a smart holiday-let purchase typically nets somewhere in the 4-7% range — better than long-term letting on paper, but you're accepting more volatility and considerably more operational complexity in exchange.

Treat any pitch promising a "guaranteed 7-10% return" with real suspicion — those guarantees are frequently financed by simply inflating your purchase price upfront, and they inevitably expire at some point.

• CAM fees: typically ฿50-90 per m² each month on Phuket condominiums — on a modest 45 m² unit, that adds up to roughly ฿27,000-48,000 annually before a single baht of rental income shows up.
• Sinking-fund contribution: a one-time payment, usually ฿500-800 per m², required on newer developments.
• Management costs: 20-35% of gross revenue for short-stay letting, or typically the equivalent of one month's rent yearly for handling long-term tenants.
• Rental income tax obligations: Thailand taxes rental income earned within its borders no matter where the owner lives — non-residents face a straightforward 15% withholding on gross receipts, or can opt into progressive rates through a Thai filing with deductible expenses. If you're a UK or Australian tax resident, that income also needs declaring back home, though tax-treaty credits generally stop you being taxed twice. Hiring an accountant who understands both jurisdictions costs far less than sorting out a mistake later.
• Annual property tax: quite low for residential use, but still worth building into your rental projections.
• Selling costs: figure 2-3% in transfer taxes when you eventually sell (more if that happens within 5 years and triggers the 3.3% Specific Business Tax), plus typical agent commissions of 3-5%.

The island's resilience largely comes down to being physically limited in supply while pulling buyer demand from a wide spread of different countries at once — that spread of demand is real insulation against any one market cooling off. Historically, the strongest appreciation has clustered exactly where three things overlap: closeness to the west-coast beaches, availability of professional management, and eligibility for Foreign Freehold. Along the Bang Tao-to-Layan stretch specifically, land values have climbed steadily for close to two decades, and branded developments consistently command a resale premium over generic stock.

The flip side: Phuket never really stops building. Fresh condo inventory arrives constantly in waves, which means resale units are competing directly against brand-new stock complete with show units and developer financing that private sellers simply can't match. The sound approach is to treat rental income as the actual return on your money, letting any capital gain beyond inflation function as a pleasant extra rather than the core of your investment case.

Because leasehold units sell 10-20% cheaper than comparable Foreign Freehold stock, yield calculations automatically look better — but don't forget the underlying asset is steadily depreciating toward the end of its 30-year registered window. A useful mental model: a leasehold condo behaves somewhat like a long-term annuity — solid income while it lasts, minimal residual value once the term winds down — whereas Foreign Freehold resembles a bond with an attached option — a lower immediate yield, but your capital stays intact and exiting later is far simpler. Neither is inherently the wrong call; the mistake is not knowing which one you've bought. For the full legal breakdown, see our companion guide comparing leasehold and freehold in Thailand.

Stretches under 30 days on a privately owned condo technically call for a hotel licence, unless a small-operation exemption applies — and enforcement of this varies enormously from one building to the next. A good number of condominium juristic-person committees flat-out prohibit sub-30-day stays, while purpose-built "condotel" developments hold proper licensing for exactly this business model. If short-stay platform letting is genuinely your plan, buy specifically into a project licensed and built for that purpose rather than risk a drawn-out dispute with fellow owners later. Anything at 30 days or beyond is unambiguously legal island-wide, without exception.

Run through these five checks before making an enquiry on anything:

1. Establish a realistic annual rent figure — request the building's genuine historical occupancy and average daily rate, not a sales team's forward projection.
2. Deduct management, CAM, utilities and tax — budget roughly 30-40% of gross revenue for holiday letting, 15-20% for long-term tenancies.
3. Divide that net figure by your fully loaded purchase cost — transfer taxes, furniture packages, everything included.
4. Pressure-test the numbers: assume 40% occupancy in green season, plus one unfavourable currency move against your home currency.
5. Weigh the result against the leasehold-versus-freehold alternative available for the same money.

Still clearing 5% net after plugging in honest, conservative figures? You've got a real investment on your hands, not a lifestyle purchase wearing an investor's disguise. Either reason to buy is legitimate — just be honest with yourself about which one actually applies. None of this amounts to financial advice; get the specific numbers on any unit checked by independent professionals before you commit.