High-Return Investment Properties in ThailandLand of contrasts — from quietbeaches to neon nights

What attracts buying real estate in Thailand?

In times of crisis and the fall of the ruble, investing in real estate is one of the most reliable solutions to preserve assets. The number of people buying property abroad is growing every year. Thailand is still a popular place among Russians to purchase real estate for both living and investment.

In this article, we will take a step-by-step look at why Thailand attracts buyers not only from Russia, but also from all over the world. Which areas are the most attractive to buy and what you need to pay attention to when making a decision about buying a property in Thailand.

Five key factors of Thailand's investment attractiveness

1. The stability of the national currency is one of the most important indicators for an investor. The Thai currency (THB) is one of the five strongest and most stable currencies in the world and its purchasing power has not fallen for more than 10 years.
2. Tourism. Thailand is among the TOP 20 most visited countries in the world according to UNWTO. What is attractive is the lack of pronounced seasonality. In the "high" season, tourists from the CIS and Europe come here. During the "low" season, there are many guests from China and other Southeast Asian countries, as well as Australia. For investors and tourists from China, there is no difference in the time of year at all, they come to Phuket all year round. 
   "It should also be noted that according to statistics from various sources, today (the end of 2023) Phuket has reached about 70% of the recovery of tourist traffic relative to the pre-crisis period. And this suggests that the tourism potential is not yet at its peak," says Oksana Sharakina, head of the VelesClub Int. representative office in Thailand.
3. The real estate market is in a growth phase. The growth of the real estate market in Thailand, in particular Phuket, is influenced by the fact that there is little land in the country on which construction is allowed, and there are strict restrictions on mass high-rise construction (no higher than 7 floors). Of course, this has a good effect on occupancy and income from real estate. At the same time, all investment strategies work in Thailand, which makes it possible to receive high income in USD: resale, rental, mixed strategy. The average payback period is 7-8 years. 
   "We work in more than 20 countries, and, indeed, the Asian direction, in particular Thailand, Phuket, shows some of the highest investment indicators in the world. For example, the rental yield in Phuket is up to 12%, while in Europe - 6% is considered a decent indicator." - General Managing Partner and Founder Sergey Tumanov gives an assessment.
4. Taxes. In Thailand, property taxes are among the lowest. 1-2% of the property price you will pay when buying, depending on how the transaction is executed – in Freehold or Leasehold. The tax on real estate ownership has a progressive scale and by Russian standards it is insignificant. The maximum rate for foreigners on income from renting out real estate is 15%, but it can be legally reduced to 3%. The sales tax will also depend on the form of Freehold or Leasehold ownership, and most often this tax can be divided between the buyer and the seller.
5. A clear development strategy. Thus, the five-year development plan for Phuket assumes the achievement of the following goals

• To become a center of gastronomic culture;
• To become a center for global health and medical tourism;
• Development of sports tourism;
• To become an international educational center;
• Implement digital technologies (smart city);
• To become a center of maritime tourism.

At the same time, infrastructure development plays a crucial role in achieving these goals, according to the authorities.

How to choose a property for investment in Thailand?

When investing in real estate in any country, it is necessary to take into account a number of factors that directly affect the investment potential: the economic development of the country, location, reliability of the developer, quality of construction, risks. And of course, the choice of an investment object will depend on the goal and strategy.

Conventionally, in Thailand, there are several areas that are usually considered when buying real estate.

Phuket or Pattaya

Traditionally, tourist locations include Phuket and Pattaya. However, if you look a little deeper, you can say that the tourist flow has fully recovered only in Phuket. In Pattaya, the process of overcoming the covid crisis has been delayed and an important factor today is the lack of its own airport. While Phuket Airport receives up to 12 million tourists a year.

Today Pattaya offers more affordable investment properties, but you need to take into account the risk of a longer return on investment and lower rental yields.

Phuket resort real estate shows stable high profitability, on average up to 30% when buying an object at the start of sales. Rental income is also kept at a high level – up to 12%. Also, some developers offer the option of guaranteed rental income and even the possibility of obtaining a mortgage for foreigners at 6%.

Other popular locations in Thailand

Everyone knows such popular resorts as Koh Samui, Krabi and Phang Nga, but few people consider these locations for real estate investments. Indeed, here the investor needs a more thorough assessment of all the factors affecting profitability and readiness for a less rapid return on invested funds. But, it is in such locations that you can buy a villa on the first coastline at a good price, which will only grow in price over the years and always be in demand for rent.

"Let's look at Koh Samui, for example. Since 2009, there has been a ban on the construction of apartments in condos on the island, and height restrictions are 6-12 meters. This explains the predominance of villas and bungalows on Koh Samui, and the stock of apartments and hotels has not been updated at all. Therefore, the construction of such a new project on the island can give a good return to the investor. Some developers have started active construction of condominiums with developed internal infrastructure on the island, and we have something to offer investors." - we specify the chief analyst of VelesClub Int. Ksenia Shamitko.

The capital is Bangkok

If we talk about the capital of Thailand, Bangkok has a modern and developed infrastructure. It is one of the most popular and visited cities in all of Southeast Asia. There is always a stable demand for local real estate, including rental. As a result, this ensures its investment attractiveness, but the profitability will be lower than in resort locations.

What is important to know when buying a property in Thailand?

1. By which form of ownership – Freehold (full ownership) or Leasehold (ownership up to 90 years in total) - to purchase real estate in Thailand directly depends on the purpose of the purchase and investment strategy. Thai law protects the rights of both the Kingdom and the rights of the investor, it is important to carefully choose a developer and carefully study the contract.
2. If you are planning to buy a villa, keep in mind that only the building itself can be fully owned by an individual. To register the land in Freehold, you will need to open a company in Thailand. However, it is not as difficult as it seems and VelesClub Int. helps in this.
3. The purchase of real estate under Thai law does not give the right to obtain a residence permit. At the same time, there are alternative long-term resident visas, including the possibility to participate in the Thailand Elite program and obtain an investment visa for up to 20 years.
4. The process of inheritance largely depends on the form of ownership in which the object is designed. Indeed, only when registering real estate in Freehold, the heirs will become full owners of the object after the administrator receives a court decision on the inheritance case. But don't rush it. When buying an object for rent (Leasehold) in the contract, you can provide for a point of transfer of the lease right to your legal successors.
5. All objects under construction in Thailand from the developer can be purchased in installments before the end of construction, as the initial payment will be up to 30%. At the same time, some developers also have options for installments for 3-5 years at 5-7% or the possibility of obtaining a loan for foreigners at 6% for up to 15 years. Even more attractive to the investor will be offers for guaranteed returns from 1-3 years or a buyback. It is worth noting that the investor always has a choice, to engage in renting out on his own, or to use the services of a professional specialized Management company that takes care of renting out the object itself, and the investor, being anywhere in the world, receives a steady income.
6. Developers provide the opportunity to resell an object at any stage of construction with the transfer of debt to another person, which allows investors to get maximum returns from investing in an object under construction by investing a minimum down payment and several installment payments, without closing payments completely. This investment strategy is recognized as the most profitable.

Buying real estate in each country has its own peculiarities and nuances, and choosing an object, both for investment and for living, takes time to study the market.