Koh Samui Rental Yields: The Gap Between Gross and What You Actually Keep
Every property market has a number it leads with. On Koh Samui, that number is the gross rental return.
Asia Lifestyle Magazine spent last week on the island putting the same question to developers, local agents, brokers and property professionals, among them Ornsirin, a Thai developer listed on the Stock Exchange of Thailand. We asked it at an industry property event, on site visits and over dinner. Do the numbers actually stack up?
Guiding us was Asa Marsh, real estate expert in Asia, who spends his year moving between property markets across the region.
“One thing I always look at when I visit a new property market isn’t just the prices,” he says. “It’s whether the numbers actually stack up.”
The number everyone leads with
Ask about returns on Samui and you will hear a range of 7% to 15% gross. It came up repeatedly, from different people, with enough consistency to suggest it is the accepted headline figure on the island.
Gross is the rent collected before anything comes out of it. No management fee, no maintenance, no empty weeks. It is the largest figure that can be stated truthfully, which is why it leads most conversations, and it is not a figure any owner actually receives.
The number that matters
Push past the headline and the answer changes. What we heard consistently, across the week, was 7% to 10% net for well managed villas in the right locations.
Both of those qualifiers are doing real work. A poorly managed villa in the wrong location does not produce that number.
Even so, 7% to 10% net is a healthy return by most international standards. It sits well above what the same money would earn in residential property in London or Sydney.
What sits in the gap
Several costs separate the gross figure from the net one.
- Management. A villa let to short stay guests needs someone taking bookings, meeting arrivals, cleaning between stays and dealing with problems at inconvenient hours. That service takes a commission.
- Booking platforms. If the guest arrives through an online travel platform, that platform takes a further cut of the rent.
- The property itself. Pools need treating. Gardens grow whether the owner is there or not. Air conditioning fails, salt air corrodes fittings, and furniture wears out faster than most buyers expect.
- Fixed running costs. Insurance, utilities, repairs, and a reserve set aside for larger work later on.
- Seasonality. Samui sits on the Gulf coast and its weather runs on a different schedule to the Andaman side. Occupancy varies across the year, so a projection built on twelve equal months will overstate the income.
- Tax. A matter for a qualified adviser rather than a magazine, but a real cost nonetheless.
Take all of that off a gross figure of 15% and the net lands roughly where the people working on the island told us it lands.
Why the demand is there at all
The returns hold up because of the kind of tourism underneath them.
Samui attracts a visitor who does not want a hotel. They want a private villa, a pool, a kitchen, space to work, and a stay measured in weeks rather than nights. That guest books further ahead, stays longer, and costs less to service per night than a run of three night arrivals.
It is a different customer to the one Phuket has built itself around. Generally younger, more relaxed, less driven by branded developments. Samui’s rental economy has grown up serving that person.
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The mistake we heard about most
Everyone we spoke to raised the same error. Buyers assume that any villa on Samui will perform like any other villa on Samui. They do not.
Management, location, design and a clear sense of who you are letting to all make a substantial difference to the same nominal asset.
“A beautiful villa with poor management can easily underperform an average villa that’s run properly,” Marsh says.
Two properties on the same road, at the same price, photographed by the same person, can return very different numbers over a decade. The work is done before the purchase, not after it.
Where a condominium changes the arithmetic
Villa yields come attached to villa costs, and every one of those costs is the owner’s to carry.
A condominium works differently. Maintenance of the building, the pool, the grounds and the security sits with the juristic person and arrives as a common area fee, which is a known figure set in advance. Letting a unit is more straightforward. Selling one is more straightforward again.
The ownership matters most, and it is where Samui has been weakest.
Under Thailand’s Condominium Act, a foreign buyer can own a condominium unit outright, freehold, in their own name. No lease, no company. Thai land cannot be held freehold by a foreigner, so a villa here means a leasehold structure or a Thai company, with the legal work and ongoing scrutiny that follows.
For years, a buyer who wanted that clean ownership on Samui had almost nothing to look at.
“For years there have been very few high quality freehold condominiums here,” Marsh says.
That is beginning to change, and it changes the yield conversation with it. A freehold condominium bought at a lower entry price, with predictable running costs and a simpler resale, is a different investment to a villa, with a different set of numbers behind it.
What we took away
The gross figure quoted on Samui is real. So is everything that comes off it. Buyers who work through both arrive at a sensible expectation, and 7% to 10% net is a sensible expectation.
Which brings the question we kept returning to. Would you rather take a slightly higher rental return on a quieter island like Samui, or accept a lower one in exchange for the infrastructure and convenience of somewhere like Phuket? Both are defensible. The reasoning behind the choice is what counts.
Nothing here is legal, tax or financial advice. Take proper counsel before you buy anything.
Own it outright, in your own name
Koh Samui has almost no foreign freehold condominiums. That single fact has shaped how people buy on this island for the last twenty years.
A foreigner cannot own Thai land. So a villa here means a leasehold structure, or a Thai company, with the legal work, the annual filings and the government scrutiny that now comes with it. A condominium is the exception.
Under the Condominium Act you own the unit outright, freehold, 100% in your own name, on a title deed carrying your name and nobody else’s.
A developer listed on the Stock Exchange of Thailand is preparing one of the island’s first serious foreign freehold condominium developments, in Fisherman’s Village. Whether you intend to live in it or let it, this is the cleanest form of ownership available to a foreign buyer anywhere in Thailand.
- No company structure, no nominee, no annual filings
- Freehold title registered in your own name
- Predictable running costs through a common area fee
- A simpler resale than any villa on the island
- Foreign ownership capped by law at 49% of the building, so the freehold allocation in any project is finite
Floor plans, pricing and first release details go to the waiting list ahead of the open market.
Join the Koh Samui freehold condominium waiting list
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