How to Earn 8-11% Yield from Real Estate in Phuket Thailand

Summary

This video explores high-yield real estate investment opportunities in Phuket, Thailand, focusing on the condo hotel model. It discusses the economic development of Phuket, tourism revenue, and the potential for investors to earn 8-11% annual returns by leasing studio apartments in hotel condo projects, managed by reputable hotel brands.

Takeaways

• 🏖 Investing in a hotel condo project in Phuket, Thailand, can yield 8-11% annually, with property value appreciation on top of rental income.
• 💰 Purchasing a studio apartment for 55 million baht (around $153,000) and leasing it back to the hotel group for a 70-30 profit split is a suggested investment strategy.
• 📈 The script assumes an occupancy rate of 67% and a daily rate of 2,600 to 6,000 baht, resulting in an annual income of around $13,600, which is an 88.8% yield at 67% occupancy.
• 🌐 Phuket is ranked 11th in US News's world's best places to visit for 2023 and is the second city in Thailand for tourism revenue.
• 📊 Post-pandemic, Phuket welcomed 4.8 million tourists in the previous year, generating 168 billion baht in revenue, with a significant increase in hotel occupancy and average daily rates.
• 🏨 The island has a growing number of luxury and first-class hotel keys, indicating a shift towards attracting more upmarket tourists.
• 🛣️ Phuket is investing in infrastructure with plans for a major tunnel expressway and an airport rail link to improve connectivity.
• 🏘️ The real estate market in Phuket saw a 37.2% increase in the number of residential units sold and a 45% increase in total value compared to the same period last year.
• 🚫 Foreigners cannot own land in Thailand but can buy condos outright, which can be rented out long-term or managed for daily rentals through condo hotel models.
• 🏢 Andaman City is a multiphase development project offering various types of accommodations, including condo hotels managed by reputable hotel brands.
• 📈 Andaman Riviera, part of Andaman City, offers units with a profitability calculation that suggests an 8-11% yield on investment, separate from potential property appreciation.

Q & A

What is the estimated annual yield on investment for buying a studio apartment in a hotel condo project in Phuket, Thailand?

The estimated annual yield on investment ranges from 8% to 11%, depending on the occupancy rate of the property.

How much does it cost to buy a studio apartment in the hotel condo project mentioned in the script?

The cost to buy a studio apartment in the hotel condo project is 55 million baht, which is approximately $153,000.

What is the profit split arrangement between the investor and the hotel group managing the property?

The profit split arrangement is 70% to 30% in favor of the investor.

What is the range of rental income that can be expected from the studio apartment depending on the season?

The rental income can range between 2,600 to 6,000 baht per day, depending on the season.

What was the occupancy rate assumed in the initial investment calculation presented in the script?

The initial investment calculation assumed an occupancy rate of 67% for the year.

How many tourists did Phuket welcome in the year following the devastating pandemic in 2022?

Phuket welcomed 4.8 million tourists in the year following the devastating pandemic in 2022.

What is the current hotel occupancy rate in Phuket according to the CBRE report mentioned in the script?

The current hotel occupancy rate in Phuket has improved to 70%, as per the CBRE report.

What is the total number of hotel keys in Phuket, and how are they distributed among different grades?

Phuket has a total of 44,069 hotel keys, with 5% in the luxury grade, 42% in the first-class grade, and 53% in the mid-range.

How has the real estate market in Phuket performed in terms of residential units sold and total value in the first half of the year?

In the first half of the year, Phuket sold 4,076 residential units, which is a 37.2% increase year-over-year, and the total value of residential units sold was 14.6 billion baht, a 45% increase compared to the same period.

What is the Andaman City project, and what does it offer to investors?

The Andaman City project is a multiphase development near Patong Beach in Phuket, offering its own hotels, residences, restaurants, bars, spas, and various activities. It includes condo hotels managed by hotel groups, boutique residences with private pools, and condominium complexes for long-term living.

What are the potential challenges for foreigners looking to invest in real estate in Phuket for daily rentals?

Foreigners face challenges such as the requirement of a Thai partner owning at least 51% of the shares for starting a business, the need for a hotel license for daily rentals, and restrictions on owning land in Thailand.