Koh Samui is one of the most popular destinations for foreign travelers and property buyers alike in Thailand. It’s a great substitute if you want to avoid the hustle and bustle in Bangkok, enjoy the white beaches, mountainous rainforests, and thrive in a community with many foreigners. You’ll be able to find everything from low-priced properties to high-end luxury resorts on this cozy and romantic island.
Before buying a property, it’s important that you get investment advice. Not only buying at the right time, but also the right type of property is crucial to maximize yields and capital appreciations.
Conrad Properties Co. is an established real estate agency on Koh Samui, it was founded by Conrad Krawczyk who has over 10 years of experience working in real estate in Asia. The company has helped many foreigners to buy property on Koh Samui, and always put their clients needs first.
In this article, Conrad shares fruitful information about the property market in Koh Samui, his own projection on the coming years, what kind of property that is in demand, and more. Let’s see what he has to say.
How’s the property market in Koh Samui at the moment?
The future of the market looks positive for the long-term. Short-term capital appreciation is still possible, but not to the extent of the ‘property boom’ prior to the global economic recession, however healthy long-term capital gains over 5 years are realistic. High short-term rental yields of 10-20% NET returns are possible with the right properties, in the right locations and with the right marketing.
The most noticeable growth has been mainly in the upper end of the market at around 1-3 million USD, with affluent investors from China & Hong Kong snapping up luxury villas at the full asking price, or in some cases over the listed price. This recent trend in the upper-end of the market has led to a surge in new off-plan luxury developments catering to these clients.
The mid-range property market around 300-600,000 USD has been more sluggish, with some older resale properties with a traditional design. These are often discounted with around 20-30%, to compete with competitively priced new modern properties. Wherein, the lower-mid level of the market from 150-300,000 USD, particularly in the areas of Plai Laem, Choeng Mon, Bophut & Chaweng Noi is still active.
The budget end of the market under 150,000 USD is also very active, as attractive options at this price become harder to find.
What types of property are in biggest demand at the moment?
The properties which are in demand currently are mid-level priced luxury sea-view villas, high-level beachfront properties & prime beachfront land plots, as they are harder to find and prices are catching up with Phuket in some cases. The simple mechanics of supply & demand means that there are only a finite amount of premium sea-view and beachfront options available in the popular part of the North East of the island.
Also the recent tourist trend is more towards couples & honeymooners coming to Koh Samui from China & Korea, leading to a sudden influx of smaller mid-level priced luxury sea-view villas of 1 & 2 bedrooms being sold, to satisfy the desire of this new demographic. Similarly, the short-term luxury rental market is also now in very high demand, particularly in fully managed luxury villa projects in the popular area of Chaweng Noi.
Another noticeable trend has been an increase of ‘secured leasehold’ modern apartment projects, which since the change in the law prohibiting building of new condominiums, are now very popular amongst foreign investors.
This change in real estate law has also led to an increase in budget villa projects around 100 -150,000 USD; similar price range to the freehold condominiums.
What are the general regulations that apply to Asian investors when buying property in Koh Samui?
Buying property in Thailand is generally easier compared with buying in other Southeast Asian countries. As an overseas buyer, you cannot directly own land in your personal name, and non-Thai buyers are only able to purchase a maximum of 49 percent of available space in condo projects. It is difficult, but not impossible, to obtain finance as an overseas buyer from inside Thailand, but that’s the same as most countries.
The money for your property purchase must be documented as coming from overseas, and a certificate is required by a Thai bank. We strongly suggest that you use an independent Thailand property law firm so you are aware of purchasing costs, taxes, to ensure a smooth & secure experience.
In regard to Asian investors, particularly in the Chinese market, the new laws forbidding Chinese nationals from sending more than $50,000 USD out of China per year have made it more challenging for them. However, the upper-end of the market remains largely unaffected with wealthy Chinese investors using offshore bank accounts to buy properties.
But for the mid-level buyers with a budget of 300-600,000 USD they often have to seek assistance of ‘loan sharks’ based in Bangkok. This does hold some risk and also with the interest rates being high, and loan terms strong, this can sometimes deter more cautious Chinese purchasers.
Which nationalities are buying property in Koh Samui, now and in the future?
The foreign buying demographic for Thailand property is forever changing. Looking back 10 years ago, the majority of foreign buyers were from Northern Europe. Later, Russians and Eastern Europeans were seen to be dominant, with now almost 80 percent of Thailand’s overseas property buyers coming from Hong Kong and Mainland China. The Malaysian & Singaporean buyers are still active, but nowhere close to the previous levels.
Similarly, the UK and AUS markets have seen a noticeable dip due to currency devaluations. Doubtless, these markets will resume high levels of activity once their respective currencies are restored in value or if the Thai Baht is devalued for any reason.
It is safe to say that this global outlook will change again in the future, and recent trends would suggest that Americans could become the next big nationality buying Thailand property.
There is a proven link between tourists and eventual property buyers, with Thailand ranking at the top in surveys & research on American tourists. However, in the meantime, Chinese & Hong Kong markets are showing no imminent signs of slowing down.
How has Thailand’s property market changed in the last decade?
Prime sea-view, beachfront or city center land has become more scarce, and hence prices have risen in the popular parts of Thailand such as Koh Samui, Phuket, Pattaya, Bangkok, Chiang Mai & Hua Hin. For example, anyone who purchased a Bangkok property 15 years ago will have doubled, if not tripled, their investment. In addition to capital appreciation in land & house prices, the favored locations have changed too.
The popular tourist destination of Pattaya in the province of Chonburi, was once very buoyant with consistent new project developments, has now seen a surge in the ‘resale’ real estate sector, as supplies have started to outstrip demand and a clear re-correction in property price valuation in this market has taken place.
In Bangkok popular areas have been dictated not only by price, but also by the development of the mass-transit networks and also by infrastructure developments. Thailand’s resorts, such as Koh Samui, also experience waves of interest from overseas buyers, and this can largely be determined by the amount of advertising undertaken by real estate agencies and developers.
The more advertising, the more interest generally, however global macro-economic conditions inevitably have some part to play in shaping the future of the Thailand property market.