Phuket has long been one of Asia’s most desirable locations for real estate investment, and condominiums remain the go-to choice for many international buyers. Whether seeking steady rental income, long-term capital appreciation, or a holiday home that pays for itself, a well-selected condo can be a rewarding asset.
Not only is Phuket’s thriving tourism sector an attraction, the island has an incredibly fast-growing expatriate community, too. With all it has to offer, it is easy to why foreigners are still taking advantage of Phuket’s many promising investment opportunities.
However, navigating the Phuket condo market requires more than just picking the right view or location. Legal considerations play a vital role in the success of your investment – especially when it comes to short-term rentals, foreign ownership quotas, and project licensing. From understanding the relevance of hotel licenses, to knowing which legal structure is the safest, it’s crucial to gain a thorough understanding to void costly mistakes.
If a Condo Purchase is Purely for Investment, it Pays to Make Sure Short-Term Rentals are Legal
One of the most critical factors to consider when purchasing an investment condominium in Phuket is whether the project holds a valid hotel license. A hotel license legally permits short-term rentals (under 30 days), making it essential for owners who wish to maximise income through platforms like Airbnb or Booking.com. Without this license, condo owners may be restricted to monthly or yearly rentals, significantly limiting the potential return on investment.
Moreover, renting out a unit on a nightly basis without a hotel license can result in legal penalties or fines from local authorities, especially as enforcement becomes stricter across Thailand.
Beyond legality, a hotel-licensed condominium often comes with professional management, onsite services, and a streamlined rental operation – all of which help attract tourists and drive higher occupancy rates. These features allow investors to enjoy truly passive income while maintaining strong yields year-round. When comparing investment options, a hotel license can be the difference between a high-performing asset and one with limited rental flexibility. It’s not just a regulatory box to tick – it’s a key revenue driver and a signal of long-term rental viability in Phuket’s evolving real estate market.
Why Ownership Structure Affects Pricing
When evaluating the true value of a Phuket condominium, many buyers focus on the price per square metre or the location – but the one essential element that must not be overlooked is the legal structure of ownership.
Whether a unit is held as a foreign freehold, leasehold, or via a Thai company can dramatically impact not only its market value but also its future resale potential and ease of ownership. Understanding these structures is essential before signing any agreement, as what appears to be a bargain may carry long-term complications or hidden limitations.
Why Foreign Freehold Condominiums are Recommended
Foreigners are allowed to own foreign freehold condominiums, but this is limited to only 49% of each condominium project. These units are highly sought-after, especially by international investors, and tend to retain their value well over time.
Any prospective buyer should be looking at only freehold options.
Explore Phuket condominiums for sale
Understanding Leasehold Units
Once the 49% of foreign freehold units, available to foreigners, have been sold out, developers will still try to sell the remaining 51% as leaseholds. There are many different opinions about leaseholds, but we recommend that anyone purchasing a condominium always opts for a foreign freehold, or if already sold, find another condominium resort with freehold availability.
A leasehold term is only valid, or shall we say guaranteed, for 30 years. If the lease is not renewed for a further 30 years, then as time passes, the lease will diminish in value. What may seem like a bargain upfront can become a liability when anyone tries to resell the unit in the future.
Thai Company Ownership
Another option is purchasing one of the leasehold units i.e. one of the remaining 51%, through a Thai limited company. While this may provide access to Thai freehold titles, it comes with added complexity.
Running a company requires compliance with Thai corporate law, including tax filings, shareholder legitimacy, and annual audits. The costs involved may not be feasible for lower end condominiums. And if not managed properly, this structure can create legal headaches down the line.
Note: Using a Thai company also has implications for income tax. If the owner stays in the property, it can be considered a taxable benefit in kind.
You can learn more about the different legal structures in our comprehensive Phuket Property Guide
Watch for Misleading Bargains
Be cautious when comparing prices in the same development. A unit might appear to be significantly cheaper than others, but the lower price could be due to an inferior title (e.g., leasehold vs. freehold), legal complications, or even lack of upkeep.
Real value comes from a combination of legal clarity, location, ownership type, and marketability. Price per square metre is one useful metric, but it must be assessed in the context of all the above.
Final Thoughts: Smart Buying Starts with Research
To avoid overpaying, buyers should:
- On resales, always compare other units on the same development that may also be for sale
- On new builds, make sure you understand the price per square metre, and whether this equates to other similar projects
- Make sure all legal ownership details are clear i.e. whether it is a foreign freehold unit, or a leasehold. Or, that it is not held in a Thai company
- Understand ongoing costs (maintenance, tax, company fees)
- Always use independent and reputable Phuket lawyer, not one affiliated with the developer, or not one forced upon you by the agent
- Only work with the most reputable agencies on the island, one that has experience and full knowledge of the local market conditions
At Thai Residential, we specialize in helping foreign buyers find legally sound, investment-worthy properties at fair market prices.
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