The potential returns on investment of owning property in Phuket.

 

Phuket the largest island in Thailand is known for its picturesque beaches and lush tropical landscapes. The island is a sought-after destination for property investment. As the market continues to thrive it is important to understand the potential returns on investment when considering purchasing a property in the topical paradise. In this article we will examine the various ways in which owning a Phuket property can generate returns including capital appreciation, rental income and tax benefits for homebuyers. So join us as we dive right into Phuket property market and discover potential returns on investment of owning a property in tropical paradise.

High Rental Yield Returns

In Phuket the rental yield varies depending on the location and type of property. For example properties in prime tourist areas such as Patong and Kamala tend to have higher rental yields than properties in more residential areas. Additionally, properties that are well-maintained and equipped with modern amenities are more likely to have higher rental yields.

When it comes to real estate investments there is no better choice than Phuket property. Phuket have a steady appreciation of property values over the years and trend is likely to continue. This makes investing in Phuket property a great way to generate long-term returns.

Capital Appreciation – Why Investing in Phuket Property is a Good Choice

Phuket property has seen capital appreciation of up to 20% or more over the past few years which is far higher than other popular destinations in Thailand. Increase in capital appreciation is mainly due to the increasing demand for real estate in Phuket due to the large number of tourists visiting the island each year. The increase in demand cause prices of properties to steadily rise.

Second factor is driven by capital appreciation of Phuket property is the limited availability of land. As the island continues to become more popular and more people purchase properties in Phuket the available land is becoming increasingly scarce. This has caused prices to rise significantly as the demand for Phuket property continues to grow.

In addition to the increasing demand for property the government of Thailand has also done its part to encourage the growth of the real estate market in Phuket. The government provides incentives to foreign investors such as tax breaks and investment benefits. Government schemas have further increased the demand for properties in Phuket leading to further capital appreciation.

Average ROI for Phuket Property Investments

Holiday homes in Phuket are in high demand, and there has been a steady increase in their supply over the past decade. Developers on the island are now offering attractive return on investment (ROI) opportunities through guaranteed rental returns, providing buyers with a handsome capital gain.

Investments in Trichada Azure can expect a 5-7% guaranteed yearly rental return for no less than 3 years, with some projects offering up to 15 years of guaranteed income generated from renting out the property. Most developers allocate around one month per year for the owners to use their property, with the rest of the year being used as a hotel room, generating a passive income for the owner. Rental management is fully handled by the management team, making it a hands-free investment.

Furthermore, some developers offer to buy back the property at the original purchase price +10-15% after a certain number of years. However, most projects require the owner to go with the developer's default furniture package and limit customization to join the rental pool.

With the average ROI of properties in Phuket espeically with villas. Then what are the districts and areas in Phuket with potentional high rental yields and return of investments. 

Phuket High Yield Investments Areas 2023

First and foremost we are going to give a potential percentage on your return of investments in top 4 districts of Phuket island. We at FazWaz calculate the potential ROI of specific areas by using the formula down below: 

• ROI = (Annual Rental Income - Annual Expenses) / Total Investment Cost x 100 

To break down the calculation of the formula is to understand the numbers needed for each calculations:

1. Annual Rental Income is the total rental income you can expect to receive from the property each year.
2. Annual Expenses are the total costs associated with owning and maintaining the property each year.
3. Total Investment Cost is the total amount you plan to invest in the property, including the purchase price and any additional expenses such as closing costs and renovation costs.

For examples Rawai, Phuket is located down south of the island known of its beautiful villas and beaches. A quiet and tranquil location good for families with plenty of international schools in the district too. 

Property Data	Amount
Median sales price for a property in Rawai:	฿5,190,000
Median price per square meter for a property in Rawai:	฿103,000
Total Investment Cost for 100 sqm property in Rawai:	฿5,190,000
Estimated Annual Rental Income:	฿240,000
Estimated Annual Expenses:	฿20,000
Property taxes:	฿10,000 per year
Maintenance fees:	฿5,000 per year
Insurance:	฿5,000 per year
Estimated Potential ROI:	4.21%

1. Patong: 4.53% estimated annual ROI returns 
2. Kamala: 4.92% estimated annual ROI returns 
3. Thalang: 4.66% estimated annual ROI returns

To check the median prices of each districts such as in Thalang, Phuket. You can click on FazWaz Property for sale pages here. 

Tax benefits of owning property in Phuket

Buying a property in Phuket can not only provide potential returns through rental income and capital appreciation but also offer various tax benefits. These benefits can include deductions for repairs and maintenance, mortgage interest, and property taxes.

One of the tax benefits of owning property in Phuket is the ability to deduct expenses related to repairs and maintenance. These expenses can include things like painting, repairs and cleaning services. This can help offset the costs associated with owning and maintaining a property, ultimately increasing the overall return on investment.

Secondly a homebuyer in Phuket have tax benefit is the ability to deduct mortgage interest. To deduct mortgage interest rates is a significant benefit for property owners as it can help to reduce the overall cost of borrowing. Additionally property taxes on Phuket properties are also tax deductible.

When compared to other countries Phuket's tax benefits are considered to be more favorable for property investors. For example US, UK and Australia have more complex tax systems, with a higher tax rate and less tax benefits for property investors.

Owning a property in Phuket can be a great investment opportunity as it offers the potential for returns through capital appreciation, rental income and tax benefits. Phuket real estate market is steadily growing in recent years and it's considered a lucrative one making a great option for those looking to invest in property.

In conclusion buying property in Phuket is a great investment opportunity due to the high demand for vacation rentals. Property owners can generate rental income through short-term or long-term rentals and rental yield is a good metric to evaluate potential returns on investment. While it's not a guarantee of returns Phuket's property market is considered to be a lucrative one and investors can expect a healthy return on their investments.

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