Investors in Phuket property are drawn to the rental yields, which can be enhanced when a professional management company is involved. Due to legal restrictions on short-term rentals by private individuals, any rental program which allows owners to capitalise on short-term holiday rentals, while offering capital appreciation for freehold ownership, is doubly attractive.
Condotel and Hotel-Licensed Condominiums
A Condotel combines the services of a hotel and a condominium. This hybrid concept permits individual units to be privately purchased, and then rented as though they were hotel accommodation.
Condotels are almost exclusively intended for investment purposes, so this is not necessarily right for you if you’re looking for holiday home. As investments, the track record for rental income is very attractive. Developments will typically offer investors either guaranteed return for the first few years, followed by entry into a “rental pool,” whereby the rental income is “pooled” together and the profits shared by all of the participating owners.
In most developments, a hotel management company will be engaged for the day-to-day running of the resort, and because these companies can typically leverage their international reputation their rental programs are very attractive to investors. And because the developments are hotel licensed, units may be rented out on a monthly, weekly or even daily basis.
And because they are also condominium licensed, they may be sold freehold to foreigners in Thailand. And while they are generally investment properties, the owners may make personal use of their unit for a set number of days per year – sometimes up to one month.
This is an excellent way to capitalise on Thailand’s buoyant real estate sector, while at the same time taking advantage of Phuket’s flourishing tourism industry. And as an owner/investor, you may also enjoy a few weeks of “free Phuket accommodation” every year.
A condominium juristic person (CJP) could theoretically allow (or at the very least, condone) the practice of short-term rentals, but the development requires a hotel license to fully comply with laws governing short-term rentals.
Branded residences are one of the fastest growing sectors of the luxury property market, and while they could be simplistically described as “luxury condotels” they are really much more than that.
Like condotels, branded residences are hybrids of a hotel and condominium, which can be owned freehold by foreigners, but their management by luxury hotel brands makes them appealing to high-net-worth individuals. (As with condotels, however, ownership is almost exclusively for investment purposes.)
The price positioning of Branded Residences is one or two notches above condotels, but for that owners can expect a rental property which will be in high demand as a result of their luxury hotel affiliation. The quality standards that come with the name also mean the units can demand premium prices on rentals.
This is one of the newest sectors on the island, and the concept is already catching on quickly, not in small part due to existing developments being very popular with wealthy Thai investors.
Condotels and branded residences offer foreigners freehold ownership of investment properties in Phuket. The hotel licenses mean a consistent income stream may be earned from short-term rentals, something otherwise denied to most condominium owners. At the same time, the professional management services are being offered by established hotel groups with the international reach needed to ensure the highest levels of occupancy.
This article appeared in The Phuket News.