Rental yield in Thailand: 4–6% net and the guaranteed-rent trap

Net rental yield in Thailand is 4–6% a year for an ordinary flat with no guaranteed-income programme. Flats sold with developer-guaranteed rent cost roughly twice as much as their neighbours, and the guarantee itself runs for about three years. People buy here first to live, and only then for the return.

What yield does Thai property deliver?

4–6% net: that was the estimate from a practitioner with 12 years in the Thai market, across Bangkok, Phuket and Pattaya. It is income after costs, with no developer guarantee.

The figure is more modest than sales presentations suggest. But building service charges are low: according to the practitioner, six months of rent comfortably covers them for the whole year.

Why is guaranteed rent a trap?

Because the guarantee is already built into the price. An example from our closed session for brokers: an ordinary project starts from AED 200,000, while the one next door with guaranteed income starts from AED 450,000.

The developer does not pay the guarantee indefinitely; the usual term is 3 years. In effect the buyer is handed back part of their own overpayment.

When the programme ends, the flat has to be sold at the market price, next to identical units that cost half as much in the first place.

Why buy at 4–6% a year?

There are three motives, and none of them is about the percentage. The first is diversification: part of the capital sits in another country and another currency.

• A home for yourself. Many owners spend the winter in the flat and let it for the rest of the year.
• Peace of mind. Buyers choose the country as a place with no military conflicts.
• A low entry point. A studio in a good building starts at around AED 200,000.

Short lets or long lets?

Both models are common in the resorts: nightly lets in high season and a long contract for the rest of the year. Some owners let only the months when they are not in residence themselves.

Management companies operate mainly in Phuket and in branded projects. Professional letting agencies are few, so an owner should establish in advance who will look after the unit.

How to check a broker's numbers

• ask whether the yield quoted is net or gross;
• compare the price with neighbouring projects that carry no guarantee;
• find out how long the guarantee lasts and who pays after it ends;
• allow for the time a resale takes: from 5 months to 2 years.

On getting out of an asset, see our piece on liquidity; on tax on rental income, see the breakdown of a condo owner's costs.

Frequently asked questions

How much does a flat in Thailand earn in rent?

On average 4–6% a year net, provided it is an ordinary project without a developer's guaranteed programme.

For how long does a developer guarantee the income?

As a rule, for 3 years. After that the income depends on the market, and the owner is left with an inflated purchase price.

Does the rent cover the cost of running the flat?

Yes. Building service charges in Thailand are low: by the practitioner's estimate, letting the flat for six months comfortably covers them.