Phuket is one of the few markets in the world where an apartment bought to rent out can deliver 8-12% gross per year - at European prices that figure usually does not exceed 3-5%. How is it possible, and what lies behind the percentages? This guide explains how to calculate ROI on renting out property in Phuket, how a rental pool and guaranteed rental work, what the real costs are and where the risks lie. No beating around the bush.
Why Phuket? - rental demand
Phuket is visited by something on the order of a dozen-plus million tourists a year - in one year there can be more of them than the entire population of Thailand. This is no accident: the island combines a tropical climate, developed infrastructure, hundreds of restaurants and hotels, beautiful beaches and direct flight connections with dozens of cities around the world. Demand for short-term rental of apartments and villas is high - and has been rising for years.
The main tourist season runs from November to April, when the weather is dry and the sky is blue. Out of season the traffic does not die down - Phuket also attracts long-term residents, remote workers and tourists from Asia, for whom the rainy season is no obstacle. Seasonality does mean, however, that year-round occupancy is lower than in the peak month - worth keeping in mind when running your calculations.
From an investor's perspective, two facts are key: a large and fairly stable tenant market and a low entry point compared with Western Europe. Details on property prices, where the whole equation begins, can be found in the guide: Property prices in Thailand 2026.
What ROI is - gross vs net
Market estimates for Phuket point to 8-12% gross ROI per year. This is an indicative value, not a guarantee. Importantly - "gross" here means: before deducting management costs, common-area fees, property tax, insurance, any repairs and vacancy periods. On the net side, the result can be considerably lower.
For comparison: the average residential rental in major European cities delivers 4-6% gross per year, and after deducting costs and tax - often 3-4%. Phuket balances out more favourably, but it also involves greater distance and less control over the property.
- Gross ROI: estimated rental income / property price x 100%. Does not account for any costs.
- Net ROI: income after deducting management costs (15-30%), common-area fees, tax, insurance and vacancies.
- The difference between gross and net can amount to 3-5 percentage points - that is a lot. Always ask for specifics, not just the headline.
- The result depends on location, operator, finish standard and seasonality - not on Phuket as a destination on its own.
How to calculate ROI - an illustrative example
The example below is purely illustrative and is meant to show the logic of the calculation. Actual values depend on the specific development, the operator, the contract terms and occupancy.
| Parameter | Option A - studio | Option B - 1BR apartment |
|---|---|---|
| Purchase price | 3,500,000 THB | 6,500,000 THB |
| Estimated annual income (gross) | 315,000 THB | 650,000 THB |
| Gross ROI (indicative) | ~9% | ~10% |
| Management costs and fees (~30%) | -94,500 THB | -195,000 THB |
| Estimated net income | ~220,000 THB | ~455,000 THB |
| Net ROI (indicative) | ~6.3% | ~7% |
This is an example showing the line of reasoning - the figures are notional and do not constitute any forecast or promise of return. Real results may be higher or lower depending on occupancy, rental rates and the operator's actual costs.
When calculating, it is also worth factoring in the one-off purchase costs (transfer fee, sinking fund and others) discussed in detail in the guide: Costs and taxes when buying property in Thailand. These costs reduce the effective rate of return if you treat them as part of the total investment.
Rental pool - how shared renting works
A rental pool is a rental programme run jointly by the developer or an external operator. All the units covered by the programme are rented out as a single pool - the operator handles bookings, looks after guests and services the apartments. The owner does nothing operationally: no searching for tenants, no handing over keys, no settling cleaning costs.
The income from all the rentals in the pool is totalled and shared among the owners in proportion to floor area or share - regardless of whether a particular unit happened to be rented. This means that you eliminate the vacancy risk for your specific apartment, but you also will not benefit disproportionately if your apartment proved more popular than average.
Typical split terms
- The owner's share of income: 60-70% (the operator takes 30-40%).
- Additional fees are often added: maintenance, cleaning, minor repairs - it is worth checking what is included and what is invoiced separately.
- The owner usually has the right to several to a dozen-plus days of personal use per year, but earns nothing during that time.
- Contracts are signed for a set period (e.g. 3 or 5 years) with the option to extend or withdraw.
A rental pool is the simplest path for an investor who does not want to handle renting from afar themselves. Many developments in Bangtao and Karon offer such a programme as early as the new-build sales stage.
Guaranteed rental - guaranteed return
Some developers offer a so-called guaranteed return: a guaranteed percentage return (most often 6-7% per year) paid to the owner for a set period, regardless of actual occupancy. This is an attractive solution for investors who value predictability at the start.
However, the "guarantee" is only as sound as the developer who provides it. It is worth paying attention to a few points:
- Does the developer have a documented track record? - buyer reviews, historical results of similar projects, years operating on the market.
- How are the payments secured? - whether the guarantee is merely verbal, or based on escrow or another mechanism.
- What happens when the guarantee period ends? - the return reverts to the market level, which may be higher or lower than the promised percentage.
- Is the purchase price not inflated in order to "finance" the guarantee upfront? - this is a common mechanism.
Guaranteed rental is a good tool if you understand its logic and have vetted the partner. It is not, however, a substitute for due diligence.
Short-term vs long-term rental and the hotel licence
In Thailand, short-term rental (under 30 days) is legally available only if the property holds a hotel licence. A private individual who rents an apartment to tourists for a week without the appropriate licence risks a financial penalty and legal problems.
The practical solution for an investor: buying into a development with a built-in rental pool programme, where the hotel licence belongs to the operator - it is the operator who is responsible for the legal aspects of short-term rental, while you enjoy the income.
A comparison of the two models
- Short-term rental (Airbnb-style): higher income per night, higher occupancy in season, but also higher servicing costs and greater dependence on seasonality. Requires a hotel licence - in practice possible through a rental pool or your own hotel.
- Long-term rental (>30 days, often 3-12 months): lower monthly income, but stable and predictable. Readily chosen by remote workers, expats and retirees. Lower turnover and cleaning costs. Does not require a hotel licence - you can rent directly.
Many investors combine both models: in the tourist season they rent short-term through the operator's programme, and out of season they look for a long-term tenant. This requires a flexible contract with the operator - not every programme allows it.
What most affects the return on investment
When talking about ROI on renting out property in Phuket, you cannot limit yourself to the island average - the differences between specific developments are enormous. What determines the result?
- Location: proximity to the beach and the entertainment hub is a key factor for short-term rentals. Bangtao is one of the strongest micro-markets - developed, with many hotels and restaurants, popular among long-term residents. Karon attracts mainly seasonal tourists, which gives a high peak and a weaker off-season.
- Finish and equipment standard: premium-standard apartments achieve significantly higher rental rates than budget-standard ones, even in the same location.
- Operator and management quality: an efficient operator with a good reputation achieves higher occupancy and more easily maintains rates. A poor operator means losses, guest complaints and repair costs.
- Occupancy: for short-term rental, 70-80% annual occupancy is a good result, but it is heavily dependent on the season and the operator's marketing. Do not assume 100% occupancy all year round.
- Fixed costs: common-area fees (maintenance fee), insurance, property tax - these must be deducted from income before we see the real profit.
You will find a full overview of listings with specific rental terms on the property listings page. More context on the market and locations is gathered in the main guide: Property in Thailand.
Risks and what to avoid
A high potential ROI does not mean an absence of risk. An investor who fails to account for it may be disappointed. The main risks:
- Developer risk: buying off-plan means that for several years you are investing in a project that does not yet exist. Delays, the developer's bankruptcy or a change in the project's terms are real scenarios - especially with lesser-known parties.
- Operator risk: rental pool results depend on the operator's efficiency. A change of operator during the investment period can drastically lower the return.
- Currency risk: if you earn in Thai baht (THB) but spend in another currency, the exchange rate has a direct impact on the real rate of return for an investor based outside Thailand.
- Regulatory risk: Thai law can change - the rules on foreign ownership or on licensing short-term rentals have already undergone several amendments. It is worth following changes or having a trusted adviser on the ground.
- Seasonality and demand risk: the pandemic showed that tourism can come to a halt. It is worth having a financial cushion for several months without income, especially if you are financing the unit with a loan.
- Check the developer's past projects - on-time completion, buyer reviews.
- Read the rental pool contract with a lawyer, not just the marketing brochure.
- Do not trust a "guarantee" without security - check where the money for payments will come from.
- Buy a location with broad tenant demand - not only tourist demand.
- Choose a proven agent who knows the market and operates transparently.
Twins Real Estate advises which developments have the best-structured rental terms and verifies the developer before recommending an investment to a client. We do not charge the buyer a commission - our fee is paid by the developer. Want to discuss a specific development? Browse current listings or get in touch with us.
The ROI figures given in this article are market estimates based on available data and do not constitute a guarantee of return on investment. Actual results depend on many factors, including occupancy, management costs, the market situation and the operator's decisions. Investing in property carries the risk of losing part or all of the invested capital. Before making an investment decision, consult an independent lawyer and financial adviser. Last updated: 6 June 2026.