Net rental yield in Phuket: how to count it
A brochure shows you gross yield at perfect occupancy. You live with net yield at real occupancy. The gap between those two numbers is the single largest source of disappointment on this island, and it is also the easiest one to close, because every input is knowable before you pay a deposit. Phuket does produce income. It simply does not like being estimated by eye.
The first question is not how much, it is whether
Before anyone calculates a nightly rate, it is worth establishing whether short letting is lawful in that building at all. In Thailand, letting for less than thirty days is hotel business under the Hotel Act and as a rule needs a hotel licence. The one narrow exemption — accommodation of not more than eight rooms and thirty guests, run as supplementary income and registered with the registrar — does not help the owner of a unit in an ordinary condominium building. A breach is a criminal offence rather than an irregularity. A nightly rate in an unlicensed project is not a yield, it is an exposure, and it does not belong in the model. I have set the whole framework out in what the law allows on short-term rental.
Where the big number comes from
Gross yield is annual rental revenue divided by the price of the property. It is easy to present because it needs only two inputs: a nightly rate and a number of nights. In almost every presentation I have read, both inputs are taken at the top of their range.
The rate that belongs in the calculation is not the high-season rate. It is the weighted average across the year, including the months when the island is quiet and the rate drops by half. And the occupancy that belongs in the calculation is not a projection. It is what the specific management company can show from buildings it already operates, in the same area, for last year.
Ask for that one document and most of the argument disappears. A company that runs real inventory has the figures on hand. A company that does not will offer you a forecast instead, and a forecast is an opinion with a decimal point.
What comes out before the money reaches you
- Management fee. On short-term rental this is normally 20-30% of revenue, and it is charged on turnover, not on profit.
- Void periods. Between guests and through the low season the apartment earns nothing while its costs continue.
- Rental income tax in Thailand. Rent from Thai property is taxable in Thailand wherever it is paid. For an individual it is the progressive scale after a deduction for expenses; the 15% often described as the non-resident rate is withholding paid in advance and largely recovered on the return, not a final tax.
- Common area fees and utilities. Charged by floor area, every month, whether or not anyone is staying.
- Sinking fund and wear. The capital fund is paid once on handover, but furniture and appliances in short-term rental age faster than most owners expect.
- Insurance, internet, cleaning between stays, consumables. Individually small, together a visible line.
- Land and Building Tax. On a residential unit that is not your registered home the rate starts in hundredths of a percent of appraised value, but hotel use is charged materially higher. It is assessed by the municipality on the position at 1 January.
The five-minute version you can do yourself
Take the average nightly rate across the full year. Multiply by 365. Multiply by real occupancy as a decimal, so 0.65 for 65%. That is your gross revenue.
From that, subtract the management fee, the annual common area charges and the rental tax. Then divide what is left by your full cost of entry, which is the price of the unit plus furniture plus all transaction costs. That is your net yield.
Two details decide the outcome. The first is that the denominator has to be the full cost of entry, not the headline price; I set out every line of it in purchase costs and taxes in Phuket. The second is that the running costs have to be in there as real annual figures, which is what the cost of owning property in Thailand is for. Leave either one out and the yield rises by two or three percentage points on paper without anything changing in reality.
Could you send me the net yield on a couple of units in my budget, with the management fee, tax and void periods already deducted?.
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On a good quality property in Phuket, a healthy net yield is in the region of 6-8% a year. In the busier Bang Tao and Laguna corridor, 4-6% net against a 7-9% gross is the realistic expectation, because supply there is high and competition for the guest is real.
Annual occupancy runs at 60-70%, rising to 75-80% in high season. The management company takes 20-30% of revenue. Those three numbers, applied honestly, are what turns a brochure figure into a bank statement.
Double-digit net yield is not something I will show you, because I have not seen it hold on this market without either elevated risk or a developer guarantee that runs for a fixed term and then ends. How those programmes work, and what the asset does after the programme finishes, is a subject of its own: guaranteed rental yield in Thailand.
The other half of the return
Rental yield is not the whole picture. Buying off-plan and holding to handover has historically added 20-30% in capital value on well-chosen projects, and for many of my clients that is the larger component of the total return.
This matters for how you read a low yield. A unit in a prime location producing 5% net while the building appreciates is a different asset from a unit producing 5% net in an oversupplied street with three identical towers under construction next door. The yield line alone will not tell you which one you are looking at.
What actually decides the number
- Walking distance to the beach and to everyday amenities, measured on foot rather than by car
- Who manages the building: an international operator, a local company, or the owner personally
- Whether the project has published performance data from phases already delivered
- How many comparable units will come onto the market in that area over the next two to three years
- What happens to occupancy in the low season, which is the real test of a location
- Whether the building's own rules permit short-term letting at all
The last point catches people out more often than it should. Some condominium rules restrict daily letting, and a daily-rate model in a building that does not allow it is not a yield calculation, it is a problem waiting for a committee meeting. I check it on every unit that is bought for rental, and the management side of it is covered in who will actually rent out your apartment.
Who does what
The numbers are my side of the table. I build the calculation, request the operator's real occupancy and rate history, price the running costs and show you the net figure with every deduction visible. Tax treatment of your rental income, and how it interacts with tax at home, sits with the Thai accountants and the tax advisers I work with, and I bring them in early rather than after the first rental year.
This island genuinely produces income. A well-chosen apartment, managed by people who show real figures, returns a solid single-digit net yield year after year, and in a currency and a jurisdiction that a lot of my clients specifically want exposure to. What it does not do is reward estimation by eye. Every input in that calculation exists in a document somewhere, and my job is to collect those documents before your money moves rather than after. If the honest number does not meet what you need, I will tell you that plainly and we will look at something else.
- Yield calculator — run your own numbers in a minute
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Legal, visa and tax work is not mine — it belongs to partners I use constantly
I am an investment strategist: I select the property, calculate the net return, check the developer and run the transaction. Anything that needs a legal, immigration or tax qualification goes to specialists I have worked with for years.
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Frequently asked
What rental yield is realistic in Phuket?
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Lyubov Fortunova
Investment strategist and founder of Fortunova Capital Group. I have lived on Phuket for more than five years and run every deal myself: I select the property, calculate the net return, check the developer and hold the process together until the keys are handed over. Lawyers, visa and tax specialists come from my own circle.
“I count net, not dreams”
Could you send me the net yield on a couple of units in my budget, with the management fee, tax and void periods already deducted?
I answer personally, within the working day, in any time zone. No calls unless you want them. A question about the article is free and commits you to nothing.
