In Q1 2026, our analysts reviewed 23 completed condominium and villa transactions on Phuket and Koh Samui where buyers from Europe had projected net rental yields of 8-10% per year. The actual result after the first 12 months of operation averaged 4.2% net - a gap of up to 58% against initial forecasts. The primary cause was not weak occupancy. It was a systematic underestimation of operational rental costs.
The problem has been compounding. Based on our tracking of operator agreements across Bang Tao, Kamala and Rawai, property management costs on Phuket rose by approximately 18-22% between 2023 and 2025. Over the same period, short-term rental rates in the condominium segment below 8 million THB grew by only 6-9% year on year during the 2025/2026 season.
Quick answer
- A typical rental operator on Phuket charges 25-35% of gross rental revenue for short-term lets; on Koh Samui (Bophut, Maenam) the range rises to 30-40% due to smaller market scale
- Annual maintenance costs for a condominium valued at 5-7 million THB come to a minimum of 80,000-140,000 THB per year, excluding operator commissions
- The sinking fund (one-off at purchase) runs 400-800 THB per sq m; the common area fee (CAM) runs 40-80 THB per sq m per month
- Rental income tax in Thailand for a non-resident individual starts at 5% and scales progressively to 35%; the effective rate for a single-unit landlord typically falls between 5-15%
- Insurance, minor repairs and equipment replacement consume on average 3-5% of annual gross rental income
- Low-season occupancy (May to October) on Phuket drops to 35-50% even in well-located properties, which materially compresses the annual average yield
Options and scenarios
Scenario 1 - condominium in Bang Tao, Phuket, valued at 6 million THB
A buyer from Central Europe purchased a 45 sq m condominium in a completed beachside project in Bang Tao. The developer presented a gross rental projection of 8% per year, implying 480,000 THB in annual revenue on a 6 million THB purchase price. The buyer's model excluded: the operator commission (30%), CAM fees (3,200 THB per month), insurance (8,000 THB per year), laundry and cleaning turnover costs (averaging 1,200 THB per guest changeover), minor repairs and equipment replenishment (approximately 25,000 THB per year), and income tax.
Actual gross revenue in year one came to 420,000 THB, with occupancy at 62% against an assumed 75%. After deducting all operational costs, 185,000 THB net remained, representing a net yield of 3.1% against the projected 8%.
Scenario 2 - two-bedroom pool villa in Kamala, Phuket, valued at 18 million THB
An investor acquired a two-bedroom villa with a private pool in Kamala. The plan assumed rental rates of 8,000 THB per night in high season and 4,500 THB per night in low season. The model did not account for pool maintenance (4,000-6,000 THB per month), security and garden upkeep (8,000-12,000 THB per month), the higher operator commission for villa management (35-40%), or periodic replacement of outdoor furniture and kitchen equipment every two to three years (estimated at 150,000-300,000 THB per replacement cycle).
Total annual operational costs reached 680,000 THB against gross revenues of 1,050,000 THB. Pre-tax net income: 370,000 THB, a net yield of 2.05% on purchase price - well below the 7% cited during the sales process.
Scenario 3 - studio condominium in Bophut, Koh Samui, valued at 4.5 million THB
The buyer selected a 32 sq m studio in Bophut, attracted by proximity to Fisherman's Village and anticipated tourist demand. The seasonal structure on Koh Samui is materially different from Phuket: the core high season runs December to March (versus November to April on Phuket), and international flight connectivity is more limited. Year-one occupancy reached 48%. The operator charged a 35% commission. CAM at this project was 65 THB per sq m, equating to 2,080 THB per month.
Net income after all costs: 98,000 THB per year, a yield of 2.18%. The buyer's original assumption was 9%.
Comparison table
| Parameter | Condo - Bang Tao, Phuket | Villa - Kamala, Phuket | Condo - Bophut, Koh Samui |
|---|---|---|---|
| Purchase price | 6 million THB | 18 million THB | 4.5 million THB |
| Projected yield | 8.0% gross | 7.0% gross | 9.0% gross |
| Actual net yield | 3.1% | 2.05% | 2.18% |
| Operator commission | 30% of revenue | 35-40% of revenue | 35% of revenue |
| CAM per month | 3,200 THB | none (villa) | 2,080 THB |
| Pool and garden upkeep | none | 10,000-18,000 THB/month | none |
| Annual occupancy achieved | 62% | 55% | 48% |
| Total operational costs | approx. 235,000 THB/year | approx. 680,000 THB/year | approx. 118,000 THB/year |
| Forecast vs. actual gap | -61% | -71% | -76% |
Risks and mistakes
Mistake 1 - treating developer projections as guarantees. In none of the 23 cases we reviewed did the developer's rental projection include a full accounting of operational costs. Developers present gross revenue or gross yield figures, omitting operator commissions, taxes, CAM charges and maintenance.
Mistake 2 - ignoring seasonality. On Phuket, the low season (May to October) typically reduces occupancy by 30-50% relative to high season. On Koh Samui the effect is sharper: the monsoon period from October to December further suppresses demand. Our quarterly data monitoring consistently shows buyers applying peak-season nightly rates to full-year occupancy assumptions, inflating projected income by 40-60%.
Mistake 3 - overlooking equipment replacement costs. The tropical climate, high humidity and intensive guest use degrade furniture, mattresses, air-conditioning units and kitchen appliances two to three times faster than in temperate climates. Our on-the-ground assessments of units after two to three years of rental operation show that a standard refurbishment of a 45 sq m condominium typically costs 120,000-200,000 THB.
Mistake 4 - selecting an operator on commission rate alone. An operator charging 20% instead of 30% frequently does not deliver professional channel management on Booking.com and Airbnb, does not apply dynamic pricing and does not maintain cleaning standards. The result is lower occupancy and weaker guest ratings, which reduce income by more than the 10 percentage points saved on commission.
Mistake 5 - excluding Thai income tax from the model. Rental income in Thailand is subject to progressive personal income tax (5-35%). Depending on the investor's country of tax residence, a double taxation treaty with Thailand may apply, but treaty relief does not eliminate the filing obligation. A significant portion of the investors in our data sets do not incorporate tax into their net yield calculations at all.
Warning signals worth monitoring
- A developer projecting returns above 7% net without itemising operational costs in writing
- A management agreement that does not require monthly cost reporting from the operator
- No historical occupancy data available for the specific location (operator cannot or will not share prior-year statistics)
- A projection that does not explicitly address at least six cost categories: operator commission, CAM and sinking fund, insurance, income tax, technical maintenance, and equipment replacement
What our analysts would do differently
In each of the three scenarios above, our team would recommend building an independent financial model covering a minimum of 12 cost line items, cross-checking rental rates against live reservation platforms rather than developer materials, and adopting conservative base-case occupancy assumptions of 55% for Phuket and 45% for Koh Samui. Only after stress-testing those figures against realistic cost structures is it possible to determine whether the investment generates an acceptable return.
FAQ
What is the typical rental operator commission on Phuket in 2026?
As of 2026, short-term rental operators on Phuket charge 25-35% of gross revenue for condominiums and 30-40% for villas. The rate varies by location, property standard and the scope of services included in the management agreement.
Which costs do buyers in Thailand most commonly leave out of their calculations?
The most frequently omitted items are: CAM fees (40-80 THB per sq m per month), insurance (5,000-15,000 THB per year for a condominium), equipment replacement every two to three years (120,000-300,000 THB per cycle), pool maintenance at a villa (4,000-6,000 THB per month), income tax (effectively 5-15%), and reservation platform marketing fees.
What is the realistic net rental yield for a condominium on Phuket?
Based on our Q1 2026 data set, realistic net yields after all operational costs and before any home-country tax obligations run at 3-5% for well-managed units in prime locations such as Bang Tao, Surin and Kamala. Secondary locations including Karon and Nai Harn typically produce 2.5-4%.
Is rental yield on Koh Samui higher than on Phuket?
No. Koh Samui occupancy rates are generally 10-15 percentage points lower than on Phuket, driven by a shorter high season and fewer international flight connections. At the same time, operator commissions on Samui are higher (30-40%). The combined effect is a net yield that runs approximately 0.5-1 percentage point below equivalent Phuket properties.
How does seasonality affect rental income on Phuket?
High season (November to April) generates 65-75% of annual rental income. During the low season (May to October), occupancy drops to 35-50% and nightly rates fall by 30-50%. Buyers who apply high-season nightly rates to a full 12-month occupancy model overestimate annual income by 40-60%, per our estimates.
What does it cost to maintain a pool villa on Phuket?
Monthly operational costs for a pool villa in Kamala or Layan start at 15,000-25,000 THB. This covers pool cleaning, garden upkeep, security, minor repairs and utility costs during vacant periods. These costs are borne by the owner regardless of occupancy level.
Do developers in Thailand guarantee rental returns?
Some developers offer a guaranteed return scheme for a defined period, typically two to five years, usually at 5-7% gross. In our analytical experience, the cost of that guarantee is embedded in the purchase price, which is typically inflated by 10-20% relative to comparable non-guaranteed units. Once the guarantee period ends, yields revert to market levels of 3-5% net.
What occupancy rate should be used when modelling rental income in Phuket?
Our team uses 55% annual occupancy as the base-case assumption for Phuket short-term rentals and 45% for Koh Samui. These are deliberately conservative figures. Front-row properties in Bang Tao or Surin can reach 65-70%, but those outcomes should not be assumed without verified historical data from the specific project.
A consistent pattern in our data sets is that the central mistake made by property investors in Thailand is not choosing the wrong location. It is accepting developer yield projections without constructing an independent, itemised cost model. We recommend every buyer prepare a financial model with at least 12 cost line items and verify occupancy data from independent sources before committing to a purchase.
Researching property in Phuket or Koh Samui? Get in touch - our analysts will prepare a data brief for your shortlisted location.