In order to find out the reasons to invest in Koh Samui Island, let’s first start answering the question: why investing in Thailand?

Nestled in the heart of Asia, Thailand enjoys beneficial trading opportunities with the countries members of the ASEAN. Its strategic location serves as a gateway to Southeast Asia, supporting the expansion of its economy, thus providing real opportunities to foreign investors.

In fact, Thailand’s economy is the second-largest in South East Asia; its per capita income is ranked fourth in the region, after Singapore, Brunei, and Malaysia. Gross domestic product growth has settled around 5% per year.

 

Thailand Real Estate investment – Source: https://www.boi.go.th

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In addition, the country has signed free trade agreements with many international trading partners, to reinforce its commitment to free and fair global trade, gaining a real reputation as a second home for many multinational companies. Thanks to its abundant natural resources, improved technologies, IT networks, skilled workforce, modern infrastructures and communication facilities.

In the recent past, the Thai government started offering various tax incentives schemes to foreign investors through the Board of Investment (BOI).* With the reduction of the successive corporate income tax to 20% in 2013, the corporate tax rate in Thailand ranks as the 2nd lowest in the ASEAN countries.  This has led to a growth in economic activities and investments and has put the country in a competitive position compared to its neighbors.

Globally, in 2019, Thailand is ranked 27th out of 190 countries in the latest Ease of Doing Business ratings. While its real estate market is now one of Asia’s most popular among foreign investors.****

 

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What about investing in Koh Samui Island?

To better understand why Koh Samui’s real estate market offers one of the most profitable investment opportunities in Asia; let’s find out why visitors choose Koh Samui for their holidays rather than any other destination?

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A tropical feel

Koh Samui is indeed internationally well-known as an agreeable holiday destination; one of its biggest assets is without any doubt, its immaculate tropical environment, featuring plentiful white sand beaches and an exotic jungle scenery.

The island offers activities and facilities for all ages and all type of travelers, it is becoming a real fast growing and flourishing tourism market.

In addition, the government has established laws supporting the sustainability of the island, unlike the high rise buildings of Pattaya and Phuket, it is not allowed to build over 12 meters on Samui; this keeps the island away from over development issues, and protects its charming nature.

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A safe island

Nestled in Chumphon archipelago, in the heard of the Gulf of Thailand, Koh Samui is naturally not prone to severe typhoons and hurricanes; there are fewer risks of natural disasters on Samui unlike islands on the Andaman Sea.

Thanks to its location near the equator, that allows warm temperatures and a stable rainfall during the whole year. The rainy season on Samui would generally last 1 to 2 months, allowing 10-11 months around tourism activities.

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Accessibility

Koh Samui International airport

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Koh Samui’s international airport is an award winning airport owned and exclusively operated by a private airline: Bangkok Airways. It is now the second international focal point after Bangkok’s Suvarnabhumi Airport. It welcomes over 1.5 million passengers every year, and the numbers keep increasing considerably over the years.

The development of the island’s air accessibility is directly linked to Bangkok Airways’ ability and keenness to enlarge its fleet capacity, route networks, and frequency of existing routes as well as airport infrastructure. It is now a major gateway to Koh Samui, benefiting from a growing number of international flights and an expanded portfolio of international code-share partners.

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Following the doubling of international passenger arrivals in 2016, the numbers continued to increase with 15% growth in 2017**.  Bangkok Airways operates both domestic and international routes to USM. Domestic routes include direct flights from Bangkok’s Suvarnabhumi Airport, Chiang Mai, Krabi, Pattaya and Phuket.

International routes include direct flights from Hong Kong, Kuala Lumpur, China Mainland, and Singapore. Mainland China continues to be the fastest growing overseas source market, followed by Germany with 35% growth as of the second quarter of 2017.***

 

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Flying to the island from Bangkok is indeed the easiest and quickest way to get to Koh Samui, and takes only an hour. However, it is also the most expensive way. On a positive note, the rates established by Bangkok Airways limit the number of visitors to the island, attracting more mid and upper market travelers and wealthy foreign investors.

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Surat Thani Airport

Surat Thani Airport is located about 90 km from Donsak pier, where most ferries leave to the islands in the Gulf of Samui, it is increasingly an alternative access point to Samui, where flights arrivals grew significantly last year by 19% to 8,228 flights. Passenger arrivals also uplifted by 12% to 1.1 million.***

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Ferry services

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In addition to these two major entry points, Samui benefits from many ferry services, companies like Lomprayah, Seatran and Raja Ferry link Koh Samui to the neighboring islands and to the mainland, allowing more domestic arrivals to the island as well as international travelers landing to Surat Thani or Nakhon Si Thammarat airports.

Samui Island is in fact, only an hour and half away from the mainland by ferry, and less than an hour by speedboat, it is actually the closest island of the Gulf to the mainland.

Developed infrastructures and facilities

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In 2012, Samui has been granted a municipality status, locally self-governed since then; this resulted in better infrastructures (better schools, better hospitals, and tourist facilities).

The island is well known for its mid and high-end hotels and resorts, first class restaurants featuring quality of cuisines, reputable international hospitals, 2 eighteen holes championship golf courses, several ferry services, a cinema, shopping malls, and leisure facilities.

Samui’s infrastructures are urbanized under sustainable rules, limiting its attractiveness as a mass market destination as Phuket had turned in the past years.

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Mid and upper market tourism destination

Koh Samui has witnessed an entire transformation, from an island traversed by jungle tracks in the 70s to an upscale tourism destination. The island’s tourism was originally associated to a ‘party’ destination on the backpacker trail. In recent years, Koh Samui has swiftly developed into a mid and upper market destination with increased air and sea connections and several internationally branded resorts.

The island attracts wealthy foreign and Thai visitors, creating a balance of international and domestic travelers and investors. Bragging over many upmarket internationally renowned hotel and resort brands, such as Le Meridien, the Nikki Beach, The Banyan Tree, Conrad, Four Seasons, The Ritz Carlton, Sala, W Hotel…

However, if compared to the other famous holiday destinations in Thailand, Koh Samui is not “commercially” overcrowded and still has great growth potential. It will surely remain a destination for higher spender visitors and investors.

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Not labelled as a sex tourism destination

Samui has luckily managed to stay away from the ‘sex tourism’ label, associated with Pattaya and Phuket, instead, the island welcomes families, couples, professionals and nature lovers, seeking a comfortable and enjoyable retreat.

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And now how about Samui’s real estate market?

Samui’s real estate offer is quite unique compared to other destinations in Thailand; the market is driven by 3 major factors: its tropical environment, its affordability as well as its sustainability. On top of the construction regulations mentioned above, limiting buildings up to 12 meters, condominium licenses were suspended since 2015, avoiding developers to overcrowd the island, hence, protecting its exotic charm.

 

When did it start?

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So here we are now, having a close look at Samui’s real estate market. Let’s first see how it all started at the first place. Going back to the ’80s, when the first foreigners began to settle down on the island, seeking a tropical, safe and comfortable living.

Back then, there were almost no developers on the island, buyers would buy land or plot, and build their own home on it, with the help of local constructors. Slowly, developers and foreign constructors started doing business on the island, offering a better choice of off-plan and built properties, following western and modern standards.

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Current trends

The current real estate market trends on Koh Samui feature an offer centered between Maenam (north of the island) and Lamai (south east), with a focus on Bophut and Chaweng neighborhoods. Those areas are popular among property buyers due to their convenient locations in close proximity to international hospitals, shopping malls, grocery shops, international schools, and Samui’s airport. Therefore, they are also the most visited spots by Samui’s tourists every year.

More recently, the areas of Plai Laem and Chaweng Noi hills have turned more popular because of their spectacular sea views, their nearness to the beach and the airport.

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The actual real estate market on Koh Samui tends toward sea view lands and properties.  Buyers are especially attracted by secure and fully managed developments with a preference for high end and luxury pool villas. Developments offering guaranteed yields over 7% per year are also catching the eye of current local and foreign investors.

As for new buyers seeking a mix investment – properties they would use a few weeks per year for their holidays, and rent out for the rest of the year – they tend to look for 3-4 bedroom pool villas sized between 400 and 600 sqm, with again a preference for a sea view and a proximity to the beach – less than 2km away to the beach-.

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On another note, in the past 2 years, we have noticed an increase in the long term rentals demand, as well as an increase in the length of stay for short term visitors. Families are now more likely interested in renting a pool villa for their holidays rather than booking rooms in a hotel, seeking a better comfort, freedom and privacy.

Hotel performances showed an increase in both average daily rate and occupancy, which grew by 4.4% and 2.7% respectively as of the second quarter of 2018 compared to the same period of the previous year. As a consequence, in 2018, the average daily rate was around 4,800 THB and the average occupancy around 80%.***

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What to expect in the future for Koh Samui’s real estate market?

Koh Samui Island has a great potential over the next years to fortify its reputation as Thailand’s favorite tropical island retreat for mid and upper market holiday travelers as well as a safe and comfortable island for expats seeking to settle on it. Koh Samui continues to show strong growth in travel and tourism. The market has demonstrated an incredible flexibility over the last few years.

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We think that the trends for residential properties and fully managed development will keep increasing for the next 5 years, European and Asian investors will still consider Koh Samui as one of the most profitable islands for their real estate investments in Thailand.

We also believe that investors will begin considering settling in the southern areas of the island, where beaches and jungles are still unspoiled, lands are still affordable compared to the northern areas and real estate investments and returns are promising.

 

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Read our article : Koh Samui : Our top 5 Villas’ developments with breathtaking sea views.

 

SOURCES

* https://www.boi.go.th

**https://www.hospitalitynet.org/file/152006263.pdf

*** https://www.c9hotelworks.com/downloads/samui-hotel-market-update-2018-09.pdf 

**** https://tradingeconomics.com/thailand/ease-of-doing-business