We invest ourselves in the best properties in Phuket
Published April 11, 2024
Comparison of living and investment conditions
Out of the above three options for living and investing, we chose:
1st place – 📍Thailand 2nd place – 📍Bali 3rd place – 📍Dubai
Thailand, or rather not Thailand in general, but specifically Phuket. Why?
Thailand is the only one that provides 📈 guaranteed returns from the world’s leading hotel systems –
Windham, Accor, Radisson in branded residences with hotel management.
Often it’s 5%-6%, but in our best properties it’ s 7% annualized rental income net of operator commissions and all expenses. Without taking into account price growth from capitalization. Under our exclusive agreements due to special conditions
1️⃣ Phuket
👨👩👧👦 For life
Here are the best beaches, the best climate – eternal summer +30, the sea is the best for swimming, developed medical centers and international schools, roads, infrastructure, many resorts and 5* hotels, excursions and entertainment, active life. Thai smile. Buddhism.
💼 For business
Stable currency – Thai baht equals the dollar for the last 30 years Independent financial system and stable political life, developed sustainable diversified economy. No inflation. Low taxes -5%-15%
🏡 The real estate market is less developed than Dubai, more developed than Bali.
Yields are higher than in Dubai and about equal to Bali. Higher in some segments, slightly lower in others. In an actively growing phase.
Plus to this return you need to add annual price growth of 5% before the pandemic and 15% in 2023, the best properties now often get more. So the full estimated yield here now is 12%-17% per year. The payback is 5 years. More on resale, but you have to know how to do it.
We share the risks and invest:
- part of it in guaranteed income,
- some of it in pre-sales at the pits,
- part in the most promising objects under construction in the best locations on the first line by the sea.
The construction period is short – 1.5 years, there are delays, as a rule, insignificant. A good reserve airfield, where you can take the family, move to live in retirement, send adult children, comfortably work remotely and create your own private pension fund buying one apartment for living and 2-3 to form a stable income for life. Close enough to fly – 9 hours. Direct flights. Friendly country. 70% of the island is a national reserve with an abundance of tropical gardens, drowning in greenery. Bright colors. Excursions. Clubs. The best beaches in the world. Thai smile On the totality of these arguments we preferred to invest in Phuket.
2️⃣ Bali
👨👩👧👦 For Life
Bali is a mecca for surfers. The climate, nature, entertainment and excursions are very similar to Phuket. It has its own community, its own lifestyle, its own environment and culture of socializing. Schools, roads, medical centers, restaurants, booming economy. In Bali, it’s not the sea that sells. It’s the views. The sunsets. They’re really beautiful.
☝️ Key difference
What is a surfer’s paradise is not always a paradise for ordinary people – there are always big waves and the ocean is barely swimmable. If you have small children who are dangerous to leave on the shore, this is an important factor. Religion Islam. This is also a factor.
💼 For Business
The local currency is fairly stable, less so than the Emirati dirham and Thai baht, but still fairly stable. There is inflation. Taxes here are higher than in Thailand – 20% which is customary to optimize to 10%, so far no one is looking after it. High cost of renewal of land lease rights 1.5% per year (45% for 30 years), young undeveloped legislation and a large number of new inexperienced developers. Fast growing economy, looking to take the lead in growth rates, large Indonesian population of about 300 million people, its own culture. Smiling people.
🏡 The real estate market here is still in its infancy
Because of this, higher returns are possible in some of the best properties, but also greater risks for newcomers.
Requires thoughtful study of locations and choice of developers. We also consider investing here, but with a very careful selection of only the most reliable developers.
The construction cycle is short as in Thailand – 1.5 years. Deadlines can be delayed. Mostly insignificant. Strongly depends on the developer. Estimated rental yield 12%-17% excluding agency commission. Management company commission can be 15%-20%. When asked if they can give a guaranteed yield of 7% instead of the estimated 17%, they look sadly at the floor and blush slightly. You can promise a lot of things. But it is quite another thing to give real guarantees from yourself under the contract.
There is only one real estate developer in Bali that at an estimated yield of ❗️17% gives ❗️7% guaranteed income.
Only in one of their properties. As an experiment. It turns out 17% of promised estimated return = 7% guaranteed return. Such a business arithmetic. Draw your own conclusions.
That’s why we chose Phuket. Better a tit in the hand. But we also occasionally look at Bali for investment.There are some really great large infrastructure projects here, which tempts us, and there is a shortage of supply in this segment due to the fact that there used to be none here at all and now it is just being built. Scarcity always gives birth to demand, price growth and increased liquidity.
Sometimes, in Bali, small new developers (which only this year here appeared a few hundred) try to attract clients with a higher profitability forecast at the expense of incorrect price comparison with the objects next to a higher class and increased occupancy period as an already promoted object. But this can be checked by ordering an expert examination from special agencies. Inexpensive. Management companies here are less greedy than in Phuket, ready to work for 15%-20% and offer more advanced services than in Phuket – super smart house and remote management service with reporting. There are no direct flights from Russia yet. But they promise. It takes 17 hours to fly.
Now there are several very good offers worthy of consideration in top locations from leading developers with high potential profitability. We represent their interests in Russia and you can contact us. No commission.
Due to the fact that no condos were built here at all until recently and supply is still lagging behind demand, rental yields may be higher here now. Here’s the thing. There’s no outright deception here. But there is one touch that will clarify things for you.
Balinese use pandemic statistics as a basis for calculations.
The fact is that Thailand was virtually closed to the public during the pandemic with strict restrictions on entry and travel, while Bali was completely open during this period. It became one of the few accessible resorts in the world during this period. So everyone flocked here at this time and the occupancy rate here became 100%. This is what the bold Balinese investors use in their calculations, lured by the maximum estimated return. Well, you’ve guessed the catch.
Although we should admit that even now the occupancy rate here is one of the highest for the season as a whole. Unlike the Thais, Balinese have learned to turn disadvantages into advantages. For example, in Thailand it is low season in summer. The temperature is still the same +30, not much rain. But tourist traffic is falling. Why do you think?
On the west coast, where the best resorts are located in this period, there are often waves, so tour operators reduce flows. Although pools, restaurants, stores, massages – everything works. And you can drive 15 kilometers from the west coast to the east coast and swim there. Or on the islands nearby. In Bali, they decided to turn a minus into a plus. Waves are cool! Get a board! Become a surfer! Admire the ocean waves. Many beaches have a rocky entrance. It’s really beautiful, but not always comfortable. Such audacity makes tour operators melt. There is no low season here. Tourists come exactly all year round.
The supply of facilities in Bali is much less. Prices are comparable to Phuket, that is much lower than Dubai.
Here they invented to build villas of 40 square meters. 👀 With a view? Well, of course you guessed where.
Not the ocean, that’s for sure. The word “villa” should have offended the wily German for such a humiliation. On the other hand, maybe it’s a generous gift to humanity on his part and broadens the horizons of people pontificating about villas. You never know. Usually in a normal villa the kitchen is more than forty meters. This is a whole villa of 40 square meters. But it works like mini pots, which are ordered by mistake on Aliexpress.
Sounds so proud– a villa in Bali. And it’s only $160,000. In Ubud. Far from the ocean. Where land is several times cheaper. He’s made them affordable and popular. And just imagine, to buy or rent one of these luxuries, you have to wait two months on a waiting list. Truly a man of genius. And they rent well and bring good profitability.
3️⃣ Dubai
👨👩👧👦 For Life
Very hot summers, little greenery, mostly artificial plantings, skyscrapers. Expensive imported food, rent. It can be +46 and higher in the shade, so wealthy Dubai residents and not only them in this period often leave. To the same Thailand and Bali, where there is infrastructure, hotels and villas of premium class. In winter it is good here. In summer you have to hide in air conditioners, you can live, but it is a different life. But here are the world’s best restaurants and shopping, the most modern technology, high standard of living, which attracts ambitious young people who have their own tastes. A more expensive standard of living. A high level of security. Prestige. And ponts, of course.
💼 For business
Dirham is the most stable currency. There are no taxes. Almost. No income tax, nds, etc. Comfortable conditions for setting up a business in a tax-free zone and working remotely. Economy. There is little production. Development is mainly due to the creation of logistics and tourist hub, oil production. And construction, which is growing by leaps and bounds. There is a project to build a city of skyscrapers 170 kilometers long right in the desert.
🏡 The real estate market is the most legally developed and transparent one
There are escrow accounts, government registers, official reports, forecasts and comparisons. Against the background of the lack of taxes, the registration fee of 4%, which is much higher than in Thailand and Bali, and the tax on renting look a bit strange.
There’s been a lot of talk the last 2 years about the inflated real estate market and the bubble. About the loss of liquidity. Prices are rising, but it is impossible to sell at these prices against the background of competition with new objects. Yield is estimated at 5%-6%. There is no guaranteed yield here as a concept. The construction period is long – 4 years. Two-thirds of the objects are delivered with a significant delay of a year or more. Prices here are noticeably, often 2 times higher than in Bali and Phuket. And the threshold of entry is also 2 times higher. Why? Well, that’s just the way it is. While there was no competition from Thai and Bali, which are now strongly pushing on the heels. To sell already bought objects recently becomes more and more difficult, about what we hear every day from their friends, partners and clients, who more often ask questions about Bali and Phuket. The capital of the rapidly growing economies of China and India, as well as Hong Kong, Japan, Taiwan, Indonesia and Australia, is also being directed there. The flight is 5 and a half hours.
To summarize
In our comparison for living and investing, Phuket won: yields – 7% guaranteed, 15% estimated, 40% on the pit. Very close to it is Bali. They are on the rising crest of a wave right now. Dubai now seems to be at the high point. Where to next? The rest of them – Europe, Russia, Turkey? Well, you know where they are.Call, write, we’ll give you the details. We’ll share our calculations.
