Koh Samui’s build-to-rent villa market taking off as vacation rentals soar

Private villas rented as vacation homes have emerged as a significant segment of tourist accommodation in Samui

Image source: Lime Samui Villas

Freestanding villas in Koh Samui are increasingly offering an alternative to the island’s traditional hospitality supply in the wake of a growing tourism sector. The demand for multi-bedroom accommodation, coupled with a preference for spacious and private villas, has increased, according to C9 Hotelworks’ new Samui Villa Rental Market Review. This trend is pushing up the development of build-to-rent (BTR) villas for investment in the real estate sector.

A resurgence of Samui tourism has been fuelled by domestic travellers, with nearly 70 percent year-on-year growth. The entry of Scoot Airlines from Singapore and the additional new routes promise further growth in the near future with an increased number of regional upscale travellers. What’s important about Scoot is its connectivity to long-haul European, North American, and Australian traffic from its parent company Singapore Airlines.

In recent years, private villas rented as vacation homes have emerged as a significant segment of tourist accommodation in Samui. Platforms like Airbnb serve this market, offering a range of options from midscale to luxury properties. Independent management companies and a handful of local groups are significant players in the luxury segment as many guests require other management and concierge services besides rentals.

From our research, well-managed properties perform generally better, given the demands of travellers in villas go beyond the bed-and-breakfast model of most hotels.

With spreading competition from the informal hospitality supply, the market is turning to management companies with a local operating presence. Access to clientele through brand recognition does not only increase overall rental turnover and rates, but also result in better overall cost control from management. Operations are becoming increasingly challenged by the lack of skilled manpower.

While the post-COVID growth of villa developments marks growing family demand on the island, many of the properties lack professional management and product standards, whereby the owners focus on visual presentation and low rental rates as a main sales strategy. The concentration of this supply is located inland hillside areas with relatively lower investment costs, resulting in reduced rates. Rate pressure is not affecting beachfront villas as inventory is still limited for premium oceanfront and sea view properties.

According to data from AirDNA, there are approximately 5,800 holiday rentals available in Samui. With favourable returns, we see increased investment in the sector, particularly in upscale build-to-rent villas. With that said, there has been a recent crackdown by the Thai government on the use of Thai nominees and registration of properties under Thai companies. This situation will likely prompt overseas investors to use the well-established long-term lease structure for land ownership versus setting up local companies.

We expect growth in existing Koh Samui properties in the resale market, as a result of a global flight to real estate assets and cross-border migration. Thailand’s well-defined Thailand Elite programme, retirement visa, and other initiatives are key catalysts. Turning to land values, compared to other resort markets across the country such as Phuket which has seen prices skyrocket, the island’s land is moderately priced and remains attractive for property development in the short to mid-term.

For further insights, check out C9 Hotelworks’ latest Samui Villa Rental Market Review.

About Bill Barnett

Bill Barnett — a globally recognised hospitality, tourism, and real estate advisor — is the founder and managing director of Asia-based C9 Hotelworks and esteemed member of the PropertyGuru Asia Property Awards (Greater Niseko) Judging Panel.

In addition to being a leading consultant, he is a frequent speaker at industry events and conferences.  With over 30 years’ experience in the Asia Pacific region, he has an extensive background in hotel operations, development, and asset management. His past employment highlights include Senior Corporate roles at international hotel chains and publically listed companies. Bill is considered to be one of the foremost industry experts in the hotel residences sector.  To date, Bill is the author of four books on travel, property, and hospitality under the titles of Slave to the Bean, Collective Swag, It Might Get Weird and Last Call. 

For more information, email: [email protected].