Phuket and Koh Samui: Emerging Real Estate Hotspots for International Investors

Rising Demand from Russian and Israeli Investors

Thailand's two largest islands, Phuket and Koh Samui, are gaining attention as premier real estate destinations, driven by significant investment from Russian and Israeli buyers. In Phuket, Russian investors remain the largest group, with their interest expected to persist as condominium units purchased in recent years continue to change hands. Meanwhile, on Koh Samui, Israeli investors are increasingly influential, particularly in the development of residential properties.

The appeal of these islands is evident in the numbers. In the first half of 2026, Koh Samui saw the launch of over 800 villa units across 70 to 80 projects, surpassing the development pace in Phuket. This surge in supply is attributed to the increased demand from international buyers, particularly post-pandemic, as the number of Israeli arrivals to Samui jumped from 70,000 to over 200,000, fueling the residential market.

Investment Strategies and Returns

Investors are capitalizing on Koh Samui's lower land prices compared to Phuket, often opting for long-term leasehold agreements instead of outright freehold purchases. This approach helps manage costs while allowing investors to develop boutique villa projects, typically comprising 10 to 25 units, which are then subleased through private networks. This integrated ecosystem encompasses property development, management, and tenant acquisition, providing a comprehensive investment strategy.

The potential returns are substantial. During peak tourism seasons, mid- to high-end villas can generate monthly rental income of several hundred thousand baht. For condominiums, legally structured rentals can yield tens of thousands of baht per month. Developers estimate annual returns between 8% to 10%, outperforming many Western markets, making these islands attractive for investors seeking strong rental yields.

Legal Considerations for Foreign Buyers

Foreign ownership in Thailand typically requires working through legal frameworks, particularly concerning land ownership restrictions. Many foreign investors opt for leasehold agreements, which can span from 10 to 30 years, providing a viable alternative to outright property ownership. This strategy not only aligns with Thai legal requirements but also offers flexibility and security for international buyers.

Potential buyers need to confirm regulatory oversight and capital monitoring, especially with the increasing use of digital payment systems in transactions. Additionally, practices such as using Thai nominee shareholders to bypass land ownership laws are under scrutiny, with authorities mandated to investigate such arrangements.

Government Response and Future Prospects

In response to these developments, there are proposals to review tax policies for foreign property buyers. Analysts have suggested adopting international models, such as Singapore's Additional Buyer's Stamp Duty, to implement a tiered tax system. This approach could enhance state revenue, support domestic housing stability, and maintain Thailand's competitiveness as an attractive investment destination.

The influx of foreign capital continues to bolster Thailand's construction, employment, and service sectors. However, concerns about the use of foreign labor and imported construction materials highlight the need for balanced economic growth. The government is keen to ensure that foreign investment contributes positively to the local economy.

Future Development and Market Dynamics

As the real estate market on these islands continues to evolve, potential buyers can consider the unique characteristics of each location. Phuket offers a more established market with a strong Russian presence, while Koh Samui presents opportunities for growth with its expanding residential supply and increasing Israeli investment.

Prime areas in Koh Samui, such as Mae Nam, Bophut, and Choeng Mon, are experiencing significant development, providing diverse options for investors. Understanding the market dynamics and legal landscape is crucial for making informed investment decisions in this burgeoning sector.

With international demand expected to remain strong over the next three to five years, Phuket and Koh Samui are poised to solidify their positions as leading real estate hubs in Thailand. In 2026, Koh Samui alone launched over 800 villa units, reflecting the islands' growing appeal.