Koh Samui Real Estate Guide

Please see below for useful information and advice concerned with buying real estate in Koh Samui. For more resources relevant to buying real estate in Thailand and Koh Samui, please visit our Koh Samui Property Blog.

Understanding The Legal Issues

When buying real estate in Koh Samui, the same general considerations which are always important when looking for real estate, such finding the right location and choosing a reputable and independent agent, naturally apply. However, because the legal regulations in Thailand governing real estate acquisition are different to those in a buyer’s home country it is also advisable that a prospective buyer spends some time getting familiar with the legal options available. Please see our legal page with more details about legal ownership options open to foreign buyers of real estate in Thailand and Koh Samui.

Location Location Location

Although Koh Samui is only 247 km², it can still take up to 45 minutes to drive from one side of the island to the other, and the characteristics of the different locations vary wildly. Hence, it is extremely important to carefully consider the location of your real estate within Koh Samui. Please see our Samui Overview page for more details about the different towns on the island. The most sought after areas for buying real estate are Chaweng Noi, Bo Phut, Choeng Mon and Plai Laem as they are most central in terms of proximity to the tourist centre of Chaweng, the fine dining of Fisherman’s Village, shopping centres such as Tesco Lotus, the airport and amenities such as hospitals. Of course, not everyone wants to be central but it is worth remembering that being more central is likely to help with future resale. So do your research and spend some time getting familiar with the different available locations.

Style Versus Substance

When looking for your Koh Samui real estate, keep in mind the difference between ''STYLE AND SUBSTANCE''. The SUBSTANCE are things that cannot be changed such as the location of the property, view, size of land plot, how noisy the area is and the floor plan. The STYLE represents easily changed surface finishes like floor tiles, paint colour, and window coverings. Focus on good SUBSTANCE, because the STYLE can always be changed to match your tastes. It can be helpful to imagine each property as if it were vacant.

Choosing The Right Real Estate Agent

When looking for real estate in Koh Samui the choice of the right real estate agent is even more important than when a buyer is searching for property in their own country. This is because they will be far less familiar with the real estate market in Thailand, and Koh Samui, and hence less familiar with market values and different locations. They will also generally have a weaker understanding of the legal issues governing real estate acquisition in Thailand compared to those applicable in their country of residence. For these reasons, spend some time choosing the right real estate agent. Look for a well-established and independent agent, not tied into any particular development.

Choosing The Type Of Property

When deciding which type of property is most of interest, i.e. house, townhouse, apartment or condominium, it is very important to have a good understanding of the legal ownership options open to foreign buyers of Thai real estate. One of the fundamental regulations important to understand is the fact that, as a foreign buyer of Thai real estate, you are not allowed to hold the freehold of land in your own name. Instead the land either needs to be leased or held in a Thai limited company. Other than the legal restrictions concerning ownership of different types of property, buyers need to consider questions such as following:
  • Is an apartment or condominium a more sensible choice than a villa for reasons of security and ease of maintenance?
  • Will I get a better rental return for an apartment or condominium as opposed to a house?
  • Which type of property will be easiest to resell? For example, will a freehold condo resell easier than a leasehold apartment?
  • How will the number of bedrooms effect the rentability of a property?
  • Should I opt for a property with a private pool to increase the appeal as a luxury holiday rental?

Understanding The Koh Samui Holiday Rental Market

Rental returns are of fundamental importance to many buyers. To ensure that the return on investment that you realise meets your expectations, do your own research on the internet to get a good feeling of what rental rates different types of property in Koh Samui command at different holiday seasons. Also bear in mind the fact that properties with a private pool will command substantially higher rental rates because they will have much more appeal at the luxury end of the holiday rental market. When you have a good feel for the rental market rates of Koh Samui holiday homes you will be in a much better position to analyse property rental projections provided by Koh Samui real estate developers.

Gated Community Versus Stand-alone Property

Whether you are looking for a beachside villa, an ocean view property in the hillside or the convenience factor of an apartment or condo in the town, it’s becoming increasingly likely that whatever you decide to buy, it will be part of a private gated community. The benefits of being in a gated community include: the use of communal facilities; on-site property management services; the increased security factor; having on-site maintenance at hand and the peace of mind knowing that you have someone to help and advise with any problems that you may encounter; having a ready-made network of social contacts; having a well maintained area surrounding your property and good road access to your home. But of course some people prefer the privacy of a stand-alone property and security guard, property management companies and home maintenance firms are available within Samui for very reasonable rates.

Understanding Your Finance Options

It is very difficult for a foreign buyer of Thai real estate to obtain funding from a Thai financial institution. So if the developer is not offering finance, which is normally the case, you need to be in a position to buy cash. This may mean, for example, that you need to arrange a loan in your country of residence or liquidate some assets. It is very important that you have secured your funding before you engage in the negotiation process with the real estate developer. Otherwise the property developer is unlikely to honour any special price that you have negotiated if can no longer complete according to the agreed time period.

Paying A Holding Deposit And Conducting Due Diligence

Once you have decided upon your chosen property, and negotiated a price with the Koh Samui property developer or seller, if you want to get the property taken off the market, the standard procedure is to pay a holding deposit. There is no set amount but a typical holding deposit would be 100,000 THB for an entry level condo or apartment and 200,000 THB for a villa. You pay the deposit upon signing the reservation agreement. If you are buying within a development, this agreement will typically be provided by the property developer, otherwise there is no set rule governing which party is responsible to draw up the agreement. You should ensure that the agreement contains a clause to stipulate that, should the property fail any due diligence checks and your appointed legal representative recommends that you do not proceed, your holding deposit is fully refundable. Upon signing the reservation agreement and paying the holding deposit, you will typically have a maximum of 45 days to carry out due diligence and enter into the main sales and purchase agreement.

Conducting Due Diligence

Before you actually complete on any property and take ownership, it is of course of fundamental importance that you get your appointed legal representative to carry out all the necessary legal checks, commonly known as conducting due diligence. The main areas of consideration are the following:
  • Does the property have legal right of access?
  • Is the property unencumbered, i.e. free from any mortgages, liens or debts?
  • Does the seller have the proper legal rights to sell the property?
  • Does the property breach any regulations concerning real estate in Thailand?
  • If the property is being sold with a company, does the company have any outstanding debts or tax liabilities?

Off-plan Property Versus Completed

The Koh Samui real estate market is relatively new hence there is still a very large proportion of property that is being sold off-plan. There is obviously a risk in buying off-plan due to the fact that you are not actually seeing the finished product when you buy it. There is a possibility that the finished product will not match that as presented in the marketing materials or that the completion date of the property is substantially delayed. However, with the quality of today’s computer generated renderings and a detailed contract covering material specification, coupled with careful choice of a reputable real estate developer, it should be possible to have get a finished property delivered to your satisfaction. Key benefits of buying your property off-plan include the following:
  • When property developers first launch a project they typically start with substantially lower prices to encourage a faster sales rate. When construction commences, and the developer has met their construction finance requirements, prices usually rise. Therefore, for investors who commit early to the project there is often a very good price incentive.
  • Because the payment schedule for your property will be tied into the construction progress, buying off-plan will place substantially less demands upon your cash-flow.
  • One of the greatest benefits of buying off-plan is that, if you get involved at the launch of the development, you get to choose your property from all that is available within the project. The quicker you are off the mark, the greater the selection of properties within the development. For example, you might be able to purchase an apartment with a superior view or position within the site; typically penthouses, corner units and those with the best outlook will sell first. Choice of the best unit within a development can then offer better potential for strong capital growth and increased rental returns.
  • Another key benefit to buying off-plan is the possibility to have input to the finished product. It is often possible to move around internal walls, put in extra doors etc, and in some cases even join together two apartments into a single property unit.

Koh Samui Building Regulations According To Distance From The Beach

Before building any property you need to hold a building permit which is obtained from the municipality office. There are certain restrictions on the structure that you can build depending on the distance of your property from the beach.
There are four defined areas which are as follows:

Area 1 - For land located up to 10 metres from the beach, no construction is permitted.
Area 2 - For land located up to 50 metres from the beach, you can only construct a single storey building with a maximum height of 6 metres (including the roof). Also, each building cannot exceed an area of 75 square metres.
Area 3 - For land located up to 200 metres from the beach, the maximum height allowed for any building is 12 metres (including the roof). Also, each building cannot exceed an area of 2,000 square metres.
Area 4 - For land located more than 200 metres from the beach, the maximum height allowed for any building is 12 metres.

Note: Property must now also be constructed with peaked roofs; flat roofs are no longer permitted.

Environmental Regulations On Samui According To Distances Above Sea Level

Level 1 – Land less than 80 metres above sea level
In general, no extra rules apply here, subject to rules relating to hotels (50 percent of hotel land area must be left unbuilt on and ‘green’), residential projects consisting of 10+ units (must have water and waste treatment facilities), in addition to water dams, golf courses and airports.
Level 2 – Land between 80 and 140 metres above sea level
At this level, a single family home can be constructed on land that is 100 square wah or greater (if the land is less than 100 square wah, construction is prohibited). Structures cannot exceed 6 metres in height and must leave 50 percent of the land unbuilt on and ‘green’; must have an architectural design based on traditional Thai, tropical or local aesthetics; must have a roof consisting of 80 percent of the total building area that matches the natural surroundings; and must include an approved water drainage system, to prevent flooding.
Level 3 – Land greater than 140 metres above sea level
Within this range, the rules for Level 2 apply and also structures cannot exceed 90 square metres.

Environmental Regulations On Samui According To Gradient of Land

In all the levels above, where the slope of the land is between 35-50 degrees, only a single family home is permitted which cannot exceed 80 square metres in area and which must leave 75 percent of the land unbuilt (50 percent of the unbuilt land area must be ‘green’ with native trees). In addition, the land area must be 120 square wah or greater, otherwise construction is prohibited. For any slope greater than 50 degrees, construction is also prohibited.

How To Negotiate With Real Estate Developers

For advice and different tactics to use when negotiating real estate developers, see our Koh Samui property blog.

Building Guarantees

When you purchase a property with a condominium title attached to it by the government, you receive by default a five year structural guarantee as well as a two year non-structural defects warranty. It is of course possible the developer may decide to improve upon this by offering more, although this is uncommon.

With regards to other non-condominium projects, where the developer is not regulated by the government, it will be necessary to make sure you get the satisfactory guarantees yourself. A quick summary of the guarantees you should be looking is as follows:
  • Structural – This is the first guarantee most people look for and that is due to its importance. It is common now for some of the better developers to offer a 10 year structural guarantee; this will include items such as foundation beams, floor slabs, retaining walls, load bearing walls, roof structures, etc...
  • Defects – This basically cover all the other parts of the building that the above doesn’t. An example would be chipped plaster board, bad tile work, etc.
  • Manufacturers – this is to essentially to cover all the other items a developer may put into your finished property, such as kitchen items, pool pumps, air-con units, etc..
  • Return to site policy – this is an important policy to have in place when buying a new property as things that go wrong often happen in the first few months. I would always recommend getting the developer to agree to a minimum of a 6 month return to site policy after handing over a new property.
On top of making all the above checks, it is also important to get details of the developer’s policy when it comes to “snagging”. This is the process of correcting small mistakes before the property is completed, maybe some that would be harder to fix at a later date.

An issue of course when buying a resale property, whether privately or within a development, is to check what guarantees from the builder/developer are still in place.