Real Estate Investment in Thailand: Types, Advantages and Disadvantages. Part 2

Investments in Property with Guaranteed Rental Income

Offers to purchase real estate—typically in new developments—with guaranteed rental returns (usually 7–10% per annum) are becoming increasingly popular. A 10% annual return is considered very high for Thailand and is difficult to achieve independently or through an agency. Is there a catch, and what does it involve?

There are many such offers on the market today. As an example, let’s consider the terms offered by the developer New Nordic for new developments in Pattaya, Phuket, Samui, as well as in Cambodia and Indonesia (Bali). Their guaranteed rental program appeared several years ago and remains one of the highest-yield offers on the market, promising up to 10% annual returns.

Terms and Structure

Price per square meter ranges from 85,000 to 120,000 Baht
Guaranteed rental program duration: 5 or 10 years
Income payment terms:

3.1. Before construction is completed:

If partial payment is made: 3% annually on the paid amount
If full payment is made: 10% annually on the paid amount

3.2. After construction completion:

Guaranteed rental income of 10% annually begins

The buyer has the right to assign their rights to a third party, with all terms preserved for the new buyer

What Actually Happens?

First, the relatively high property price (compared to similar projects) is justified by the right to receive higher income. While the higher price may seem like a disadvantage, the return is calculated based on this price—resulting in higher nominal income.

Second, the guaranteed rental period begins only after 100% payment of the property, whether during or before construction. This allows the investor to recover their initial investment and generate profit.

Third, after the guaranteed rental period ends, the investor retains ownership of a liquid asset and can use it at their discretion—live in it, rent it out independently, or sell it.

Fourth, before construction is completed, there is technically no rental income, since the property is not yet operational. However, payments are made in the form of compensation (often referred to as “cashback”).

For the buyer, this means:

Payments received before construction completion are not rental income but a refund of part of the purchase price from the developer, and therefore are generally not subject to taxation
If the buyer pays 100% upfront, they effectively extend the period of receiving 10% returns to include the construction phase—the earlier the payment, the higher the total income

Fifth, if the buyer decides to exit the investment, recover funds, and transfer money out of Thailand, they hold a ready-made investment product—a property with guaranteed rental income. A new buyer can begin receiving returns immediately upon assignment or purchase.

Conclusions

Purchasing a property under construction with guaranteed returns is not purely a traditional real estate investment. The buyer acquires an investment product that includes property ownership.

Guaranteed rental programs are currently a good alternative for investors who do not plan to live in the property but view it as a secure asset until the end of the income period and eventual resale.

If the developer fails to meet income payment obligations, the investor still retains ownership of the property. However, greater risk arises if issues occur during construction, which may lead to legal disputes. It is advisable to choose developers with a proven track record of completed projects and those offering integrated services such as property management, infrastructure, and tourism support.