While both Phuket and Koh Samui are thriving real estate markets, recent, more strict enforcement of the law, specifically the Land Code Act, has caused a noticeable divergence in property ownership dynamics. In 2024, the Thai government intensified its crackdown on non-compliant Thai companies used to hold the freehold of villas, a move that has significantly impacted the lower end of the Koh Samui villa market. Following the crackdown, Koh Samui has seen a notable increase in leasehold villa projects available at the lower end of the market. However, due to its large choice of freehold condominiums available at all price points, the same dynamic has not been witnessed in the Phuket property market.
In this article we explore why Koh Samui developers are shifting towards 30-year leasehold structures, while Phuket’s market remains freehold-dominated.
The Freehold Villa Crackdown: Operation Nominee Swoop
In 2024, the Thai government launched Operation Nominee Swoop, read more details on The Nation, investigating thousands of Thai companies that were suspected of being set up purely to hold the freehold of land for foreigners. These companies typically:
- Had Thai shareholders with no actual business interest (acting purely as nominees).
- Were not set up as genuine businesses, lacking any intent to make a profit.
- Were not paying dividends to the Thai shareholders.
- The crackdown has affected both Phuket and Koh Samui with a dampening of demand. However, developers on Koh Samui responded by offering new villa projects available on single 30-year lease terms.
Koh Samui’s Shift Towards Leasehold Villas
Unlike Phuket, Koh Samui has very few freehold condominium options. Buyers looking for secure, long-term ownership have few alternatives if the cost of using a Thai company to acquire the freehold of the land has now increased substantially due to the now strictly enforced requirements for them to be fully compliant with the law.
Key Factors Driving the Change in Koh Samui:
- Lack of Freehold Condominiums – Only one major new freehold project, Anava Condos, has been recently released on the Koh Samui property market. In contrast, Phuket has hundreds of freehold condominium developments, allowing buyers to switch to condos instead of leasehold villas.
- Developer Adaptation – Many new villa projects up to 10M THB in Koh Samui are now being offered exclusively on a single 30-year lease term, with no renewal option. Developers have factored the shorter ownership period into a lower list price to remain competitive.
- Increased Buyer Awareness – With the government’s legal scrutiny, buyers are now more cautious about using Thai companies to hold freehold villas, making leasehold structures the only compliant choice in many cases.
Why hasn’t Phuket seen the same shift towards leasehold?
There is a diverse supply of freehold condominiums with entry-level prices from just a few million baht, covering the entire spectrum of price points right up to many millions of US dollars. So, focusing on the price bracket of 2-10M baht, there is a very wide selection of freehold condominiums available, offering a viable, simple alternative to the more complicated and expensive corporate setup required to acquire a freehold villa.
Market Response – What’s Changing?
With these differences, developers in each market have adapted differently.
Koh Samui:
- More villas offered on a single 30-year lease, with pricing adjusted accordingly.
- Freehold villa availability has significantly decreased.
- Anava Condos remains one of the only freehold options for investors in the lower price bracket.
Phuket:
- No major increase in leasehold villa offerings.
- Freehold condominiums remain the go-to option for foreign buyers.
- The market remains diverse and stable, with both freehold and leasehold options available.
Investment Implications – What Should Buyers Consider?
Given these shifting dynamics, buyers looking at Phuket vs Koh Samui should consider the following:
Leasehold Villas in Koh Samui:
- Lower upfront cost but ownership limited to 30 years.
- Extra space, private pools, and more privacy.
- No renewal options, meaning resale value may be affected.
Fewer freehold alternatives available.
Freehold Condominiums in Phuket:
- Full foreign ownership with less legal risks.
- Phuket offers far more options, from luxury to mid-range condos.
- Investment security remains strong with a well-established market.
Freehold Villas in Phuket (With Legal Company Setup):
- Still possible if structured legally under a compliant Thai company.
- Buyers must ensure genuine Thai shareholders and a real business model.
- More scrutiny from authorities, but still a viable ownership structure.
- These are certainly viable and more suitable for freehold villas in the higher price brackets because the higher price of the property can absorb the increased setup and administration costs.
Looking Forward
The 2024 crackdown on non-compliant Thai companies has reshaped the property ownership dynamics of Koh Samui’s villa market. While for price brackets up to 10 million baht, villas sold on a single 30-year lease term are becoming increasingly common in Koh Samui, in Phuket, at these lower price points, this segment is dominated by freehold condominiums.
