Thailand Real Estate: Communal Development or Stand-Alone?

When discussing requirements from prospective property investors for Phuket and Koh Samui, they often indicate their preference for a property to be in a development, or alternatively they want a villa or house that is stand-alone. In this article, I will attempt to evaluate the most important points with respect to each type of property. Both options have their distinctive advantages and disadvantages, and ultimately the best investment choice depends on the combination of the buyers’ preferences and characteristics of the local real estate market.

Defining Communal Developments and Stand-Alone Properties

First, we need to clarify some definitions. A communal property development is one that has at least some shared infrastructure or facilities for which the property owners have a collective responsibility to maintain and pay for. At the most basic level, a communal development can just feature shared internal roads or infrastructure like electricity. The other end of the scale, the communal aspects can extend to extensive features, such as communal gardens, security services, swimming pools, gyms, a reception area, or on-site management staff, and much more.

A stand-alone property, on the other hand, lacks any communal aspect in legal terms. While a stand-alone property may be part of a collection of similar houses or villas, it is legally independent, and the property owner has no legal responsibility for any communal aspects within the development.

It is important to note that the choice between a communal development and a stand-alone property applies only to houses and villas. Apartments and condominiums, by the nature of the property type, will always share buildings and infrastructure, and therefore they are within communal developments due to collective responsibility for some aspects of the project.

Advantages of Communal Developments

Note: one point we need to make here is that we know from 20 years of experience marketing Thailand real estate that prospective property buyers for both Phuket and Koh Samui often attach a very high perceived level of safety from being within a communal development. This is of course understandable, as they are very often unfamiliar with the local property market and the safety of the neighbourhood and so on. However, in reality, the level of risk that the property investor associates with buying property that is sand-alone versus one in a communal estate in either Phuket or Koh Samui is in practice rarely justified. These islands in fact have lower crime rates in terms of burglary and theft than many of the cities from the investors’ country of residence.

Other than a perceived lower level of risk/higher safety, communal developments in Thailand offer significant convenience, especially for buyers who value security and minimal responsibility for infrastructure. These developments will include some, or all, of the features below.

• Shared infrastructure: Any communal development will have a minimum level of shared infrastructure, such as internal roads and lighting.
• Security and management: Many developments include gated access, 24/7 security, and on-site staff to handle maintenance and administrative tasks.
• Rental management services: Often provided in a communal complex, these can include rental marketing, invoicing, airport transfers, housekeeping, and cleaning services, often making it easier for owners to rent their properties when not in use.
• Consolidated utilities: Bills for water, electricity, internet, and other utilities may be consolidated into a single monthly invoice.
• Additional facilities: Many community developments will offer additional facilities such as gyms, communal pools, gardens, and reception areas.

For investors seeking a hassle-free approach, communal developments are designed to provide convenience and peace of mind. Of course, these benefits do depend on a successful setup to manage the communal aspects. The developer may still own the communal areas, and in this case, the property owners are reliant on their efficient management. Alternatively, the individual owners of the villas and houses could collectively own the communal areas together. In either case, the success of the development is closely tied to how well the communal aspects are managed.

Disadvantages of Communal Developments

Despite the conveniences, communal developments come with potential drawbacks:

1. Ongoing costs: Property owners must pay regular maintenance fees and often contribute to a “sinking fund” for major repairs and renovations. These costs are usually non-negotiable, unless the property owners collectively own the communal areas, and they can increase over time. Exuberant communal charges, also known as maintenance fees or HOA fees, can have a significantly negative effect upon a property owner’s ability to resell.
2. Bad communal management: Similar to escalating ongoing costs, if the communal aspects are not officially managed, the development is likely to become rundown, and this will, of course, devalue all the properties and make resale more difficult.
3. Lack of flexibility: Once a property is purchased in a communal development, it is not possible to “opt out” of all of the communal aspects, even if they no longer suit the buyer’s needs. However, some features of a communal development are likely to be optional, such as private pool and garden maintenance.

Branded Developments & Developer Reputation

Branded developments refer to properties developed or marketed in collaboration with well-known hospitality or lifestyle brands. These projects often incorporate the brand’s signature design, service standards, or management expertise to offer a distinctive and elevated living experience. The level of brand integration can vary widely, from full hotel-style services and luxury amenities to properties that primarily leverage the brand name for prestige and recognition.

One of the key advantages of buying into a branded development is the reduced risk of poor estate management and escalating fees. A brand’s reputation is a critical asset, and branded developments typically uphold higher standards of management, service, and property build quality to protect that reputation. This is particularly relevant to property for sale in Phuket, where there is a wide range of branded developments, as opposed to real estate in Koh Samui, where such options are very limited. Over the last few years, there has been a very notable proliferation of branded property developments in Phuket, and the island’s property market is now the leader in Thailand in terms of branded real estate offerings.

Similarly, purchasing from a local developer with multiple projects and a strong track record offers similar advantages. Phuket or Samui developers with an established local presence and long-term goals are really building their own local brand. A noticeable example in Phuket is the well-established developer Botanica, who has delivered a number of luxury communal villa developments. They are highly incentivised to maintain consistent quality, reasonable fees, and effective management to secure their reputation and attract future buyers. However, branded developments backed by globally or regionally recognised names add an additional layer of safety, appealing to investors who prioritise long-term value and management reliability. An example of an internationally branded real estate in Phuket is the resort of Tri Vanada in Thalang, which partnered with the global wellness brand La Prairie.

We should also note that branded developments nearly always come with communal aspects. These properties are typically resort-style complexes featuring shared infrastructure, facilities, and services, such as swimming pools, gyms, security, and on-site management. For buyers seeking the prestige and convenience of a branded development, accepting these communal aspects is worthwhile.

By combining brand prestige with high service standards and well-maintained communal facilities, branded developments provide a compelling option for investors seeking both luxury and peace of mind. However, buyers should carefully assess the level of brand integration and the associated communal fees to ensure the investment aligns with their long-term goals.

Restrictions in Communal Developments vs. Freedom in Stand-Alone Properties

Another important consideration when evaluating communal developments is the potential for restrictions imposed on property owners. Many communal developments, especially branded ones, enforce rules and regulations designed to maintain a uniform appearance and community standards. These restrictions can include:

• Limits on customisation: Property owners may face restrictions on redecorating or customising the interior and exterior of their property.
• Pet policies: Some developments prohibit or limit the presence of pets on the property.
• Guest and occupancy rules: There may be restrictions on the number of guests allowed to stay at a property at any given time.
• Smoking restrictions: Smoking may be prohibited in certain areas or entirely within the development.
• General community rules: Regulations may cover noise levels, communal area usage, and other day-to-day activities.

While these rules often have a positive effect upon preserving property values and ensuring harmony among residents, they will also limit the flexibility of property owners. In contrast, a stand-alone property with no communal aspects provides complete freedom. Owners are free to customise their home, invite as many guests as they like, and set their own rules without adhering to a broader set of community guidelines.

Advantages of Stand-Alone Properties

For those seeking more autonomy and control, stand-alone villas and houses for sale in Phuket, Koh Samui, and Thailand as a whole, offer several benefits:

• No communal fees: Owners are free from monthly management fees, sinking funds, or shared infrastructure costs.
• Control over property: Without a management company, owners have full control over their property and are not tied to external decision-makers.
• Potential for cost efficiency: In resort destinations like Koh Samui, Phuket, and Pattaya, local companies offer a wide range of affordable property management services. Owners can hire services for pool cleaning, gardening, and security independently by doing their own research for the most efficient property management company. The result can often be a significant saving when compared to the charges from being tied into a communal development.
• Ability to manage your own rentals: We often encounter property owners in both Phuket and Koh Samui who successfully manage their own rental services using worldwide property portals such as Airbnb. Of course, the villa or house owner needs to invest a certain amount of their own time, but the commission fees you need to pay the rental portals are usually fairly minimal when compared to the fees charged for in-house rental management of a development.

So, the basic point is that stand-alone properties are ideal for buyers who prefer flexibility and are comfortable managing their property’s upkeep and any rentals.

Disadvantages of Stand-Alone Properties

However, stand-alone properties require more effort from the owner:

1. Responsibility for maintenance: Owners must arrange for services such as cleaning, pool maintenance, and repairs themselves. This can be time-consuming, particularly for those who do not live in Thailand year-round.
2. Security concerns: In remote areas, the absence of security can be a concern. However, hiring a live-in maid or engaging local security services can mitigate this issue.
3. House maintenance in tropical climates: Especially if they incorporate a lot of wood, homes in Thailand’s tropical climate deteriorate quickly if left unattended. Regular inspection, airing, cleaning, and property maintenance are all essential.
4. Rental management: If the property owner does not wish to manage their own rentals, they will need to engage the services of an independent villa rental company.

Note, for luxury properties, many owners opt to hire live-in staff or use private management companies, which can provide flexibility and the superior level of bespoke services they require.

Key Takeaways

• Communal developments offer convenience, security, and shared facilities but come with mandatory fees and reliance on a management company or collective management by the property owners.
• Stand-alone properties provide autonomy and potential cost savings, but more effort is needed by the property owners, and they have more responsibility.
• Branded developments and well-established developers provide added security due to their incentives to maintain reputation and thereby generally mitigate risks associated with poorly managed developments or unreasonable communal charges.
• The choice between communal developments and stand-alone properties applies only to houses and villas, as apartments and condominiums for sale in Phuket, Samui, and anywhere else, will always have communal aspects due to shared buildings and infrastructure.

Real estate investors in Thailand should carefully evaluate their priorities, the local market, and the long-term implications of each option before purchasing. One point to keep in mind is that Phuket has a much larger choice of branded developments and more resort complexes than Koh Samui. Hence, there are a lot more properties for sale in Phuket, including villas, houses and condos, that are in communal developments and managed complexes.