Tourists at Nai Harn Beach in Phuket, where foreigners have driven the market. Sarot Meksophawannakul

The rental residential market in Phuket has generated an annual yield of more than 10% this year, driven by the ongoing tourism and property boom, which has fuelled high demand for short- and long-term rental properties in prime areas.

Prakaipeth Meechoosarn, head of Phuket property sales at consultant CBRE (Thailand), said a new condo project was launched every two weeks in Phuket this year.

"The large number of new launches this year, both villas and condos, is driven by demand from foreign buyers returning for the high season," she said.

"This surge in residential sales is having a positive impact on the rental market."

The rental market has been booming since the pandemic, with the peak occurring this year based on limited supply, said Ms Prakaipeth.

In prime areas with high demand such as Bang Tao or near Laguna Phuket, rental yields exceed 10%.

A top seller is one-bedroom units sized 50-60 square metres, which can command a rental rate of 1,000-1,200 baht per sq m per month, or 50,000-60,000 baht per month.

Demand primarily comes from foreigners seeking both holiday homes and business professionals relocating to Phuket, she said.

"The rental yield in Phuket averages 9-10% per year, twice as high as the guaranteed return rates previously offered or guaranteed by condo projects, which have now exited the market in tandem with Chinese investment buyers," said Ms Prakaipeth.

Angkana Saeloo, director of sales for Banyan Group Residences at property and hospitality firm Banyan Group, said the rental residential market has grown in tandem with the tourism sector.

"During the tourism peak in Phuket post-pandemic, the average occupancy rate at Laguna Phuket was 80% over the past few years, compared with 70% during its first 30 years," she said.

At Skypark, one of the group's condo projects in Laguna Phuket, a one-bedroom unit sized 30 sq m can command a rental rate of 30,000 baht per month. This rental rate generated a high rental yield for buyers, as the units were launched for sale before the pandemic priced around 4 million baht, said Ms Angkana.

She said most tenants are expats working in the hospitality sector.

Some buyers are business owners who visited Phuket for work and sought rental units, then transitioned to residential buyers, said Ms Angkana.