Under the Phuket Sun: What Traps Await Foreigners in Thailand’s Real Estate Market

Phuket, a tropical paradise, attracts thousands of foreign investors dreaming of seaside villas or profitable resort condos. Following the pandemic and geopolitical disruptions, the influx of foreign capital into the island’s real estate market surged. For example, since the start of the conflict in Ukraine, Phuket has seen an influx of wealthy Russians, buying up to 40–60% of listed properties (previously only 10–15%) [leech=https://www.nationthailand.com/business/property/40036104]. This boom drove prices up by 15–20%, making the local market one of the hottest in Southeast Asia. In 2023, foreigners purchased a record 6,614 condos in Thailand — 16% more than the previous year, nearly half of them by Chinese nationals [leech=https://www.bangkokpost.com/property/2922881].

Yet behind glossy brochures and agent smiles lurk serious risks. The market has become a breeding ground for fraud, flooded with inexperienced investors unfamiliar with local laws [leech=https://www.bangkokpost.com/property/2922881]. Thai authorities themselves admit: the country is experiencing not only a property boom but also a fraud boom. Over the past few years, several high-profile scandals emerged where foreigners lost large sums chasing “paradise homes.” This article is a journalistic investigation into the dangers facing foreign buyers in Phuket: real cases from 2023–2025, legal nuances, fraud schemes, criminal threats, and rental pitfalls.

Legal Nuances: What the Law Says and How It's Circumvented

The primary legal barrier: foreigners cannot directly own land in Thailand. The law explicitly prohibits non-Thai citizens from buying land or standalone houses [leech=https://www.bangkokpost.com/property/2922881]. The only exception is for condominiums. Under the 1979 Condominium Act, a foreigner may own a unit, provided the total foreign ownership in the project does not exceed 49% of the total condo area [leech=https://phuketbuyhouse.com/ru/articles/980-zakony-o-kondominiumah-phuketa-vazhnaya-informatsiya-dlya-inostrantsev].

To own villas or landed homes, foreigners often use workaround schemes such as nominee Thai companies or long-term lease agreements:

- Nominee Thai Company. A foreigner creates a company where they own 49% of the shares, and 51% are held by Thais — often mere figureheads. This scheme is illegal, and the government announced its intention to crack down on it in 2022 [leech=https://www.samuiforsale.com/real-estate/foreigners-warned-on-land.html]. Thousands of foreigners could face forced divestment of land holdings unless they comply [leech=https://www.samuiforsale.com/real-estate/foreigners-warned-on-land.html].

- Long-term Lease. Thai law permits 30-year land leases with optional renewals (sometimes marketed as “90-year leases”), but only the first term is guaranteed. Renewal depends on contract terms, which can be challenged or denied [leech=https://www.samuiforsale.com/real-estate/foreigners-warned-on-land.html].

- Usufruct and Superficies. These lesser-known schemes (lifelong usage rights or building rights) are sometimes used in marriages to Thai citizens or developer partnerships. These methods are complex and highly dependent on trust and legality.

Bottom line: legal ownership is a minefield for foreigners. A misstep can cost you everything. Always consult an independent Thai legal expert before committing to a deal.

Fraud and Scams: How Buyers Are Tricked

Dozens of investors fall victim to scams yearly. Most rely on language and cultural familiarity — scammers often pose as fellow nationals, such as Russian or Chinese agents or bloggers [leech=https://www.bangkokpost.com/property/2922881].

Fake Developers and Projects

One major scam is selling off-plan units in non-existent or illegal projects. In 2022–2023, Frenchman Swann Polidor exposed a massive scam in which three Thai organizers defrauded hundreds of investors in the “City Life Patong” condo development [leech=https://thethaiger.com/news/national/phuket-property-swindle-frenchman-exposes-multimillion-baht-real-estate-scam]. His mother, among the victims, lost her life savings.

The main figure in the scam, Savit "Mai" Ketrod, had a long history of fraud. He was arrested back in 2018 for similar misconduct [leech=https://www.bangkokpost.com/thailand/general/1457410]. Despite that, he returned to business under a different name.

Other cases include British investor David Edward Chappell, who lost 15 million baht on Koh Samui in a condo scam where the developer had no building permits [leech=https://thainewsroom.com/2023/06/01/briton-files-complaint-after-losing-15m-baht-in-koh-samui-condo-scam].

Common scam tactics:

Selling unbuilt projects
Selling illegal or non-permitted constructions
Double sales of properties
Fake title deeds
Misleading terms like “no taxes” or “can register in your name”
Non-refundable deposits without contract protections

How to Protect Yourself

Always verify the developer’s reputation.
Avoid off-plan unless you verify ownership and permits.
Engage independent lawyers for due diligence.
Be wary of deals marketed through fellow nationals.

Conflicts and Developer Disputes

Even legal projects can fail. Developers can run into financial trouble or vanish entirely, leaving investors with half-built properties. In 2024, Australians lost millions in The Peaks Residences scam in Kata, Phuket — even after winning a court case, they never got their money back [leech=https://thethaiger.com/news/phuket/aussie-buyers-lose-millions-in-phuket-condo-scam].

Developers often start construction without proper permits or titles. Some, like Emerald Development Group, have a track record of multiple failed projects and lawsuits [leech=https://www.bangkokpost.com/thailand/general/1457410].

If your project stalls:
- Join other victims
- Contact media and embassies
- File police reports with Tourist Police or CIB

Criminal Risks: Mafia, Raids, and Corruption

Phuket is known for organized crime in taxi, jet ski, and other tourist sectors [leech=http://bangkokpost.com/thailand/special-reports/420246/the-great-phuket-cleanup].

In real estate, mafia elements may use property to launder money or as fronts for illicit activities [leech=https://www.nationthailand.com/business/property/40036104].

Buyers may also fall victim to criminal schemes involving nominee companies or forged ownership claims. There are reports of corrupt partners or spouses seizing property from foreign owners.

Corruption in courts and police can make legal battles even harder. Many cases require diplomatic intervention to gain traction [leech=https://thethaiger.com/news/national/phuket-property-swindle-frenchman-exposes-multimillion-baht-real-estate-scam].

Rentals and ROI: Promise vs. Reality

Investors often buy properties for rental income. Brochures promise 7–10% annual returns and full-service management. However:

The income is often net of high fees and hidden clauses [leech=https://thethaiger.com/thai-life/property/ask-an-agent/the-truth-behind-rental-guaranteed-returns-in-thailand].
The rental market is seasonal and competitive.
Airbnb-style rentals under 30 days are illegal without a hotel license [leech=https://www.khaosodenglish.com/featured/2025/03/07/thailand-cracks-down-on-illegal-daily-rental-condo-businesses].
Authorities are cracking down on illegal rentals, issuing fines and conducting undercover raids.

Tax obligations also exist:
15% withholding tax on rental income for non-residents [leech=https://kellerhenson.com/property-tax-thailand-guide-foreigners].
Land and building tax for non-primary residences [leech=https://aseannow.com/topic/1178487-thailand%E2%80%99s-new-land-and-building-tax-act-2020-tax-assessment-notice].

Conclusion: How to Invest Smartly

- Understand legal restrictions and avoid land ownership traps.
- Verify documents, titles, and developers independently.
- Be realistic about returns and legal rental limits.
- Avoid scams, especially from fellow nationals.
- Use public pressure and media to fight fraud.
- Plan rental strategies carefully with tax compliance in mind.

Thailand has enormous potential, but navigating the real estate market — especially in hotspots like Phuket — requires diligence, legal awareness, and cautious optimism.