What is the average rental yield in Laos?

Authored by the expert who managed and guided the team behind the Laos Property Pack

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BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Laos. If you'd like to learn more about us, you can check our presentation page.

What are the typical rental yields right now in the main cities and regions of Laos?

Rental yields in Laos currently range from 1.9% to 4.6% gross annually across major cities and regions.

Vientiane offers the most stable yields, with apartments and houses generating between 2.5% and 4.6% gross returns. The capital city's yields remain relatively steady due to consistent expat demand and government worker housing needs. Central Vientiane properties targeting international tenants typically achieve the higher end of this range.

Luang Prabang delivers yields close to 3.0% to 4.5%, buoyed by consistent tourist demand throughout the year. Well-managed apartments in the historic center perform particularly well, especially those designed for short-term rentals. The UNESCO World Heritage status continues to drive rental demand from both tourists and expatriate workers in the hospitality sector.

Secondary cities like Pakse, Savannakhet, and Champasak show yields ranging from 1.9% to 3.5%. These markets depend heavily on local demand and government employment, making returns more modest but potentially more stable long-term. Rural areas typically generate the lowest yields at 1.5% to 2.8% due to limited rental demand and lower property values.

As of September 2025, these yields remain significantly lower than regional benchmarks, with Bangkok achieving 4-6%, Jakarta over 5%, and Hanoi around 4% annually.

How do yields differ between apartments, houses, villas, and commercial properties?

Apartments consistently generate the highest rental yields in Laos, particularly smaller units targeting expat and tourist markets.

One and two-bedroom apartments achieve yields of 3.5% to 4.6% in central locations, with studios and one-bedroom units performing best due to higher demand per square meter. These properties attract expatriate workers, NGO staff, and short-term business travelers willing to pay premium rents for modern amenities and central locations.

Houses and villas typically deliver lower yields between 2.0% and 3.5% due to higher purchase prices and more limited rental demand. The expat community in Laos is relatively small, and most prefer apartments over large houses. Maintenance costs for houses also tend to be higher, further impacting net yields.

Commercial properties show the widest yield range from 2.0% to 5.0%, depending heavily on location and tenant quality. Prime office space in central Vientiane can achieve higher yields when leased to international organizations or established businesses. Retail properties perform moderately, with yields influenced by foot traffic and local purchasing power.

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What's the average purchase price per square meter, including fees and taxes, across different property types?

Property prices in Laos vary significantly between urban centers and rural areas, with Vientiane commanding the highest prices per square meter.

Transaction and legal fees typically add 5-8% to the purchase price, covering transfer taxes, notary fees, legal representation, and registration costs. Foreign buyers may face additional documentation requirements that can increase these costs. Properties outside major cities generally have lower transaction fees due to simpler processes and lower property values.

How do yields vary depending on property size and surface area?

Smaller apartments consistently deliver higher rental yields per square meter in the Lao property market.

Studio and one-bedroom apartments achieve the highest yields, often reaching 4.0% to 4.6% gross annually. These units benefit from strong demand from single expats, young professionals, and business travelers who prioritize location over space. The rental price per square meter for smaller units is typically 20-30% higher than larger apartments in the same building.

Two-bedroom apartments show moderate yields between 3.0% and 4.0%, appealing to small expatriate families and couples. These properties offer a good balance between rental income and tenant stability, with longer average tenancy periods compared to studios.

Three-bedroom apartments and larger properties generate lower yields between 2.5% and 3.5% due to slower rental price growth per square meter. The demand for large apartments is limited primarily to senior expat executives and diplomatic families, creating a smaller tenant pool.

Houses and villas consistently show the lowest yields per square meter, typically 2.0% to 3.0%, regardless of size. Larger properties also face higher maintenance costs, vacancy periods, and management complexity, further reducing net returns for investors.

What are the average mortgage rates and financing options available for property investors?

Mortgage financing for foreign property investors in Laos is limited and expensive compared to regional alternatives.

Local banks offer mortgage rates between 8% and 12% annually for foreign borrowers, significantly higher than Thailand (3-5%), Vietnam (7-9%), or Malaysia (4-6%). These rates reflect the higher perceived risk and limited competition in the Lao banking sector. Most loans require substantial collateral and local guarantors.

Loan terms typically extend up to 15 years for foreign investors, with loan-to-value ratios rarely exceeding 70%. The Bank of Lao PDR (BCEL) and Banque Franco-Lao offer the most established foreign lending programs, though approval processes can take 3-6 months. Many banks require borrowers to maintain local bank accounts and demonstrate steady income sources.

Alternative financing often involves seller financing arrangements or partnerships with local investors. Some investors choose to purchase properties entirely with cash to avoid the high borrowing costs and complex approval processes. Developer financing may be available for new construction projects, typically at rates similar to bank mortgages.

Foreign investors should budget for mortgage origination fees of 1-3% of the loan amount, plus legal and documentation costs that can add another 1-2% to financing expenses.

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What are the running costs, taxes, and other expenses landlords need to factor into rental yield calculations?

Property ownership costs in Laos can significantly impact net rental yields, requiring careful calculation of ongoing expenses.

Income tax on rental income ranges from 10% to 15% for individual property owners, while companies face 24% tax rates. Landlords can deduct certain expenses including maintenance costs, property management fees, loan interest payments, and depreciation. Proper documentation of deductible expenses is essential for tax optimization.

Property maintenance costs typically run 8-15% of gross rental income annually, covering routine repairs, painting, cleaning, and appliance replacement. Older properties or those targeting short-term rentals often require higher maintenance budgets. Air conditioning maintenance and electrical repairs are particularly common expenses in the tropical climate.

Property management fees range from 8% to 12% of monthly rental income for professional management services. Self-managing landlords can avoid these fees but must handle tenant relations, rent collection, and maintenance coordination personally. Insurance costs typically add 0.5-1.5% of property value annually.

Additional expenses include utility connections (if landlord-paid), periodic renovations, legal fees for tenancy agreements, and potential vacancy periods between tenants. Transfer and registration fees for property purchases add 2-6% to initial investment costs.

What's the difference in profitability between short-term rentals like Airbnb and long-term leases?

Short-term rentals can generate higher gross returns but require significantly more management and face higher operational costs.

Airbnb properties in Vientiane achieve median monthly earnings around $407, with top-performing hosts earning $1,053 or more monthly. However, annual occupancy rates average only 39%, creating substantial revenue volatility. Successful short-term rentals typically require prime locations, modern furnishings, and active management to maintain competitive ratings.

Long-term rentals offer more predictable income streams with occupancy rates typically exceeding 85% annually. Monthly rents are lower than short-term equivalents, but reduced management costs, lower vacancy rates, and minimal guest turnover expenses often result in better net profitability for passive investors.

Short-term rental expenses include frequent cleaning, guest supplies, utility costs, platform commission fees (3% Airbnb), and higher insurance premiums. Marketing and maintaining guest communications require ongoing time investment. Seasonal demand fluctuations in Laos can result in very low occupancy during certain months.

Long-term leases typically involve lower management costs, stable utility expenses, and minimal marketing requirements once tenants are secured. Most successful long-term rentals target expatriate professionals seeking 1-2 year lease agreements, providing income security for property investors.

Can you give example rents for different property types in key areas, so I can see how the numbers break down?

Current rental rates across Laos vary significantly based on location, property type, and target tenant demographic.

These rental ranges reflect properties marketed to expatriate tenants and international organizations. Local rental rates for Lao nationals are typically 30-50% lower than expatriate-targeted properties. Furnished properties command 20-40% premium over unfurnished alternatives, while properties with reliable electricity, water, and internet access achieve the highest rents.

Who are the typical tenant profiles—expats, locals, students, businesses—and how does that affect demand?

The Lao rental market is driven primarily by expatriate workers, international organizations, and tourism-related demand.

Expatriate professionals represent the highest-paying tenant segment, typically working for international NGOs, diplomatic missions, or development organizations. These tenants seek modern apartments with reliable utilities, internet connectivity, and Western-style amenities. They commonly sign 1-2 year leases and accept rental rates 50-100% above local market levels.

International businesses and organizations lease both residential and commercial properties, often requiring multiple units for staff housing. These institutional tenants provide stable, long-term rental income but may require property modifications to meet security or operational standards.

Local professionals and government workers form a significant portion of the rental market but typically pay lower rents and prefer simpler accommodations. This segment drives demand in secondary cities and suburban areas where international presence is limited.

Students represent a smaller rental segment concentrated around educational institutions in Vientiane and Luang Prabang. Student housing demand focuses on affordability rather than amenities, generating lower yields but potentially stable occupancy.

Tourism-related short-term rentals target international visitors, particularly in Luang Prabang and Vang Vieng. This segment offers higher daily rates but faces significant seasonal variation and requires active property management.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Laos versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What are the current vacancy rates by area and property type?

Vacancy rates in Laos vary significantly between locations and property types, with urban centers generally showing better occupancy than rural areas.

Vientiane center experiences apartment vacancy rates between 7% and 10% as of September 2025, though this may be rising due to new construction and increased supply. The capital's apartment market faces pressure from ongoing development projects targeting expatriate tenants, creating more competition for existing landlords.

Peripheral districts around Vientiane and secondary cities show higher vacancy rates of 12-18%, primarily due to slower demand growth and limited expatriate presence. Properties in these areas often require longer marketing periods and may need to offer below-market rents to secure tenants.

Short-term rental properties face particularly challenging occupancy levels, with average annual occupancy rates below 40% across Laos. This contrasts sharply with Thailand (60-70%) or Vietnam (50-65%), reflecting the country's still-developing tourism infrastructure and limited international visitor numbers.

Commercial properties in prime Vientiane locations maintain vacancy rates around 8-12%, while secondary commercial areas may experience 15-25% vacancy. Office demand depends heavily on international organization presence and government expansion, creating concentrated demand in specific districts.

Rural and small-town properties face the highest vacancy challenges, with rates potentially exceeding 20% for properties targeting higher-income tenants. Local demand in these areas focuses primarily on affordable housing rather than investment-grade rental properties.

How have rental prices and yields changed compared to one year ago and five years ago, and what are the forecasts for 1, 5, and 10 years ahead?

Rental prices in Laos have shown modest but steady growth over recent years, with yields experiencing slight compression due to supply increases.

Over the past year, rental prices in central Vientiane and Luang Prabang have increased by approximately 2-4%, driven primarily by inflation and steady expatriate demand. This growth rate is modest compared to regional markets but reflects the stability of the Lao economy and limited speculative investment activity.

The five-year picture shows more substantial changes, with urban property prices appreciating by approximately 57% while rental growth has been more modest at 3-5% annually. This divergence has resulted in yield compression, particularly in central Vientiane where property prices have outpaced rental income growth.

Short-term forecasts for 2026 suggest continued modest rental growth of 3-5% annually in major cities, supported by ongoing infrastructure development and gradual increase in international presence. The China-Laos railway corridor is expected to drive demand in connected cities over the next 2-3 years.

Five to ten-year projections indicate property price appreciation of 3-5% annually in cities, with potential for higher growth of up to 10% along the railway corridor as connectivity improves. However, rental yields are expected to remain flat or dip slightly as markets mature and supply increases.

It's something we develop in our Laos property pack.

How do current yields in Laos compare with other similar Southeast Asian cities, and what are the smartest property choices today?

Laos offers significantly lower rental yields compared to other Southeast Asian markets, but with correspondingly lower entry costs and risks.

The smartest property investment choices in Laos focus on highly rentable 1-2 bedroom apartments targeting expatriate tenants in Vientiane and Luang Prabang. These properties benefit from the most stable demand and achieve the highest yields within the market constraints.

Properties near new infrastructure developments, particularly along the China-Laos railway corridor, offer potential for capital appreciation as connectivity improves. Locations near international schools, diplomatic areas, and expatriate amenities consistently outperform the broader market.

Short-term rental properties in tourist hubs like Luang Prabang can generate higher returns for investors willing and able to manage turnover and seasonal variations. However, this strategy requires active management and tolerance for occupancy fluctuations.

For investors seeking stability and moderate appreciation over high current returns, Laos offers a compelling entry point as an early-mover market. The combination of lower property prices, political stability, and gradual economic development creates opportunities for patient capital focused on long-term growth rather than immediate cash flow.

It's something we develop in our Laos property pack.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. BambooRoutes - Laos Buy Property Guide
2. BambooRoutes - Laos Real Estate Trends
3. Global Property Guide - Laos Rent Yields
4. InvestAsian - Cities Highest Rental Yields
5. BambooRoutes - Laos Price Forecasts
6. Global Property Guide - Laos Square Meter Prices
7. BCEL Bank - Loan Interest Rates
8. BFL Bred Bank - Home Loan Information
9. AirROI - Vientiane Capital Short-term Rental Data
10. LaosLife - Cost of Living in Laos