Real Estate in Thailand

[farangy]

There has been a lot of news lately in regards to enforcement of property laws. Foreigners cannot own land and can only own condos in buildings that are 49% or less owned by foreigners. The long-standing way to skirt the law has been to open a Thai real estate investment company where the farang investor holds the voting shares. As a consequence there are thousands of such companies in Thailand whereby the foreigner runs the company that owns their property. Though he technically doesn't own the land, he controls it.

Now there has been word (but as of yet no action) that the government will investigate the silent Thai partners to see if they are contributing or able to contribute towards the initial investment.

Today I visited one of Thailand's larger developers and a lawyer to get the latest updates as I am in the above scenario. My visit to the developer was very disappointing in they didn't seem to have a clear vision of what is going on despite the fact that the majority of purchasers of their condo units are foreigners. Whereas I can understand that the situation is somewhat ambiguous, what I didn't like was their reactive approach- they will just wait to see what happens- no clarification to the purchasers of their condos, no communication, nothing. To me this is clear mismanagement of a serious market issue- their company has been specifically named in the newspaper as one that could be hurt if the laws were to change but they choose keep silent.

A visit to the lawyer proved more revealing- as of today their property transfers are still taking place without issues but they're monitoring the situation closely to see if there could be any changes. There are other options available if the government does in fact try to intervene but the uncertainty is creating a lot of rumors and they've seen a big drop in business over the past few weeks.

I wonder how this will impact the real estate market as a whole. Clearly a lot of the major projects out there heavily depend on foreigners- for example buildings like The Met in Bangkok and the huge villas built in Phuket. Without such foreigners, how can the developers expect to sell such properties- I'd think that, especially in the case of the Phuket properties, there simply isn't enough domestic demand out there.

Any thoughts from those of you familiar with the market?

[macca_tirana]

Thanks

i find your investigation interesting and useful.

It seems to be one of the darkest subjects i have ever come across, with no one able to give a clear answer.

Regards Phuket it is almost impossible to buy business properties, leasing is far more common. But never been a fan f dead money or working your butt of for a few years developing your business only for the lease to expire.

I would love to have a small business in thailand but at the moment feel the risk is too high.

Fair play to the Thai people though. So many markets are being over run by foriegn money and it has negative effects on local community.

I have worked in Croatia, Slovenia and Serbia. many locals can no longer afford to buy because the Brits and germans have sent the property market through the roof.

[PattayaDaz]

What did you expect... There have always been farangs ''bending'' the property laws by owning a house through the ''company'' method. Either because they didn't want to live in a condo or a myriad of other reasons.. The only difference then was that it was only a small percentage and it was all rather low key.. Now you have multi national advertising on the internet and in the western press as well as TV travel shows..All are saying ''you can buy property in Thailand'' which of course you can't (unless its a condo) So this has led to the latest rumblings from the government.. I'm not sure of the exact reasons but I'd suggest it could be a result off.. Loss of face and feeling of losing control or big Thai developers losing business to foreigners and calling their buddies in the government to complain.

Again in the past the guy with his house in a company name just had the house as his primary residence or holiday home (its meant to be the companies head office).. Now guys are buying up 10+ rai of land putting it in a company name and then developing it into a housing estate. Guess you could call it ''taking the piss'' so somebody has decided to put the brakes on...Seems that it was only in Chonburi that land transfers were halted and I think its back to normal now..Anything that slows down the ridiculous property price rises seen recently can't be bad thing though..

[Pugger]

I agree completely with Macca above. I live in Pattaya and this town is now groaing under the strain of greedy out of control real estate development aimed at expats. I have zero sympathy if all the real estate companies went bust, as they have already made a killing without regard to anyone else. The negative aspects are:

1. huge inflation of land and house prices beyond what locals or even foreigners working in Thailand can afford.

2. Dramatic increase in traffic congestion mostly caused by construction or foreigners driving around town most of whom wouldn't be here if it wasn't for them buying houses which appear cheap to them. Services such as handymen, laundry etc have increased massively too as they idiots are clueless to the real cost and think it is cool or kind to throw their money around.

3 Increased polution and deterioration of the already dubious environment here. The devastation in the Pratamnak Hill area is very depressing as well as the draining of coastal marshlands for housing projectsi Jomtien. Step the other side of Sukhumvit and it makes you wonder why anyone would retire to such a place.

4. The balance of Thais and foreigners in Pattaya has now swung out of control. Many respectable Thais are moving out and leaving the town to the foreigners making the town have the dubious distinction of being a center for geriatric foreigners as well as sex tourists. Anybody interested in Thailand is going to find little of interest here.

Ok, I know Pattaya has always had a bad reputation, mostly deserved but at least before you could get around, afford to stay here and generally relax. It beats me why all these old codgers would want to come here in the first place and live in a construction site with nothing but scum bags and crooks (mostly foreigners) to rip them off but there seems no end in sight. I for one will be delighted if the laws are strictly enforced and all the load mouth 'loads of money' (mostly British, I'm ashamed to say) have to bugger off back to the UK or to Spain from whence they came. Incidently, they are wrecking Crete in Greece the same way and probably anywhere else this jumped up class of sellers of UK properties can buy into. Where is it all going to end? It is so frightening to think the whole of the Thai coast spreading out from Pattaya, Hua Hin, Samui and Phuket is going to be developed with possibly millions of holiday homes for these idle and boring scum that we have to put up with every day in Pattaya getting inthe way and generally being a nuisance to people who actually want to go about their normal daily business. I for one did my best to get away from similar types when I moved to Thailand 16 years ago and they were all timid or stupid to realise what Thailand had to offer. Now they come here, they spoil it and change it into the sort of place they left behind.

I have always defended the fact that I can't own land or most property in Thailand on the grounds that it keeps the country Thai and gives the Thais no reason to resent us being here.

The only thing stopping me from really wanting these shell companies to be stopped is next there could be a racist backlash and all foregners whether they are living and working here and contributing or not will be not welcome. It's happened before and it could happen again.

[Loburt]

Over development and despoiling communities and the environment isn't only being driven by the market for foreigners. That may be he case in Pattaya, but in many other places it is wealthy Thais who are doing it. Several politicians have been caught building homes inside national parks and forest reserves.

If you're looking to buy a condo, I don't think these new rules, or enforcement of existing rules, should affect you very much. It has more to do with buying land and buidling on it, I believe.

This is just another reason to hope the caretaker prime minister won't be around much longer. It sounds to me like another big ruse to shake down the dirty falangs.

[condotown]

You have to discriminate between individual condo units and everything else.

Foreigners CAN buy and own a piece of air in space (condo) and can hold the title to that with NO problems whatsoever. In fact, multiple condos can be owned by one person.

All the other crap is convoluted bullshit to which I say "buyer beware"

I've listened to the sales pitches many times, but insisted on control of my own money and property and want the title of 100% in my hand or it can become a complete nightmare, especially when it comes time to unload.

Whatever happens to all those land and homeowners, including the holders of the famous VIP card, get what they deserve for having such blind faith in a system that repeatedly does this kind of thing to suckers.

[primetime]

The Alien Business Act of 1999 governs most investment activity by non-Thai nationals and opened limited additional business sectors to foreign investment. Nevertheless, foreign investment in most service sectors is limited to 49 percent ownership.

The U.S.-Thai Treaty of Amity and Economic Relations (AER) was originally signed in 1833. The 1966 iteration of the Treaty allows U.S. citizens and businesses incorporated in the U.S., or in Thailand that are majority-owned by U.S. citizens, to engage in business on the same basis as Thais, exempting them from most of the restrictions on foreign investment imposed by the Alien Business Act of 1999. Under the Treaty, Thailand restricts American investment only in the fields of communications, transport, fiduciary functions, banking involving depository functions, the exploitation of land or other natural resources, and domestic trade in agricultural products.

Under the 1999 amendment to the Land Code, foreigners who invest a minimum of 40 million baht (around $1 million) are permitted to buy up to 1,600 square meters of land for residential use with the permission of the Ministry of Interior. Petroleum concessionaires may own land necessary for their activities. Many foreign businesses instead sign long-term leases, and then construct buildings on the leased land. Under the 1999 Property Leasing Bill, non-Thais are allowed to own up to 100 percent of a condominium building, although other restrictions apply.

see http://www.state.gov/e/eb/ifd/2005/42188.htm

[Undercover]

I think it's extremely unlikely that there will be any serious move made by the Government to restrict foreign ownership. However, it's one of those hot button issues in any country that politicians and the press love to exploit because people everywhere are xenophobic, racist and like to blame things on foreigners.

We had the same kind of anti-foreigner hysteria in the US in the late 80's when the Japanese were buying up all the Class A office buildings in Los Angeles. There was a lot of screaming about it but it eventually went away and most of the Japanese ended up losing their shirts and the property passed into other hands....

Mexico used to also have highly restricted foreign ownership, especially of beachfront property. They threw in the towel in the late 90's and opened the market.

The fact is, it's a global economy. Without foreign investment the economy here would collapse, just like it would in the U.K.or the U.S.A.

What will happen? Who knows? But my prediction is, five years from now, the laws will be more liberal in terms of foreign ownership - not less.

[paddy26]

so you can own every condo in a building from the second flaw up but you cant buy the whole building??? somone please enlighten my dumb ass :?:

[farangnbkk]

farangy:

You need to pester the developer to find out if your condo is part of the units that can be owned outright by a farang.

They might not have even thought about the allocation. If you are persistent, they just might allocate you into that direct ownership percentage just to get you to stop bugging them.