The Thai government, led by Prime Minister Srettha Thavisin, is considering a plan to allow foreigners to buy or rent property in Thailand for up to 99 years. While this proposal aims to attract foreign investment and stimulate the economy, it has faced opposition from various groups concerned about its long-term implications.
Key Takeaways
- The Thai government is considering allowing foreigners to buy or rent property for up to 99 years.
- Chinese investment in Thailand is rapidly growing, affecting multiple business sectors.
- Experts warn that the proposal could lead to a ‘Hong Kong-ization’ of the Thai real estate market.
Growing Chinese Investment
Chinese investment in Thailand is expanding rapidly, impacting nearly every business sector. Chinese supermarkets are spreading into the provinces, restaurant franchises are offering low prices using mostly imported ingredients, and Chinese companies are involved in transportation, construction, and real estate.
Previously, Chinese investors mainly bought property to live in or rent out. Now, they are forming joint ventures with Thai partners to develop real estate, focusing on major urban areas like Bangkok, Phuket, Chiang Mai, and Pattaya.
Legal Concerns and Shifts
Mr. Thanakrit Thaimee, Co-Founder and Managing Director of TA Law Firm, has observed significant changes in Chinese investment patterns. Before the pandemic, many Chinese tourists visited Thailand and sought opportunities to start businesses catering to other Chinese. However, the pandemic has shifted their focus to relocating production bases from China to Thailand to avoid U.S. and EU tariffs.
Thanakrit noted that while Thailand benefits significantly from Japanese investments due to their working style, Chinese investments offer fewer benefits. He attributed this to the different work culture; Chinese investors often bring their own teams and prefer to work with other Chinese people, although this is starting to change.
Real Estate Market Concerns
Thanakrit expressed concerns about the Thai government’s proposal to let foreigners buy or lease real estate in Thailand for up to 99 years and to own up to 75% of condos in a project. He believes that a 99-year lease is too long and that a 60-year lease would be more reasonable.
He explained that changing the law to allow foreigners to lease or buy real estate for up to 99 years would require amending the Property Rights Act B.E. 2562. Currently, leases are set for 3-30 years and can be transferred, inherited, or mortgaged. The idea of extending leases to 99 years aims to attract foreign investors, as the current 30-year limit might not be attractive enough.
Potential Impacts
Thanakrit also discussed the proposal to increase the foreign ownership limit in condos from 49% to 75%. He noted that in some parts of Bangkok, like Sukhumvit’s On Nut and Bang Na areas, there are still condos available for foreigners, but in more sought-after areas like Ekkamai and Thonglor, 49% of condos are already rented by foreigners. Allowing foreigners to own 75% of condos might be excessive and could impact the project’s voting rights.
He concluded by saying he is concerned that changing the law to address real estate and Chinese investment might take too long in Parliament, amid ongoing foreign capital influx.
Sources
- Expert Warns Against "Hong Kong-ization" of Thai Real Estate Market, Khaosod English.
