Thailand has announced a significant policy shift aimed at boosting its real estate sector and attracting foreign investment. The new measures include increasing the foreign ownership limit for condominiums to 75% and extending property leases to 99 years.
Key Takeaways
- Foreign ownership limit for condominiums increased from 49% to 75%.
- Property lease durations extended to 99 years.
- Aimed at stimulating the economy and attracting foreign investment.
- Measures to protect local buyers and ensure market transparency.
Policy Announcement
On June 21, 2024, the Cabinet Secretary’s office announced urgent measures to stimulate the economy through the real estate sector. The new policy aims to ease regulations for foreign ownership, following a Cabinet decision on April 9, 2024, to boost the economy and prepare Thailand to become a global industrial hub.
Deputy Prime Minister Phumtham Wechayachai proposed the implementation of these measures on behalf of the Prime Minister during a Cabinet meeting on June 18. The Ministry of the Interior has been tasked with examining the feasibility of these measures and completing the necessary legal procedures.
Proposed Measures
The Ministry of the Interior is reviewing the following measures:
- Extending property rights under the Property Rights Act 2019 to allow leases up to 99 years.
- Increasing the foreign ownership limit for condominiums from 49% to 75%.
These measures may include conditions such as restricting the voting rights of foreigners and foreign legal entities that acquire property in excess of the 49% limit.
Industry Response
The policy consideration aligns with the demands of seven real estate associations, who have jointly urged the government to amend the Property Rights Act and the Condominium Act. Mr. Isara Boonyoung, Chairman of the Real Estate, Design and Construction Trade Association Committee of the Thai Chamber of Commerce, highlighted the benefits of extending lease periods to 99 years for both Thai and foreign investors.
“With 30-year land leases, banks are reluctant to provide much credit, possibly only 50-60%. However, if the lease period is extended to 99 years, leased land can be used as business collateral equivalent to freehold land,” he said.
Potential Impact
Raising the foreign ownership limit for condominiums to 75% could attract more foreign investment, stimulate growth, and potentially revitalize Thailand’s real estate sector. Increased demand from foreign investors could lead to more supply, giving locals more options and potentially leading to better quality developments and more affordable prices.
However, it is crucial to balance these benefits with measures to protect local buyers. Stricter regulations and increased transparency in the real estate sector could help ensure that the market remains fair and accessible to all.
International Comparison
The proposed changes in Thailand contrast with the Philippines, where foreign ownership of condominiums is restricted to 40%. This highlights the varying approaches to real estate market regulation and their potential implications for sector revitalization and international buyer attraction.
If implemented, Thailand’s new policy could indeed revitalize the sector and attract more international buyers. However, careful consideration of the impact on the local market and housing affordability will be essential.
Sources
- Thailand’s New Policy?: 75% Foreign Condo Ownership, 99-Year Leases, Khaosod English.
- Raising the Cap on Foreign Condo Ownership: A Potential Game-Changer? – Thailand Business News, Thailand Business News.
