Thailand’s real estate market has experienced highs and lows due to various happenings in the country’s history. This is understandable as in any country, the political, economic and even environmental climate will affect how lucrative businesses can be. Another factor influencing Thailand’s real estate market is the type of real estate investment buyers or renters are looking to take on. Real estate in Thailand includes condominiums, houses, villas and land.
Other factors affecting the Thailand real estate market include the location of property, the cost, purpose of investment, quality of structure and the ease of legal process.
Lucrative Areas to Acquire Condominiums
In cities such as Phuket, Pattaya and Bangkok, the development of condominium projects is on the rise. Condominium purchases are more popular among foreign buyers because Thai law places restrictions on the ownership of land by non-nationals. Land can eventually be held by a non-Thai national however not in their own name. This restriction and others makes acquiring ownership of a condominium less of a hassle for foreigners.
In addition to being the named owner of this type of property, foreigners can use the title deed as collateral while in Thailand. These units are usually much cheaper than houses, are in a convenient location and can easily be rented or re-sold without a complicated process.
The Housing Market
The housing market is a little different. Since houses come with land, the route to acquiring ownership is not so straightforward for foreigners. In order to hold ownership, a foreigner would have to establish or use their existing Thai limited company to route the sale. The house plus land would then become the holdings of the company and not the individual. Another solution to this challenge is to use an extended lease agreement (usually for 30 years) to acquire the land. In this way, you do not own the land but still have a long term possession arrangement.
Buyers who may prefer to own a house benefit from greater privacy, more living space than with a condominium and will also benefit from rise in market value on the property.
Purchasing a villa definitely requires the use of a lawyer and/or real estate agent to provide guidance through the legal and acquisition processes. Your representatives will play their respective roles in going through the process of conducting property searches, spearheading the setting up of limited liability Thai company (through which the sale will be conducted) and then finally processing the actual sale. You may be provided with additional advice depending on whether the property for purchase is a completed development or is undergoing construction. Your attorney will provide the best advice on how to protect yourself and your investment for maximum benefit.
Routes of Acquiring Land
It has already been established that under Thai law land cannot be directly held in ownership by non-Thai nationals. In order to acquire ownership of land, the non-national would have to have to use their Thai limited company or if they are married, acquire possession through their Thai spouse. This however has certain requirements because the title documents will not reflect part ownership of the non-Thai party in any way. It would thus have to be understood and agreed that in the event of dissolution of the relationship, the likelihood of total loss of investment to the Thai party is the inevitable outcome.
An alternative method of acquiring land without legal ownership is through a leasehold agreement. This long term agreement, up to 30 years, allows the lease holder to enjoy all the benefits of the land during that period of time up until when the lease ends. The renewal of the lease at the end of the period is not automatic, so the leaseholder must seek renewal and the subsequent lease may not exceed 30 years. These leases allow for the construction of structures on the land and the name of the lease holder will be added to the title deed and maintained at the Land Department.
Additional Considerations Regarding Thailand Real Estate
- Thailand’s real estate industry is not regulated by the government to provide standardization of fees and commissions required from investors. With this in mind, it is important to have candid and transparent discussion with real estate agents and lawyers to determine what is to be expected in terms of their compensation for transaction associated services.
- If you are a foreigner holding title to real estate in Thailand, it is important to draft up a final will and testament document for your beneficiaries. This document must detail all the assets you hold in Thailand including your bank accounts, vehicles, property and personal effects. While it is good to have a will in your home country, it is recommended that you have a will drafted in Thailand, which the government will request to disseminate your assets. Having a will in the Thai language prevents the additional processes required to translate and verify a non-Thai language copy in the event of death.
Author Bio – This article is written by Patrick Swan in support of CBRE, the first international real estate consultant firm to be established in Bangkok. For more information pertaining to Thailand real estate, please do visit their website today.