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  1. #1
    Thailand Expat
    dirtydog's Avatar
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    Pattaya Jomtien

    Foreign ownership limits stifle growth

    Foreign ownership limits stifle growth


    Restricted foreign ownership and a prohibition on lending to foreign property purchasers are obstacles to the growth of the Thai resort property market, according to the international real estate consultancy CB Richard Ellis (CBRE).

    David Simister, the chairman of CBRE in Thailand, said that currently under Thai law foreigners were allowed to buy up to 49% in area terms of a condominium but in many resort areas there was not enough local demand for high-end resort condominium units, so developers were unable to sell the 51% Thai quota.

    He said the main option open to the developers was to offer 30-year leases, plus options to renew, on the Thai-quota condominium units. They are relatively illiquid because of the leases' short length and so there is a limited secondary market in resales.
    Foreigners are not allowed to own land and the maximum length of a lease is 30 years, although developers can offer options to renew the lease terms twice, for a total of 90 years.

    ''If offering unlimited ownership of condominiums or freehold land title is not acceptable, then in order to grow the resort property market, it will be necessary to offer increased foreign ownership of condominium property and longer leases of 90 years,'' he said.

    Foreign condominium purchasers are prohibited from borrowing money locally to purchase a condominium. Foreign ownership regulations state that all funds used to purchase a condominium must come from overseas in foreign currencies.

    By contrast, CBRE said Malaysia had limited regulations on foreign ownership of property. Any acquisition of property by a foreigner requires the approval of the Foreign Investment Committee.

    ''However, this is a formality and rarely is approval withheld. The only restriction is that the property should be valued at more than 150,000 ringgit, or around 1.5 million baht. Foreigners are also allowed to borrow locally to fund property purchases,'' the company said.

    Meanwhile, Malaysia is promoting a special programme under ''Malaysia My Second Home'', granting a 10-year visa to foreigners opening a fixed deposit at a Malaysian bank in the amount of 300,000 ringgit (about three million baht) and the right to buy up to two houses priced at more than 150,000 ringgit.

    Vietnam offers overseas buyers 50-year leases and China offers foreigners a maximum leasehold period of 70 years for land intended for residential use.
    Mr Simister said the key to Thailand maintaining its position as Asia's leading resort property market would be a combination of thoughtful environmental control and less restrictive ownership issues with greater foreign quota of condominiums, longer lease terms of 90 years, and the ability of foreign purchasers to finance property acquisitions.

    Singaporean inflows down sharply, says BoI


    Investment from Singapore to Thailand faced a dramatic drop by 88% in the first month of this year in light of various confrontations between the two countries, according to the Board of Investment (BoI).

    Investment inflows from Singapore fell to 619 million baht in January from 5.26 billion in the same period last year, which had been a sharp increase from 1.69 billion baht in January 2005.
    The relationship between Thailand and Singapore has been severely tested since former prime minister Thaksin Shinawatra's controversial visit to the island state last month. The temperature rose further when Gen Sonthi Boonyaratkalin, head of the Council for National Security, said two weeks ago that satellites belonging to Shin Satellite Plc, now partly owned by Singapore's Temasek Holdings, should be returned to the Thai people.

    Singapore is the top investor in Thailand among Asean countries and has been among the top five overall for many years. Singapore invested 28.92 billion baht in Thailand last year, a 104% rise from the previous year, putting it in third place behind Japan (110.47 billion) and the United States (37.06 billion).

    A source at the BoI said the decline of Singaporean investment had in fact been seen from late last year because Singaporean investors lacked confidence in the political situation, as well as the interim government's policy toward their country.

    Thamrong Mahajchariyawong, the BoI's deputy secretary-general, said investment from China was expected to grow 20% this year, the highest level among all countries.

    But the investment amount from China remains considerably small compared to the sums from Japan and the US.

    In January, investment from China rose 550% year-on-year to 345 million baht from 53 million in the same period last year. Investment from Japan rose 87% to 10.7 billion baht and that from the US rose 30% to 528 million baht.
    Mr Thamrong said the Chinese inflow was driven by the Beijing government's policy to push investment capital out of China to reduce the pressure of yuan appreciation against the US dollar.

    Bangkok Post

  2. #2
    ding ding ding
    Spin's Avatar
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    I wish they would stop talking about 90 year leases. They give the impression that you can get 90 years lease fairly comfortably.
    That is not the case and the initial 30 year lease can only be extended if the owner of the land agrees to the option clause in in your lease agreement to extend. No clause can be included to have the option to renew twice to give 90 years.
    The thing to remeber about leases is that it is for 30 years and MAYBE for another 30 but it is not guaranteed.
    My opinion is that if any farang agent starts talking about "90 year neverending leases" then you should walk away from him.
    This guy at CBRE should know better than to be spouting this shit

  3. #3
    Malaysia seems pretty smart in terms of their approach. I'll probably start looking more in that direction in future developments.

    I think that Thai side of my Asian tour is beginning to wind down. Funnily-enough Malaysia was on my radar, but their overly-strong Muslim approach in those days put me off a little. Time for a re-look.

  4. #4
    Thailand Expat
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    17-12-2010 @ 12:06 PM
    Slight difference between please, and abject indifference, though to be fair the Malays ought to check out Thailand's farang friendly infrastucture.

    Also, as the Thais will be watching how the Malay policy pans out, if it attracts significant numbers of people (and money) that would otherwise have ended up here, the right monkey may be prodded awake to give us less imposing immigration demands and costs. Could also be just wishful thinking.

  5. #5
    I think that Thailand is actually walking backwards in time, at the moment, towards greater conservatism (monarchism rather than nationalism). I would wonder if things will become progressively more difficult, rather than the other way around.

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