Thai Cabinet Approves New Property Policy for Foreigners
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Loading... - Mei Takehiko
- 07 Aug 2024
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In a strategic move aimed at revitalizing Thailand’s real estate market, the Thai Cabinet has approved significant policy changes to attract foreign investment. The Real Estate Information Centre (REIC) of the Government Housing Bank supports these changes, which include extending property leaseholds for foreigners from 30 years to 99 years and increasing the foreign ownership ratio in condominium projects from 49% to 75%.
REIC Director Wichai Wiratkapan emphasized the necessity of these measures due to a substantial increase in unsold housing units. As of the first quarter of this year, there were 213,429 unsold units valued at approximately 1.21 trillion baht, marking a 36.5% increase from the same period last year. This policy change is expected to attract foreign buyers, particularly multinational corporation executives and digital nomads, to invest in Thailand’s property market.
The decision comes in response to a significant drop in purchasing power among Thai consumers. Stricter loan criteria imposed by banks since January, under a Bank of Thailand measure to curb rising non-performing loans (NPLs), have exacerbated the situation. Many borrowers seeking housing loans under 3 million baht are being rejected, and this trend is now affecting higher-bracket consumers seeking 10-million-baht loans.
Wichai emphasized that these measures should be carefully implemented and regulated to prevent long-term negative impacts on the property market. He suggested piloting the measures in specific zones such as major cities, special economic zones, and tourist destinations like the Eastern Economic Corridor (EEC), Pattaya, Phuket, and Bangkok. This approach would allow authorities to study the impact and make necessary adjustments.
The REIC director drew parallels to past measures, noting that foreigners were permitted 100% ownership of condo buildings from 1999 to 2004 to revive the market after the Tom Yam Kung crisis. He suggested that similar temporary measures could be effective in the current context.
Pornnarit Chuanchaisit, president of the Thai Real Estate Association, expressed optimism that the property market would recover within three to six months. He attributed this potential recovery to government investment projects, the upcoming tourism high season, and the digital wallet handout scheme, which are expected to boost the economy in the second half of the year.
The extension of property leaseholds in Thailand allows foreigners to lease land for longer periods, providing them with greater security and stability for their investments in the country. This move aims to attract more foreign investors to the Thai property market by offering them more favorable terms for property ownership.
In addition, the increased foreign ownership ratios in certain property developments enable foreign investors to have a larger stake in specific projects, further incentivizing them to invest in Thailand’s real estate sector. This strategic initiative is designed to stimulate the property market and drive economic growth by encouraging more foreign capital to flow into the country.
By implementing these measures, Thailand aims to enhance its competitiveness in the global property market and position itself as an attractive destination for foreign investment, particularly in the real estate sector. This is particularly important amid challenging economic conditions, as it demonstrates a proactive approach to attracting foreign capital and fostering economic development.
Thailand’s new property policy changes represent a significant step towards rejuvenating its real estate market. By extending leaseholds and increasing foreign ownership ratios, the country aims to attract more foreign investment, stimulate economic growth, and improve the overall health of the property market. These measures, if carefully implemented and regulated, have the potential to provide substantial benefits to both the real estate sector and the broader economy.
