Pattaya Daily News

30 June 2006 :: 16:06:20 pm 21102

Thailand property foreign ownership-How does foreign investors purchasing land in Thailand have an impact on the local economy?

Another perspective on Thai property. Many people do not completely understand the whole matter; others feel indifferent. They are merely thinking of it in terms of investment. Why all of a sudden have the land laws been enforced? Please use your own judgment and draw your own conclusions when reading this article.
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During the year 2532 (1989)

According to statistics, there was evidence that suggested a peak point in the condominium section of the property market. This was especially apparent in the Sukhumvit area of Bangkok, the most sought after and expensive area of Bangkok. However, there are still many projects and buildings being built like there is no tomorrow. Within the same year there were at least fifty golf courses being built all over Thailand. Residing in these exclusive and most expensive condominiums were many foreign investors from overseas. There is evidence to suggest that many of these properties have been reserved or sold, even before the for-sale signs have been put up or the old buildings have been torn down. From this figure, no one knows just how many foreign investors actually own these properties, but it’s believed to be more than half. On top of this, investors who bought properties to turn a profit, usually saw a return of more than 100%. In those days, foreign investors were not allowed to own condominiums. But with all the loopholes in the legal system, it provided an open opportunity for them to easily pocket a profitable gain.

During the year 2534 (1991)

Thailand was beginning to suffer badly in the property market. During 2533, many foreign investors were starting to pull out of the property market, and many others followed suit. The last group of investors who purchased property for a profitable gain even sold their properties at a loss in an attempt to get out of the trouble. Many property developers even devised a clever way to buy back properties from the original buyers. The idea worked well and got the buyers to sell their properties and move out. However, this idea backfired and left the developers with properties that they could not re-sell. Thailand then saw a further decline of the property market.

During the year 2538 (1995)

As a result of the decline in the property market during 2533-2538, there was a drop off in the occupancy rate. In condominiums over 3 million baht in the Sukhumvit and Rama 4 area, only 2380 of 4071 units were actually occupied. This equates to an occupancy rate of only 41.5%. From these figures it was determined that about 20% of the units were foreign owned.

During the year 2540 (1997)

During this year, foreign investors eagerly awaited a drop in the property market. This coincided with the new land law, which allowed foreign investors to purchase land. This new law rejuvenated the property market and saw many foreign investors return and once again, began to invest in the property market.

During the year 2542 (1999)

Since the foreign investors were allowed to buy land at a relatively rock bottom price, in turn they could also make a handsome profit.

The belief was that honest investors who followed the rules should be allowed to gain certain rights and privileges, i.e., when he is married to a Thai he should be given certain rights. After all, if he chooses to come and live and invest in Thailand and certain rights are not granted, he would feel alienated.

The truth is that when a foreign investor chooses to set-up a business in Thailand, we allow him certain rights and privileges, i.e., the right to own numerous businesses with little interference from Government officials. In the case of him marrying a Thai, he would owe an oath of allegiance to Thailand, and in turn, be allowed to apply for Thai citizenship. The country would be in grave danger if it were too simple for foreigners to buy property.

An important issue that needs to be addressed is that there are some investors who are only investing for their own financial gain, and not for the greater good of the Thai economy. After they turn a tidy profit, they move on. One dreads to think what will happen to the future of Thailand if investors continue on in this manner.

Singapore and Malaysia have allowed foreigners to buy land with relatively ease, but without causing too much of a disadvantage to the economy. One should look at this in detail, so that one can ask, ‘if they can do it, then so can we’. We want foreign investor to come and invest in Thailand, but not to buy up plots of land and natural resources, which are the treasures of the generations to come.

Therefore, there is no real need to change the law. It is pointless to think about foreigners buying land. There is no point in bringing up the fact that foreigners are able to buy land anywhere else they wish. For instance, a Thai national is allowed to buy land in America. But excuse me; is the property law in Thailand and the regulations much tougher than that in Europe? It likens to the notion that allows millionaires from underdeveloped countries to buy land in Thailand. The Thais see that those people will not cause trouble for their country because they are smarter than those investors.

Reporter : PDN staff   Photo : PDN staff   Category : Property

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