Asian Property Review chats with Srettha Thavisin, President of Sansiri PLC and Cobby Leathers, Head of International Business, Sansiri PLC, on the current situation for foreigners interested in owning a piece of Thailand.
Q: Can foreigners buy land in Thailand? If not, are there plans to allow them to own land or landed property instead of just strata property?
A: Foreigners are not allowed to own land, unless they are married to a Thai national. However, they can own up to 49% ownership in any condominium development, making freehold condominiums the best purchasing option in Thailand for foreign buyers.
Outlined by the Condominium Act B.E. 2522 (1979), freehold condominiums allow foreigners direct freehold ownership of the condominium unit, as well as common property co-ownership via a special status. This grants absolute ownership of the property which is the best form of tenure that foreigners can be granted in Thailand, resulting in greater ease of buying and reselling of the property.
Q: Will ownership tenure be increased for foreigners in the future?
A: There are no talks for this at the moment, unfortunately.
Q: With the new King and the military at odds sometimes, will this give rise to some political uncertainty that might cause a loss of confidence in Thailand?
A: We believe that Thailand is unlikely to face major economic disruption or political uncertainty in the near future.
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Despite some challenges, the Thai economy remained resilient and grew by 3.2% with growth still expected to improve, largely due to:
- Expansion of export sector to support recovery of manufacturing production and private investment;
- Acceleration of agricultural production and farm income to support increase in household consumption;
- Acceleration of public investment;
- Supplementary budget of 190 billion baht in fiscal year 2017; and
- Favourable expansion in the tourism sector, which correlates to the residential real estate industry in many ways.
Q: With so many other countries in ASEAN (e.g. Malaysia, Vietnam, Cambodia, Laos, Indonesia, Myanmar) vying for foreign investor dollars, how will Thailand ride out the competition?
A: The country is placed 19th on macroeconomics, its best showing among the 12 measures, and scores well in financial development (34th) and market efficiency (30th).
Thailand is an attractive host country – remarkable economic progress experiencing foreign direct investment (FDI) inflow’s growth of 21% over the past 6 years, compared to the global percentage of 0.7%, thereby gaining a solid reputation as a second home for various global multinational enterprises (MNEs).
Worldwide connections – Thailand will become the center of a new economic engine of ASEAN. The country has signed free trade agreements with numerous trading partners worldwide as well as our participation in the ASEAN Economic Community (AEC) which facilitates free flow of goods, services, investment, capital and skilled labour within the region.
Hub of Regional Road Connectivity – Thailand has more than 465,000 kilometers of roads and a vast highway network connecting each region nationwide. We are also continuously upgrading and constructing new international road networks. Our goal is to increase regional cooperation with numerous fast-growing countries such as China, India, Viet Nam, Malaysia and Singapore and become a major hub of regional road connectivity.
Rail Systems and Mass Transit – More than 4,000 kilometers of railway lines connect the various regions of Thailand. Plans are in the works to build both double-track railways and high speed trains, enabling a better connection with its neighbouring countries. A new mass transit system in Bangkok is also under construction. A total of more than 175 new stops are expected in the Bangkok Metropolitan Mass Transit system as well as in the rail connection between the Suvarnabhumi and Don Mueang airports.
Competitive Corporate Income Tax – Corporate income tax is the 2nd lowest amongst our ASEAN counterparts, standing at 20%. This has led to an increase in economic activities and investments in Thailand, positioning Thailand competitively against other countries.
Q: Can foreigners borrow loans from Thai banks to purchase Thai property? What are the usual requirements?
A: Most banks in Thailand have their individual policy and loans are usually available to foreigners only if they have lived and worked in Thailand for a number of years.
However, we have an ongoing partnership with Bangkok Bank – based on your status as an existing account holder from a number of regional offices, Bangkok Bank will provide loans on Thai property for foreign buyers, subject to terms and conditions.
Additionally, other foreign banks provide similar loan programmes out of Singapore such as UOB, ICBC and BOC having specific offerings for Thai condominiums under foreign ownership.
The loans will be granted on fair market value of the property based on the bank’s own valuation process.
Criteria to access bank loans for foreign residents of Thailand:
- At least a 1-year work permit or a Thai resident permit.
- A letter of employment indicating their years of service in Thailand and their annual salary.
- Pay slips will usually be attached to this as well.
- The banks may also request for the employer’s company documents.
- The banks would also conduct credit checks on the foreigner.
- The applicant’s age combined with the loan period must not exceed 60 years.
- Applicants must have a stable and secure job.
- Applicants must have a fixed income three times higher than each installment repayment.
- The loan to value rate ranges from 50-70%
Q: Is there an oversupply of condominiums in Bangkok especially the Sukhumvit area?
A: In our view, there is no oversupply – there is an increasing demand in Sukhumvit area every year, especially in the CBD area and locations in proximity to the BTS and MRT.
According to research by CB Richard Ellis (Thailand), a large portion of the downtown Bangkok condominium supply is in the Sukhumvit area, which remains the most established residential area for both Thais and expatriates, accounting for 32% of the supply in the downtown area.
Based on research by a real estate agency in Bangkok, new supply in the outer Sukhumvit area in the past few years have not significantly exceeded demand for units in the area. In addition to the strong cumulative sales in the fringe of Sukhumvit, the supply and demand demonstrates the high potential of the area.
Q: What is the outlook for the Thai property market for the rest of 2017?
A: Though improving slowly, the underperforming economy and some other negative factors have eroded Thailand’s consumer confidence, resulting in lower spending amongst the locals and consequently adversely affecting the national economy in the long run.
To stimulate higher demand for real estate including residences, commercial buildings and other architectural constructions, these projects are anticipated to offer outstanding features such as innovative designs inspired by world-class architects and designers. This is significant to create new experiences to ensure continuing interest from the public.
Business conglomeration i.e. collaboration among key business investors has become the most preferred strategy in driving growth for business, as it generates broader fundraising channels as well as presents highly excellent credit when applying for loans.
Several real estate investors in Thailand are seriously attempting to advance their marketing and promotional channels to efficiently attract both local and foreign customers. An investment fund has been established to ensure the development of new technological systems to be featured in smart phones, which is aimed at providing excellent customer service and after-sales support at all times.
In recent years, large real estate-based companies have been focusing on launching luxury residential projects to tap into the high-end market. Deemed as a small segment in the entire real estate market, the existence of luxury homes, condominiums, and serviced apartments will continually create a buzz among high-income earners living in different business districts of the city.
Q: Can you give examples of the type of property technology that Sansiri will be venturing into or funding?
A: One of the key drivers for Sansiri’s future business will be investment in venture capital.
- We will invest in property technology and look for innovations that can link to our core business – property technology will not only help to reinforce and improve our existing operations, but also become our new income stream in the future.
- In a move to progress into the digital age and utilise enterprise data, the company will set up a data analytics and business intelligence centre as a new business unit, applying advanced data analytics and digital tools across its value chain.
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