Client case studies
|Thailand Real Estate||
Thailand real estate presents opportunities for international entrepreneurs and property investors. While government regulations help to avoid mortgage related issues of other countries, the financial market turmoil and increasing economic uncertainty will impact Thailand real estate. The following will help you determine whether Thailand real estate is the optimum investment strategy to fulfill your objectives.
Thailand real estate is not reliant on availability of debt finance like other western markets. Thai banks follow strict lending approval guidelines where maximum mortgages are not the norm. Banks have focused on domestic business with property loans rarely exceeding 70% of the banks valuation of a property. Foreign purchases require evidence that the funds have been brought into the country to finance the purchase price so mortgages are not required.
Overview of Asia Property Consultants Thailand Real Estate Services
Restrictions apply, but foreign ownership of Thailand real estate is allowed whether the purpose be for residential real estate, commercial real estate, or as a property investment. The easiest way for foreigners to purchase Thailand real estate is via condominiums where the only restriction is that the total foreign ownership within a condominium block cannot exceed 49% and the funds used to buy the property must be remitted from outside of Thailand and recorded by a Thai bank.
Inflation is another economic indicator which could impact on Thailand real estate. According to Bangkok Bank data, the June 2009 inflation rate has decreased by 4% compared to 2007 rates. The Fiscal Policy Office predict that inflation rates should increase during the following year.
Despite the first three months of the year seeing low stimulus and weak demand in residential markets, local demand has lead to increased purchases of condominiums in Bangkok. CB Richard Ellis predicted that 2009 was going to already be a difficult sales year without the effects of the recession due to residential property supply having an additional 10,000 units built by the end of the year' increasing the current supply in central areas of Thailand to 68,000. While local demand has helped, foreign investors are still needed to improve Thailands Residential Real estate market.
Despite optimism of Thailand's stability as an economy, the Thai GDP contracted 7.1% in Q1 2009, proof of the worldwide effect of the economic downturn. Thai government have taken severe and proactive measures and invested BHT400 billion into the economy. It is expected that the Thai economy will have recovered entirely by Q4 2009 (Federation of Thai Industries).
In Q2 2009 the Ministry of Finance has recently begun drafting a Commercial Collateral Act which offers security similar to floating charges that was not previously covered by the Thai civil and commercial code. Property and other real estate assets can be used as commercial collateral and is classified under two categories 1) Businesses and 2) Other Properties and Assets. The new Act will offer both local and foreign investors an easier means to acquire finance for investments.
Tourism plays a key role in the development of Thailand real estate. The Tourism Authority of Thailand (TAT) expects 14 million visitors to key tourist destinations in 2010, this represents a 5.6% increase from the 2009 figure of 13.2 million. The total revenue generation expected by tourists in 2010 is 540 billion baht, which represents a 6.4% increase from this year's targeted revenue of 530 billion baht.
The Thai Chamber of Commerce predicts that Thailands economy is predicted to grow by more than 3% in 2010. However this figure solely depends on: oil prices not incrising rapidly, currency value not being volatile and political issues being resolved. Pre-financial crisis GDP levels are expected to be reached in 2 years. Optimism grows as exportation and employment inclines, however the Thai economy is still vulnerable to changes in foreign importation and political conflict could hinder Thailands growth.
|Thailand's economy does offer tangible benefits for foreign investment. According to DTZ's 2010 Global Occupancy Cost Report, Thailand is the second cheapest place in the Asia Pacific region in regards to occupancy costs. Making Thailand a great place for foreign companies to establish branch offices.|
Ownership of Thailand real estate requires payment of taxes. There are specific taxes for buying Thailand property or selling Thailand property and the buyer and seller can negotiate on who pays these taxes. The taxes involved include income/withholding tax, stamp duty, transfer fee, specific business tax, land tax and structures usage tax. Asia Property Consultants advise international investors on the taxation requirements associated with Thailand real estate.
The current political uncertainties will not help attract investment into Thailand real estate. Growth in Thailand real estate market will depend on continued strength of the tourism industry, along with government initiatives to encourage investment.
Thailand has taken the longest, of all the East Asian countries to recover from the economic recession; this lag time presents an investment opportunity. Greater capital inflow, and improved country infrastructure points to a growing real estate market.
For more information on Thailand real estate, telephone us in Singapore at (+65) 6735 0120 or email us here
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