Buying Property In Thailand

04 march 2016

When it comes to expert advice, few know more about buying property in Thailand than author Rodney Waller.

Back at home, you probably know exactly how to go about buying a house. Even so, it’s not something you’ll undertake lightly. You know that when it comes to real estate you need to be as knowledgeable as possible, and find trustworthy experts. But what if you’re in a foreign country? In a country where you can’t speak the language, don’t know the customs, and where you may have spent little time so far? The first task is to find out as much as you can about the purchasing process and hear what true experts are saying. In the labyrinthine business of negotiating your way through Thai property laws, you may well have come across Rodney Waller’s book, ‘Buying Property in Thailand’. It’s very readable, and gives you an indepth guide to buying here. It stands out as the definitive guide in the industry, a sort of Lonely Planet for house hunters. The person behind it, Rodney Waller, is an expert who has studied not just the property market in Thailand but the events that can impinge on it. His own development, The Ridge, took part in the 2014 – 2015 Thailand Property Awards and was declared the winner of the Best Residential Development (Samui). We asked him about buying property as a foreigner and also the forecast for 2016. What do we need to be aware of? And are things looking good on the property front?

Firstly, he maintains, it’s impossible to talk generally about properties in Thailand, lumping all types together, if you are a foreign purchaser. Under Thai law, property can be freehold or leasehold, and consist of condominiums, villas and land. As a foreigner, you can buy and own properties with freehold condominium status. And you can buy and own buildings and structures, such as villas (as distinct from the land on which they’re built). You can also lease any building or land as a foreigner, for a maximum of 30 years, with one renewal allowed. But you cannot actually own the land.

So far, so clear. “Things get complicated when foreigners enter the grey area of trying to buy land,” he says. “It’s legal for a Thai company to own land, and it’s technically legal for a foreigner to own shares in a Thai company. However, it’s quite against the spirit of Thai law for a foreigner to use a Thai company as a vehicle to buy land using nominee shareholders. Increasingly the government is checking into these companies to see where the funding is coming from. However, these grey areas allow foreign revenue to come into the country, while foreign property owners get to benefit from their purchases – even if the property they’ve acquired is indirectly owned through companies. This situation has been going on for years, and benefits the economy.”

The primary underlying reasons for these conditions are that foreign ownership laws in Thailand are among the strictest in Asia, in contrast to Malaysia, for instance, which welcomes foreign property ownership through investment programmes. Second, laws relating to nominee shareholdings are still unclear; merely taking the step to clarifying the law would have a positive effect on the market. With Thailand’s entry to ASEAN, Rodney says that there will be pressure to bring its property ownership rules more in line with member states. He foresees some relaxation of the laws. While freehold ownership of land might not be on the near horizon, longer lease terms or foreign-friendly zoning might become a reality, which would certainly lead to more confidence in the property market. ASEAN, according to Rodney, will be responsible for much more, however. With Thailand’s entry, more demand for property will also come from Asia - Singapore, Malaysia, and especially China.

With China’s stock market falling, and the economy showing signs of problems ahead, the Chinese are manipulating their currency to make exports more competitive. So Chinese investors, understanding that their currency is being deliberately devalued, are looking outside for investment opportunities. Apart from the usual investment hotspots of London and Sydney, they will be picking investments in Asia, especially Thailand. As we all know, it doesn’t take a large percentage of Chinese investors to move a market. Just a tiny fraction of China’s 1.4 billion people would transform demand and prices on a small island in Thailand. “Statistically speaking, the velocity of property sales can often be predicted by tourist numbers,” says Rodney. “Before investing, purchasers often visit several times before deciding to invest. Just looking at the increase in visitors from mainland China should indicate a growth in demand from Chinese buyers now and into the future. Enough to create a boom in property prices? Possibly.”

Rodney is very positive about the future, especially right here on Samui. “Even if it’s quite hard to purchase in Thailand,” he says, “out of all of South-East Asia, investors prefer Thailand because of the welcoming nature of the Thai people, and all the other plus points, such as the weather, infrastructure, the transport hubs, and so on. And when they think of coming to Thailand, Samui is top of the list as a boutique destination.” He explains it’s because the island has maintained its status and beauty. “Phuket is a mature market, Pattaya is generally perceived as a lower end destination, but Samui has retained its niche as a high-end resort destination. It offers a great climate, with year-round sunny days and a very short monsoon season, and is still very green. Samui has a lot of room to grow.” As for other trends, buyers in the market now are focussed on value. Ten years ago, a rising market lifted all boats. Now, buyers are selectively investing in stylish architecture, quality projects and quality construction, especially those that offer good value. Key indicators, Rodney says in conclusion, have changed. “To make sense of the market today, it’s necessary to understand international market events and recognise their impact on the Thai market. Samui may be an island, but it’s very much influenced by what’s going on in the greater world beyond.”