Global real estate firm CB Richard Ellis has called for Thailand to ease the stringent requirements it demands for foreign property investment in order to stimulate growth in the Thai economy. They believe that the progression of improved foreign ownership legislation in the country would have a substantial effect on the performance of the economy.
This is a time of fragile global economic recovery, and CB Richard Ellis' report highlights a belief that the incremental income that international investment in the Thai property market would encourage could not be ignored. If handled appropriately, these changes could have a significant impact on the wider Thai economy, without adversely affecting social and economic conditions.
The popular property markets in this region are those such as the completely liberal market of Hong Kong, and the Singapore property market which has considerably reduced restrictions on foreign ownership. In western markets like the one in the UK, foreign owners are preferred over domestic buyers particularly with regard to tax.
Encouraging more clemency for Thai banks to lend to foreign buyers against the security of Thai property would have significant rewards as existing inbound investments are on a 100% cash basis. Residential developers, resort developers, construction contractors, and the Thai banking system would all gain the benefits.
If sensible checks and balances were in place to limit the level of debt, and banks charged foreigners a premium over Thai borrowers, probably somewhere in the region of 1-2%, CB Richard Ellis believe that overseas property investors would rush to take up onshore loans. They also believe that foreign investors would also accept more stringent controls on repossession in the event of a default.
The existing rules, which specify that there can be no more than 49% foreign ownership in any registered condominium were set up to avoid foreign control of landed property. If the ownership ratio was augmented to equal market demand, there would undeniably be a major uplift in foreign investment.
This is a time of fragile global economic recovery, and CB Richard Ellis' report highlights a belief that the incremental income that international investment in the Thai property market would encourage could not be ignored. If handled appropriately, these changes could have a significant impact on the wider Thai economy, without adversely affecting social and economic conditions.
The popular property markets in this region are those such as the completely liberal market of Hong Kong, and the Singapore property market which has considerably reduced restrictions on foreign ownership. In western markets like the one in the UK, foreign owners are preferred over domestic buyers particularly with regard to tax.
Encouraging more clemency for Thai banks to lend to foreign buyers against the security of Thai property would have significant rewards as existing inbound investments are on a 100% cash basis. Residential developers, resort developers, construction contractors, and the Thai banking system would all gain the benefits.
If sensible checks and balances were in place to limit the level of debt, and banks charged foreigners a premium over Thai borrowers, probably somewhere in the region of 1-2%, CB Richard Ellis believe that overseas property investors would rush to take up onshore loans. They also believe that foreign investors would also accept more stringent controls on repossession in the event of a default.
The existing rules, which specify that there can be no more than 49% foreign ownership in any registered condominium were set up to avoid foreign control of landed property. If the ownership ratio was augmented to equal market demand, there would undeniably be a major uplift in foreign investment.
About the Author:
Pauline Felward has written about Thai property and Singapore property for the past two years. She is familiar with the overseas property market and is even an overseas property investor herself.
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